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NLPWESSEX, natural law publishing

"I don't think  in the last two or three hundred years we've faced such a concatenation
of  problems all at the same time.... If we are to solve the issues that are ahead of us,

we are going to need to think in completely different ways."

  Paddy Ashdown, High Representative for Bosnia and Herzegovina 2002 - 2006



** To Go Direct To Current Energy News Reports - Click Here **
To Go Direct To 2009 News Reports Archive - Click Here **


Peak Oil and Energy Crisis News

Earlier Peak Oil And Energy Crisis News










Selected News Extracts 2009

"The most important contributors to the world’s total oil production are the giant oil fields....The evolution of decline rates over past decades includes the impact of new technologies and production techniques and clearly shows that the average decline rate for individual giant fields is increasing with time. These factors have significant implications for the future, since the most important world oil production base – giantfields –will decline more rapidly in the future, according to our findings.... By 2030 the production from fields currently on stream could have decreased by over 50% in agreement with IEA (2008) . The struggle to maintain production and compensate for the decline in existing production will become harder and harder. Our conclusion is that the world will face an increasing oil supply challenge, as the decline in existing production is not only high but also increasing."
Giant oil field decline rates and their influence on world oil production
Energy Policy Volume 37, Issue 6, June 2009

"(Steven Chu, Obama Secretary of Energy) was my boss. He knows all about peak oil, but he can't talk about it. If the government announced that peak oil was threatening our economy, Wall Street would crash. He just can't say anything about it."
David Fridley, Lawrence Berkeley National Laboratory (US Department of Energy)

Cheer Up, It's Going to Get Worse, 17 June 2009

"The world will never be able to produce more than 89m barrels a day of oil, the head of Europe’s third largest energy group has warned ....Christophe de Margerie, chief executive of Total, the French oil and gas company, said he had revised his forecast for 2015 oil production downward by at least 4m barrels a day because of the current economic crisis and the collapse in oil prices....Delays and cancellations in projects to extract oil from Alberta’s tar sands and Venezuela’s Orinoco belt – both expensive and environmentally difficult operations in which Total is active – will cut 1.5m b/d of supply that would have come on stream had oil prices remained strong. ...Meanwhile, Mr de Margerie now expects a faster decline in production at older fields, such as those in the North Sea. At lower price levels, companies will find it harder to justify the greater cost of keeping such fields pumping."
Total says oil output near peak
Financial Times, 15 February 2009


'We need a new way of thinking' - Consciousness Based Education


"Gas drilling is often portrayed as the ultimate win-win in an era of hard choices: a new, 100-year supply of cleaner-burning fuel, a risk-free solution to the nation’s dependence on foreign energy. In the next 10 years, the United States will use the fracturing technology to drill hundreds of thousands of new wells astride cities, rivers and watersheds. Cash-strapped state governments are pining for the revenue and the much-needed jobs that drilling is expected to bring to poor, rural areas. Drilling companies assert that the destructive forces unleashed by the fracturing process, including the sometimes toxic chemicals that keep the liquid flowing, remain safely sealed as much as a mile or more beneath the earth, far below drinking water sources and the rest of the natural environment. More than a year of investigation by ProPublica, however, shows that the issues are far less settled than the industry contends, and that hidden environmental costs could cut deeply into the anticipated benefits. The technique used to extract the gas, known as hydraulic fracturing, has not received the same scientific scrutiny as the processes used for many other energy sources. For example, it remains unclear how far the tiny fissures that radiate through the bedrock from hydraulic fracturing might reach, or whether they can connect underground passageways or open cracks into groundwater aquifers that could allow the chemical solution to escape into drinking water. It is not certain that the chemicals – some, such as benzene, that are known to cause cancer – are adequately contained by either the well structure beneath the earth or by the people, pipelines and trucks that handle it on the surface. And it is unclear how the voluminous waste the process creates can be disposed of safely. 'This is a field where there is almost no research,' said Geoffrey Thyne, a former professor at the Colorado School of Mines and an environmental engineering consultant for local government officials in Colorado. 'It is very much an emerging problem.' The lack of scientific certainty about hydraulic fracturing can be traced in part to the drilling industry’s success in persuading Congress to leave regulation of the process to the states, which often lack manpower and funding to do complex studies of underground geology. As a consequence, regulations vary wildly across the country and many basic questions remain unanswered. ProPublica has uncovered more than a thousand reports of water contamination from drilling across the country, some from surface spills and some from seepage underground. In many instances the water is contaminated with compounds found in the fluids used in hydraulic fracturing. ProPublica also found dozens of homes in Ohio, Pennsylvania and Colorado in which gas from drilling had migrated through underground cracks into basements or wells. But most of these problems have been blamed on peripheral problems that could be associated with hydraulic fracturing – like well failures or leaks – without a rigorous investigation of the entire process. ProPublica has also found that drilling procedures that can prevent water pollution and sharply reduce toxic air emissions – another frequent side effect -- are seldom required by state regulators and are mostly practiced when and where the industry wishes. Another uncertainty arises from the enormous amounts of water needed for 'fracking.' The government estimates that companies will drill at least 32,000 new gas wells annually by 2012. That could mean more than 100 billion gallons of hazardous fluids will be used and disposed of each year if existing techniques, which often involve 4 million gallons of water per well, are used."
Natural Gas Drilling: What We Don’t Know
ProPublica, 31 December 2009

"Kazakhstan will produce 13,900 tonnes of uranium this year and 18,000 tonnes in 2010, state nuclear company Kazatomprom said on Wednesday, raising earlier forecasts. The Central Asian state became the world's largest uranium producer this year and has been responsible for the bulk of global output growth in the last few years."
Kazakhstan raises 2009-10 uranium output targets
Reuters, 30 December 2009

"Manufacturers increasingly are moving production back to Britain as shoddy quality and higher freight prices are undermining the cost advantage of producing goods overseas. A report into the state of the manufacturing sector by the EEF and BDO, the accountants, finds that one in seven companies surveyed had moved production back to the UK from abroad in the past two years Many British manufacturers have outsourced production to countries with lower labour costs, in Eastern Europe or Asia, in the past decade, a trend that has accelerated as an increasing number of British companies have fallen into foreign ownership. But higher freight, energy and commodity costs have increased the expense of production overseas, while the recession has put pressure on companies to re-evaluate decisions on location. According to the EEF, the manufacturers’ organisation, 14 per cent of companies have moved production back to the UK because cost savings have not been as great as expected. Other reasons were that the quality of goods was not up to standard and that the speed of getting products to market was not fast enough....The EEF reports that nearly seven in ten companies agree that the UK is a competitive location for their manufacturing activities. Two years ago only 43 per cent of companies surveyed were positive about the UK’s business environment for manufacturing."
Companies begin moving production back to UK
London Times, 30 December 2009

"The declining flow of oil from Alaska's North Slope is creating anxiety among executives who run the trans-Alaska pipeline. Within a matter of years, they say, they will need to take costly steps to preserve the life of the 800-mile-long line. If they aren't successful, ice and wax could become a serious problem for the pipeline, increasing the risk of corrosion and spills. Alyeska Pipeline Service Co.'s sense of urgency isn't because the North Slope is running out of oil. The Slope's producing oil fields still contain enough oil to supply the pipeline for at least several more decades. Many other oil prospects on land and in the ocean remain unexplored.  So what's the problem? In the 1980s, at peak oil flows, a barrel of oil made the trip from Prudhoe Bay to Valdez in four days. Now it takes 13 days. The slower flow causes the temperature of the hot oil to cool faster. At some point, the oil temperature will dip below the freezing point of water along certain segments, unless Alyeska reheats the oil inside the pipe. As it gets colder, ice and wax may coat the insides of the pipeline. The colder oil might also increase the risk of buried segments of the pipeline jacking up in the ground, company officials said. The problems have been building for decades and will only become more pressing as oil production declines further. For example, Alyeska, owned by BP, Conoco Phillips, Exxon Mobil and two smaller companies, used to launch devices to scrape wax -- a component of the oil -- out of the pipe's interior every several weeks. Now it's every four to seven days. While ice formation is not yet a problem in the trans-Alaska pipeline, it was the alleged cause of Prudhoe Bay's second-largest oil spill from a smaller pipeline a month ago.  Alyeska officials said they don't know yet how soon they will need to make major upgrades to the trans-Alaska pipeline to deal with the colder oil temperature and how much it will cost. They hope to have some answers by the end of next year, when they conclude a $10 million study of the problem. One thing they do know: New oil production from undeveloped oil prospects in the Arctic will not come on line soon enough to sidestep the problem....Among Alyeska's earlier projects to adapt to declining oil flow was its $500 million project, finished this year, to replace the pumps that move the oil to Valdez. That project was plagued with cost overruns and other mishaps. The new pumps are now configured to work when the pipeline is transporting as little as 300,000 barrels per day. This year, the pipeline moved roughly 700,000 barrels per day, one-third of its peak flow in the late 1980s....Alyeska officials said they can prevent reduced oil flow from harming the pipeline but they conceded their research is taking them into uncharted territory. 'There's very little information elsewhere in the world on running pipelines in the Arctic at low temperatures,' said Mike Joynor, an Alyeska vice president involved in the $10 million study..... Alyeska officials believe they may see problems more worrisome than wax as soon as five years from now. They say that when the flow rate drops to only 500,000 barrels of oil a day, the oil temperature at certain points along the route north of Fairbanks could dip below 32 degrees. The small amount of water suspended in the oil could settle out and form ice crystals. Ice that coats pipe walls could create a hospitable spot for corrosion. Ice chunks that could form might batter pump-station equipment, regulators worry. Also, during a long pipeline shutdown, ice could plug sections of the line, making it difficult to restart the oil flow.Another problem might appear 15 to 20 years from now when the pipeline is projected to be moving just 300,000 or 350,000 barrels per day. At that point, the oil would no longer heat the ground around the buried sections of the pipeline enough to prevent the pipe from jacking up during frost heaves.... Due to the uncertainty about oil prices and the North Slope's production decline, it's hard to predict when the oil companies will decide it no longer makes sense to run the pipeline. The increased cost of piping the oil to the Valdez tanker port is just one part of their decision-making. Ultimately, the companies will determine whether the oil fields are generating the financial returns they want, state and federal officials said.... Some state politicians pushing to cut the oil industry's state taxes recently warned the trans-Alaska pipeline could shut down as early as 2018. But state officials think that's extremely unlikely. They point to recent oil industry filings with the federal Securities and Exchange Commission that say the pipeline could remain viable as late as 2050."
Less oil may spell problems for pipeline
Tacoma News, 28 December 2009

Until recently, China was a net exporter of coal. Now it is an importer. Chinese coal production will peak in five to ten years, if not sooner. Australia is by far the biggest exporter of coal in the world, yet total Australian exports of coal represent only five percent of Chinese consumption. It simply will not be possible for Australia or any other country to supply China with the quantity of coal required.”
Dr John L. Perkins, Senior Economist, National Institute of Economic and Industry Research, Melbourne, Australia

Association for The Study Of Peak Oil USA, 28 December 2009

"Venezuela and China gave a new boost to their thriving economic ties Tuesday, signing a package of agreements that advances China strategy of locking in access to the South American country's vast oil reserves. After two days of talks in Caracas, the China National Offshore Oil Corporation will help the government of President Hugo Chavez develop the Boyaca 3 oil block in the Orinoco-belt, a large heavy-crude basin in Eastern Venezuela. The move is part of Venezuela's efforts to increase oil sales to China to 1 million barrels per day from the 400,000 barrels per day it says it currently supplies. Under Chavez, Venezuela has tried to curb oil exports to the U.S. and searched for new markets. Despite his efforts, the U.S. remains the main destination for Venezuela oil, with sales averaging around 1 million barrels per day. The China National Petroleum Corporation also moved forward by securing access to another oil block in the Orinoco region that could eventually produce 400,000 barrels of oil per day. The Chinese oil titan also agreed to build a refinery with Venezuela that will process crude from a joint oil venture between the two countries that operates the Junin 8 block."
Venezuela, China Sign Oil Deals
Wall St Journal, 23 December 2009

"Even as Indians were preoccupied with carving up States and people across the globe were looking with scepticism at the climate jamboree in Copenhagen, quietly China made some more inroads into Central Asia. On Monday, December 14, the Chinese President, Mr Hu Jintao, opened a pipeline linking a gas field in Turkmenistan with his country's Xinjiang region. The 1,833-km pipeline, snaking through Kazakhstan, Uzbekistan and Turkmenistan, is expected to reach its full annual capacity of 40 billion cubic metres by 2012-13 and will fuel China's ever-thirsty growth engine....The China project diverts supplies from the long-delayed pipeline that the European Union wanted to build from Turkey to Central Europe. Sitting on some of the largest oil, gas and metals reserves, Central Asia is in the eye of a brewing geopolitical storm that Russia, China and the West are hoping will blow their way. Though the Western oil firms were quick off the block to grab assets in the region, particularly in oil-rich Kazakhstan, after the Soviet collapse in the 1990s, they have not been able to match China that has advanced billions of dollars in loans or in picking up energy Moscow's relief, China, unlike the Western powers, has neither sought regime changes or democracy nor military bases in Central Asia. All of these would have made Russia uneasy. As politics hots up, the Russian President, Mr Dmitry Medvedev, will head to Turkmenistan for energy talks."
China puts Central Asia on tap
Business Line (India), 21 December 2009

"China has arrived in Central Asia. That is the unmistakeable lesson of the opening of the Turkmenistan-China gas pipeline on December 12 (BBC, December 14). The 1,833 kilometre pipeline, which will carry up to 40 billion cubic metres (bcm) of gas, also traversing Kazakhstan and Uzbekistan before linking into China’s network in Xinjiang, was formally agreed only in April 2006. The construction of such an ambitious project in a relatively limited time-frame is a concrete demonstration of Beijing’s push to secure the region’s natural resources. 'The strategic significance of the Turkmenistan-China pipeline cannot be underestimated', said analyst Borut Grgic (Atlantic Council, December 18). It is hard to argue with his assessment. This pipeline could be yet another blow to the EU’s Nabucco pipeline, from the Caspian to Europe: but Nabucco is already so frail that the possibility of losing Turkmen gas as well seems inevitable. Far more significant is the implications for Russian and Iranian Caspian policies, as well as China’s rising influence in Central Asia. For Ashgabat, the pipeline will be a vital economic lifeline when operating at full capacity in 2012: the lack of supply to Russia is currently costing around $1 billion per month. It also opens the way for greater Chinese investment in the country’s huge but largely untapped gas fields. In the long-term, we could even see Chinese-built pipelines stretching across the deserts of Turkmenistan to Chinese-operated gas fields in the Caspian Sea. We are also likely to see a ripple effect from this project, as Kazakhstan and Uzbekistan begin plugging their own gas supplies into the Turkmenistan-China pipeline....China’s increasing domination of Russia’s former dominions in Central Asia – which has also included recent plans to buy up Kazakh farmland (RFE/RL, December 17) – will have long-term implications for Russia’s political, energy and economic strategies. How it handles the rise of China in the region will be one of the most unpredictable trends of the next decade. In order to keep the three Central Asian transit states cooperating with each other (not guaranteed given their history of disputes), China will have to make a firmer political commitment to the region. Just as Georgia, Azerbaijan and Turkey have become close allies as a result of the Baku-Tbilisi-Ceyhan project, so China, Kazakhstan, Uzbekistan and Turkmenistan will be bound together through this new pipeline. The implications - for Russia, Iran, and the West – will be serious."
Turkmenistan-China pipeline changes energy balance
Azeri-Press Agency, 21 December 2009

"To provide more clarity on investor and price behavior, the CFTC released two months ago historical data dating back to 2006 on investor holdings in major U.S. commodity markets. Wall Street banks such as JPM and Barclays ( BCS - news - people ) Capital , another commodities powerhouse, have studied that data and concluded that speculators have little to do with the price moves in at least oil, if not other commodities. JPM said its analysis showed most of the oil market volatility over the last three years was closely related to inventories of crude oil and movements in the U.S. dollar -- the currency that oil and most commodities are traded in. It said 96 percent of the variance in weekly oil prices between 2006 and 2009 was due to inventory shocks that occurred when crude stockpiles suddenly tightened or relaxed. The balance of four percent could be attributed to so-called speculation, or pure position changes by investors. 'Large changes in positions do indeed move the market, but ...those effects are only lasting if there is an economic justification for that shift,' JPM said. 'Further, we also find that managed money will often enter the market to anticipate changes in fundamentals, showing that the market is working efficiently.' And while conventional theory often had market positions and prices moving in tandem, the CFTC data showed the exact opposite happened during the height of the oil rally in 2008. 'During the 12 months from summer '07 to summer '08, when oil moved from $80 to $145, net positions were steadily falling as financials experts anticipated a worsening of the economic fundamentals behind oil prices,' JPM said."
Speculators don't cause oil price swings - JPMorgan
Reuters, 17 December 2009

"The Organization of Petroleum Exporting Countries raised the estimate for the amount of crude its members will have to pump next year as world consumption recovers. OPEC, which produces about 40 percent of the world’s oil, predicts members will need to produce 28.61 million barrels a day to satisfy demand in 2010. That’s about 100,000 barrels a day more than last month’s projection and represents an increase in 30,000 barrels a day from 2009, the first annual rise in three years. 'Following two years of sharp declines, world oil demand is expected to return to growth in 2010,' OPEC’s Vienna-based secretariat said in a monthly report e-mailed today. 'Fundamentals will continue to be weak in the first half of the year before improving in the second half.' OPEC committed to reducing supply by 4.2 million barrels a day in a series of meetings late last year to combat shrinking demand. Members including Kuwait, Algeria, Libya and Qatar have said they don’t think supply quotas will change when the group meets in Angola on Dec. 22 because oil prices remain at levels members consider satisfactory."
OPEC Raises Forecast Demand for Its Members’ Crude Oil in 2010
Bloomberg, 15 December 2009

"Almost three-quarters of the money spent on Britain and Europe's energy sectors by 2030 will need to go towards renewable power, according to the International Energy Agency (IEA). Dr Fatih Birol, chief economist of the IEA, said that 72p in every pound of new investment ought to be spent on clean energy, such as wind and solar, to hit current targets on global warming. The remaining 28p would be spent on nuclear and fossil fuels."
IEA: 72p of every pound invested in energy needs to be spent on renewables
Daily Telegraph, 14 December 2009

"China's President Hu Jintao has opened a new pipeline that will deliver gas from Turkmenistan to his country. He was joined by the leaders of the Central Asian countries through whose territory the pipeline passes. Analysts say the pipeline marks a major advance of Beijing's influence in the region and a step forward in its drive for increased energy security. The new pipeline also breaks Russia's long-standing stranglehold on Turkmenistan's vast gas supplies. 'China is positive about our co-operation and the opening of this gas pipeline is another platform for collaboration and co-operation between our friendly nations,' Mr Hu said. The pipeline is expected to deliver 40bn cubic metres a year to China by the time it is running at full capacity in 2013. This is about half of China's current demand, says the BBC's Michael Bristow in Beijing....Turkmenistan is nearing the completion of another pipeline to Iran, and expressed an interest in supporting the EU-backed Nabucco project. President Hu and Kazakhstan's President Nursultan Nazarbayev unveiled the Kazakh section of the pipeline in Astana on Saturday. It is Kazakhstan's first export route that does not go through Russia."
China president opens Turkmenistan gas pipeline
BBC Online, 14 December 2009

"Building wind farms is even more important for keeping the lights on than tackling global warming, according to the chief executive of E.ON Renewables. At the Copenhagen climate change conference, Frank Mastiaux, who is aiming to make wind and solar a third of E.ON's business, claimed that increasing emphasis on renewables made sense from a commercial point of view given the inevitability of rising oil, gas and coal prices. 'I believe climate is not the most credible argument first for renewables,' he told The Daily Telegraph. 'I believe it looking after the climate is vital. But as a company that provides energy as its core purpose, I have the supply element in the front of my mind. We've seen situations in Europe where shortage of gas creates panic in the market. 'More people want energy – more people on the planet and the planet will get under stress.' He made an appeal to those influenced by the so-called 'Climategate' emails, which appeared to show experts manipulating data to exaggerate the extent of global warming, to consider security issues. 'There are still climate sceptics out there,' he said. 'They should do the math: work out people on the planet versus resources and just get renewables on your patch as soon as possible.' Yvo de Boer, UN executive secretary for the climate change talks, also emphasised the importance of energy security as a reason for companies to look towards renewable energy. 'The best thing that happened for the climate was when Russia closed off the gas pipelines to Ukraine,' he said."
Wind farms for security not the climate, says E.ON Renwables chief executive Frank Mastiaux
Telegraph, 13 December 2009

"A joint venture between the UK's Shell and Malaysia's Petronas oil companies has won the right to develop Iraq's giant Majnoon oil field. A total of 44 companies took part in a bid for 10 fields in the second such auction since the invasion in 2003. Shell and Petronas beat a rival bid from France's Total and China's CNPC. Although Majnoon is a huge oil field, with reserves of 13 billion barrels of oil, it currently produces just 46,000 barrels per day. Shell and Petronas have pledged to increase that output to 1.8 million barrels per day. Their venture, which includes a 20-year service contract, will receive a fee of $1.39 a barrel. In June this year, a winning bid to develop an Iraq oil field received $2 a barrel. Also on Friday, a consortium led by China's CNPC was awarded the contract for Iraq's Halfaya oil field. The consortium also includes Malaysia's Petronas and France's Total. It requested fees of $1.40 a barrel of oil extracted from the field, and projected output would reach 535,000 barrels per day. Halfaya, in southern Iraq near the border with Iran, is a much smaller field with reserves of 4.1 billion barrels of oil. Two of the fields on offer at the auction, East Baghdad and the Eastern Fields, failed to attract any bids.  Iraq's known reserves of conventional oil rank behind only Saudi Arabia and Iran. Its daily output is relatively small - about 2.4 million barrels - but it aims to triple that over the next few years. It needs the expertise of foreign companies to reach that goal of reviving its oil industry, which has been battered by years of war and sanctions. As much of its oil is relatively cheap to extract, analysts suggest the potential profits for foreign companies could be huge. 'This is an opportunity without precedent anywhere else in the world. The scale of reserves available for development and exploitation is without equal,' Peter Kemp from Energy Intelligence told BBC News. 'That is something that no oil company... can ignore.' But as BBC World Service's economics correspondent Andrew Walker points out, there are serious drawbacks for foreign contractors, most obviously the issue of security. 'Iraqi politics and an uncertain legal environment are also complications, creating doubts about the soundness of some oil contracts,' he says."
Iraq oil development rights contracts awarded
BBC Online, 11 December 2009

"Chinese leader Hu Jintao will mark a new milestone in Beijing's quest for control over Central Asia's energy resources when he inaugurates a new gas pipeline from Turkmenistan next week. China has already stepped up its presence in the region by handing out billions of dollars in loans, snapping up energy assets and building an oil pipeline from Kazakhstan. The new pipeline will add natural gas to the resources China buys from the region, which was for decades dominated by Russia but is now also close to the West. Hu will visit Kazakhstan and Turkmenistan from Saturday to Monday, and in Turkmenistan he will attend the formal opening of a gas pipeline connecting China to Central Asia, Chinese Vice Foreign Minister Wang Guangya told a news conference in Beijing. Another official at the briefing said China was open to other energy projects in central Asia, where the former Soviet states have been looking beyond Russia for fresh markets. 'In the energy sector, China is pursuing diversification of energy imports, while the Central Asian countries are pursuing diversification of exports,' said Zhang Xiyun, director-general of the Chinese foreign ministry's department for European-Central Asian affairs. 'This kind of cooperation will naturally continue and has room to develop further,' said Zhang, who mentioned Central Asian reserves of oil, natural gas and uranium. China already receives Kazakh oil by pipeline and continued to increase its share of its production through acquisitions this year, including purchase of an 11 percent stake in state-controlled KazMunaiGas EP for $939 million. It also entered the booming Kazakh uranium sector in April, when China Guandong Nuclear Power Co (CGNPC) and Kazakh state nuclear firm Kazatomprom announced plans to lift uranium output from their joint venture. 'China, unlike many other economies, is growing and will continue to grow,' Kazakh central bank chairman Grigory Marchenko said at a briefing on Thursday. 'They need resources for that. Geographically, it is easiest and cheapest to get those resources in Kazakhstan. Our geography is our destiny.'"
China's Hu to woo Central Asia energy suppliers
Reuters, 10 December 2009

"The start of work on a giant gasfield in the Russian Arctic will be delayed because of cost and financing problems, according to Total, the French oil company, one of Gazprom’s partners in the $20 billion (£12 billion) project. The final investment decision for the Shtokman field, which will extract gas from beneath the Barents Sea, was to be taken in the next few months, but Arnaud Breuillac, Total’s vicepresident for exploration in Central Europe, said that the decision would not be taken until the end of next year. 'In the current conditions, it is absolutely normal that the project is taking more time than was initially planned. Projects on a scale such as Shtokman are coming up against difficulties in attracting finance,' he said. A collapse in the price of natural gas has put financial pressure on Gazprom and forced the company to delay investments. The start-up of another Siberian gas project, Bovanenko on the Yamal Peninsula, has been delayed until late 2012. Gazprom had insisted that Shtokman, a project targeted at the lucrative European and American export markets, was a priority, but the economics appear to have gone awry....Shtokman is among the world’s biggest unexploited gasfields. With 100 trillion cubic feet in reserves it could supply Britain for 30 years, but the resource is remote. The gasfield lies 500 km northeast of Murmansk in the Barents Sea. Plagued by icebergs and too distant from shore for helicopters, the problem of building offshore platforms and laying pipelines has been a financial and logistical headache for Gazprom, Total and StatoilHydro, the third partner. However, Shtokman is of great strategic importance for Gazprom, as the resource is earmarked for export to Northern Europe via Nordstream, the proposed Baltic Sea pipeline. Nordstream has strong support in Germany with an important investment by E.ON. The first gas shipments along the pipe, which will link Russia directly to Germany, bypassing Poland, were expected in 2013. A second stage of the project envisages exports of liquefied natural gas (LNG) to America with the construction of a gas liquefaction plant in Murmansk by 2014."
Economic chill delays work on Gazprom’s giant Arctic gasfield
London Times, 9 December 2009

"The world’s electricity industry will set out a plan on Tuesday for rolling out the technologies needed to cut carbon dioxide emissions, showing how ambitious plans to tackle global warming could be achieved.Electricity generation accounts for about a third of the world’s carbon dioxide emissions from energy use, which in turn accounts for two-thirds of all greenhouse gas emissions. This is one of the sectors in which deep cuts in emissions are most practicable – the technologies for producing electricity without emitting carbon dioxide are either in use or close to deployment. Europe’s electricity industry has already committed to going carbon-free by 2050. Electrification also offers the prospect of cutting emissions from other sectors. Electric cars look a better bet than biofuels for greening road transport. Electric heat pumps, which carry heat into the home, are an alternative to burning coal and gas for warmth. However, low-carbon power is going to be more expensive, at least initially, and will require a huge investment in infrastructure as well as a steep improvement in energy efficiency. In short, there will have to be an entirely new type of electricity grid.... Even so, any transition to carbon-free generation will take decades. Low-carbon technologies are generally more expensive than fossil-fuel plants: in the case of some, such as offshore wind, they are a lot more expensive. At the same time, power generation will not always be available. The British government, which is backing Europe’s fastest expansion of wind power, is building into its plans for 2030 a huge margin of spare generation capacity which can be used when there is no wind.  Managing demand will become crucial. Lars Josefsson, who is chief executive of Sweden’s Vattenfall, one of Europe’s biggest electricity companies, and president of Eurelectric, the industry association, says: 'The key to Europe’s low-carbon future will be on the demand side.' If power supply is inflexible, it is particularly important that demand is flexible to balance the grid. A higher cost of energy will make consumers more worried about wasting it. The electricity system will probably have to be based on a “smart grid”, which uses information technology to manage flows of power around the network. This would include smart meters – which show consumers how much energy they are using and also allow flexible pricing – devices in homes that can send information and receive instructions, and even smart appliances, that would switch off automatically when not needed."
Industry looks to green electric future
Financial Times, 9 December 2009

"Saudi Aramco, the world’s largest state-owned oil company, is drilling a record number of wells to find more resources and boost natural gas output to meet industrial demand, Oil Minister Ali al-Naimi said. Saudi Arabia’s state producer aims to discover a minimum 5 trillion cubic feet (142 billion cubic meters) of so-called non- associated gas reserves annually, he said at a conference in Dubai today. The country, which had gas reserves of 263 trillion cubic feet at the end of 2008, has opened areas for exploration in the south in partnerships with Royal Dutch Shell Plc, China Petroleum & Chemical Corp., known as Sinopec, OAO Lukoil and Eni SpA, al-Naimi said. 'We project that in 2010 proven reserves will be even higher,' al-Naimi said. The country is also increasing ethane production for the petrochemical industry and new facilities will add capacity to process about 400 million cubic feet of ethane a year by 2014, he said. Saudi Arabia is expanding and upgrading its oil and gas production and refining businesses at a cost of $100 billion to speed industrial growth and tap rising demand in Asia, al-Naimi said last month. Middle Eastern oil producers are turning to natural gas, a fuel previously burnt off as it was extracted along with crude, to fire the power plants needed to meet demand increases from growing populations and economies. Oil producers are also seeking to add new industries capable of using crude, gas and refinery byproducts."
Aramco Drills Record Number of Wells, Adds Gas Output
Bloomberg, 9 December 2009

"Fathih Birol, the chief economist of the International Energy Agency (IEA), believes that if no big new discoveries are made, 'the output of conventional oil will peak in 2020 if oil demand grows on a business-as-usual basis.' Coming from the band of geologists and former oil-industry hands who believe that the world is facing an imminent shortage of oil, this would be unremarkable. But coming from the IEA, the source of closely watched annual predictions about world energy markets, it is a new and striking claim. Despite repeated downward revisions in recent years in its forecasts of global oil supply in 2030, the IEA has not until now committed itself to a firm prediction for when oil supplies might cease to grow. Its latest energy outlook, released last month, says only that conventional oil (as opposed to hard-to-extract sources like Canada’s tar sands) is 'projected to reach a plateau sometime before' 2030.  Mr Birol’s willingness to acknowledge that conventional supplies may peak in a decade’s time points to a subtle shift in policymakers’ attitude towards the 'peak oil' debate. This debate is not about whether the supply of oil, a finite resource, could some day stop growing. Rather, it hinges on the timing of an end to increases in global oil production, and on what happens next. The most pessimistic peak-oil proponents think that global oil supply has peaked or is about to do so. Given projections of demand increasing well into the future, they fear economic disaster. By contrast, oil optimists like Cambridge Energy Research Associates (CERA), an energy-research firm based in Boston, argue that high prices will lead to improved technology that will enable oil firms to find new oilfields; make it economically feasible to extract oil under more challenging geological conditions or manufacture it from coal or natural gas; and increase the amount of oil that can be recovered from existing fields. This, they argue, will allow demand to be met for at least a couple of decades. After that, CERA reckons, 'supply may well struggle to meet demand, but an undulating plateau rather than a dramatic peak will likely unfold'. Until now official estimates from the IEA were far closer in spirit to those from the likes of CERA than the pessimists. Mr Birol’s statement suggests that the IEA has extended a tentative foot into the other camp. The reasons are not hard to find. After analysing the historical production trends of 800 individual oilfields in 2008, the IEA came to the conclusion that the decline in annual output from fields that are past their prime could average 8.6% in 2030. 'Even if oil demand were to remain flat, the world would need to find more than 40m barrels per day of gross new capacity—equal to four new Saudi Arabias—just to offset this decline,' says Mr Birol. A daunting task."
The peak-oil debate - 2020 vision
The Economist, 10 December 2009

"China is driving ahead with an ambitious programme to expand its atomic energy capacity over the next decade, raising questions about its ability to find the uranium it will need, at home or abroad. Total capacity reached 9.1 gigawatts by the end of 2008, and the government fully expects to hit its official 40 gigawatt target well before the 2020 deadline. China currently operates 11 reactors and has 17 under construction, but has 124 more on the drawing boards, according to industry group the World Nuclear Association (WNA). The expansion programme will cause its demand for uranium to rocket 10-fold by 2030, making it the world's second biggest consumer of the radioactive metal following the United States, according the WNA forecasts. Zhang Guobao, the country's senior energy official, has repeatedly stated that China intends to raise the bar 'by a large margin', and those in the know believe it should easily smash its existing targets....Concerns have been raised about the availability of sufficient fuel to feed the growing demand in China and elsewhere, but Pan discounted any immediate problems. He claimed there was 'absolutely no problem' finding the uranium to run 40 gigawatts of capacity, either within China's borders or through overseas acquisitions. Over the longer term, however, others concede that acquiring enough of the key ingredient in nuclear power generation could be a big challenge. 'The uranium market in the future faces a lot of uncertainties with not a small supply shortage,' said Zhou Zhenxing, who heads the uranium development unit at the China Guangdong Nuclear Power Corporation (CGNPC), the second of China's big nuclear firms....The need to feed such growing capacity has required the two state-owned giants to hunt the globe for new sources of fuel -- with CGNPC chasing uranium reserves in Kazakhstan, Uzbekistan, Australia and Namibia, and CNNC signing deals to explore and develop in Mongolia and Niger. China has been developing its own uranium mines since the 1950s, mainly in the remote northwest. But total output is a state secret, and it is unclear whether it will be enough to power the dozens of reactors due to go online before 2020. According to figures from the China Nuclear Industry Association, China has currently developed only a third of the uranium required to fuel 40 gigawatts of capacity by 2020, and exploration needs to be stepped up if China wishes to avoid being exposed to the volatile foreign market. 'The exploitation rate of Chinese uranium mines is actually very low right now, so there is room to improve the supply volume,' said He Kun, a professor at the Nuclear and New Energy Technology Research Institute at Tsinghua University. Zhou of CGNPC said his company alone would need more than 10,000 tonnes of uranium per year by 2020. With CGNPC likely to control about half of China's nuclear capacity by then, that would put total annual demand at around 20,000 tonnes, a massive increase on the 769 tonnes produced in 2008, according to World Nuclear Association estimates. Pan of CNNC conceded that there was an urgent need to develop new mines for the longer term."
China struggles to fuel its nuclear energy boom
Reuters, 10 December 2009

"Nearly one in 10 U.S. households runs on power from Soviet nuclear bombs. Now Russia hopes its Cold War arsenal, twinned with fast-growing uranium mines and enrichment capacity, will also be powering China, India and other booming economies when a 20-year nuclear fuel pact with the United States expires in 2013. Russia has expressed no desire to refresh the 'Megatons to Megawatts' programme, under which it will recycle the equivalent of 20,000 nuclear warheads and create enough uranium to power the entire United States for two years. Instead, the Kremlin is pursuing lucrative deals to supply fuel directly to power firms in the U.S. market, home to more than a quarter of the world's nuclear power generating capacity. Russian supplies from old warheads are currently key in the global uranium market, accounting for 13 percent of world supply, helping fill a gap from mined output. Analysts expect recycled Russian supplies to continue to flow after the U.S. deal expires in 2013, but falling to around two-thirds of present levels. 'Russia wants to expand its nuclear presence all over the world,' said Marina Alexeyenkova, analyst at investment bank Renaissance Capital. 'The economics of the 20-year contract to reprocess weapon-grade uranium are not so attractive to Russia.' Russia, holder of a tenth of the world's uranium reserves, is positioning itself as a major player in meeting growing demand from the nuclear power industry. The country already has a 15 percent share of the global reactor-building market. The expiry of the post-Cold War partnership with the United States, which is expected to earn Russia more than $8 billion, has fuelled concerns about a looming supply shortfall. But Russia has not shunned the U.S. market and its 104 reactors. Instead, it has this year signed a succession of deals to supply fuel directly to U.S. utilities, including PG&E Corp (PCG.N), Ameren Corp (AEE.N), Exelon Corp (EXC.N) and Luminant. [ID:nL31032609] The first deals prompted Sergei Kiriyenko, the former prime minister who now heads state nuclear giant Rosatom, to say Russia had 'broken through the wall' forbidding independent sales of Russian fuel to the U.S. market. They also effectively end the monopoly of U.S. government agent USEC Inc (USU.N) on imports of Russian uranium..... Analysts say direct deals could ultimately be more profitable for Russia than the existing programme, which was set up in 1993 to encourage a country still rebuilding after the Cold War to extract and use fuel from dismantled warheads. Russia is also seeking routes into other developed markets through partnership with companies such as Japan's Toshiba (6502.T) and Germany's Siemens (SIEGn.DE), as well as building a share of emerging economies in Asia. 'The Chinese market is booming, with plans to build over 70 new reactors by 2030. For Russia, it's strategically important to fix contracts in this particular market,' Alexeyenkova said. Max Layton, analyst with Macquarie Securities in London, said global supply concerns related to the expiry of the Russian-U.S. agreement were overplayed. 'The Russians will use it, sell it to the Chinese or sell it as part of other reactor packages,' he said. 'From a (global) supply-demand balance perspective, it doesn't matter whether they sell it to the U.S.'"
Russia looks beyond U.S. to conquer uranium markets
Reuters, 10 December 2009

"Vast coal deposits lying deep beneath the North Sea will be burnt in situ to generate up to 5 per cent of Britain’s energy needs, under new plans approved by the Government last week. The UK Coal Authority has awarded licences to Clean Coal, an Anglo-American company, to develop five offshore sites for a technology called Underground Coal Gasification (UGC). The method, which has not been used on a commercial scale in the UK, although it is widely used in Australia, taps the high energy content of coal while doing away with the costly and labour-intensive need to mine it first. Rohan Courtney, a former director of Tullow Oil who is chairman of Clean Coal, said that the potential for the technology was enormous. 'There are enormous amounts of coal lying beneath the North Sea which have never been accessed,' he said. 'This technology is going to open up the industry again in the UK.' The sites approved for use stretch up to 10km offshore from Sunderland, Grimsby and Cromer on the shores of the North Sea, Canonbie, near Annan in Dumfries and Galloway on the other side of Scotland, and Swansea Bay, outside the entrance to the Bristol Channel. The combined coal reserves are estimated to be at least one billion tonnes, equivalent to more than one sixth of all the coal consumed in an average year around the world. Global consumption of coal is about 5.8 billion tonnes a year. Total consumption in the UK is about 80 million tonnes a year. The technique uses two bore holes drilled into a coal seam. The injection well is used to ignite the coal and keep it burning by pumping down oxygen to supply the fire. The other is used to extract a methane-rich synthetic gas that can be used to generate electricity by driving an above-ground power station. Mr Courtney said that polluting carbon dioxide produced from the burning process could be stripped out and backfilled into the cavities created beneath the surface using a technology that was easier than the carbon capture and storage (CCS) method that is proposed for use by power stations. However, the methane gas produced will also emit carbon dioxide when it is burnt....Enormous deposits of coal are known to lie beneath the North Sea, extending from onshore deposits that have been mined in Britain. Offshore exploration for oil has also shown the presence of coal in many areas. Ms Bond said that, within 20 years, UGC could supply a large amount of Britain’s power needs, with some projects being developed far offshore using former oil platforms."
North Sea coal to be burnt underground
London Times, 9 December 2009

"The Japanese Government is working on a 'growth blueprint' that would exploit the prolonged weakness of the US dollar and mount a state-backed resource grab for rare technology metals around the world. If the plans, which are in their early stages, come to fruition, the Government would assist companies in buying the rights to mine rare earth minerals wherever they are up for grabs. Tokyo is understood to have placed a high economic priority on securing global rare earth rights for Japanese companies because of the looming prospect of a resource war with China. The metals most coveted by Japan are a collection of 14 lanthanides that make hybrid vehicles possible and will be critical to the future of electric cars because their strong magnetic properties allow for lighter motors....Over the past decade, Beijing has reached the point where it enjoys a 90 per cent global monopoly over the production of rare earth metals. As its high-tech industries have developed, it has consumed an increasing quantity of those produced domestically and significantly lowered export quotas to places such as Japan. Even large Japanese manufacturers have resorted to illegal quota-busting and source about a quarter of their annual supplies from illicit rare earth mines in China. As China has hardened its stance on exports, Japan has begun a frantic search for supplies elsewhere."
Government ready to back business in minerals race
London Times, 9 December 2009

"Petroleos Mexicanos, the state oil producer, said output at its Cantarell field will fall by about 5.2 percent next year, the slowest drop in five years. Production at Cantarell will fall to about 550,000 barrels a day next year from an average 579,990 barrels through the first 10 months of this year, Jesus Puente Trevino, adviser to Chief Executive Officer Juan Jose Suarez Coppel, said in an interview in Houston today. The company’s natural-gas production will drop to 6.2 billion cubic feet a day in 2010, he said. That represents a 12 percent drop from the average 7.05 billion cubic feet a day this year through October, according to data compiled by Bloomberg. Pemex is injecting gas and employing other recovery methods to stabilize a six-year drop at Cantarell, the third-largest in the world when it was discovered in the 1970s. The decline forecast for next year would be the slowest since production at the offshore field fell 4.5 percent from a year earlier in 2005, according to data compiled by Bloomberg."
Pemex Cantarell Oil Output to Drop Least in 5 Years
Bloomberg, 9 December 2009

"Scientists at the European commission have cast doubt on whether biofuels could ever be produced sustainably in significant quantities, dealing a blow to the aviation industry, which sees such fuel as a key way to reduce its emissions. The researchers argue that the greenhouse gases emitted in making biofuel may well negate most of the carbon dioxide savings made by replacing fossil fuels. Of particular concern is the uncertainty over emissions of the potent greenhouse gas nitrous oxide. The road transport industry is also keen to increase the use of biofuels, and an EU directive last year requires 10% of all road transport fuel to come from plants by 2020. Theoretically the fuels are carbon-neutral: when burned they only release the carbon dioxide they absorbed while the plants were growing. Campaigners argue biofuels are not as sustainable as they seem and say more biofuels would mean the destruction of virgin forests – and the release of their stored carbon – to create agricultural land. Heinz Ossenbrink, of the EC's Institute of Energy (IoE), said research carried out by EU-funded scientists increasingly pointed to a long-term problem for large-scale biofuels use, namely the emissions of nitrous oxide. This is about 270 times more potent than carbon dioxide as a greenhouse gas and is released through use of fertilisers to grow biofuel crops. 'Some of the older studies don't take that into account,' he said. 'We have now come to less positive values for biofuels.'"
Nitrous oxide concerns cloud future of biofuels
Guardian, 8 December 2009

"Kazakhstan's uranium output growth is set to moderate in 2010 after a leap in recent years that has made it the world's largest producer, analysts said, citing technological and economic considerations. The former Soviet republic, which sits on a fifth of global uranium reserves, plans to produce 13,800 tonnes this year, up from 8,500 tonnes in 2008. But 2010 production is seen at 15,000 tonnes, a much smaller increase. Analysts said the slowdown is partially due to technical bottlenecks such as the deficit of sulphuric acid which Kazakhastan's main state firm is trying to overcome by setting up its own production. Poorer ores at newly developed fields are another factor. 'Our main reason to question production estimates from Kazakhstan stems from the fact that a significant proportion of new mines is slated to come from the more geologically problematic Syrdarya uranium province,' Bart Jaworski, an analyst at brokerage Raymond James said in a note last month. Jaworski said this less developed region could contain high carbonate content which neutralizes acid before it can dissolve uranium, and abundant fine grain content which causes clogging of filters and deeper deposits. 'In addition to geological issues, leading concerns... include shortage of engineers and other skilled workers (and foreign worker restrictions), electricity shortages (already affecting operations) and uncertainty of the successful stewardship of Kazatomprom... which is now under new management.' Kazakhstan's uranium industry was shaken this year by the sacking and arrest of Kazatomprom's veteran chief executive Mukhtar Dzhakishev who has been credited with turning his company into top league producer. Dzhakishev has been accused of illegally selling uranium deposits for personal benefit, a charge he has denied. He has yet to face trial."
Kazakh uranium output growth set to decline
Reuters, 8 December 2009

"In the spring of 2003, more than a million people marched through the streets of cities across Europe and the U.S. to rail against U.S. plans to invade Iraq and oust Saddam Hussein. Amid the chants for peace was an angry accusation: the war was merely a grab by Western companies for Iraq's vast oil reserves. Nearly seven years on — and after more than 4,600 Americans and tens of thousands of Iraqis have been killed — Iraq's natural resources are only now emerging as spoils of war. As U.S. troops prepare to withdraw from the country next year, some of the world's biggest energy companies, among them ExxonMobil and Royal Dutch Shell, are racing to lock up multibillion-dollar deals with officials in Baghdad that will allow them to exploit the country's giant oil fields. The deals will not only allow Big Oil to return to Iraq for the first time since Saddam nationalized the industry in 1972. By modernizing a production system wrecked by conflict and embargoes, Iraq's exports could also get a huge boost, putting the country's parlous economy on firmer footing and allowing Iraq to take its place as an oil power almost equal to Saudi Arabia. Not just the fortunes of one war-torn country are at stake. Researchers believe that Iraq's untapped oil reserves total at least 115 billion barrels — the third largest in the world. When fully developed, Iraq's oil industry could significantly boost global crude supplies and even bring down oil prices. Tapping Iraq's oil is an industry event of historic proportions, says Alex Munton, a Middle East analyst at global energy consultancy Wood Mackenzie. 'There are very few examples in history you can point to and say, 'A similar thing happened there,' because there really have not been any,' he says. After a flurry of initial oil field – development deals were completed in November, Munton said, 'Iraq's future has just changed, absolutely.' ...After months of sticking to their demands, oil companies now are agreeing to Iraq's $2-a-barrel offer. In mid-November, Italian oil executives from ENI flew to Baghdad to sign a deal on Zubair, a southern Iraq field with about 4.1 billion barrels of reserves. ENI plans to pump about 1.1 million barrels a day from Zubair in partnership with California-based Occidental Petroleum and South Korea's Kogas. ENI was quickly followed by ExxonMobil and Royal Dutch Shell, which agreed to produce about 2.3 million barrels a day in another giant field called West Qurna. Combined with BP-CNPC's anticipated output from Rumaila, 'those three fields alone would be about 6% of total oil production in the world' when output targets are reached, says Munton, the Wood Mackenzie analyst....Even though Total dropped its bid in June for one of Iraq's fields, it is now considering several others on offer in a second round of bids, which Iraq's government has scheduled for mid-December; Iraqi oil officials say they expect about 45 companies to compete for 15 fields. Says Darricarrère: 'It is difficult for any major oil company not to be in Iraq.' But being there won't be easy, either, due to daunting technical and other challenges. Iraq's oil industry has limped along for years on creaking old equipment, patchwork pipeline networks and decayed, rusted port facilities; Saddam-era sanctions largely prevented the industry from upgrading to state-of-the-art equipment. The country produces just 2.5 million barrels a day, down from 2.8 million barrels before the U.S. invasion and a sharp drop from its high of 3.7 million barrels in 1979, when Saddam boosted production to finance his calamitous war with neighboring Iran. A government adviser recently told Britain's Independent newspaper that only about one-third of the 1,400 wells in southern Iraq are functioning. Oil Minister Hussein Shahrastani estimates it will cost about $50 billion to upgrade infrastructure needed to produce Iraq's target of 6 million barrels a day by 2017. 'Iraq's oil industry is in a dire state,' says Samuel Ciszuk, Middle East energy analyst for the consultancy firm IHS Global Insight in London....battles over how to carve up Iraq's oil revenues between the country's bitterly divided ethnic groups have stopped parliament from signing a national hydrocarbon law originally drafted in 2006. After previously insisting that they would not do business in Iraq without a legal framework governing central issues such as revenue-sharing, oil executives now are resigned to the fact that it may be years before a law is forthcoming. Neither companies nor government officials want to wait any longer to kick-start production. The Iraqi people are impatient for economic relief, and since more than 90% of Iraq's budget comes from oil revenues, nothing seems to offer more hope than the arrival of Big Oil."
Pump It Up: The Development of Iraq's Oil Reserves
TIME, 7 December 2009

"China's position as a net importer of coal is unlikely to change although domestic supply is expected to increase next year, said an industry expert....China became a net importer of coal for the first time in the first quarter of 2007, with net import hitting 2.91 million tonnes."
China likely to remain net importer of coal in 2009: expert
Xinha, 6 December 2009

"Preventing runaway global warming may be twice as expensive as previously thought and Britain will have to incur billions of pounds of additional debt to cover its share of the cost, according to the world’s most influential climate change economist. Lord Stern of Brentford said that future generations would find it easier to pay off the debt than to cope with the consequences of climate change. He called for air passengers to pay a significant proportion of the cost through a new global tax on flights, and shipping should also contribute through a new tax on bunker fuel. The author of the 2006 Stern review on the cost of tackling global warming admitted that the latest science indicated that he had been too optimistic in that report. Cuts in CO2 emissions would have to be deeper and made more quickly to have a 50-50 chance of keeping global temperatures from rising more than 2C (3.6F) above pre-industrial levels.... Lord Stern’s 2006 report estimated that the cost of tackling climate change, including investment in renewable energy and other low-carbon technology, would amount to 1 per cent of global GDP. His latest analysis estimates the cost to be closer to 2 per cent, and possibly reaching 5 per cent. He concluded: 'This may turn out to cost more and we should be prepared to pay that. If it costs us 3 or 4 or 5 per cent [of GDP], it would still be a good deal.' The report says that if emissions continued rising at the present rate, there would be a 'significant probability' of global temperature rising by 5C or more by the end of the century. 'The human species has only been around for 200,000 years at most and has no experience of trying to survive under such conditions,' he said. 'It is highly likely that there would be massive movements of people, probably hundreds of millions, with the risk of conflict that would be severe, prolonged and global.' Lord Stern’s report recommends that the concentration of CO2 equivalent gases in the atmosphere should be capped at 500 parts per million (ppm) and, over time, fall well below 450ppm. His 2006 review said that 550ppm would be acceptable. He says that total emissions of CO2 equivalent should fall from 47 billion tonnes this year to 44 billion tonnes by 2020 and to well below 20 billion tonnes by 2050."
Global warming measures will cost ‘twice as much as predicted’
London Times, 2 December 2009

"Conventional oil refers to liquid hydrocarbons trapped in deep, highly pressurised reservoirs, which means that when the wells are drilled, the oil usually gushes to the surface of its own accord. Non-conventional oils are not so forthcoming, and need large amounts of energy, water and money to coax them from the ground and turn them into anything useful, like diesel or jet fuel. As a result, non-conventional oil production to date has been slow to expand - with current output of just 1.5 million barrels per day. Not only that, because they take so much energy to produce, they are responsible for higher carbon emissions per barrel than conventional...In a scenario most favourable to tar sands - high oil prices, growth in demand and a supportive regulatory framework - IHS CERA predicts output from the Canadian tar sands could reach 6.3 million barrels per day by 2035. That's a small fraction of forecast global demand, but to achieve even this, production would have to grow twice as fast as it ever has. That, says Forrest, 'is really pushing it'. So what of the other alternatives? Oil shale is the next large unconventional resource under consideration, with around 2.5 trillion barrels of 'oil equivalent' identified. It was used to produce oil before the oil industry took off in the late 19th century. To produce oil from it, you essentially need to speed up a geological process that takes millions of years. This is done by heating the rock to 500 °C until the kerogen decomposes into a synthetic crude oil and a solid residue....The IEA estimates shale oil would cost between $50 and $100 per barrel to produce, without taking into account any carbon-emissions pricing that may come into force. It expects no significant shale oil production this side of 2030.... Just as shale oil is nothing new, neither is making liquid fuels from coal. Two German researchers developed the eponymous Fischer-Tropsch process in the 1920s, heating coal to produce a gas of carbon monoxide and hydrogen, which is then catalysed to produce diesel and kerosene. The technology was exploited by oil-strapped, coal-rich Germany during the second world war, and by South Africa in the 1980s and early 1990s to beat sanctions imposed during apartheid. South Africa has the world's only major coal-to-liquids (CTL) plant operating today and China has recently built a demonstration plant in Inner Mongolia. So, could coal be the answer? Few doubt there is enough of the stuff to support a major expansion of CTL (New Scientist, 19 Jan 2008, p 38), and the fuels produced are of a high quality. The drawbacks are formidable: it takes about two tonnes of coal and up to 15 barrels of water to produce a single barrel of synthetic fuels. That makes it expensive. The IEA says that when it comes to US coal, to supply just 10 per cent of US transport fuel consumption would mean investing $70 billion, and raising coal production by 25 per cent - an additional 250 million tonnes per year....The gas-to-liquids process (GTL) emits much less carbon than CTL, because the feedstock is cleaner, but still more than conventional crude. That's because almost half of the 280 cubic metres of gas it takes to produce a barrel of GTL fuel is burnt during the conversion process. Three small plants account for global production of 50,000 barrels of synthetic fuels per day. That should quadruple in the next few years with the opening of two larger plants in Qatar and Nigeria....The IEA's chief economist Fatih Birol says non-conventionals can defer global peak oil to 'around 2030'. Others are not convinced. 'If everything goes well,' says Steven Sorrel, the lead author of the UKERC report, 'oil sands might produce 6 million barrels per day in 20 years' time, but by then we'll need to add at least 10 times that much capacity - without allowing for any growth in demand. It's very hard to see non-conventionals riding to the rescue.'"
Extreme oil: Scraping the bottom of Earth's barrel
New Scientist, 2 December 2009

"Some 60% of the 66,500 tonnes of uranium needed to fuel the world’s existing nuclear power plants is dug fresh from the ground each year. The remaining 40% comes from so-called secondary sources, in the form of recycled fuel or redundant nuclear warheads. The International Atomic Energy Agency, which is a United Nations body, and the Nuclear Energy Agency, which was formed by the rich countries that are members of the Organisation for Economic Co-operation and Development, both reckon that, at present rates, these secondary sources will be exhausted within the next decade or so. Once every two years the two agencies publish what is considered the best estimate of global uranium stocks, 'Uranium: Resources, Production and Demand', colloquially known as the Red Book. It estimates that there is enough unmined uranium to supply today’s nuclear power stations for at least 85 years for less than $130 per kilogram. But Michael Dittmar, a researcher at the Swiss Federal Institute of Technology in Zurich, thinks they are mistaken. He has studied the uranium supply and argues, in a recent series of papers, that shortages will drive the nuclear renaissance to an untimely end. Dr Dittmar has unpicked the most recent Red Book numbers on primary production and asserts that they are founded on an alarmingly weak basis. The Red Book is compiled from questionnaires, each of which is handled differently in the countries to which it is sent. The forms might be completed by any number of different government agencies, with added input from mining companies. All, of course, will have their own agenda about the matter. He concludes, 'The accuracy of the presented data is certainly not assured.' Dr Dittmar goes on to speculate about the accuracy of a great many figures, both of the amount of uranium that is known to exist, and estimates of how much more might be available. He predicts that shortages of uranium could begin as early as 2013. For its part, the World Nuclear Association, a nuclear-industry body, argues that if uranium becomes more expensive, mining companies will devise cleverer ways of extracting it—from rock, other elements or even from seawater. Its estimates put the demand in 2030 at anywhere between 42,000 and 140,000 tonnes. Although your correspondent suspects that Dr Dittmar is probably being overly pessimistic, he is inclined to agree with him that the Red Book’s precise assessments of what will be economically sensible over 85 years are far from accurate. But there are two other factors that could come into play. One is that there may eventually be enough economic incentive for the countries with weapons stockpiles of uranium to release much of it for warmth and peace. The other is that the International Energy Agency thinks that nuclear power could more easily weather a storm in fuel markets. A 50% increase in the price of uranium would, the agency predicts, cause only a 3% rise in the cost of the electricity it generates, compared with 20% for coal and 38% for gas. Either way, none of the figures take into account nuclear 'new-build'. Where there is an economic incentive to extract more of a resource, industry has a long history of developing technology to do it. Just do not bet on electricity from nuclear power ever becoming too cheap to meter."
A uranium shortage could derail plans to go nuclear to cut carbon emissions
Economist, 30 November 2009

"Advanced biofuels will not be in widespread use until about 2020, the chief executive of Royal Dutch Shell has said, puncturing hopes that they could be on the verge of a commercial breakthrough. Peter Voser, who took over at the head of Shell in July, told reporters at a briefing last week that it would take 'quite a number of years' before there is a commercially proven plant."
Shell reins back expectations
Financial Times, 29 November 2009

"Britain is to start piping gas directly from Russia for the first time in 2012, according to the chief executive of Nord Stream, the Kremlin-backed gas pipeline venture. In an interview with The Times in Switzerland, Matthias Warnig said that more than 4 billion cubic metres of gas a year had already been booked for the UK market through the pipeline, which is due to enter service by the end of 2012. That is equivalent to more than 4 per cent of total UK gas demand of about 94 billion cubic metres per year. Mr Warnig said the additional gas imports would help to offset a steep decline in production from the North Sea, which is due to fall by 6 per cent this year. ' 'The UK is switching from a gas exporter to an importer,' he said. 'By 2025 there will be a substantial import need ... Several billion cubic metres per year are already contracted for the UK through Nord Stream.' At present, Britain imports negligible quantities of gas from Russia but that is about to change. Construction of the €7.4 billion pipeline, 51 per cent-owned by Gazprom, the Russian gas giant, is due to start in April. It will be laid at a rate of three kilometres a day by special vessels starting from the German and Russian ends of the route. Russian gas destined for the British market would be piped through the Netherlands and Belgium, across the North Sea via pipelines that run to Bacton in Norfolk. Mr Warnig said that 22 billion cubic metres of the pipeline’s 55 billion cubic metre capacity had already been contracted out by its partners, which include E.ON and BASF of Germany and Gasunie of the Netherlands. Of that, he said, Gazprom UK had booked 4 billion cubic metres a year while another company, Wingas, had contracted a further unspecified amount for the UK. Britain will need to import 50 per cent of its gas supplies this winter from countries such as Norway, Qatar and Algeria, a sharp rise from 27 per cent in 2007. Britain was a net exporter as recently as 2004 but by 2015 will need to import three quarters of its supplies of the fuel. The growing dependency on imports is a result of Britain’s increasing reliance on gas for electricity generation. Almost 35 per cent of UK electricity comes from gas-fired power stations, up from less than 5 per cent in 1990....Russia is also keen to press ahead with a second gas pipeline running via the Mediterranean to Greece, Italy and Southern Europe. It has been dubbed South Stream, although it is running several years behind Nord Stream. America has also been backing construction of another pipeline called Nabucco, which would bypass Russia and deliver gas from Central Asia and Iraq to Europe."
Piped gas from Russia to boost Britain’s supplies from 2012
London Times, 28 November 2009

"The nuclear safety regulator has warned that two new reactor designs earmarked for use in Britain remain incomplete and could be rejected unless improvements are made. The Nuclear Installations Inspectorate (NII) said that it was concerned about several features of both the US-Japanese and French reactor technologies that had been proposed for use in a new generation of British nuclear power stations. The NII, which is part of the Health and Safety Executive, is conducting a safety review of the so-called AP-1000 reactor from Toshiba-Westinghouse and the European Pressurised Reactor (EPR) from Areva of France. Final approval of the designs is not due to be granted until 2011, but an update on progress said that significant questions remained unanswered. Kevin Allars, the director of new nuclear build design assessment at the NII, said that he was confident that both designs 'could be suitable' for use in Britain. However, he added: 'If they aren’t acceptable, or there are sufficient doubts in our mind whether they should be built in this country, then we will not issue a design acceptance confirmation. So far we don’t have a complete design yet from either . . . So we cannot rule it out.' In particular, he said that progress on the AP-1000 design was behind schedule because its parent company had been too slow in providing information about a range of issues. He said that the NII was concerned about the functioning of specialist valves controlling pressure at the heart of the reactor, while there were also worries about a proposal to use a 'modular' method of construction designed to cut costs....In July, The Times disclosed that the NII was concerned about the 'control and instrumentation' systems, the so-called brain of the reactor. Mr Allars said that, since then, Areva and EDF had submitted a proposal to resolve these concerns, which the NII said it had accepted 'in principle'. However, he added that it was 'too early to say' whether they would be sufficient to resolve the matter and that further details would be published next year."
Nuclear plans still flawed, says watchdog
London Times, 27 November 2009

"China Guangdong Nuclear Power Holdings Co., one of the country's two nuclear-energy firms, said it will need more than 100,000 metric tons of uranium between 2009 and 2020 to feed its growing fleet of nuclear-power plants, a huge jump from current demand levels that underscores the scope of China's nuclear-energy ambitions. Guangdong Nuclear Power's uranium needs will jump to 10,000 tons a year in 2020 from 2,000 tons this year, Zhou Zhenxing, chairman of the company's uranium-supply unit, said Thursday. Mr. Zhou, speaking at a conference, didn't detail how quickly the demand growth would accelerate within that period, although the company has several nuclear units expected to come online soon that will increase its demand. 'Domestic uranium output is [by] far not enough to meet our needs,' said Mr. Zhou, whose unit is called China Guangdong Nuclear Uranium Resources Co. The World Nuclear Association estimates that global uranium consumption is 65,000 tons a year. Guangdong Nuclear Power is expected to have 34 gigawatts of nuclear-power capacity in operation by 2020, accounting for more than 50% of China's total capacity, up from 3.94 gigawatts currently operational, Mr. Zhou said. China doesn't publish uranium-output data. However, the the World Nuclear Association says China's five operational uranium mines—two in Jiangxi province and one each in Shaanxi, Liaoning and Xinjiang—together produce about 840 tons a year. China has 11 civil nuclear reactors. It plans to build dozens more by 2020, bringing the nuclear sector's share to 5% of China's power-generating capacity, or about 70 gigawatts, from less than 2% now. In May, China's top energy official, National Energy Administration head Zhang Guobao, said longer-range plans would see China having more than 100 reactors in 20 years, matching the current level of the U.S. China now relies on imports for about half of its uranium needs, with supplies coming from Russia, Namibia, Australia and Kazakhstan. China National Nuclear Corp., the nation's top nuclear-power company in terms of power capacity and its dominant domestic uranium producer by output, said in August it aims to raise its domestic uranium production to 2,000 tons a year by 2020."
Guangdong Nuclear Power's uranium needs
Wall St Journal, 26 November 2009

"Director of Centre for Strategic Studies under Azerbaijan’s President Elkhan Nuriyev will visit the US. The center told APA that on December 2, Nuriyev will meet with Vice Chairman of The Cohen Group international consulting organization, Ambassador Marc Grossman, President of the Armitage International, Ambassador Richard Armitage and other political experts, inform the American diplomats and political analysts about the Center, discuss problems of regional security and prospects of the cooperation with other think tanks of the US. On December 4, Elkhan Nuriyev will make a speech at the regional conference on the theme 'Geopolitical state of the Caspian basin and America-Azerbaijan relations during Obama administration' organized by U.S. Azeris Network (USAN) in Chicago-Kent College of Law of Illinois Institute of Technology. The aim of the conference is to inform the U.S. experts about the geopolitical realities in the Caspian basin, Azerbaijan’s decisive position as the main source of the energy resources in the region and a transit country, role in the global energy security, importance of the strategic partnership between Baku and Washington, other security problems of the region. Representatives of Azerbaijani Diaspora in the US, leading experts of the Chicago University and officials will attend the forum. Elkhan Nuriyev will meet with heads of think tanks of the US, have discussions on the regional projects on scientific cooperation between the analytical organizations of the two countries."
Director of Centre for Strategic Studies under Azerbaijan’s President to visit US
Azeri-Press Agency, 25 November 2009

"Namibia currently produces around 5,000 tonnes of uranium oxide annually and there is room for more. 'Uranium oxide production rose sharply in 2008 pushing Namibia for the first time up from sixth to fourth biggest producer globally after Canada, Kazakhstan and Australia,' said Robin Sherbourne, an economist at Old Mutual financial services. In September, an Australian company Extract Resources announced new uranium deposits in the country. The deposits have an estimated 14.8 million pounds of uranium oxide production annually, for 20 years, at a capital costs of 704 million dollars, the company said."
Namibia's dwindling diamonds make way for uranium boom
Agence France Presse, 24 November 2009

"Growing world oil use will likely outpace the rate of new supplies in 2010, eroding the huge stockpiles of crude which have mounted around the world since the start of the global economic crisis. According to a Reuters poll of ten top oil-tracking analysts and organizations, oil demand is predicted to rise by 1.3 million barrels per day (bpd) next year to 85.9 million bpd. At the same time, the rise in production from outside the Organization of the Petroleum Exporting Countries and output of natural gas liquids (NGLs) from OPEC members is seen growing by just 800,000 bpd in total....'The key question for prices is supply,' Barclays C apital analyst Costanzo Jacazio said. '2010 is really a bridging year -- if the economies continue to perform as well as they have been doing during the early stages of the recovery, then I think by 2011 we'll be seeing the demand numbers at or above where they were in 2008.' Non-OPEC output is seen averaging 51 million bpd in 2010, up from 50.8 million bpd, while OPEC output of NGLs -- which are not subject to the producer group's production quotas -- are expected to rise to 5.6 million bpd, up by more than 20 percent since 2008. If OPEC members can maintain current adherence levels to present output quotas, with group output including Iraq assessed around 28.9 million bpd, crude oil inventories could fall by almost 150 million barrels next year. Demand for OPEC's crude is seen at 29.3 million bpd....The expected demand increase in 2010 will be the first year to show average growth since 2007, before record prices and the economic crisis slashed consumption. Global oil demand has fallen by almost 2 percent since 2007, when average annual consumption hit an all-time high around 86.2 million barrels daily. The steep drop in demand saw oil prices crash from record highs of almost $150 a barrel in July 2008 to below $33 a barrel in December last year. Since then prices have more than doubled to just below $80 a barrel as OPEC -- whose member countries pump more than one in every three barrels of oil -- tried to cut output quotas by 4.2 million barrels, or 5 percent of world demand. Demand growth is expected to be strongest in countries outside the OECD, with China leading the way. 'We see a healthy demand recovery of 1.5 million barrels next year, there's only so much you can contract,' said Sarah Emerson, director of Energy Security Analysis Inc. in Boston. '(Demand) growth in China next year should be significant and the U.S. will go from two years of contraction to growth.' The Chinese economy is expected to grow by around 8 percent in 2009 and may post even stronger growth next year. Implied Chinese oil demand in October was up more than 10 percent year-on-year, customs data showed on Monday. Inside the OECD, the United States is seen posting a small recovery in demand. But many analysts remain doubtful about the strength of growth with some arguing oil use may never revisit highs of earlier this decade in North America and Europe. 'We're not going to be in an environment when prices will shoot back to anything like $120 a barrel in 2010,' Jacazio at Barclays Capital said. '(But) we still see oil demand growth next year outpacing non-OPEC supplies and NGLs combined.'"
World oil demand growth to outpace supply in 2010: poll
Reuters, 24 November 2009

"What could support prices even further is the fear that the world’s uranium resources might not be as plentiful as the World Nuclear Association predicts – an optimistic 83 years of reserves. Michael Dittmar, from the Swiss Federal Institute of Technology in Zurich, last week published a report claiming that without more access to military stockpiles, western uranium supplies are likely to be exhausted by 2013. The world’s nuclear plants today use 65,000 tons of uranium each year, with about two-thirds coming from mines and the rest from secondary sources such as reprocessed fuel and re-enriched uranium previously earmarked for warheads. Many analysts are unconvinced by this analysis, claiming an almost limitless supply of uranium if miners make the effort to find it, but huge investment will be needed to extract and process it into a useable form. This year alone, spending on uranium exploration is down 20pc on 2008. The big producers, such as Canada’s Cameco and Energy Resources of Australia have been hit both by flooding at their key mines and a lower uranium price on weak demand for electricity during the recession. There are other supply risks. If global production is to be increased, the world will have to start relying on the politically uncertain regions of Niger, Namibia and Kazakhstan. Nuclear may be the most reliable form of low-carbon generation, providing a more stable source than wind or hydro power and less carbon dioxide than fossil fuels, but the world’s biggest uranium exporters will not be able to provide all of the world’s extra supplies."
Time to join the nuclear bandwagon
Daily Telegraph, 22 November 2009

"Electric cars and unreliable wind power could bring down Britain’s electricity network, National Grid said as the Government launched a £30 million grant scheme to promote the installation of charging points for plug-in cars. Steve Holliday, National Grid chief executive, said that without smart meters in homes and an intelligent system to balance supply and demand, the network would be unable to cope....A big part of the solution to the potential peak demand overload, said Mr Holliday, would lie in the car’s battery, which would act as a power source for the grid, in peak periods. A smart meter would enable a household to supply power to the grid from a car battery between 5pm and 7pm, when lighting, heating and domestic appliance use creates peak demand. The power flow would then reverse during the night when the battery would be charged up cheaply at low electricity tariffs. The cost of installing smart meters could be as high as £500 per household, according to estimates from Ernst & Young, the accounting firm. It believes that it would cost 50 per cent more than Government estimates of a £9 billion bill for hooking up every home in the UK to a smart grid..... Government plans for Pluggedin-Places — up to six cities or regions with charging points for electric cars — were outlined yesterday by Lord Adonis, the Transport Secretary. He called for a series of civic and private sector partnerships to compete for £30 million in government grants. Groups of investors will be asked to match the government funds. 'Our aim is for electric and lowcarbon cars to be an everyday feature of life on UK’s roads in less than five years,' Lord Adonis said. Charging points have so far proved expensive to install. A public/private project to build 73 charging points cost the Government £500,000. A fleet of 1.5 million electric cars on the roads in 2020 would create annual demand of 6 terrawatt hours, equivalent to the output of a large power station running 24 hours a day or 2 per cent of current electricity demand. National Grid reckons that it would take seven hours to charge a typical 22 kwh battery from a household 13 amp socket. However, if a typical commuter drove for only half of the potential 60-mile range, the battery would be half full before charging in the evening, a store of electricity that could be available to the grid."
Government gears up £30m to promote charging points
London Times, 20 November 2009

"Developing countries now emit more greenhouse gas than rich countries, according to a study that will intensify demands for all countries to set targets for cutting emissions. Total emissions from burning fossil fuels in developing countries, including China, India and Brazil, have more than doubled since 1990 and are continuing to rise rapidly. By contrast total emissions from developed countries, such as the US, Japan and Britain have hardly changed over the same period. Last year developed countries were responsible for 46 per cent of global emissions, with developing countries responsible for 54 per cent. The figures, published by an international team of scientists, will put pressure on developing countries to set stricter targets for slowing the increase in emissions. China and India are refusing to agree to any cap on their emissions and are instead offering vague targets for cutting emissions per unit of GDP. China overtook the US in 2006 as the world’s biggest emitter of greenhouse gases and has extended its lead each year since then. The study, published in the journal Nature Geoscience, compared the total emissions of 38 developed countries with those of all other countries. The authors, led by Professor Corinne Le Quéré, of the University of East Anglia, concluded: 'Since 1990 the growth in fossil fuel CO2 has been dominated by countries that do not have emissions limitations. Among [developed] countries growth in some has been offset by declines in others.' The study said that the increase in emissions from developing countries was in part due to their manufacture of goods for export to rich countries.  Professor Le Quéré said that emissions per person remained much higher in rich countries, which supported only about a billion of the world’s population of 6.7 billion. However, explosive growth in emissions in some countries, especially China, meant that the gap was slowly closing. China emitted 4.8 tonnes of CO2 per person in 2007, a rise of 138 per cent since 1991. India emitted 1.2 tonnes, up 79 per cent, and Brazil 2.1 tonnes, up 30 per cent. The UK’s emissions fell 12 per cent over the same period to 9.3 tonnes per person and US per capita emissions fell by 1 per cent to 19.9 tonnes. Professor Le Quéré said that the study did not take account of historic responsibility for greenhouse gases in the atmosphere. She said that developing countries were responsible for only 20 per cent of cumulative emissions since 1751. 'Emissions in rich countries have only stabilised because they have reached a certain stage of development which other countries have yet to attain.' The study also found that the growth in global emissions from fossil fuels had accelerated from 1 per cent a year in the 1990s to an average annual rate of 3.4 per cent between 2000 and 2008. The growth continued last year during the global economic downturn, though at a reduced rate of 2 per cent. Coal has overtaken oil as the biggest source of emissions, largely because many developing countries, including China, have vast domestic reserves of coal but have to import oil.”
Greenhouse gas emissions study highlights need for tighter national targets
London Times, 18 November 2009

"One in 12 of the world’s largest crude oil tankers are being used to store oil rather than move it from place to place, according to research by a London shipbroker. The trend follows a spike in oil futures prices that has created incentives for traders to buy crude oil and oil products at current rates, sell them on futures markets and store them until delivery."
Tankers store oil as futures prices rocket
Financial Times, 17 November 2009

"IHS Cambridge Energy Research Associates, the consulting firm founded by the oil historian Daniel Yergin, has resolutely been on the optimistic side of the peak oil abyss. In a new report released this week, the firm once again explains why it believes that oil supplies will keep growing for the next two decades. After that, the firm says, production will reach 'an undulating plateau,' meaning it will remain more or less flat for a couple more decades after that. The report, called 'The Future of Global Oil Supplies: Understanding the Building Blocks,' shows how oil supplies will reach 115 million barrels a day around 2030, up from 92 million barrels today. They will remain at that level through 2050. (The report sets a lower peak level than in recent years, IHS said, because the recession had led companies to reduce their investments and demand is not expected to rise as high as previously thought.) Any long-term forecast is by definition tricky. But analysts at IHS said they have coaxed production data from more than 450 fields around the world, including in OPEC, as well as projects outlined by oil companies to develop new reserves. They found that the average decline rate in oil fields is 4.5 percent, less than many pessimists assume; second, 60 percent of world production still comes from nearly 550 so-called giant fields that are not in danger of suddenly plummeting; and finally, the world’s oil endowment is much bigger than many estimates about peak oil allow for. The ultimate point of the report, said Peter Jackson, the study’s main author, was to point out that while geological issues are important, future oil production will be mostly driven by the 'above ground elements of the equation.'  'Looking ahead, we can see that the upstream industry faces many challenges,' the report said. 'The longer-term problem lies not below ground, but in obtaining the investment and resources that the industry will need to grow supply significantly from current levels.' This analysis of these risks parallels what many executives have been warning: that limited opportunities to invest in new supplies could lead to an oil shock in the next decade. The chairman of Hess Corporation, John Hess, recently told an oil conference in London that last year’s record price 'was not an aberration; it was a warning.' The chief executive of France’s Total, Christophe de Margerie, has also sounded the alarm, saying that the world would be hard pressed to pump more than 90 million barrels of oil a day by 2015 because of geopolitical constraints. Steve Andrews, the co-founder of ASPO-USA, the domestic chapter of the Association for the Study of Peak Oil, said the optimism of IHS is misplaced and 'irresponsible.' But his analysis also tracks with the concerns about how much the world can produce. 'In the theoretical world where Exxon could drill in Saudi Arabia, in Iran and in Iraq, as well as offshore California, you know we could get considerably higher production,' said Mr. Andrews. 'But there is what we call practical peak oil. It’s the real world.'”
No Peak in Oil Before 2030, Study Says
New York Times, 17 November 2009

"A leading academic institute has urged European governments to review global oil supplies for themselves because of the 'politicisation' of the International Energy Agency's figures. Uppsala University in Sweden today published a scathing assessment of the IEA's annual World Energy Outlook, saying some assumptions drastically underplayed the scale of future oil shortages. Kjell Aleklett, professor of physics at Uppsala and co-author of a new report 'The Peak of the Oil Age', claims oil production is more likely to be 75m barrels a day by 2030 than the 'unrealistic' 105m used by the IEA in its recently published World Energy Outlook 2009. The academic, who runs a Global Energy unit at Uppsala, described the IEA's report as a 'political document' developed for consuming countries with a vested interest in low prices. The report from Aleklett and others, including Simon Snowden from the University of Liverpool, says: 'We find the production outlook made by the IEA to be problematic in the light of historical experience and production patterns. The IEA is expecting the oil to be extracted at a pace never previously seen without any justification for this assumption.' There is particular concern about high future production rates from 'unconventional' sources such as tar sands, with the Uppsala report saying there is a lack of information about the figures in the 2008 Outlook and largely repeated in the latest one. 'We must therefore regard the IEA production figure as somewhat dubious until it is explained more fully,' added the Swedish report, which is to be published in the journal Energy Policy. The Uppsala findings come days after the Guardian reported that IEA whistleblowers had expressed deep misgivings about the way energy statistics were being collected and interpreted at the Paris-based organisation. Insiders questioned whether US influence and fears of stock market 'panic' were encouraging the IEA to downplay the potential for future oil scarcity. Aleklett, whose latest work was funded by the state-owned Swedish Energy Agency, said he had experience of similar internal worries about the IEA."
Oil: future world shortages are being drastically underplayed, say experts
Guardian, 12 November 2009

"Planning is not the only obstacle to a rebirth of nuclear power in Britain. The technology’s torturous economics are, if anything, even trickier. The trouble is that, whereas the fuel is cheap, nuclear-power plants themselves are very expensive to build and the pay-off from that investment is slow. It is hard to know the true cost of a modern nuclear plant. Most Western reactors that are still running were built years ago (Britain’s newest, Sizewell B, is 14 years old). Two new reactors of the type Britain may choose are being constructed in Finland and France. Discouragingly, the Finnish reactor, originally priced at €3 billion (£2.1 billion at the time), is three years late and around €2 billion more expensive than expected. The French plant is also thought to be over budget, by around 20%. To the industry’s opponents, all this is proof that nuclear electricity is uneconomical....Nuclear energy’s best hope lies in carbon pricing, which forces fossil-fuel plants to pay for the environmental cost of the carbon they generate. The price of carbon under Europe’s emissions-trading scheme is currently around €14 (£12.65) per tonne, far short of the €50 that power-industry bosses think would make nuclear plants attractive. People in the industry are arguing for a price floor. Since that would boost every form of low-carbon generation equally, setting one would allow ministers to observe their no-subsidy pledge, and still see the reactors built; but the floor would have to be set high to make a difference."
Splitting the cost
The Economist, 12 November 2009

"It is very hard for the average person in the street to come to a sensible conclusion on peak oil. It's a subject that prompts a passionate polarisation of views. The peak oilists sometimes sound like those extraordinary Christians with sandwich boards proclaiming that the end of the world is nigh. In contrast, the the international economic establishment – including the International Energy Agency (IEA) – has one very clear purpose in mind at all times: don't panic. Their mission seems to be focused on keeping jittery markets calm. Faced with these options the majority of people shrug their shoulders in confusion and ignore the trickle of whistleblowers, industry insiders and careful analysts who have been warning of the imminent decline in oil for over a decade now.... the 2008 edition of World Energy Outlook, the annual report on which the entire energy industry and governments depend. It included the table also published by the Guardian today... What it made blindingly clear was that peak oil was somewhere in 2008/9 and that production from currently producing fields was about to drop off a cliff. Fields yet to be developed and yet to be found enabled a plateau of production and it was only 'non-conventional oil' which enabled a small rise. Think tar sands of Canada, think some of the most climate polluting oil extraction methods available. Think catastrophe. What made this little graph so devastating was that it estimated energy resources by 2030 that were woefully inadequate for the energy-hungry economies of India and China. Business as usual in oil production threatens massive conflict over sharing it. Now, this all seemed pretty gigantic news to me but guess where the World Energy Outlook chose to put this graph? Was it in the front, was it prominently discussed in the foreword? Did it cause headlines around the world. No, no, no. It was buried deep into the report and no reference was made to it in the press conference a year ago. The fear is that panicky markets can cause enormous damage – panic-buying that prompts fights over resources, which in turn could lead to power cuts in some places and other such mayhem. But so far in facing this huge challenge, our political/economic system seems unable to cope with reality. We are forced to carry on living in an illusion that we have so much time to adapt to post-oil that we don't even need to be talking or thinking much about what a world without plentiful oil would look like. Reality has become too dangerous."
Too fearful to publicise peak oil reality
Guardian, 10 November 2009

"The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying. The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves. The allegations raise serious questions about the accuracy of the organisation's latest World Energy Outlook on oil demand and supply to be published tomorrow – which is used by the British and many other governments to help guide their wider energy and climate change policies. In particular they question the prediction in the last World Economic Outlook, believed to be repeated again this year, that oil production can be raised from its current level of 83m barrels a day to 105m barrels. External critics have frequently argued that this cannot be substantiated by firm evidence and say the world has already passed its peak in oil production. Now the 'peak oil' theory is gaining support at the heart of the global energy establishment. 'The IEA in 2005 was predicting oil supplies could rise as high as 120m barrels a day by 2030 although it was forced to reduce this gradually to 116m and then 105m last year,' said the IEA source, who was unwilling to be identified for fear of reprisals inside the industry. 'The 120m figure always was nonsense but even today's number is much higher than can be justified and the IEA knows this. 'Many inside the organisation believe that maintaining oil supplies at even 90m to 95m barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further. And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources,' he added. A second senior IEA source, who has now left but was also unwilling to give his name, said a key rule at the organisation was that it was 'imperative not to anger the Americans' but the fact was that there was not as much oil in the world as had been admitted. 'We have [already] entered the 'peak oil' zone. I think that the situation is really bad,' he far back as 2004 there have been people making similar warnings. Colin Campbell, a former executive with Total of France told a conference: 'If the real [oil reserve] figures were to come out there would be panic on the stock markets … in the end that would suit no one.'"
Key oil figures were distorted by US pressure, says whistleblower
Guardian, 9 November 2009

"The UK could run out of gas within six hours this winter, the Observer has learned. The revelation has sparked a row between the Conservatives and Labour over who is doing more to keep the heating on. Last winter, the UK was left with only three days of reserves when foreign energy companies started exporting gas to supply their European customers after Russia cut supplies that used a pipeline through Ukraine. A spokeswoman for Ed Miliband's energy and climate change department said that under a civil contingency act he had the power to halt exports from the UK if the Queen had signed the order. Charles Hendry, the shadow energy minister, told the Observer that the current minimum requirements on companies to keep gas in storage were not tough enough to safeguard the security of the UK's energy supplies. Labour hit back this weekend, accusing the Conservatives of 'blighting progress' on building more gas storage facilities by blocking planning reforms proposed by the government. If its storage facilities are full, the UK has enough gas supplies for about 16 days, based on average demand. France's storage capacity would last a maximum of 91 days and Germany's 73 days. But National Grid has told energy companies that they only need to fill tanks by a minimum of 2.3% this winter. If all gas imports to the UK ground to a halt, for example if Gazprom turned off supplies to Europe, and supplies from the North Sea were disrupted, this amount would keep the country's households and businesses supplied for just six hours on a cold day. In France, regulators require companies to keep their facilities at least 85% full from November. Unlike France and Germany, the UK has direct access to dwindling gas fields in the North Sea which provide about half the country's gas needs and ensure some security of supply. National Grid also said the government had powers in an emergency to order North Sea operators to boost production. But fields are already operating at 90% capacity. UK energy companies do not have access to storage facilities in Europe, unlike their foreign counterparts. National Grid said its minimum requirement for gas storage was based on ensuring the smooth and safe operation of the network, rather than security of supply. It said it had the power to slow the rate of withdrawal of supplies, but admitted it could not order companies to replenish stocks once tanks became depleted. Businesses could be cut off to keep households supplied, it added. The system assumes the market will deliver sufficient supplies by sucking in gas to the UK when demand is high."
Winter crisis could see UK 'run out of gas in hours'
Observer, 1 November 2009

"Less than half the population believes that human activity is to blame for global warming, according to an exclusive poll for The Times. The revelation that ministers have failed in their campaign to persuade the public that the greenhouse effect is a serious threat requiring urgent action will make uncomfortable reading for the Government as it prepares for next month’s climate change summit in Copenhagen. Only 41 per cent accept as an established scientific fact that global warming is taking place and is largely man-made. Almost a third (32 per cent) believe that the link is not yet proved; 8 per cent say that it is environmentalist propaganda to blame man and 15 per cent say that the world is not warming. Tory voters are more likely to doubt the scientific evidence that man is to blame. Only 38 per cent accept it, compared with 45 per cent of Labour supporters and 47 per cent of Liberal Democrat voters."
Global warming is not our fault, say most voters in Times poll
London Times, 14 November 2009

"Rio Tinto's listed uranium subsidiary, Energy Resources of Australia, says low uranium prices and the effects of the financial crisis are hampering global mine development, setting the scene for a uranium shortage further out.  ERA chief executive Rob Atkinson said current spot prices of $US45 a pound did not appear to factor in coming demand and current supply issues. A number of developing mines around the world (not ERA's) were 'very much' greenfield sites, Mr Atkinson told The Australian. 'With the very weak American dollar, and also with the difficulties still in getting capital, there is a high likelihood a number of these projects won't get up.' Uranium prices have hovered between $US40 and $US50 a pound for most of the year after a steady slide from a 2007 record high of almost $US140."
Uranium shortage ahead, says ERA
The Australian, 14 November 2009

"Only a quarter of people believe that climate change is the most serious problem that the world faces, according to a poll for The Times. The finding suggests that the public is unconvinced by the Government’s message that climate change is 'the moral issue of our times' and that we must embrace urgently a low-carbon lifestyle. The poll, undertaken last weekend, found that only two in five people in Britain accept as an established scientific fact that global warming is largely man-made. The high degree of scepticism undermines the Government’s position at the UN climate change summit in Copenhagen next month. Gordon Brown will struggle to persuade developing countries that he has public support at home for drastic measures to reduce carbon emissions. Developing countries are threatening to walk out of the summit unless rich nations, including Britain, commit to making much greater cuts in carbon emissions than they are currently promising. The poll results indicate that voters are not yet convinced of the need for significant sacrifices and will resist new green taxes. Conservative voters are consistently less likely to be worried about global warming than other groups and are less supportive of measures to reduce emissions. There is also a small gender gap, with women slightly more supportive of new green taxes than men. Overall, 83 per cent accept, from what they have heard, that the Earth’s climate is changing and that global warming is taking place, with 15 per cent disagreeing. Even among the majority that believes in global warming, only half believe that it is 'now an established scientific fact that climate change is largely man-made'. Among the public as a whole 41 per cent agrees that it is established that climate change is largely man-made. Tory voters are more dubious, at 38 per cent, than Labour and Liberal Democrat supporters (at 45 and 47 per cent). A third of the public (32 per cent) agree that climate change is happening but believes it has not yet been proven to be largely man-made, while 8 per cent think that the view that climate change is man-made is environmentalist propaganda. Fifteen per cent believe that climate change is not happening....On specific policy options the poll shows an increase in support compared with three years ago for new taxes on air travel intended to reduce the number of flights people take, and for raising the cost of motoring to encourage people to drive less. Compared with November 2006, there has been a reduction in support for a much higher tax on cars that use a lot of petrol and emit high levels of carbon dioxide. There is now a clear majority of 57 to 40 per cent in favour of new air travel taxes, up from a split of 50/46 per cent in 2006. The highest support is among women, professionals and managers, and Liberal Democrat voters. Despite an increase in support, a majority still opposes increases in the cost of motoring, by 53 to 44 per cent. By contrast, despite a reduction in support, a big majority of 68 to 29 per cent support much higher taxes on cars that use a lot of petrol. Men (64 to 34 per cent) are much less enthusiastic than women (72 to 24 per cent). A very big majority (87 to 11 per cent) support new building regulations for all new houses to meet the highest standards of insulation by making more use of renewal energy such as solar power, even if this increases the cost of new homes. Middle-class people back such a change much more than working-class groups. The public clearly opposes, by 52 to 41 per cent, calls for the cost of meat to be raised because the farming of cows and pigs is a key contributor to methane emissions, a cause of climate change. Opposition is highest among men and Conservative voters. Voters very strongly support, by 69 to 26 per cent, proposals to set limits on carbon dioxide emissions and to make companies pay for their emissions, even if this results in higher prices for manufactured goods and energy."
Widespread scepticism on climate change undermines Copenhagen summit
London Times, 14 November 2009

"Britain has no chance of meeting its main carbon-reduction target because it lacks the engineering and manufacturing capacity to deliver the required renewable energy, a study has found. The Government has made a legally binding commitment to cut emissions by 80 per cent by 2050 but has failed to set out how this could be achieved. The study by the Institution of Mechanical Engineers says that the target, the central plank of Britain’s negotiating position at the UN climate change summit in Copenhagen next month, is 'an act of faith' with no grounding in reality. Britain would need to build the equivalent of 30 nuclear power stations by 2015 to be on course to meet the target, the study says. On Monday the Government said it hoped that private companies would build ten by 2025. The institution calls on the Government to accept the 'uncomfortable reality' that the 80 per cent target, mandated in the Climate Change Act, is unachieveable. It says: 'Given the magnitude of the engineering challenge and the pace of action required, the institution concludes that the Climate Change Act has failed even before it has started. It seems likely that the Act will have to be revisited by Parliament or simply ignored by policymakers.'.... The study estimates that, even using optimistic assumptions about annual rates of carbon reduction, the earliest the target for 2050 could be achieved is 2100.
Government’s emissions target is unachievable, says study
London Times, 13 November 2009

"RIA Novosti quoted the national nuclear power company Kazatomprom as saying that Kazakhstan's uranium output increased 61% YoY in January to September 2009 to 9,535 tonnes. The company said in a statement that for the year as a whole, Kazatomprom expects to receive a net income of KZT 49 billion."
Kazakhstan uranium output up by 61pct
Steel Guru, 12 November 2009

"A leading academic institute has urged European governments to review global oil supplies for themselves because of the 'politicisation' of the International Energy Agency's figures. Uppsala University in Sweden today published a scathing assessment of the IEA's annual World Energy Outlook, saying some assumptions drastically underplayed the scale of future oil shortages. Kjell Aleklett, professor of physics at Uppsala and co-author of a new report 'The Peak of the Oil Age', claims oil production is more likely to be 75m barrels a day by 2030 than the 'unrealistic' 105m used by the IEA in its recently published World Energy Outlook 2009. The academic, who runs a Global Energy unit at Uppsala, described the IEA's report as a 'political document' developed for consuming countries with a vested interest in low prices. The report from Aleklett and others, including Simon Snowden from the University of Liverpool, says: 'We find the production outlook made by the IEA to be problematic in the light of historical experience and production patterns. The IEA is expecting the oil to be extracted at a pace never previously seen without any justification for this assumption.' There is particular concern about high future production rates from 'unconventional' sources such as tar sands, with the Uppsala report saying there is a lack of information about the figures in the 2008 Outlook and largely repeated in the latest one. 'We must therefore regard the IEA production figure as somewhat dubious until it is explained more fully,' added the Swedish report, which is to be published in the journal Energy Policy. The Uppsala findings come days after the Guardian reported that IEA whistleblowers had expressed deep misgivings about the way energy statistics were being collected and interpreted at the Paris-based organisation. Insiders questioned whether US influence and fears of stock market 'panic' were encouraging the IEA to downplay the potential for future oil scarcity. Aleklett, whose latest work was funded by the state-owned Swedish Energy Agency, said he had experience of similar internal worries about the IEA. 'The Organisation of Economic Cooperation and Development (OECD) gave me the task of writing the report, Peak Oil and the Evolving Strategies of Oil Importing and Exporting Countries. This report was one of those discussed at a round-table meeting that was held in the IEA's conference room in Paris. At that opportunity, in November 2007, I had a number of private conversations with officers of the IEA. The revelations now reported in the Guardian were revealed to me then under the promise that I not name the source. I had earlier heard the same thing from another officer from Norway who, at the time he spoke of the pressure being applied by the USA, was working for the IEA.'"
Oil: future world shortages are being drastically underplayed, say experts

Guardian, 12 November 2009

"In the 19th century it was European colonialists who scrambled for Africa’s riches. Today it is Asia’s emerging powers who are trawling the continent for raw materials to fuel their economies. This week, China promised African countries £6 billion in cheap loans after signing a series of multibillion-dollar deals to swap resources for infrastructure. India was not far behind. 'The whole world is out to grab Africa’s resources, not just China,' said Patrick Smith, the publisher of the fortnightly newsletter Africa-Asia Confidential. India is keen to export its pharmaceuticals, technology and industrial hardware and to import African copper, cobalt, diamonds, gold and oil.... Both Asian powers — like the US and others — are eager for a share of African oil to secure and diversify their energy supplies. Last year 16 per cent of China’s oil came from Angola, while 10 per cent of India’s came from Nigeria. When India bid for oil concessions in Angola, Africa’s largest oil producer, it found the market had already gone. Chinese state companies had secured monopolies by working for years in joint ventures with Angolan government-controlled companies, and by mixing politics with business in oil-for-infrastructure deals. By 2009, it was estimated that China had given loans worth up to $20 billion (£12 billion) to fund Angola’s post-war reconstruction, cementing a relationship that has paid off for China in millions of barrels of oil. A report in August by the Royal Institute of International Affairs (RIIA) on Asian involvement in the Nigerian and Angolan oil industries noted that 'China’s deeper pockets have certainly put a brake on India’s ambitions.'”
China and India engaged in 21st century ‘scramble for Africa’
London Times, 12 November 2009

"Global oil demand will grow in the fourth quarter of 2009, its first year-on-year increase in fuel use since the second quarter of 2008, the International Energy Agency said on Thursday.
In its monthly report, the Paris-based adviser to 28 industrialised economies, raised its
global oil demand estimate for 2009 to 84.8 million barrels per day (bpd). Next year oil demand is expected to average 86.2 million bpd, following stronger-than-expected preliminary data in North America and buoyant demand in non-OECD Asia and the Middle East, the report said."
Global oil demand to see growth in Q4 - IEA, 12 November 2009

"A looming glut in supplies of natural gas will trigger sliding prices and weaken Russia’s grip over Europe’s energy supplies, the International Energy Agency (IEA) said yesterday. In its 2009 World Energy Outlook, the IEA said that the surplus in global supplies could hit 200 billion cubic metres per year by 2015 — equivalent to more than three years’ annual gas production from Britain’s part of the North Sea. Fatih Birol, chief economist with the IEA, said that the glut was emerging because of slumping global energy demand amid the recession and booming American production of gas from 'unconventional sources', so-called 'tight gas' and 'shale gas'. New technology that uses hydraulic pressure to blast previously unreachable gas out of rock formations was driving a 'silent revolution' in the US energy market, with 'far-reaching implications' for the rest of the world. 'This is a gamechanger that will put downward pressure on spot prices,' he said. The United States is the world’s largest gas market, with annual consumption of about 653 billion cubic metres, but, until only two years ago, it was expected to have to import growing quantities of the fuel from overseas. However, production of unconventional gas in America has quadrupled since 1990 and now accounts for more than half of the total. The IEA said that the trend had raised doubts about the wisdom of huge investments that have been made around the world in recent years in liquefied natural gas (LNG) production and transport. 'Gas suppliers to Europe and Asia-Pacific will come under increasing pressure to modify their pricing terms and cut prices to stimulate demand.' Mr Birol said that the glut would have a host of other effects and would 'call into question Russia’s ambitions' to start selling LNG to other countries. Britain is the world’s fourthlargest consumer of gas, after the US, Russia and Iran. The UK burns about 91.4 billion cubic metres of the fuel every year."
World gas glut will weaken ‘Russian grip on Europe’
London Times, 11 November 2009

"Spain was celebrating its commitment to renewable energy yesterday after wind turbines dotted across the country produced more than half of all its electricity for the first time. High winds across Spain on Sunday meant that for over five hours, over 53 per cent of the country’s power came from wind energy. The towering white wind turbines which loom over Castilla-La Mancha — home to Cervantes’s hero Don Quixote — and which dominate other parts of Spain, set a new record in wind energy production. Most of the wind power was used immediately, 6 per cent was stored and 7.7 per cent was exported to France, Portugal and Morocco. In the past decade Spain has relentlessly invested in wind power, along with other renewable sources, making it the third-biggest supplier after the United States and Germany. Luis Atienza, president of Red Eléctrica which runs Spain’s electricity grid, said: 'This makes us proud. There is no other country of our size which has completed and bettered a renewable energy production of over 50 per cent in such a timescale.'...José Luis Rodriguez Zapatero, Spain’s Prime Minister, a strong believer in renewable energy, has hinted his Government may phase out nuclear plants. The move has provoked opposition from within the nuclear industry, his own party and from the opposition conservative Popular Party. Spain began its wind power push in 1997, but five years ago critics believed it could not produce more than 14 per cent of the country’s electricity. Wind farms have produced 17,700 megawatt-hours (mWh) of electricity so far this year, but renewable energy industry figures believe this figure could rise to 40,000mWh by 2020. Spain’s Socialist Government invested €991 million (£890 million) in wind power in 2007. Already it has reaped a return on its investment; in 2007 it saved €1 billion on fossil fuels, according to the Spanish Environment Ministry. José Donoso, president of the Spanish Wind Energy Association, said: 'A few years ago no one would have predicted these figures but we believe we can go on rising. It will be good for the environment and reduce our importation of fossil fuels.' Red Electrica said this year wind power is expected to produce 13 per cent of all electricity, hydroelectric power 10 per cent and solar power 2.5 per cent. Spain’s solar industry is one of the fastest growing in the world."
Spain’s wind turbines supply half of the national power grid
London Times, 10 November 2010

"Here's the bad news about the global recession's potentially coming to an end: the recovery could spark a massive energy crisis with increased demand for fossil fuels from China and other developing countries, tighter oil supplies and skyrocketing oil prices. And this is just in the near future. The longer-term picture looks even more daunting. If the world continues to guzzle oil and gas at its present pace, global temperatures will rise by an average of 6°C by 2030, causing 'irreparable damage to the planet.' The warning from the International Energy Agency (IEA), an intergovernmental energy watchdog based in Paris, could add extra weight to the negotiations leading up to the climate-change summit in Copenhagen next month, when leaders will attempt to come to an agreement on a successor to the Kyoto Protocol's limits on greenhouse-gas emissions.....But the energy crisis may be even more critical than what the IEA is saying. According to a report in the Guardian on Tuesday, the agency, under pressure from the U.S., has in past reports deliberately underestimated just how fast the world is running out of oil. The newspaper quoted an unnamed senior IEA official as saying that the U.S. encouraged the agency to 'underplay the rate of decline from existing oil fields while overplaying the chance of finding new reserves.' The official questioned the prediction in last year's World Energy Outlook that oil production could be raised from the current level of 83 million bbl. a day to 106 million bbl. a day, saying the estimate was higher than is feasible. This year's report lowers that prediction to 105 million bbl. a day. But critics of the IEA have long said the world has passed its peak in oil production and that such levels are unrealistic. A chief economist for the IEA, Fatih Birol, disputed the Guardian's report. 'I don't see any particular encouragement from the U.S. or any other of our governments,' he told TIME on Tuesday. He said the accusations about the IEA's downplaying of the world's tightening oil supplies surprised him, since 'we have said that oil production is declining in existing fields sharply,' he said."
After the Recession, an Energy Crisis Could Loom
TIME, 10 November 2009

"Ten nuclear power stations are to be built in Britain at a cost of up to £50 billion as the Government tries to prevent the threat of regular power cuts by the middle of the coming decade. The nuclear industry welcomed the plans, but critics said that ministers had acted too late to avoid an energy crunch caused by the closure of ageing coal-fired stations. Although the sites were known to be in line for development, the announcement signals the Government’s increasing ambition for nuclear power. Ed Miliband, the Energy Secretary, intends that construction of the stations should be quick enough to help to meet Britain’s 2050 target of reducing carbon emissions by 80 per cent while bolstering energy security as North Sea gas supplies decline. The announcement comes after a radical shake-up in planning laws. Under powers awarded to the Government last month, local authorities have been stripped of the right of veto over new nuclear plants and other key energy projects. Decisions will instead be taken by the Infrastructure Planning Commission, which was created to slash the period required to secure consent for energy projects from seven years to one year....None of the plants, which will cost at least £4 billion each, will be ready before 2017 — too late to replace eight coal-fired stations earmarked for closure by 2015. Greg Clark, the Shadow Energy and Climate Change Secretary, branded Mr Miliband’s statement a 'declaration of a national emergency for our energy security'.  He said: 'Every one of the measures contained in this statement should have been brought forward ten years ago when they had the chance to secure the investments that are so desperately needed to keep the lights on, keep prices down and cut carbon emissions. Why did they leave it so late?'.... Sam Laidlaw, the chief executive of Centrica, owner of British Gas, which is a partner with EDF, welcomed the changes. He said: 'Britain has a power generation gap looming from 2015 onwards which will need to be filled by new low-carbon replacements, particularly nuclear, and speed of decision making is very important. The current planning system has been a significant barrier so moves to streamline the process are welcome.' Each new reactor will generate up to 1.6 gigawatts — enough to power a city the size of Manchester — and should last for 60 years. The first is likely to be built by EDF Energy at Hinkley Point, Somerset, and should come into service by the end of 2017. New reactors at Sizewell, Suffolk, Wylfa, Anglesey, and Oldbury, Gloucestershire, are also likely to be among the first wave. Hartlepool, Co Durham, Bradwell, Essex, Heysham, Lancashire and three sites near Sellafield, West Cumbria, were also named. Ministers have ruled out construction of a new plant at Dungeness, Kent, citing the risk it faced from rising sea levels. Mr Miliband indicated three greenfield sites that might be suitable later on, although he cautioned that there were “serious impediments” to all of them. They are Kingsnorth, Kent, and Owston Ferry and Druridge Bay, both in the North East. About 13 per cent of Britain’s electricity was generated from nuclear power reactors last year and the Government wants to raise this to 25 per cent by 2025."
Ten nuclear stations to be built in bid to prevent energy shortage
London Times, 10 November 2009

"Families will pay a new levy on electricity bills for at least the next 20 years to fund technology designed to capture the carbon from coal-fired power stations. The Government is planning to raise £9.5 billion from the levy to subsidise up to four carbon capture and storage (CCS) demonstration plants. Details of the first plant will be announced early next year. The Department for Energy and Climate Change said yesterday that uncertainty over the commercial viability of CCS meant that public support might have to continue beyond 2030. The Government is promoting CCS to justify approving new coal plants to replace the eight due to close by 2015 under European rules on air pollution. Burning coal produces far more carbon than burning gas for the same amount of electricity but ministers want to build new coal plants to reduce Britain’s dependence on imported gas....The department said the CCS levy, likely to start in 2011, would be about £17 a year per household. It said that the cost could be higher if its assumptions about the cost of CCS proved too optimistic. The initial levy, which will be imposed on electricity suppliers but passed on to consumers, will run for 15 years. This will pay for the first phase of CCS, under which new coal plants will have to capture the carbon from only about a quarter of their generating capacity. Ed Miliband, the Energy and Climate Change Secretary, said that the levy could be continued beyond the 15-year period to subsidise CCS for the entire output of the four plants."
Government impose ‘carbon capture levy’ to fund coal-fired power plants
London Times, 10 November 2009

"The world is closer to a peak in oil supply than International Energy Agency estimates admit, UK newspaper The Guardian reported in its Tuesday edition, citing an unidentified 'whistleblower' at the IEA. The IEA, which advises 28 industrialized countries on energy policy, is scheduled to release its World Energy Outlook on Tuesday. It 2008 Outlook forecasts world oil supply will rise to 106 million barrels per day in 2030. 'Many inside the organization believe that maintaining oil supplies at even 90 million to 95 million barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further,' the Guardian quoted the IEA source as saying. Fatih Birol, the IEA's chief economist, could not immediately be reached by Reuters for comment on the Guardian article, which appeared on the newspaper's front page. While the Paris-based IEA has repeatedly warned that a lack of investment could lead to a strain on supply, it maintains that there is enough oil in the ground. Its 2008 World Energy Outlook said global oil output was 'not expected to peak before 2030.' The peak oil theory -- that supply has reached or will soon reach a high point and then fall -- has long been confined to the fringes of informed opinion within the industry. There is also growing interest in peak demand, the view that oil supply will reach a high point because of policies to curb fuel use as part of efforts to counteract global warming, not a lack of supply."
IEA 'whistleblower' says peak oil nearing: report
Reuters, 9 November 2009

"A huge expansion of nuclear power was signalled by the Government today as it named 10 sites where new power stations could be built. Energy Secretary Ed Miliband said that despite increases in renewable energy a boost to nuclear power would be needed to meet the nation's energy needs. The first is set to be operational by 2018 and, by 2025, nuclear electricity generation could amount to around 40 per cent of new energy provision. Nine of the new sites are in England, including three in Cumbria, with the 10th in Anglesey, North Wales. And Mr Miliband said a streamlined planning process would mean a clear timetable of one year from the acceptance of an application to a decision. Mr Miliband said a faster planning system would save UK industry up to £300 million a year in 'unnecessary expense'. One third of future generating capacity must be given consent and built by 2025, said the minister, adding: 'While there are already proposals to build more energy infrastructure, more is needed to bring about the shift to a low-carbon future.' Mr Miliband said a series of policy statements published by the Government today included a clear direction towards a 'massive expansion' in renewables, a new nuclear programme based around 10 sites, as well as moves to introduce clean-coal technology. The 10 sites named today are at Braystones, Sellafield and Kirksanton, all in Cumbria, Heysham in Lancashire, Hartlepool, Co Durham, Sizewell in Suffolk, Bradwell in Essex, Hinkley Point in Somerset, Oldbury in Gloucestershire and Wylfa in Anglesey."
Ten new nuclear sites named as Government aims for 'massive expansion' in energy
Daily Mail, 9 November 2009

"The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying. The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves. The allegations raise serious questions about the accuracy of the organisation's latest World Energy Outlook on oil demand and supply to be published tomorrow – which is used by the British and many other governments to help guide their wider energy and climate change policies. In particular they question the prediction in the last World Economic Outlook, believed to be repeated again this year, that oil production can be raised from its current level of 83m barrels a day to 105m barrels. External critics have frequently argued that this cannot be substantiated by firm evidence and say the world has already passed its peak in oil production. Now the 'peak oil' theory is gaining support at the heart of the global energy establishment. 'The IEA in 2005 was predicting oil supplies could rise as high as 120m barrels a day by 2030 although it was forced to reduce this gradually to 116m and then 105m last year,' said the IEA source, who was unwilling to be identified for fear of reprisals inside the industry. 'The 120m figure always was nonsense but even today's number is much higher than can be justified and the IEA knows this. 'Many inside the organisation believe that maintaining oil supplies at even 90m to 95m barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further. And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources,' he added. A second senior IEA source, who has now left but was also unwilling to give his name, said a key rule at the organisation was that it was 'imperative not to anger the Americans' but the fact was that there was not as much oil in the world as had been admitted. 'We have [already] entered the 'peak oil' zone. I think that the situation is really bad,' he added....John Hemming, the MP who chairs the all-party parliamentary group on peak oil and gas, said the revelations confirmed his suspicions that the IEA underplayed how quickly the world was running out and this had profound implications for British government energy policy. He said he had also been contacted by some IEA officials unhappy with its lack of independent scepticism over predictions. 'Reliance on IEA reports has been used to justify claims that oil and gas supplies will not peak before 2030. It is clear now that this will not be the case and the IEA figures cannot be relied on,' said Hemming....The IEA was established in 1974 after the oil crisis in an attempt to try to safeguard energy supplies to the west. The World Energy Outlook is produced annually under the control of the IEA's chief economist, Fatih Birol, who has defended the projections from earlier outside attack. Peak oil critics have often questioned the IEA figures. But now IEA sources who have contacted the Guardian say that Birol has increasingly been facing questions about the figures inside the organisation. Matt Simmons, a respected oil industry expert, has long questioned the decline rates and oil statistics provided by Saudi Arabia on its own fields. He has raised questions about whether peak oil is much closer than many have accepted. A report by the UK Energy Research Centre (UKERC) last month said worldwide production of conventionally extracted oil could "peak" and go into terminal decline before 2020 – but that the government was not facing up to the risk. Steve Sorrell, chief author of the report, said forecasts suggesting oil production will not peak before 2030 were 'at best optimistic and at worst implausible'. But as far back as 2004 there have been people making similar warnings. Colin Campbell, a former executive with Total of France told a conference: "If the real [oil reserve] figures were to come out there would be panic on the stock markets … in the end that would suit no one."
Key oil figures were distorted by US pressure, says whistleblower
Guardian, 9 November 2009

"Britain's biggest developer of offshore wind farms has hired Rothschild to sell stakes in its projects because it cannot afford to build them. The move by Dong Energy, the Danish power giant, casts fresh doubt on the government’s carbon-reduction plans just six months after it ramped up subsidies to keep the offshore wind sector afloat. Nuclear power and offshore wind are the main pillars of the government’s plan to slash pollution. Ed Miliband, energy secretary, will underline their importance when he delivers the national policy statement on energy tomorrow. Construction costs, however, have soared. Dong has plans to develop wind farms with a capacity of 3 gigawatts, enough to supply more than 2m homes, but they will cost more than £10 billion to build — twice the price just three years ago. 'The issue is that these projects require enormous amounts of capital and it’s getting very difficult to justify,' said an industry source. 'The enthusiasm there once was has diminished.'"
Future of wind farms in doubt
London Times, 8 November 2009

"This year's Petroleum Geology Conference in London included the following item on the agenda: Peak Oil: Advancing the topical debate over the timing of peak oil & gas 'The aim of the Geological Society's Peak Oil evening meeting is to further discuss and debate the timing and impact of Peak Oil & Gas. Have we become so efficient at exploring and producing petroleum resources that we are we already there as Colin Campbell ASPO) would argue? Or will technology solutions and a move to more unconventional deposits save the day as Mike Daly (BP) and Glen Cayley (Shell) would suggest? And let's not forget gas. Malcolm Brown (BG Group) sees a longer future for gas but will the progressive use of gas as a substitute for oil hasten its decline? Lots of questions, but do we really have the answers? Come along to the Geological Society on the evening of Tuesday 15th April and join in the debate. Our four invited speakers will present their case, to be followed by a panel discussion.' The debate took place as planned, but with a change in speakers from the original announcement. BP chief geologist David Jenkins argued for the motion that peak oil is "no longer a concern," and Jeremy Leggett argued against, incorporating the UK Industry Taskforce on Peak Oil and Energy Security conclusions into his case. At the end of the debate, approximately five hundred oil-industry geologists voted. Only about a third voted in favor of the motion 'Peak oil is no longer a concern.' The debate has been written up in November's issue of Petroleum Review."
Geologists Vote that Peak Oil is a Concern
The Oil Drum, 8 November 2009

"British families could be forced to pay up to £227 extra on their annual energy bills to help to fund a new generation of nuclear power stations under plans proposed by the French company expected to build most of them. EDF Energy, which wants to build four reactors in Britain at a cost of about £20 billion, was accused of holding the Government to ransom last night, after an executive told The Times that none would be built unless the Government agreed to underwrite part of the cost. Speaking before a government announcement on Britain’s energy future on Monday, Humphrey Cadoux-Hudson, managing director of EDF Energy’s new nuclear business in Britain, said the nuclear programme would proceed only if the Government ensured that consumers paid more for electricity from fossil fuels, such as coal and gas, which is cheaper but produces more greenhouse gas, making nuclear more competitive. To fix the market in favour of nuclear energy he proposed a minimum price on the permits that energy companies need to buy to emit carbon dioxide. The cost of permits was too low — at about €14 per tonne — for energy companies to be encouraged to invest in nuclear rather than gas-fired power stations, which are far cheaper and quicker to build. He said that a price of €25-35 per tonne of carbon dioxide was necessary to make construction of nuclear stations profitable. 'A floor price for carbon is needed ... The waste product of fossil fuel generation needs to have a cost,' he said. Matthew Sinclair, research director at the TaxPayers’ Alliance, strongly rejected the proposals. He said: 'There is no way that the Government should even think of acceding to EDF Energy’s demands for a floor price on carbon.' Mr Sinclair claimed that the cost to British consumers would be about £4.2 billion to £5.9 billion per year, or £162 to £227 per household, and that it would hit poor and vulnerable households hardest. Ben Ayliffe, a campaigner for Greenpeace, accused EDF of holding the Government to ransom over the new build programme. 'They have got them by the short and curlies ... Even with the full resources of the French Government behind them, it seems they cannot make the economics of new nuclear stack up.' With supplies of North Sea gas rapidly running out, on Monday the Government will disclose an approved list of sites for new nuclear plants, each of which would churn out enough electricity to power a city the size of Manchester for 60 years. By 2015 it hopes that at least eight will be under construction, with the first, at Hinkley Point, Somerset, due to enter service in 2017."
EDF Energy wants Britain to fix the market if it builds nuclear plants
London Times, 7 November 2009

"Georgia plans to launch a Russian-language television channel targeting ethnic minorities across the Caucasus, in its latest challenge to Moscow's influence in the strategically important region. Russia and the West are vying for influence over the region, a strategic crossroads at the threshold to Central Asia and criss-crossed by pipelines carrying oil and natural gas to the West. The head of Georgia's public broadcaster, Gia Chanturia, said the company planned to launch the first regional channel in the Caucasus. 'Its main goal is to talk about national minorities living in this region,' he told Reuters. Moscow is unlikely to look kindly on a Georgian-run channel broadcasting to its southern republics, where it has fought two wars against Chechen separatists in the past 15 years and faces a growing threat from Islamist insurgents. Chanturia said the plan was in its early stages, and was spurred in part by the situation after pro-Western Georgia's five-day war with Russia in August last year. 'In a way the creation of this channel is linked with the processes in our country after the war last year and in the region in general,' he said. He said the channel would probably begin broadcasting via the Internet before moving to satellite. Chanturia flatly denied media reports that fugitive Russian tycoon Boris Berezovsky would finance the project, saying the claims were, 'if not strange, then very stupid.' Berezovsky wielded huge political influence in Moscow in the 1990s before falling foul of then-Russian president and now Prime Minister Vladimir Putin. He now lives in self-imposed exile in London. Berezovsky also denied involvement, telling Reuters by telephone: 'This is not true. I repeat, it is not true.' Chanturia said the channel would be funded from the Georgian budget and would contain news from across the region. Russia crushed a Georgian assault on the breakaway pro-Moscow region of South Ossetia last year after days of deadly clashes and months of rising tensions between Moscow and staunch U.S.-ally Tbilisi. Georgian media reports say the project will involve a number of high-profile Russian journalists known for their criticism of the Russian leadership."
Georgia Plans Russian-Language Regional TV Channel
Reuters, 5 November 2009

"Iraq has struck a deal with a consortium led by US oil giant Exxon Mobil, and including Royal Dutch Shell, to develop the West Qurna 1 oil field. This is the second major deal the country's oil ministry has agreed with overseas oil firms this week. The latest deal, which needs cabinet approval, is designed to boost oil production at the Qurna oil field from 280,000 to 2.1 million barrels a day. Earlier this week, Iraq struck a similar deal with Italian firm ENI. Under the terms of the deal, ENI will lead a consortium to develop the Zubair oilfield in southern Iraq. The deal, which also needs cabinet approval, calls for the group to extract 200,000 barrels of oil a day, rising to 1.1 million a day within seven years. Last month, Iraq signed off a deal with Britain's BP and China's CNPC. The two oil companies will develop the giant southern oilfield in Rumaila. The project aims to almost triple output at the 17-billion-barrel field - increasing it by two million barrels a day. These agreements are the first major oil deals Iraq has signed with international oil companies since the US-led invasion of 2003. Iraq has the world's third-largest oil reserves, but production has yet to reach full potential. The country's total daily output of about 2.4 million barrels is lower than it could be, because of sanctions against former Iraqi governments, lack of investment and insurgent attacks, analysts say."
Iraq in third overseas oil deal
BBC Online, 5 November 2009

"What was the industry that powered Britain towards prosperity in the 1980s, and made us one of the most dynamic and successful nations in the Western world? I'll give you a clue: it was described by a prime minister as 'God's gift' to the British economy; its revenue stream pumped ever larger amounts of cash into the Exchequer – and its subsequent collapse has helped send the public finances spiralling towards disaster. If your first reaction was 'the City', think again. The answer is North Sea oil. One of the peculiarities of British politics – and economics – is the reluctance to take into account the critical contribution of oil to the economy. We spend so much time droning on about our excessive reliance on the financial sector that we tend to ignore this elephant in the room. But the truth is that, for the past quarter of a century, Britain has been a petro-economy. In 1999, we were producing more oil than Iraq, Kuwait or Nigeria. The following year, we pumped out almost twice as much natural gas as Iran – a country with reserves that are the envy of the world. The result is that while we are apt to attribute the sudden spurt in Britain's prosperity in the mid- to late-1980s to a deregulated and reinvigorated City, it owed far more to the massive windfall from the North Sea. Take a look at the numbers. In 1979, when Margaret Thatcher came to power, the amount Britain owed, as a nation, was £88.6 billion. In the subsequent six years, taxes from the North Sea (which had been pretty much non-existent previously) generated an incredible £52.4 billion. This was no temporary windfall: last year, thanks to record oil prices, the Treasury had its largest ever haul from the North Sea, at £13 billion. This colossal sum equates to more than 3p on the basic rate of income tax – and it was thanks in great part to such revenue that Labour was able to sustain public spending in recent years without a drastic increase in interest rates or having to pass the extra costs on to consumers in the form of higher taxes. The benefits went far beyond the public finances. Were it not for the cushion provided by oil exports, the deficit in Britain's current account – its international ledger – would have been one of the worst in the Western world. Moreover, much of the massive rise in business investment in the years before the financial collapse was due entirely to spending in the North Sea. In short, without oil, recent history would have been vastly different. Growth would have been weaker, consumer spending less and the public finances decidedly more parlous. That's not to say Britain would have been an economic pygmy – just that oil is a luxury that has permitted us to live much more comfortably. There are two problems, however. The first is that the stuff is running out. Production of North Sea oil has halved in the past decade; Britain has gone from being comfortably self-sufficient in oil and gas to being a net importer. This means the UK is now doubly sensitive to an increase in oil prices, and to any potential breakdown in energy supplies: witness Russia's brief and terrifying interruption of most of Western Europe's gas imports a couple of years ago. The second issue is that since the oil arrived, we have treated it not as a luxury but as a staple of economic life. Unlike the Norwegians, who diverted a slice of their North Sea revenues into an investment fund designed to provide for them when the oil started to run dry, chancellors of every political hue treated North Sea taxes as current income. This was a mistake. Norway's prudence has helped it withstand this crisis and establish itself as the Switzerland of the 21st century. Even worse, treating the oil money as a permanent asset rather than a temporary benefit has left us ill-prepared for its decline. But declining it is."
North Sea oil is dragging us into the red
Daily Telegraph, 5 November 2009

"Will it be China that finally pays the huge bills for repairing and rebuilding Afghanistan and Iraq — and reaps the rewards? It’s looking that way: as the US and Britain look for an exit from the battle zones, China is digging in. From its point of view, the wreckage of other governments’ half-completed wars offers a chance to strike deals on terms that look cheap on all but the most apocalyptic views of the course of those conflicts. To some involved in development on the ground, that has benefits, if China will risk money where others fear to tread. But to many in Washington, it looks as if China is winning the benefit of the struggles of the US and its allies. This week, China National Oil Corporation finally secured its place in Iraq. Together with BP, it signed the first big oil deal since the 2003 invasion. China’s oil companies set up a presence in Iraq soon after the invasion. Those observing their deliberations say that they were not indifferent to the security of their employees compared to Western companies — and were very keen not to be thought indifferent — but had the clear competitive advantage of being able to take a more relaxed approach to the legal uncertainties of title to Iraq’s oil revenues. As it happens, that extra tolerance was not necessary, as BP’s part in the deal shows. For all the public protests that greeted the sale, the Baghdad Government had finally addressed some key questions that had stymied investment. But China’s willingness to contemplate a rougher environment underpinned its presence during the worst turmoil, analysts say. The Afghan copper mine deal struck two years ago, and just now getting under way, has come during an even worse stage of violence. But some analysts think it will prove extremely lucrative for China — the source of continuing controversy. In November 2007, the China Metallurgical Group won the right to develop the Aynak copper field south of Kabul, in a former al-Qaeda stronghold. China’s bid of $3 billion came with a pledge to build a coal power plant and the country’s first freight railway. Analysts reckon the field is one of the world’s largest undeveloped copper reserves. In the words of one senior Obama official, US geological surveys of Afghanistan’s untapped riches are 'a good reason why it should not be considered a poor country'. Senior Afghan officials, including the Ambassador to the US, have said that bidding was above board and that the Chinese company won partly because it could start work earlier. But US and Canadian companies have complained at the secretive process, suggesting that it was tilted towards China. Analysts suggest that the deal undervalues the mine. Chinese officials have not commented on allegations of bias, but say that their project will bring infrastructure and jobs soon, despite insecurity."
As allies struggle in battle, China moves in to do business
London Times, 5 November 2009

"The International Energy Agency next week will make a 'substantial' downward revision to its long-term forecast for global oil demand, a person familiar with the matter said, marking the second year running the group has slashed its view of the world's thirst for oil. The forecast of slower growth in oil demand puts the IEA increasingly in a camp of contrarians bucking the popular view that crude demand will grow briskly in a postrecession world. That view holds that long-term demand will grow at a fast clip because of rising emerging-market wealth and consumption in places like China and India. The IEA, which advises rich nations, such as the U.S., on energy matters, is set to use its closely watched annual World Energy Outlook report to forecast that improved energy-efficiency measures in developed nations, as well as climate-change legislation, will help to slow the rate of global oil consumption. A person familiar with the Paris-based IEA's plans said 'demand-management policies' are having more impact than previously expected in the developed world, which accounts for about 55% of world oil consumption. The IEA outlook, a guidepost for industry trends, is scheduled to be released Nov. 10. A drop in industrial activity from the recession is also a big factor in the revision. Baseline assumptions used in the previous long-term outlook have to be adjusted down to account for the tough economic conditions of the past year. Last year, the IEA shaved 10 million barrels a day off its long-term forecast and projected consumption in 2030 would hit 106 million barrels a day, or about 25% above current levels. It isn't clear how that compares with the cuts expected in this year's forecast by the IEA....Various analyst estimates maintain that the roughly 2% a year average growth rate in world oil consumption seen earlier this decade -- the biggest reason for crude prices hitting a record $147 a barrel last year -- may turn out to be an anomaly and that annual growth in the neighborhood of 0.5% to 1% is more the norm. Still, a lot more energy, including nuclear power and raw crude, will be needed to power rising economic activity in China, the world's second-biggest oil consumer after the U.S., and other markets. Cost savings gleaned from more-efficient products and processes may yield more commerce and, thus, more demand for oil. And there is this: The world has seen previous periods of energy-efficiency gains almost vanish after new oil supply hits the market and pressure prices lower, as happened in the 1990s. Some analysts believe crude could rise to $200 a barrel within a few years from today's $79 level. They say a speedier-than-expected economic recovery could make open consumers' wallets to higher crude prices. Still, price increases are bound to reinforce conservation. 'There is a market assumption today that we will head back to the old days of rapid oil demand, but we think we are heading into new days,' in which the growth in consumption will be more subdued, said Dan Yergin, chairman of IHS Cambridge Energy Research Associates. Mr. Yergin says several factors are prompting companies and consumers to make the most of their energy dollars. Among them: the sting of record oil prices in recent years, the threat that political obstacles in many oil-producing states will slow delivery of new barrels to the market, and the battle against climate change. The energy-research group said last month it thinks oil consumption in the industrialized world peaked in 2005. Mr. Yergin believes the same will probably happen globally in two decades. Deutsche Bank says global demand will peak by 2016 as consumption reaches around 90 million barrels a day, versus about 85 million currently, due to efficiency gains and technology improvements in electric vehicles."
World Need for Oil Expected to Ease
Wall St Journal, 4 November 2009

"After a year in which Europe slashed its imports of Russian natural gas, OAO Gazprom says it sees signs of a turnaround, with European demand now exceeding precrisis levels. Analysts, however, said Gazprom's customers had simply started buying bigger quantities of Russian gas late in the summer to take advantage of lower prices, not necessarily because the European economy was recovering. In a statement, Gazprom said its sales to Europe since July exceeded sales in the same period of 2007 and 2008."
World Need for Oil Expected to Ease
Wall St Journal, 4 November 2009

"... this month Scientific America[n] is back on track with a cover story entitled 'A Plan for a Sustainable Future - How to get all energy from wind, water and solar power by 2030.' tells us that currently the world is consuming about 12.5 trillion watts of all forms of energy at peak consumption. In 20 years, the demand will be up 16.8 trillion watts given growth in population and living standards. U.S. peak demand in 2030 would be 2.8 trillion watts of all forms of energy. Interestingly enough that would decline to 1.8 trillion if the U.S. automobile fleet were converted from gasoline and diesel to far more efficient electric power. If you are worried about enough sun and wind, you shouldn't be, as suitable wind locations will be able to provide 40-85 trillion watts, solar an additional 580 trillion watts and water power in one form or another, two trillion more. The hardware numbers the authors arrive at to replace fossil fuel are impressive, - 3.8 million 5-megawatt wind turbines, 490,000 tidal generators, 720,000 0.74 megawatt wave converters, 1.7 billion .003 megawatt rooftop photovoltaic systems, 5,300 geothermal plants, 900 1.3-megawatt hydroelectric plants, and to top it off 49,000 concentrated solar 300-megawatt power plants and 40,000 commercial photovoltaic power plants. Total cost would be on the order of $100 trillion. Interestingly the authors do not consider an effort of this magnitude beyond the capacity of the world's industrial, manufacturing and construction resources. They note the massive transformation that took place during World War II when nearly every industrial nation on earth was switched over to producing war material. Producing four million wind turbines and over 20 years (200,000 per year) and the other installations required is not beyond a global civilization that has the capacity to produce 80 million automobiles each year. Three hurdles to a transition away from fossil fuels have been identified. The first is whether there will be enough specialized materials - particularly exotic ones such as neodymium, tellurium, indium and lithium that would be necessary for the magnets of wind turbines, photovoltaic cells and high capacity vehicle batteries. While a solution to this is not immediately obvious, the authors seem to believe that alternative ways of making the necessary components plus recycling should be sufficient to produce and sustain the necessary hardware. A major feature of the plan is the mix of solar, wind, water, and geothermal power that if harmonized in large-scale smart grids should be able to fill the demand for electrical energy around the clock despite the intermittent nature of wind, solar. With hydro (including tides, waves, and flowing rivers) and geothermal providing a base, wind and solar would provide the bulk of the load in a post-carbon world depending on the time of day and wind and sun conditions. An important requirement for such a mix would be a grid capable of moving power from areas where the sun is shining or the wind blowing adequately at any given moment to deficit areas. Another important consideration is that costs of renewables are dropping and those of fossil fuels are growing. Wind is already competitive with the cost of coal generated electricity is some areas. The better grades of coal are depleting and will have to be replaced by lower energy coals that have to be moved long distances. In the authors' opinion, sequestering carbon from coal and nuclear power are non-starters due to the costs and energy involved in building and operating the facilities. The last major hurdle to this fossil-fuel-free utopia is the political will. The status quo (fossil fuels) is deeply entrenched, with massive resources to fight change. So far the need for a transition is to most largely theoretical in that there are no shortages and fossil fuels are not yet prohibitively expensive. In America, gasoline is still affordable by most, the seacoasts are not yet routinely flooding and the crops are still growing. Recent polls are showing more and more people are becoming skeptical that reducing carbon emissions from fossil fuels is really a priority in view of the current economic difficulties."
The Peak Oil Crisis: A Plan For Renewables
Falls Church News-Press, 4 November 2009

"A combination of oil, luxury property investments and behind-the-scenes African diplomacy had more to do with Simon Mann’s release than anything that his own government could have done. Call it a deal, an understanding, a nod or a wink, but however you put it the release of Mann and his accomplices suits a number of interested parties very nicely. In 2005 62 black South African mercenaries finished their sentences — served in Zimbabwe, where they were arrested — for their part in the alleged coup attempt in Equatorial Guinea. Since then South Africa has been quietly working to free four of its white citizens, held with Mann, in the notorious Black Beach prison in Malabo, Equatorial Guinea. Both sides wanted the issue cleared up before President Zuma arrived in Equatorial Guinea today on a state visit. He will be accompanied by his energy, foreign and state security ministers — the biggest delegation to visit the country — with the aim of strengthening ties. 'South Africa is keen to promote economic relations in the areas of agriculture, mining, energy, tourism and infrastructure development,' the President’s office said yesterday. South Africa, which faces a critical shortage of energy, particularly wants oil and gas deals and the rights to exploit suspected mineral riches on land. The flip side is that most of Equatorial Guinea’s ruling elite — particularly its 'first family' — have huge investments in South Africa, including properties in Cape Town, Johannesburg and Pretoria. President Obiang is a regular visitor. South Africa was deeply angered at being used as yet another springboard for yet another coup against a fellow African nation — Mann implicated Thabo Mbeki’s Government in his “confession”. But even while backing Mann’s extradition to Equatorial Guinea it quietly pushed for a proper trial, receiving an unofficial assurance that the Briton would not receive the death sentence and would go home early if he told all. In this it got the support of the US, President Obiang’s closest ally since his country found its vast oil reserves. The South Africans also argued that the plot was orchestrated in Britain and Spain by big financiers, backed unofficially by their governments, to get access to oil reserves because too much was going to the US, and the mercenaries were small fish in a big pond."
African diplomacy helps to free Simon Mann rather than government help
London Times, 4 November 2009

"A giant mechanical digger gouges out a chunk of topsoil, grass and tree stumps, extending a neat furrow that stretches into the distance. Dozens of similar furrows run parallel with the regularity of a ploughed field. Yet no crop could grow in the pitch-black surface exposed by the machine working 1,000ft below our helicopter. This is the edge of a fast-expanding open-cast mine in the Canadian tar sands, one of the world’s most polluting sources of oil. It takes only a few minutes to fly across the 200 sq miles (520 sq km) of mines, processing plants and man-made lakes of toxic water. But Canada has so far extracted only 2 per cent of a resource that it hopes will turn it into a global energy superpower. BP and Shell are among dozens of oil companies preparing to raise production from 1.3 million barrels a day at present to 2.5 million by 2015 and 6 million by 2030. Canada faces a dilemma as it prepares for next month’s UN climate summit in Copenhagen. It wants to present itself as environmentally responsible but also wants the profits from the tar sands, which cover an area of Alberta’s natural coniferous forest larger than England. The sands contain 174 billion barrels of proven reserves, the world’s second-largest reserves after Saudi Arabia. With improved techniques, Canada hopes to extract between 315 billion and 1.7 trillion barrels. A Co-operative Bank study calculated that, even if all other carbon dioxide emissions stopped, fully exploiting the tar sands would still tip the world into catastrophic climate change by raising global temperatures more than 2C above pre-industrial levels. Extracting each barrel of crude from the sticky mass of sand, clay and bitumen produces two to three times as much CO2 as drilling for a barrel of conventional oil. The tar sands boom faltered a year ago as the oil price fell below the $60 a barrel at which the extraction process is profitable. Now, with oil at about $80 a barrel, hundreds of fortune seekers arrive each day in Fort McMurray, the oil equivalent of a gold rush town.....Canada knows, however, that the biggest long-term threat to its tar sands industry is not dead ducks but international regulations on greenhouse gas emissions. Most of the crude is exported to the United States, where several states are considering banning it because it is so carbon-intensive. America’s dependence on tar sands is a sensitive issue in Washington, and Barack Obama’s ambassador to Canada toured the mines last month and questioned the companies about their carbon emissions. Alberta’s latest proposal to rid tar sands of their dirty image is a C$2 billion subsidy for carbon capture and storage (CCS) facilities. Shell plans to install CCS by 2015 at an upgrading plant but admits that it would reduce carbon emissions from its tar sands production by only 15-20 per cent. Mel Knight, the energy minister for Alberta, which receives C$12 billion a year in revenue from its oil and gas industries, told The Times: 'There has to be at least a hundred years of production in the oil sands and CCS will make this more palatable. My feeling is we will reach a steady state of five million barrels a day. The oil sands are critical [to] the global supply of energy. The world needs the energy and there’s no alternative that we can see.' Shell plans to increase production from 155,000 barrels a day to 255,000 next year. BP is designing a plant with an initial output of 60,000 barrels a day, rising to 200,000 within a decade. Canada has offered belatedly to cut its current CO2 emissions by 20 per cent by 2020 but wants to be forgiven for ignoring the target set at Kyoto a decade ago. Its emissions were 26 per cent above its 1990 levels by 2006: the Kyoto target was a 6 per cent cut."
It’s a dirty business — the new gold rush that is blackening Canada’s name
London Times, 4 November 2009

"Vast amounts of oil lie in the bitumen-rich sands of Northern Canada, but whether oil companies choose to spend billions extracting them will hinge on decisions made 6,000 miles away in Denmark next month. Even at the best of times, squeezing crude from Alberta’s tar sands is an environmentally fraught process that is economic only with very high oil prices. The cost of oil production can be $70 (£43) per barrel compared with only $5 for the onshore oilfields of Saudi Arabia or Kuwait. The prospect of a successful climate deal in Copenhagen threatens to hit the industry with a cost that could drive it out of business: international carbon regulation. Like all big economies, Canada will be expected to agree to make cuts in its CO2 emissions of at least 20 per cent by 2020 and up to 80 per cent by 2050. A key goal of the UN meeting is to create an effective global trading scheme for carbon emissions — a tool that would place a firm price on greenhouse gases produced by industry. A weak trading system of this kind already exists in Europe but governments want to create a bigger and bolder scheme that would penalise the use of high carbon fuels and drive global investment into cleaner energy. As one of the most carbon intensive fuels around, the Canadian oil sands industry would be one of the biggest losers. So much energy is needed to heat raw bitumen into a usable crude that an oil sand operator typically uses up the equivalent of one barrel of oil for every three barrels it extracts. For the same energy expenditure you would expect 100 barrels from a conventional Middle East oil well. There is a lot at stake. The Canadian Government collected more than C$30 billion from oil sands–related activities from 2000 to 2008 and about 240,000 jobs rely on the industry. Powerful interests inside and outside Canada are determined to find a sustainable method of producing oil from the tar sands."
Copenhagen talks could leave oil industry with a sinking feeling
London Times, 4 November 2009

"The biggest energy innovation of the decade is natural gas -- more specifically what is called 'unconventional' natural gas. Some call it a revolution. Yet the natural gas revolution has unfolded with no great fanfare, no grand opening ceremony, no ribbon cutting. It just crept up. In 1990, unconventional gas -- from shales, coal-bed methane and so-called 'tight' formations -- was about 10% of total U.S. production. Today it is around 40%, and growing fast, with shale gas by far the biggest part. The potential of this "shale gale" only really became clear around 2007. In Washington, D.C., the discovery has come later -- only in the last few months. Yet it is already changing the national energy dialogue and overall energy outlook in the U.S. -- and could change the global natural gas balance. From the time of the California energy crisis at the beginning of this decade, it appeared that the U.S. was headed for an extended period of tight supplies, even shortages, of natural gas.... The companies were experimenting with two technologies. One was horizontal drilling. Instead of merely drilling straight down into the resource, horizontal wells go sideways after a certain depth, opening up a much larger area of the resource-bearing formation. The other technology is known as hydraulic fracturing, or 'fraccing.' Here, the producer injects a mixture of water and sand at high pressure to create multiple fractures throughout the rock, liberating the trapped gas to flow into the well. The critical but little-recognized breakthrough was early in this decade -- finding a way to meld together these two increasingly complex technologies to finally crack the shale rock, and thus crack the code for a major new resource. It was not a single eureka moment, but rather the result of incremental experimentation and technical skill. The success freed the gas to flow in greater volumes and at a much lower unit cost than previously thought possible.... In the last few years, the revolution has spread into other shale plays, from Louisiana and Arkansas to Pennsylvania and New York State, and British Columbia as well. The supply impact has been dramatic. In the lower 48, states thought to be in decline as a natural gas source, production surged an astonishing 15% from the beginning of 2007 to mid-2008. This increase is more than most other countries produce in total.... With more drilling experience, U.S. estimates are likely to rise dramatically in the next few years. At current levels of demand, the U.S. has about 90 years of proven and potential supply -- a number that is bound to go up as more and more shale gas is found. To have the resource base suddenly expand by this much is a game changer. But what is getting changed? It transforms the debate over generating electricity. The U.S. electric power industry faces very big questions about fuel choice and what kind of new generating capacity to build.... It could also mean that more buses and truck fleets will be converted to natural gas. Energy-intensive manufacturing companies, which have been moving overseas in search of cheaper energy in order to remain globally competitive, may now stay home... So far only one serious obstacle to development of shale resources across the U.S. has appeared -- water. The most visible concern is the fear in some quarters that hydrocarbons or chemicals used in fraccing might flow into aquifers that supply drinking water. However, in most instances, the gas-bearing and water-bearing layers are widely separated by thousands of vertical feet, as well as by rock, with the gas being much deeper.... Unconventional natural gas has already had a global impact. With the U.S. market now oversupplied, and storage filled to the brim, there's been much less room for LNG. As a result more LNG is going into Europe, leading to lower spot prices and talk of modifying long-term contracts. But is unconventional natural gas going to go global? Preliminary estimates suggest that shale gas resources around the world could be equivalent to or even greater than current proven natural gas reserves. Perhaps much greater."
America's Natural Gas Revolution
Wall St Journal, 3 November 2009

"The British oil giant BP will today take control of Iraq’s biggest oilfield in the first important energy deal since the 2003 invasion. The move has created uproar among local politicians invoking resentful memories of their nation’s colonial past. The agreement to develop the Rumaila field, near the southern city of Basra, will potentially put Iraq on the path to rivalling the riches of Saudi Arabia within a decade — if the Government can fend off corrupt officials, continuing terrorist attacks on pipelines and political uncertainty. Many Iraqi MPs say that the deal is illegal, and that the constitution should give them, not the Oil Minister, the final say over the country’s vast resources. BP will develop the field, believed to hold about 17 billion barrels of oil, with CNPC, a Chinese oil producer and supplier. Along with other agreements to be signed this year, BP’s presence is forecast to increase Iraqi production from 2.5 million barrels a day to 7 million in about six years. Ownership of the field will remain in Iraqi hands — as the Government has been at pains to point out — with the contract giving the companies $2 for every barrel extracted. Industry critics have branded the return derisory, but say that BP is eager to get a foothold in Iraq. After years of stagnation, Iraq appears determined to exploit natural resources to fund infrastructure improvements. It is the world’s 11th-biggest oil producer, with the potential to climb to third place or higher. 'With an extension of the pipeline network they could reach the [output level of] the Saudis,' said Ben Lando, of the website Iraq Oil Report. Saudi Arabia is the world’s second-largest producer at nine million barrels a day, behind Russia at ten million barrels....BP has not been criticised directly, but its involvement will revive memories of past exploitation by the British. It is believed widely that Britain created and controlled the country for the benefit of British exporters. This week several MPs wrote a letter of protest to Christopher Prentice, the British Ambassador in Baghdad, saying that BP’s move was undermining democracy by circumventing parliamentary approval of the Rumaila deal."
Outcry against 'colonial' takeover by BP of Rumaila oilfield in Iraq
London Times, 3 November 2009

"The Organization of Petroleum Exporting Countries raised crude-oil production last month to the highest level in 10 months as members took advantage of higher prices, a Bloomberg News survey showed. Output averaged 28.76 million barrels a day in October, up 80,000 barrels from September, according to the survey of oil companies, producers and analysts. The entire gain came from the 11 OPEC members with quotas, all except Iraq. The 11 countries pumped 26.31 million barrels a day, 1.465 million barrels above their target. Iraqi output was unchanged. OPEC cut output quotas by 4.2 million barrels to 24.845 million barrels a day last year as fuel demand tumbled during the worst recession since the 1930s. The group, which left the targets unchanged at a Sept. 9 meeting in Vienna, is set to meet again on Dec. 22 in Luanda, Angola. 'They are looking at prices near $80, and a stronger economic picture, and have decided it’s a good time to earn a bit more,' said Rick Mueller, a director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. Crude prices have more than doubled from a four-year low of $32.40 a barrel reached at the end of last year, which caused OPEC to make production curbs. Oil has traded between $65 and $82 since Aug. 1. ...OPEC had 5.74 million barrels a day of spare capacity last month, down from 5.82 million in September, the survey showed. Saudi Arabia can increase daily output by 2.65 million barrels, the most of any member. OPEC’s two West African members, Nigeria and Angola, had the biggest production increases last month."
OPEC Output Rose in October, Bloomberg Survey Shows
Bloomberg, 2 November 2009

"Exxon Mobil Corp., the world’s biggest oil company, agreed to pay C$250 million ($231 million) for UTS Energy Corp.’s stakes in three oil-sands prospects in western Canada. UTS expects after-tax proceeds for its 50 percent stakes in the leases east of Alberta’s Firebag River to be about C$200 million, the Calgary-based company said today in a statement. Vancouver-based Teck Resources Ltd. owns the other 50 percent of the Alberta leases, which cover a combined area equal to half the size of Sacramento, California."
Exxon Mobil to Pay $231 Million for Oil-Sands Stakes
Bloomberg, 2 November 2009

"A stretch of coastline on the Texas-Louisiana border provides a startling glimpse of Europe’s energy future. There, where Lake Sabine empties into the Gulf of Mexico, a giant port was completed last year. Built at a cost of $1.5 billion (£900m), it was meant to be a vital new part of America’s energy infrastructure. Giant tankers from places such as Qatar and Sakhalin island in Russia’s far east were meant to dock there to inject their cargoes of liquefied natural gas (LNG) straight into the national pipeline network. The Sabine Pass terminal was meant to take about one ship a day but since it opened for business 18 months ago only 10 ships have come in. 'This big shiny new terminal was one of the ones built as the answer to declining US gas production and increasing demand,' said Steve Johnson president of Waterborne Energy, a Texas energy consultancy. 'Now it’s in mothballs.' It is much the same story at America’s eight other LNG import terminals. They are running at only 10% of capacity. 'We have had so much new production come on stream that all of a sudden the role of these terminals has changed dramatically,' said Johnson. 'They are getting the world’s leftovers.' The reason is shale gas — a new and abundant source of natural gas, trapped in rock formations. Oil companies have known about it for decades but always dismissed it because it was too expensive and difficult to extract. In the past few years new technologies that pump water underground to fracture the rock and free the gas have been perfected. The breakthrough has opened a new frontier for the energy industry and turned long-held assumptions about the world’s dwindling supplies on their head. Suddenly, America is awash with gas. Tony Hayward, chief executive of BP, said it had created a 'a revolution in the gas fields of North America'. In a report this summer, the US potential gas committee increased its estimates of American reserves by a third. The Department of Energy now predicts that shale gas could meet half America’s demand within two decades and turn the country into a net exporter. The gas price has reacted accordingly, crashing by 60% in the past year, severing the long-standing link with the oil price. The revolution in America has set off activity elsewhere. In August Conoco Phillips signed a deal to explore 1m acres in Poland. Shell has bought licences in Sweden, and Exxon Mobil has large holdings in Germany and Poland. France recently launched a licensing round. Other projects are under way in Argentina, Australia, China and India. Paul Wheeler, managing director at the Jefferies International investment bank, said: 'There is a landgrab going on in Europe. It will change the game if the big oil companies crack the geological code of unconventional gas in Europe. The resulting gas production would make Europe more self sufficient and put the brakes on Russian gas becoming a more potent instrument of political influence.' Burning gas produces far lower carbon emissions than oil or coal. For governments struggling to hit pollution targets, that is important. So is security of supply. Countries are scrambling to get new supplies. Companies in Britain have spent billions on new LNG terminals on the Isle of Grain in Kent and at Milford Haven in Wales to make up for the North Sea’s decline. Croatia and Poland are also working on plans to build new port capacity. Construction on the £7 billion Nabucco pipeline from Turkey to Austria — meant to reduce Europe’s dependence on Russia — is set to begin next year. Opinion remains divided over whether the American experience can be repeated. Researchers at Texas A&M University estimate world reserves could increase ninefold. Nick Grealy, an energy consultant who runs the No Hot Air website, said shale gas was a 'millionaire ticket that can be shared by everybody'. Critics say the prospects are far less promising. They argue that shale reserves rapidly peter out once they are accessed and that the variable nature of rock formations makes it difficult to always use the same technology, making it expensive and unpredictable.”
Shale gas blasts open world energy market
Sunday Times, 1 November 2009

"From one end of the known world to the other, which is to say from Boston to Washington and some points in between, there is a consensus among the well informed that one part of a national energy plan is in place. Thanks to the discovery and mapping  of huge reserves of gas in shale formations, we have an alternative to dirty old coal, and, possibly, imported oil for transport fuel. A 40 per cent increase in the country's gas reserves! You can thank advanced American technology for that. Well, you can thank advanced American something, but along with the technology you can also thank the advanced American ability to extract money from investors. The key element of this national characteristic is the willingness to listen carefully to determine what people with money want to hear, and then tell them that. Again and again. Shale gas, the latest magic solution being financed with other people's money, now appears to be costing more, and has much less certain prospects, than Wall Street, Washington, or their consultants around Boston, were counting on. The historic problem with raising money from outside investors to pay for oil and gas drilling is the lack of consistent co-operation on the part of geology. Time and again, with all the three dimensional seismic imaging, reservoir engineering, and so on, people drill wells to 5,000 or 6,000 metres only to get a dry rock collection. Finding oil and gas requires a significant amount of trial and error. Bankers, brokers, and institutional investors do not want to hear this. They want to hear that the businesses they invest in are predictable. The production of natural gas dispersed through shale rock plays well to this characteristic....Now shale gas fields have gone from having about 15 per cent of the total gas exploration and production spending committed to them to well over half. Enormous reserves have been found. But how much can be produced economically, and how quickly? The leading shale sceptic analyst is an independent geologist, Art Berman, often described as a 'radical'. Rather soft spoken, though, he says: 'I hope I'm wrong about shale.' The problem, as he sees it, is that the standard industry analysis about shale well Estimated Ultimate Recovery, or lifetime production, is too optimistic. 'They have fantastic initial rates, but the question is whether the (rate of production) persists as they say.' For example, he says, in deep shale formations 'the rock collapses as gas is produced, and crushes the proppant. And as the fractures are drained you have to frac and frac and frac.' Expensive. Dan Pickering, director of research at the Houston investment firm of Tudor Pickering Holt, counters: 'Berman's decline curve analysis is looking too early in the production curves to judge where the decline (rate) will actually be. As for rising decline rates, I think exploitation techniques have improved, so rising decline does not necessarily mean worse economics.' Ben Dell, of Bernstein Research in New York, whose work is respected by both sides in the debate, says: 'The average well deteriorates more in quality, and more wells fail, than people believe. Still, I think a rise in prices would make more (shale prospects) economic. Plenty of plays work at $9 per mcf [1,000 cubic feet].' This less-than-expected productivity in the leading gas sector tells Mr Dell that US gas production will decline on the order of 10 per cent next year, leading to $8-$9 gas, or $3 to $4 more than the forward curve anticipates. Wall Street and Washington had better do more due diligence, right quick, on the shale gas industry's insider debate."
Shale gas numbers may not add up
Financial Times, 1 November 200

"A new U.S. oil pricing benchmark is rapidly taking shape, threatening to further erode the dominance of the Nymex crude futures contract. Argus Media said Wednesday its Sour Crude Index will be adopted by Saudi Aramco to set prices for oil sold in the U.S., in a move away from a formula tied closely to light, sweet crude futures traded on the New York Mercantile Exchange."
New Oil Price Benchmark Gathers Steam as Saudis Sign On
Wall St Journal, 29 October 2009

"America's thirst for oil is a gathering threat to its national security – and the risk will grow further as the world's population touches 7 billion, a military adviser to the Pentagon told the Senate today. In a second day of debate on energy, Democratic senators today pivoted from the economy to national security to try to make the case for a climate change bill. The threat to Americans' security ranged from the here and now – with troops in Afghanistan and Iraq tied down by their reliance on gas-guzzling equipment – to years into the future when extreme temperatures and rising sea levels could lead to a widespread social breakdown. 'We have never before on this planet had close to 7 billion people which we will have in 2011. We have never had the unprecedented level of per capita energy use multiplied by that 7 billion people,' Dennis McGinn, a member of the Military Advisory Board, composed of senior retired admirals and generals, told the Senate. 'We have a whole host of indicators, warnings and trends that tells us climate change is bad for national security.' He said the country would face risks on multiple fronts. 'America's current energy posture constitutes a serious and urgent threat to national security – militarily, diplomatically and economically.' The Pentagon is already beginning to focus more acutely on the threat posed by climate change. Military research labs are exploring new energy-saving devices, and other ways of conserving fuel in the battlefield. The conflicts in Afghanistan and Iraq have made planners acutely conscious that fuel dependence is putting US forces at risk. The US marines corps recently ordered an energy audit of its operations in Afghanistan, in a bid to reduce enormous fuel costs. 'We are tied down by fuel. Fuel is a real day-today concern for our forces in the field who are tethered to that fossil fuel tail,' said Kathleen Hicks, the deputy undersecretary of defence for strategy."
Thirst for oil poses threat to US national security, says military adviser
Guardian, 28 October 2009

"The head of the Energy Information Administration (EIA) told Congress today that the agency will report later this week that US proved natural gas reserves increased from 2007 to 2008 by 3%.  That is slower growth than the 13% increase in proved gas reserves seen the year before, the EIA's Richard Newell told the Senate Energy Committee at a hearing on natural gas.  Reuters quoted Newell as saying that technology has 'led to large increases in available reserves by expanding the types of resource rock that can be drilled economically,' particularly with shale rock formations.  So far, the Barnett shale in Texas has been developed the most, but other shale formations, such as Haynesville in Louisiana, may produce more gas supplies and the Marcellus shale in the North-East is much bigger, Newell said. Proved reserves are those volumes of gas that geological and engineering data show with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, according to the EIA. 'Estimates vary, but the US probably now has between 50 and 100 years' worth of recoverable natural gas which is accessible with technology available today,' BP America chief executive Lamar McKay told the Senate committee."
EIA sees boost in US gas cache
Upstream Online, 28 October 2009

"Britain is facing an energy shortfall by 2015 over its exposure to six risky Russian gas developments, if the UK becomes much more dependent on imports from abroad, according to Ofgem. Alistair Buchanan, chief executive of the energy regulator, has found that Europe could be under-supplied by 41bn cubic metres in six years’ time, if key Russian projects – many already delayed – fail to deliver. This will affect the UK if it relies on a significant expansion of gas-fired power stations to replace retiring coal stations, while nuclear plants are not operational until 2020 and energy demand rises in a strong global economy. It would narrow to a 33bn cubic metre shortfall of gas by 2020. Europe will also need three new pipelines from Russia and Eurasia – Nord Stream, South Stream and Nabucco – plus two other major fields at Shtokman and Yamal in Siberia to meet its needs. 'Of these six big projects – three pipelines and three gas fields – virtually none have yet locked in the full financing needed to proceed and or complete,' Mr Buchanan said, ahead of giving a lecture at the Cass Business School. 'The UK has a cliff edge coming up in the middle of the next decade and we’ve got to take a view on how uncertainties in Russia rank in our stress-testing.' Regional tensions between Russia, Turkmenistan, Azerbaijan and Turkey mean that there are many shifting alliances and projects competing for finite funding. There is also a risk that Russian producers could divert supplies to China. 'Turkmenistan will have to deliver a phenomenal amount of growth and there are severe doubts around the financing of pipelines and fields to bring the gas west. A dash-for-gas scenario takes a Britain that used to have its own energy into a world where macro-geopolitics is a way of life,' he said. The Government insists that gas imports will not rise in the next decade due to energy efficiency. However, the Prime Minister’s special energy adviser, Malcolm Wicks MP, has warned that 'such projections are inevitably uncertain and experts have estimated higher import dependence'."
Britain faces gas shortage in six years due to Russia
Daily Telegraph, 28 October 2009

"E.ON, the energy group that shelved plans for a new coal-fired power station at Kingsnorth, Kent, is drawing up plans to build a new gas-fired plant of the same size in Nottinghamshire, leading to fears that Britain will be over-reliant on imported natural gas. An E.ON spokesman said that the group had begun a 'scoping study' to construct a 1,600 megawatt gas-fired power plant — enough to power two million homes — at High Marnham, on a site where a coal-fired station was closed in 2003. The plans, unveiled quietly last month, also appear to counter E.ON’s claim that it had ditched the plans for Kingsnorth because of a shortage of UK electricity demand. It has also stoked concerns that Britain is becoming increasingly reliant on gas for electricity generation, even as supplies of the fuel from the North Sea are rapidly being depleted. This winter, Britain will have to import half its natural gas, against 5 per cent in 2004, when it ceased to be a net exporter for the first time. Nick Campbell, energy analyst at Inenco, said: 'If suppliers continue to choose gas-fired units over clean coal and perhaps even nuclear, this raises questions over security of supply as the UK is set to become more reliant on liquefied natural gas as the global economy recovers.'....Gas-fired stations are relatively cheap and quick to build and provoke less public hostility than coal or nuclear. The share of Britain’s electricity produced by burning gas has risen from 2 per cent in 1992 to 35 per cent as ageing coal and nuclear plants have been retired from service. Several gas-fired stations are under construction in the UK, including in Pembroke, West Wales, and in West Burton, Nottinghamshire. E.ON has submitted a statement outlining its High Marnham plans to Nottinghamshire County Council. A full planning application is likely next year."
E.ON plant plans raise fear of gas-dependent Britain
London Times, 27 October 2009

"Opec, the oil producers’ cartel, has said that it may increase oil production this year if prices continue to rise. José Botelho de Vasconcelos, the Angolan Oil Minister who is the present president of Opec, said that oil prices of between $75 and $80 per barrel were at an optimum level for both consumers and producers. However, he said that any further rise towards $100 per barrel threatened to sabotage the nascent global economic recovery. 'I think a balanced price is always better. You know that, if necessary, some countries are open to injecting more oil into the market and that will be done . . . We need to maintain the balance.' The comments echo similar recent remarks from Abdalla Salem el-Badri, Opec’s secretary-general..... Yesterday, new figures illustrated that China’s apparently unquenchable thirst for oil had grown at its fastest pace in more than three years last month as the country’s economy continued its recovery. Chinese crude demand increased by 12.5 per cent during September — the fastest rate of increase since June 2006 — to 8.17 million barrels per day. The rise of 460,000 barrels per day compared with demand in August was the sixth consecutive monthly increase. Last week global crude prices hit their highest level for more than a year at $82 per barrel.....The pick-up in oil demand from China tracked a rise in Chinese car sales of nearly 84 per cent last month from a year earlier to a new high at 1.02 million units, according to China’s Association of Automobile Manufacturers. China is the world’s second-largest oil market after the United States, which consumes just over 19 million barrels per day....Weaker oil prices this year are putting pressure on oil companies to further trim spending plans. In a research note, Fred Lucas, a Cazenove oil analyst, suggested that BP’s management might use today’s results to hint at the potential for lower capital expenditure in 2010."
Opec signals rise in oil output as global price rallies
London Times, 27 October 2009

"A proposed green tax to cut carbon emissions would lead to an £800 increase in the average annual household energy bill over the next decade. Plans put forward by the Green Fiscal Commission (GFC), a Government-supported think tank, would see the tax on gas and electricity rise every year. By 2020, the new levy would amount to 80 per cent of the cost of the average gas bill and 30 per cent of the average electricity bill. The tax forms part of a £150 billion package of proposed measures, including a tripling of fuel duty over the next decade and a tax of up to £3,300 on new cars. The GFC says that the scheme is essential to shifting Britain onto a lower carbon lifestyle and meeting international targets on cutting greenhouse gas emissions. However, critics claim that asking customers to pay even more for energy will push many hard-up families to breaking point.  The planned green tax on new cars was also condemned by motoring groups yesterday.....The price of an average annual gas bill is £808 while the price of an average annual electricity bill is £445, according to the price comparison website It means the tax on gas and electricity bills could reach £779.90 a year, more than 60 per cent of the current £1,239 annual dual fuel bill. Will Marples, a spokesman for, said: “Unprecedented levels of investment will be required in Britain’s energy infrastructure over the next few years, with an estimated £230 billion needed to be funded largely through increases to customers bills over the next 15 years. 'A green tax on top of this could push bills to unmanageable levels for consumers.' Another suggestion in the GFC report was that households should be forced to install insulation and other energy-saving measures when they build extensions or redecorate their homes....By shifting tax onto high-carbon activities like driving and energy use and cutting taxes on low-carbon activities and levies like National Insurance, the Commission argues it is possible to produce a new green tax framework that is neutral overall in terms of the total burden on taxpayers. 'This is not just about reducing emissions, but helping the UK to develop low-carbon competitiveness,' Mr Ekins said....The report also suggests a £300 tax on new cars, increasing annually to £3,300 by 2020."
Green tax proposals 'would increase household energy bills by £800 a year'
Guardian, 27 October 2009

"Carbon capture technology will not solve the climate change threat posed by the expansion of tar sands developments, a damning new report warns today. The study produced by The Co-operative Financial Services and WWF-UK debunks the idea, lauded by oil companies and the Canadian government, that carbon capture and storage (CCS) will significantly counter the high levels of greenhouse gases emitted in the production of oil from tar sands deposits in Alberta, Canada. The production of tar sands oil is a highly energy intensive process and emits on average three times more CO2 than conventional oil production. Canada’s proven tar sands reserves are 173 billion barrels of oil, second only to Saudi Arabia. The report examines the potential for CCS to prevent CO2 from entering the atmosphere as a result of tar sands production and concludes that the process could not possibly achieve what has been claimed. The study finds that whilst the amount of CO2 emitted during production needs to be reduced by around 85 per cent to make tar sands oil comparable with conventional oil, even the most optimistic forecasts for CCS see production emissions reduced by 10 to 30 per cent at selected locations by 2020 and 30 to 50 per cent across the industry by 2050. The study said that even under the most optimistic scenarios for the application of CCS, the projected production emissions from tar sands developments would be greater than the whole of Canada’s 2050 carbon budget were it to reduce emissions by 80 per cent compared with 1990 levels, as the climate science requires. It also warns that the maximum potential of CCS would be insufficient to reduce lifecycle emissions of tar sands oil to levels needed to meet emerging international low carbon fuel standards such as those in California and the EU."
Carbon cannot significantly reduce tar sands emissions, says new report
Christian Today, 26 October 2009

"A report examining the impact of a global biofuels program on greenhouse gas emissions during the 21st century has found that carbon loss stemming from the displacement of food crops and pastures for biofuels crops may be twice as much as the CO2 emissions from land dedicated to biofuels production. The study, led by Marine Biological Laboratory (MBL) senior scientist Jerry Melillo, also predicts that increased fertilizer use for biofuels production will cause nitrous oxide emissions (N2O) to become more important than carbon losses, in terms of warming potential, by the end of the century. Using a global modeling system that links economic and biogeochemistry data, Melillo, MBL research associate David Kicklighter, and their colleagues examined the effects of direct and indirect land-use on greenhouse gas emissions as the production of biofuels increases over this century. They report their findings in the October 22 issue of Science Express. Direct land-use emissions are generated from land committed solely to bioenergy production. Indirect land-use emissions occur when biofuels production on cropland or pasture displaces agricultural activity to another location, causing additional land-use changes and a net increase in carbon loss. No major countries currently include carbon emissions from biofuel-related land-use changes in their carbon loss accounting and there is concern about the practicality of including such losses in a system designed to reduce fossil-fuel emissions. Moreover, methods to assess indirect land-use emissions are controversial. All quantitative analyses to date have either ignored indirect emissions altogether, considered those associated from crop displacement from a limited area, confused indirect emissions with direct or general land-use emissions, or developed estimates based on a static framework of today's economy. Using a modeling system that integrates global land-use change driven by multiple demands for land and that includes dynamic greenhouse-gas accounting, Melillo and his colleagues factored in a full suite of variables, including the potential of net carbon uptake from enhanced land management, N2O emissions from the increased use of fertilizer, environmental effects on carbon storage, and the economics of land conversion. 'Our analysis, which we think is the most comprehensive to date, shows that direct and indirect land-use changes associated with an aggressive global biofuels program have the potential to release large quantities of greenhouse gases to the atmosphere,' says Melillo."
Biofuel Displacing Food Crops May Have Bigger Carbon Impact Than Thought
Science Daily 25 October 2009

"To date, the debate on 'peak oil' has had little influence on UK energy policy. But a combination of strong demand growth, erosion of spare capacity and ominous warnings from analysts has heightened concerns. Global production increased only marginally between 2004 and 2008, despite record high prices. While the recession has reduced demand, prices remain around $80 per barrel and the cancellation and delay of upstream projects could lead to shortages when the economy recovers. Two physical features of oil resources make a peak in global production inevitable. First, the rate of production from individual fields tends to rise to a peak or plateau relatively early in a field's life and then decline, largely as a result of falling pressure. As a result, some 4pc of global production capacity needs to be replaced each year, simply to maintain production at current levels – that's equivalent to a new Saudi Arabia coming on stream every three years. With demand rising and decline rates increasing, production is becoming progressively more difficult to maintain. Around half of global production capacity will need to be replaced before 2020. Second, most of the world's oil is located in a small number of large fields. Although there are some 70,000 fields worldwide, around half of global production derives from only 110 of them, and as much as a fifth from only 10 fields. Around 500 "giant" fields account for two-thirds of all the oil that has ever been discovered. Most of these giants are relatively old, many are well past their peak of production, most of the rest will begin to decline within the next decade or so and few new giants are expected to be found. This combination of features will drive the global peak. At some point, the additional production from the newer, smaller fields will be insufficient to compensate for the decline in production from the ageing giants. This process has been observed in more than 100 regions worldwide, with the peak typically occurring well before half of the resources have been produced. Economic and political circumstances profoundly influence the timing, and the complex interactions between supply and demand make a 'bumpy plateau' more likely than a sharp peak. But, at some point, decline becomes inevitable....even under optimistic assumptions about the size and future development of the resource, a global peak before 2030 appears likely. Under more realistic assumptions, the peak could occur much earlier – or may already have passed. Given the scale of investment required and the associated lead times, there are doubts whether non-conventional resources can substitute. For example, the most bullish forecasters expect the Canadian oil sands to provide 6m barrels per day by 2030, which is less than the capacity lost every two years as a result of depletion. More importantly, developing such resources will make it impossible to avoid dangerous climate change. The depletion of oil resources requires urgent attention if the worst consequences are to be avoided and if only climate-friendly solutions are to be deployed. There are numerous opportunities on the demand side, such as improving vehicle fuel efficiency, developing electric vehicles and investing in public transport. These changes are under way but may need to proceed much faster than is currently envisaged. At present, however, neither the UK Government nor the major opposition parties appear to take this issue seriously. This needs to change."
The rise and fall of oil production
Daily Telegraph, 24 Ocotober 2009

"Current giant and super-giant fields are soon destined to be so depleted that no leap in technology or increase in price will prolong their life. Oil is a finite resource. Because the amount of oil has been underestimated in the past doesn't mean it is today or will continue to be. The estimates of the commercially recoverable oil found in fields discovered decades ago have been, in many cases, adjusted upward over time. This upward assessment is primarily attributed, in addition to increased field knowledge and production histories, to giant leaps in technology used to access and extract the oil. Those who cite this trend as proof that oil shortages are not a near-term threat are only correct in assuming that for much of their history, the giant and super-giant fields were under-utilized. However, they fail to acknowledge the trend's limitations. Regardless of the claims of the U.S. Geological Survey and others of a trillion barrels of undiscovered oil, let's look at the recent history of finding giant and super-giant fields. The consistency of their contribution is largely the result of increased rates of extraction, not to new discoveries. As time passes, new discoveries are increasingly smaller, of lower quality and located in ever-more difficult operating environments. In the 1960s, 26 giant and super-giant fields were discovered. That number has consistently declined to only two so far in the first decade of the new millennium. The conditions necessary to create giants and super-giants occur infrequently, and where they do occur the real estate has, with few exceptions, been well explored. Trying as hard as they can to discover giant or super-giant fields, the oil companies' results have been disappointing. Because many countries (such as Russia and in the Middle East) keep information regarding their oil fields a state secret, many giant and super-giant fields may deplete much sooner than generally anticipated. The public does not know the forecast of production from these fields because there is no single repository of such information. It is shameful that we know so little about their state of depletion.  To say that we need not concern ourselves because we still have plenty of oil to exploit is simply irresponsible. There is insufficient information about the state of the giant and super-giant fields to make such a judgment. However, the statistics, depletion rate and rate of replacing giant and super-giant fields clearly indicate reduced future production capacity and increased price and cost. The most pressing, but largely ignored question is when and at what cost?"
Global oil supply: Separating fact from fiction
Houston Chronicle, 24 October 2009

"Uranium giant Cameco Corp. (TSX:CCO) says it has resumed efforts to drain water from the troubled Cigar Lake mine, which has been flooded for three years. Cameco stopped pumping in August 2008 when it discovered that water was still flowing in, although the source of the problem wasn't known at the time. But Cameco said Friday the inflow was stopped by placing an inflatable seal between the shaft and the source of the inflow and then backfilling and sealing with concrete and grout. The level where the flooding occurred is 'not part of future mine plans,' the company said. Cameco said it will take six to 12 months to dewater and secure the mine, and it will provide an estimated production start date after the water has been pumped out and the condition of the underground development has been assessed. Cameco operates and owns 50 per cent of the project, which has the potential to be one of the world's biggest uranium mines."
Cameco says dewatering of flooded Cigar Lake uranium project has resumed
Canadian Press, 23 October 2009

"Oil tycoon T. Boone Pickens told Congress on Wednesday that U.S. energy companies are 'entitled' to some of Iraq's crude because of the large number of American troops that lost their lives fighting in the country and the U.S. taxpayer money spent in Iraq. Boone, speaking to the newly formed Congressional Natural Gas Caucus, complained that the Iraqi government has awarded contracts to foreign companies, particularly Chinese firms, to develop Iraq's vast reserves while American companies have mostly been shut out. 'They're opening them (oil fields) up to other companies all over the world ... We're entitled to it,' Pickens said of Iraq's oil. 'Heck, we even lost 5,000 of our people, 65,000 injured and a trillion, five hundred billion dollars.' President Barack Obama has pledged to withdraw U.S. troops in Iraq. 'We leave there with the Chinese getting the oil,' Pickens said. Iraq's Oil Minister Hussain al-Shahristani told a Washington conference on Wednesday that his government was happy with the energy auction it held earlier this year. The auction was the first chance for foreign oil firms to compete for Iraqi oil since the U.S.-led invasion in 2003. 'We're pleased with scale and participation of the IOC (International Oil Companies) and the transparent and public competition,' Shahristani said at a U.S.-Iraq business and investment conference. BP and the Chinese oil company CNPC were the only firms to win a contract in Iraq's bid round this summer, the first chance for foreign oil firms to compete for Iraqi oil since the U.S.-led invasion in 2003. Seven other oil and gas fields failed to attract bidders on the terms Iraq offered."
Pickens says U.S. firms 'entitled' to Iraqi oil
Reuters, 22 October 2009

"The number of people falling behind with fuel bills soared by nearly 50pc during the past six months, a charity warned today. Citizens Advice said it had seen a 46pc increase in the number of people contacting it during the six months to the end of September who had fuel debts, compared with the same period of the previous year. It said the rise continued a trend seen in recent years, with the number of people who were in debt to their fuel supplier jumping by 82pc since 2005/2006. The majority of people who owed money on their energy bills in 2008/2009 were of working age, with only 5pc of people aged over 65. Eight out of 10 people who were behind with their energy bills had incomes which were half the national average, with 32pc living off less than £400 a month, while a quarter of people with fuel debt had a disability."
The number of people behind with their energy bills increases by 50 per cent
Daily Telegraph, 21 October 2009

"Chinese annual car production has topped 10 million for the first time as carmakers boost output to meet growing demand, state media has said. The 10 millionth car produced this year rolled off the First Automobile Works Group assembly line in Changchun, the official Xinhua News Agency reported. Despite the downturn and falling sales at most global carmakers, demand for cars in China is booming. State incentives, such as tax cuts on small cars, have boosted sales. Like many other governments around the world, China has also introduced subsidies to trade in older vehicles. Previously, only the US and Japan had produced 10 million cars in a single year.  Domestic Chinese car sales overtook those in the US for the first time in December of last year, and this trend has continued.  Global carmakers are now increasingly targeting China as a key growth market."
China car output 'breaks record'
BBC Online, 20 October 2009

"Abdalla Salem El-Badri , secretary-general of OPEC, blamed governments for failing to keep speculators in check, pointing out that there was no shortage of oil supplies around the world. 'I'm not an advocate of banning speculation, but they should not be going wild,' he said. 'If they go wild, everybody goes wild.' Mr El-Badri said that supplies currently kept on floating storage platforms would have to be used up before OPEC's members lifted production, which has been sharply scaled back over the last year. He said he was not comfortable with oil returning to prices above $100 per barrel when there was still plentiful supply. But those sharing a platform at the Oil & Money conference in London, including Nobuo Tanaka, director of the International Energy Agency, Tony Hayward, chief executive of BP, and Paolo Scaroni, dismissed the suggestion, pointing to economic recovery and a weak dollar behind increasing prices. 'The market is driven by fundamentals of supply and demand,' Mr Hayward said. However, oil industry executives agreed that $80 oil allowed more capacity for investment in new fields, where fossil fuels are difficult to extract. Mr El-Badri said several OPEC members were now reviving long-term projects. 'We, OPEC, are ready to invest,' he said. Energy companies increasingly are being pushed towards gas and oil fields in new places, such as shale-gas in the US, coal-seam gas beds in Australia and shale formations in the Middle East, since much of the world's reserves are in politically difficult countries."
OPEC and corporations disagree as oil hits 12-month high of $80 per barrel
Daily Telegraph, 20 October 2009

"Throughout the 20th century, an abundant supply of low-cost energy was the driving force behind the spread of global prosperity and development. Today, satisfying ever-growing energy demand in a sustainable way has become the world’s biggest challenge. According to BP’s projections, we will need about 45 per cent more energy in 2030 than we consume today. That will require industry to invest some $25 to $30 trillion — more than $1 trillion (£600 billion) a year for 20 years. We need a more diverse energy mix — involving greater use of nuclear power and of renewable sources as well as fossil fuels — to enhance energy security and tackle climate change. But we also have to face a few facts. First, the transition to a lower-carbon economy is a journey that will take decades. Second, it is not clear right now how we are going to get there....You might say that this is what you would expect to hear from the chief executive of one of the world’s largest oil and gas companies. But BP is also a significant investor in renewable resources such as wind, solar power and biofuels. The reality is that the technology, infrastructure and regulatory framework for alternative energies will take decades to be deployed at scale. At present, all of the world’s wind, solar, wave, tide and geothermal power account for only about 1 per cent of total energy consumption. Looking ahead, even the boldest forecasts say they will meet less than 10 per cent of demand in 2030. The sheer scale of the energy industry makes a rapid transition inconceivable. It takes 30 years, for example, to turn over the capital stock in the power generation sector and 15 years in cars. That is why it is so important to establish and start implementing a road-map for the transition now, based on an understanding of the existing infrastructure, changing technology and economic incentives. It is all about smart choices — about ensuring that the money we invest is spent to best effect. In many cases, such choices can be made on the basis of what we know now, rather than technologies still in development. And the smartest and most effective choice we can all make is to use energy far more efficiently. Take transport, responsible for 25 per cent of UK CO2 emissions. By far the most effective path to a lower- carbon road transport industry lies in making internal combustion engines more efficient. Smaller, more efficient petrol and diesel engines, combined with increasing use of hybrid technologies, will produce significant carbon savings in the next two decades. Increasing use of biofuels will help. By extracting CO2 from the atmosphere as they grow, some biofuels can reduce greenhouse gas emissions by 80 per cent compared with conventional petrol, according to recent studies. At BP we believe that biofuels could provide more than 10 per cent of global road transport fuel by 2030. To put this into perspective, the combination of advanced hybrid cars and quality biofuels offers comparable CO2 savings to running battery-powered electric cars from the existing UK electricity grid — but at less than half of the additional cost..... gas, the cleanest fossil fuel with less than half the carbon emissions of coal..... is abundantly available to the UK. Indigenous gas provides 73 per cent of UK consumption today and could still make up as much as 30 per cent in 2020. Gas is also widely available from non-UK suppliers, ranging from Norway to North Africa, as well as from the global market for liquefied natural gas. Any concerns about security of supply can be addressed by diversifying suppliers and building more storage capacity. Gas is also a necessary complement for renewable sources, given that gas-fired generators — unlike nuclear and coal-fired plants — can be readily switched on and off to back up intermittent wind and solar power."
Tony Hayward is chief executive of BP - Act now if you don’t want the lights to go out
London Times, 19 October 2009

"Wulf Bernotat looks cold — and sceptical. 'Are you sure we are making any money out of this?' the chief executive of E.ON, the world’s largest utility company, asks one of his employees. “This is a business, you know... Mr Bernotat seems genuinely exasperated by what he regards as fanciful policymaking that bears little relation to the realities of running a business. Above all, he believes that Britain’s target of generating one third of its electricity from renewable sources, such as wind and wave energy, by 2020 is naive and he says that politicians need to do far more to 'adjust expectations . . . There is a big mismatch with what is achievable. I think it is even bigger in the UK than in Germany. Politicians need to be more realistic.' His argument is that without bigger state subsidies or a higher price for carbon emissions, E.ON cannot afford to make the investment necessary to meet such ambitious targets. 'The carbon price is too low to support any accelerated investment in carbon abatement. Every investment must deliver an acceptable return.' The same focus on pure economics over ideology is behind E.ON’s decision to put the Kingsnorth development on hold. The announcement exposed divisions within Britain’s environmental movement. While many hailed it as a victory, others saw it as a disaster, warning that it would delay E.ON’s plans to invest in new carbon capture and storage (CCS) equipment — key technology in the battle against climate change, a battle in which the Government wants Britain to be a world leader. Mr Bernotat quickly brushes aside any suggestion that E.ON yielded to outside pressure from green groups. 'It was simply a reaction to market developments,' he says, adding that the recession has pushed back the need for new plants in the UK to about 2016 because of plummeting electricity demand. 'Demand is not developing at the same speed and we just felt we had to adjust our investment programme.' Kingsnorth, he says, is only one of a string of investments that E.ON is deferring because of the recession, which he says will leave depressed demand for electricity across Europe for another two years."
Monday manifesto: UK renewable energy target 'naive' says Wulf Bernotat
London Times, 19 October 2009

"Russian President Dmitry Medvedev sought to expand Moscow's political and economic influence in the Balkans on Tuesday by bringing a euro1 billion ($1.5 billion) loan to recession-hit Serbia and offering Belgrade a 'strategic partnership' in the distribution of Russian gas to Europe. The loan deal — approved during the first-ever visit to Serbia by a Russian president — adds to Russia's growing clout in Serbia, which relies on Moscow's diplomatic support in the U.N. Security Council to oppose the secession of Kosovo, Serbia's former province. About 60 countries have recognized Kosovo's independence, including the U.S. and most of the European Union.... Medvedev praised 'strategic' cooperation between the two countries, especially the planned construction of the South Stream natural gas pipeline that would bring Russian gas to Europe via the Balkans. 'Our goal is to make Serbia a big energy player which will distribute the Russian gas' in Europe, Medvedev told Serbia's Parliament. 'We are seeking to turn the cooperation between our two states into a strategic partnership.' Russian President Dmitry Medvedev sought to expand Moscow's political and economic influence in the Balkans on Tuesday by bringing a euro1 billion ($1.5 billion) loan to recession-hit Serbia and offering Belgrade a 'strategic partnership' in the distribution of Russian gas to Europe..... In the Balkans, most of the former communist states are weary of Moscow's clout and are courting the West. But Moscow has taken a special interest in Belgrade's fortunes. Russia not only shares cultural, ethnic and religious roots with Slavic, Orthodox Christian Serbia. Serbia's conflict with the U.S. and Europe over Kosovo became a symbol of the evaporation of Russian influence in eastern and central Europe in the decade after the breakup of the Soviet Union."
Medvedev Visits Serbia Bearing $1.5 Billion Loan
Associated Press, 20 October 2009

"World oil prices hit their highest point for a year yesterday, as a major new report urged governments around the world to take drastic action to head off an approaching oil supply crunch. US light crude futures pushed above $79 a barrel, supported by the view that a recovering world economy would raise demand for crude. Oil prices have more than doubled from the low point they hit in the spring, but are still around half the all-time high of nearly $150 a barrel they reached in early summer last year. Analysts have been surprised at the recent resilience of oil prices given the impact on energy demand of the global recession. In spite of this year's volatility in the oil price, the underlying trend for a decade has been for it to rise steadily. A report from the non-governmental organisation Global Witness – famous for its exposé of so-called 'blood diamonds' – pointed to an impending supply shock that could be so severe that many of the world's poor countries would simply be shut off from the world of energy by sky-high prices. Two years in the preparation, Global Witness's report, Heads in the Sand, accused governments of ignoring the fact that the world could soon start to run short of oil. This would lead to huge consequences in terms of price shocks and much higher levels of violence around the world than last year's food riots. 'There is a train crash about to happen from an energy point of view. But politicians everywhere seem to have entirely missed the scale of the problem,' said the report's author, Simon Taylor. 'We are all addicted to oil but if you look at the mathematics of the problem, they simply don't add up in terms of future supply and demand.' The report went through the latest figures from the oil industry and the Paris-based International Energy Agency, which last year drastically reduced its estimate of the available oil. The IEA figures showed there could be a gap of 7m barrels a day between supply and demand by 2015. That represents about 8% of the expected world demand by then of 91m barrels a day. The IEA expects production from existing oilfields to fall by 50% between now and 2020 and warned the world needs to find an additional 64m barrels a day of capacity by 2030 – equivalent to six times current Saudi Arabian production. But Global Witness took issue with the IEA's recommendation that the oil industry spend $450bn a year chasing these supplies, many of which may well not be there. Because of the demands of climate change, the report argued, the money would be better invested in moving rapidly to a post-oil world of renewable energy and conservation....The report said that between 2005 and 2008, global oil production ceased to grow in spite of widespread investment and rising prices, which should normally have brought forth a big rise in supply. It notes that the biggest year for new discoveries was 1965, since when they have been falling. Global oil production overtook new discoveries in 1984 and has outpaced them ever since. It also dismissed as myth a widely held expectation that tar sands in Canada could fill the supply gap. Tar sands are unlikely ever to yield more than 3-4m barrels a day, equivalent to the pace at which existing fields are declining every year. Taylor said the four key issues about oil – declining output, declining discoveries, increasing demand and insufficient projects in the pipeline – have been apparent for many years. 'But governments and multilateral agencies have failed to recognise the imminence and scale of the global oil supply crunch, and most of them remain completely unprepared for its consequences,' he said."
Oil prices hit high but report warns of supply crunch
London Times, 19 October 2009

"The golden age of oil refiners has ended. Will they see another? Such doom-laden questions crop up with any cyclical business -- as do proclamations of golden ages. But after the stellar profits of recent years, a sense of despair is gathering over refiners. Margins have collapsed amid recession. The likes of Valero Energy and Sunoco have switched off plants to cope. Rex Tillerson, head of Exxon Mobil, reckons U.S. gasoline demand peaked in 2007. It is this concept of 'peak demand' that haunts the refining sector just as 'peak oil' supply besets the upstream production side. Mr. Tillerson figures U.S. demand will fall to around 17 million barrels a day by 2020, from about 19 million a day today."
Refining Business Enters the Twilight Zone
Wall St Journal, 18 October 2009

"British homes could soon be heated by gas produced from cow manure and sewage slurry, under plans being considered by Centrica, the owner of British Gas. The company, which has 16 million UK customers, is drawing up plans to build a plant that would use organic waste to produce biomethane that could be injected directly into the national gas network. National Grid has estimated that such biogas could supply 18 per cent of total UK demand for gas — or 18 billion cubic meters of the approximately 100 billion total consumed in Britain every year. A spokesman for Centrica said that biogas was an 'interesting technology' and that it was studying the option of constructing a plant in Britain that would process an array of materials, from abattoir and farm waste to municipal food waste. John Baldwin, a biomethane consultant with CNG Services, which is advising Centrica, said that the industry remained “embryonic” in the UK but was well advanced in continental countries. However, he said that the economics of British biomethane production would be transformed in April 2011, when the Government begins a subsidy scheme called the Renewable Heat Incentive. By the end of this year, the Government is poised to set a premium that will be paid to biomethane producers from 2011, potentially unleashing a flood of investment into the industry. About 15,000 cars in Sweden use the fuel, which is available in filling stations."
British Gas owner could use cow manure to heat homes
London Times, 16 October 2009

"The gas price has collapsed worldwide. It has been beaten down by recession and at the same time undermined by new discoveries in America and new supplies of sea-borne liquefied natural gas from the Gulf. Households don’t see this in their bills but industrial buyers of gas have watched the spot or 'day ahead' price fall from 70p per therm to about 20p over the past 12 months. One of the reasons your bill isn’t falling is that most of your gas was bought by a utility, not on the spot market but under a long-term contract with a big energy group. It is these contracts, some as long as 30 years, that are now the subject of a tug-of-war between the world’s biggest companies. Europe’s gas buyers are not just demanding lower prices, they are looking to rewrite deals. They want to link long-term prices more closely to spot markets and they want the big gas suppliers in Siberia, the North Sea and North Africa to take more price risk. The conflict erupted last week at the World Gas Conference when Alexey Miller, the chairman of Gazprom, flatly denied that his company would renegotiate prices or volumes. At the same time Wulf Bernotat, chief executive of E.ON, Gazprom’s biggest customer, said he was in talks over the deferral of unwanted volumes of gas. In one corner, stubbornly, sit the suppliers — troubled giants such as Gazprom of Russia, Sonatrach of Algeria and StatoilHydro of Norway. These mainly sell gas through long-distance pipelines under 'take-or-pay contracts'. These deals, sometimes linked to the entire output of a big gasfield, require purchasers to take specified annual volumes of gas. If they don’t take all the gas, they must pay for it anyway and the volume declined can be supplied later when demand for the fuel increases. The take-or-pay price is almost always linked to an index, made up typically of a basket of alternative fuels related to crude oil. Take-or-pay was invented to provide stability in a simple world made up of single buyers and monopoly sellers — Russia selling gas to Germany or the old British Gas buying from Shell. Gas trading did not exist because there was no organised market. Shell needed the certainty of a guaranteed customer to justify the cost of drilling wells and building pipelines. British Gas wanted a reliable supplier and both sides wanted a certain price. In the other corner, fuming, sit today’s buyers — companies such as Britain’s Centrica, E.ON of Germany, Italy’s ENI and GDF-Suez of France. They see the price of spot gas plummeting in liquid markets such as the NBP in Britain, at Zeebrugge in Belgium and America’s Henry Hub, but they have already bought gas from Russia at a gas price linked to oil, which remains stubbornly high. Put in simple terms, today’s UK spot gas price of 26p per therm translates into an oil price of about $24 per barrel, compared with today’s crude price of about $75 per barrel. The problem will continue, says Simon Blakey, a gas expert at IHS-Cera, the energy consultants. He reckons demand will remain below minimum contracted volumes into 2011. That means Europe could be working through its gas glut well into 2014-15. Italy is squabbling with Russia over some $2 billion worth of contracted gas for which it has no customer, and if the glut, as expected, lasts three years, the whole of Europe is arguing about liability for a gas bubble worth $25-$35 billion at current prices. For Gazprom, it is a growing nightmare, compounded by the group’s enormous financial commitments to build pipelines in the Baltic and giant gasfields in the Yamal Peninsula and in the Barents Sea. Money talks and Gazprom cannot ignore the convoys of ships from the Gulf, Egypt and Nigeria, dumping liquefied gas into tanks at Zeebrugge, the Isle of Grain and Milford Haven at prices that are half the cost of Russian take-or-pay gas. For the Kremlin, it will be hard to accept that its biggest export earner, the nation’s No 1 taxpayer, should be subject to the daily whims of traders watching screens in London. Gazprom will put up a huge fight to prevent any linkage to spot markets and many outside Russia will wonder whether gas, the fuel that underpins Europe’s energy future, should become a trader’s plaything."
Sellers on the spot ahead of gas war
London Times, 15 October 2009
"Prime Minister Vladimir Putin used a trip to China to clinch oil, natural-gas and nuclear agreements, helping turn Russia into a global energy supplier with pipelines stretching from Berlin to Beijing. Russian companies signed deals on starting gas deliveries, jointly refining Siberian crude and building Chinese nuclear reactors on a two-day visit to Beijing that started yesterday. 'China is Russia’s economic future,' said Roland Nash, chief strategist at Renaissance Capital in Moscow. 'If this relationship works out, it will be a major contributor to the stability and speed of global economic growth.' Asia’s largest energy consumer is crucial for diversifying Russian energy exports away from traditional markets in Europe. Enemies for most of the Cold War, the two countries are now building relations across their 4,000-kilometer (2,500-mile) border based on China’s appetite for resources and Russia’s ability to deliver them as the world’s biggest energy producer. OAO Gazprom, the Russian state-run gas exporter, signed a framework agreement with China National Petroleum Corp. that could turn China into Russia’s biggest single gas customer. The country currently imports no gas from Gazprom, whose web of pipelines still reaches out to Europe. Igor Sechin, Putin’s deputy for energy, signed an additional accord setting deadlines on future gas supplies. A contract may be ready in June 2010 with deliveries in 2014 or 2015, Sechin told reporters. Shipments could reach China by new pipelines or as liquefied natural gas aboard tankers, he said. 'This potential deal could be a game changer in the Russian gas sector, moving it towards Asia,' said Cliff Kupchan of New York-based Eurasia Group. 'Price is the key. No agreement, no deal.' Gazprom Chief Executive Officer Alexei Miller told reporters the company is seeking a pricing formula similar to the one it uses in Europe, where the cost of gas is pegged to the price of crude. China, the world’s largest user of coal, relies on the comparatively cheap, dirty fuel to power its factories and generate electricity. Gas is not the only energy source Russia can offer its neighbor, Sechin said. China yesterday agreed to use Russian expertise to construct two additional reactors at its Tianwan nuclear plant. Russia has also started selling electricity to China from its Far East region. Coal exports to the country will total at least $1 billion by the end of the year, Sechin added. Russia agreed in February to supply China with oil for 20 years in return for a $25 billion credit to state oil company OAO Rosneft and the government’s oil pipeline monopoly OAO Transneft. The total value of oil deals signed with Chinese companies this year is about $100 billion, according to the Russian government. The first segment of an oil pipeline reaching the Chinese border is planned to be finished this year. Sechin, also chairman of Rosneft, said the company reached an agreement with CNPC yesterday on building a refinery in Tianjin, 100 kilometers southeast of the Chinese capital. The joint project may also involve as many as 500 filling stations, he said. Chinese money has helped transform Rosneft from a second- tier oil company into Russia’s largest crude producer. ”
Putin’s China Visit Helps Russia Become Global Energy Supplier
Bloomberg, 14 October 2009

"Demand for oil in developed nations peaked in 2005, and changing demographics and improved motor-vehicle efficiency guarantee that it won't hit those heights again, IHS Cambridge Energy Research Associates says in a new report. Reduced petroleum demand in developed nations could make their economic growth less vulnerable to oil price shocks, the report states. Nonetheless, global oil demand is still expected to grow, overall, driven by China and other developing nations as the world economy recovers. But demand for oil that has fallen in recent years in Organisation for Economic Co-operation and Development, or OECD, nations won't be made up, the analysts say. 'The economic downturn has been masking a larger trend in the oil demand of developed countries,' said Daniel Yergin, the company's chairman. 'The fact is that OECD oil demand has been falling since late 2005, well before the Great Recession began.' The biggest reason, the group says, is that oil demand in the transportation sector -- which is the United States' dominant use of oil and accounts for 60 percent of OECD petroleum demand -- is flattening. The trend has been noticed elsewhere, as well. Exxon Mobil Corp. CEO Rex Tillerson said this month that U.S. gasoline demand peaked in 2007. The Cambridge Energy Research Associates, or CERA, analysis cites several reasons why demand in developed nations -- which accounts for slightly more than half the world's total -- won't recover. Among them: Car ownership rates have reached 'saturation,' while populations are aging and population growth ranges from low to negative. Also, OECD governments, driven by global warming and energy security worries, have tightened fuel efficiency standards, while high prices in recent years have also pushed consumers away from gas guzzlers. In the United States, the Obama administration plans to implement rules that push corporate average fuel economy, or CAFE, standards to a fleetwide average of 35.5 miles per gallon by 2016, four years ahead of the schedule Congress laid out in a 2007 energy law. Global demand will nonetheless grow, fueled mostly by developing nations, CERA finds. The company forecasts world demand to increase from 83.8 million barrels per day this year to 89.1 mbd in 2014. 'Just 900,000 bpd [barrels per day] of growth is expected to come from OECD countries, just a fraction of the 3.7 million bpd of demand lost over the course of 2005 to 2009,' the report states. But CERA cautions that developed nations will hardly be through with oil anytime soon. The demand reduction in OECD countries between the 2005 peak and 2030 is expected to be 'fairly modest,' it states."
Oil Demand Has Peaked in Developed Nations, Never to Return -- Report
New York Times, 13 October 2009

"The Potential Gas Committee at the Colorado School of Mines made national news this summer when it announced that, largely because of shale gas, the United States has a 100-year supply of domestic natural gas. Shale-gas deposits lie under parts of Southwest Colorado that have never been drilled, including Montezuma, Dolores and western La Plata counties. Gas executives have seized on the study to push for a much greater role for their product in electricity generation, especially as the Senate prepares to debate a climate-change bill. 'I truly believe that natural gas is the common thread of the economy, the environment and energy security,' said Peter Dea, former president of the Colorado Oil and Gas Association. Art Berman of Labyrinth Consulting Services struck out at Dea and other natural-gas optimists. His study of the Barnett shale field in Texas – the only mature shale play in the country – showed that the wells decline much faster than companies like to admit, and less than a third of the wells drilled will produce enough gas to break even. 'There are lots of opinions about shale gas. What we’ve done is not an opinion. It’s an observation,' Berman said. But companies continue to tout shale gas as a 'game changer' because of pressure from Wall Street, Berman said. 'In the midst of a boom, it’s hard to sit on the sidelines. Because a CEO is responsible for his company’s stock price, and if you’re not in one of these plays, Wall Street says, ‘Come on, guys,’ Berman said. That is too pessimistic a view for Edward Warner, who played a role in two previous game-changers in the gas industry. He was an Amoco geologist who helped unlock coal-bed methane in Southwest Colorado, and later he was one of the first people to recognize the potential of Wyoming’s Jonah field, the most concentrated deposit of natural gas in the United States. To Warner, the American gas supply is limited only by technology and innovation."
Assembly of peak oil experts look at shale gas
The Durango Herald, 13 October 2009
"While the rest of the world recoiled in horror at recent events in Guinea, where at least 150 pro-democracy supporters were killed and dozens of women publicly raped by government soldiers, China has sensed an opportunity to steal another march on Western competitors in Africa. China is preparing to throw the junta in Guinea a lifeline in the form of a multibillion-pound oil and mineral deal, financed largely by soft loans. Such policies have already served China well with rogue and discredited regimes from Angola to Sudan. The move comes as the European Union, spurred on by France, the former colonial power, and the African Union are considering sanctions against Guinea if its young military leader, Captain Moussa Dadis Camara, continues to renege on a deal to stand down in favour of free elections....There is now barely a country on the continent that does not have a sizeable Chinese presence. Copper-rich Zambia and the Congolese province of Katanga now boast the fastest-growing Chinatowns in the world. Sudan, for years out of bounds to Western companies because of its links to terrorism, now pumps 600,000 barrels of oil a day from its Red Sea port into Chinese ships. In return it received weapons that it used against rebellious black Africans in Darfur....Annual trade between China and Africa is now put at £62 billion, more than four times the £15 billion that it reached in 2004. China has also written off billions of dollars of bad African debt and used its 'war chest' of foreign currency reserves to cement new alliances and finance cut-rate loans and commercial lines of credit. There is only one condition: any money provided must be used to pay Chinese companies and buy Chinese goods that flood the continent’s bustling street markets. Stalls now overflow with cheap plastic sandals, underwear, artificial flowers and cut-price motorbikes and tools."
China tightens grip on Africa with $4.4bn lifeline for Guinea junta
London Times, 13 October 2009
"The central challenge for energy policy is to deliver on climate change and energy security at the least cost. Last Friday the energy regulator Ofgem warned of the dangers if we don’t deliver on Britain’s commitment to renew our energy infrastructure. The Ofgem report contradicted the traditional view that you can deliver on climate change or energy security, but not both. It is the low-carbon, home-grown energy scenario that would give the best guarantee of energy security and the lowest price increases. The reason is that our North Sea reserves are declining. A high-carbon future would mean we rely more and more on imported gas. Two thirds of the world’s reserves are in Russia and the Middle East and with rising demand from emerging economies, we could face significantly higher prices. And yet in the short term, gas-fired power stations are easiest and cheapest to build so without action from government, that’s what companies will do. Our low-carbon transition plan published in the summer laid out how we can limit our dependence on gas imports over the next decade. But it requires us to do some difficult things. In particular, we need to deliver on the three alternatives to gas: renewables, clean coal and nuclear. In each case, we need significant government intervention. All three require reform of the planning system so energy projects don’t get tied in knots. In the face of opposition from the other parties, we are establishing an Infrastructure Planning Commission to speed decision making. We should respect local concerns but just saying no will fail the country. And that’s what many local authorities do. Sixty per cent of wind turbine applications to Conservative councils are rejected.... This week Britain will be hosting governments from 20 countries in London to discuss how government can support carbon capture and storage (CCS). This technology has the potential to cut emissions from coal by more than 90 per cent. When some countries rely on coal for 95 per cent of their electricity, this is a technology we cannot do without. But CCS has been around for a long time without the investment to reach industrial scale. Business alone will not make that investment and while it doesn’t, it’s the environment that pays the price. Steven Chu, the US Secretary for Energy, understands the need for government to play an active role. His colleagues in China, Australia, Canada, the UK and many other countries also get it. That is why we are planning a levy to provide financial support for CCS. The Conservatives’ only response is to spend money on CCS that the Treasury has already allocated to pay off the deficit. On nuclear power, government needs to break down the barriers to delivering new stations. Again the Conservatives have opposed us, with Mr Cameron calling it a 'last resort'. With gas power stations and renewable sources being built, nuclear coming on stream and incentives for clean coal, we can be confident about our security of supply. It is true that in the next few years power plants generating 18 gigwatts will close. But we already have plants that can generate more than that under construction or with planning permission. E.On’s decision to delay its plans for a new coal-fired plant at Kingsnorth was made because it doesn’t think Britain will need the energy it would have supplied in the short term. But to deal with climate change, Britain needs to be on a path to zero-carbon power. That could require even greater action. That is why my department is looking at what will be needed between 2020 and 2050, with our report due to be published in the spring. It is the kind of long-term planning that only governments can do."
Ed Milliband, Secretary of State for Energy and Climate Change - We must work together to keep the lights on
London Times, 12 October 2009
"Motorists should pay higher taxes in the form of a national road-pricing system to cut carbon dioxide emissions, according to the Government’s climate change advisory body. The speed limit on all motorways should be strictly enforced and may have to be reduced to 60mph to help to meet the Government’s legally binding carbon reduction targets. The Committee on Climate Change, which devised the targets and advises the Government on how to meet them, says that a “step change” is needed in emissions reduction. In its first annual report to Parliament , the committee says that emissions cuts since 2003 have been 'far slower than now required to meet (carbon) budget commitments'. Emissions fell by an average of 0.5 per cent in each of the five years to 2008. The committee says that emissions cuts of 2-3 per cent a year are needed every year from now until 2050 to meet the targets...It also says the Government may have to double the grants planned for electric cars from 2011 to £10,000 for at least the first 25,000 buyers. It says otherwise the extra cost of battery-powered cars would be prohibitive. The committee concludes that the total subsidy needed to achieve widespread use of electric cars is likely to be £800 million, rather than the £250 million pledged by ministers. Britain’s free-market approach to electricity generation is failing to deliver the carbon savings required, the committee reports. It proposes government intervention to raise the price of carbon emissions permits, currently about £12 a tonne. The committee considers this too low to give power companies sufficient incentive to invest in renewable energy. It also says the Government should consider a tax on carbon if the European emissions trading scheme continues to have little impact on total emissions. The committee calls for 8,000 more wind turbines by 2020, three new nuclear power stations and four coal plants with carbon capture and storage systems. It also suggests a national programme to insulate homes and install efficient condensing boilers."
Tax motorists more to help save the planet, Government is urged
London Times, 12 October 2009
"It falls to the Committee on Climate Change to tell a truth that politicians dare not mention. Unencumbered by the need to win elections, the committee can say what we must do to meet our legally binding targets to cut greenhouse gas emissions. Ministers are fond of saying how Britain is leading the world by promising to cut emissions by 34 per cent on 1990 levels by 2020 and 80 per cent by 2050. They are less fond of outlining the sacrifices required. The committee makes clear that the apparent good progress to date is a 'false impression' created by the recession and, before that, the closure of much of manufacturing industry. 'Where CO2 emissions have fallen, the extent to which this has been through implementation of measures to improve energy or carbon efficiency is very limited.' Emissions will continue to fall this year but once the economy starts to recover, they will rise unless the Government uses 'stronger levers'. The committee takes vague government aspirations and explains exactly what will have to be achieved. For example, while ministers have waffled about an electric car revolution, it sets tough targets: 240,000 electric cars by 2015, 1.7 million by 2020...
Climate change committee tells a truth that politicians avoid
London Times, 12 October 2009

"The issues of constrained supplies for oil really started back in the late 1970s. In the 1979-1980 time frame, there was a very rapidly rising demand for oil and an inability to supply it. And Saudi Arabia was being called upon back then to jump capacity from 8-9 million [barrels a day] to 10 million to 15 million. And frankly it was very difficult to do that. So that was when I first came face to face with the issue of oil supplies. This went away in the mid-1980s when there was low demand and alternatives came along. However, it resurfaced as a problem in the mid-1990s, particularly during the late 1990s when oil prices collapsed. There was no investment or very minimal investment globally in oil capacity. At the same time there was a very rapid rise in demand. The OPEC countries were considered as a solution; somehow they would increase capacity from 20 to 30 to 40 million barrels/day, and I didn’t think it was sustainable. So I really got involved with this problem in the late 1990s..... It’s very important to adhere to proper reserve definitions when we’re talking about oil. Oil is money in the bank. If you are very loose in terms of how you define it, you can go off and make assumptions that are unsustainable. The current numbers published—I call them 'declared reserves'—are something like 1,200 billion barrels. On top of that there are another 150 billion of extra-heavy crudes and 150 billion Canadian type of bitumens. So that would lead you to believe that we have roughly 1,500 billion barrels of proven oil reserves. In fact, those are hardly proven. There is a lot of speculation. If we go back to the SEC type of definitions, that number drops way back, maybe down to 900 billion. I think it’s important to be precise about the definitions if not the actual estimates, because that’s the only way we can decide how much can be delivered on a timely basis. So yes, I think I would say 900 billion proven, perhaps 1,200 billion probable and potential. But that’s about the limit....At the same time, when we look at the technical side, yes there are many resources that have not been tapped. You could go to coal-to-liquids, you could go to gas-to-liquids, you could go to the ultra-deep ocean and Arctic regions, but these are all far more expensive and there is a ceiling to what the global economy can afford for energy. Roughly speaking, once you get to five to six percent of the global GDP being spent on oil, that’s about the ceiling. You cannot just assume that people will pay the price at higher and higher costs. For that reason, I do think we do have a boundary, we do have a limit to what is available with current technologies, in terms of supplementing supplies....The nature of the oil industry is such that it takes a long time to deliver additional capacity. And at the same time it’s becoming evident that the resources to deliver additional capacity…the resources are not there. To give you an analogy, yes we can put a man on the moon, we can put 10 men on the moon…can we put 10,000? There aren’t the resources. The oil industry is being pressed to deliver a huge amount of oil—we’re producing 85 million barrels a day, with forecasts going to 100-plus million barrels a day. So, overcome declines, add new capacity, and do this on a sustained basis at affordable prices, and that’s where the economics are breaking down. You don’t have the logistics, you don’t have the industry infrastructure, and the costs are climbing. We just witnessed that when you have semi-submersibles that are running you $500,000 to $600,000 a day to operate, you can’t afford cheap oil any more. That’s the reality. So the economics have broken down. It’s not a matter of you throw a little money and you get a lot of oil; it’s now you throw a lot of money and you get a little oil.....There is no national plan for Iraq to develop its resources. The postage stamp approach of every company takes a field and decides what to do with it doesn’t give you a national program, doesn’t give you an integrated process. If you add up all the capacities that are being talked about—7 to 8 million barrels a day—where is the natural gas going to come from to maintain pressure and deplete the reservoirs? These are fields that have been mature for a long time. So I think Iraq is doing a fantastic job at trying to sustain its current production. There are a lot of very skilled people there, very good engineers and professionals. I think they are very challenged; they have to rebuild a country, not just an industry. They need power, they need transportation, they need communication, and—more important than anything, probably—they need an organization. Iraq will probably come back up to 2.5 to 3 million barrels a day, perhaps 4 million; I think that would probably be the ceiling. That’s about as much as Iran produces....Iran is running into this predicament of needing to improve its recovery through gas injection to sustain capacity but not having access to its own domestic gas for lack of technology. And also they have a strong requirement for domestic gas in general. So ironically, while Iran has the world’s second-highest gas reserves—over 1,000 trillion cubic feet—they are not an exporter of gas; they are a net importer of gas, in fact they import a little from Turkmenistan. So this is the paradox of Iran: they claim 130 billion barrels of oil reserves, they claim over 1,000 trillion cubic feet of gas reserves but they are not able to produce more than 4 million barrels a day and they can’t even export gas. It’s a real tragedy in a sense."
Interview with Sadad al Husseini - Former exploration and production engineer at Saudi Aramco, Saudi Arabia's national oil company
Part 2—'A lot of Money = a Little Oil'
ASPO-USA, 12 October 2009

"Britain's ambitious policies to cut carbon dioxide in the fight against global warming are still not enough, the official climate change watchdog warns today in its first annual report. Even though the Government has created a detailed plan for transition to a low-carbon economy, a 'step change' is still needed in the pace of reducing carbon emissions, and in fact the rate should be more than doubled, says the Climate Change Committee. This will have to involve everything from a comprehensive national home insulation strategy to creating a fleet of 1.7 million electric cars with the infrastructure to support them – otherwise, says the committee, on current rates of progress, the "carbon budgets" to which the Government has committed itself are unlikely to be met....By most measures, Britain is doing well – it is the only country in the world to have a binding framework for getting its CO2 emissions down, established with considerable fanfare under last year's Climate Change Act. Yet this is far from enough, the committee says. Ministers are now legally committed to bringing down UK carbon emissions to 34 per cent below their 1990 level by 2020, by using three five-year-long budget periods where the reductions can be monitored. The Climate Change Committee – chaired by Lord Turner of Ecchinswell, who as Adair Turner was director general of the Confederation of British Industry – is the progress-chasing part of the process, and each year it will report publicly on how the Government is doing – and if necessary, deal out criticism which could be politically embarrassing. Its first annual report, placed before Parliament today, cannot yet assess progress, as precise CO2 emissions figures for 2008, the first year of the first budget period, are not yet available. However, the committee warns starkly that the current rate of reduction is inadequate to meet the Government's own targets – and says that it will have to be more than doubled."
Cars must be electric, says climate tsar
Independent, 12 October 2009

"America is not going to bleed its wealth importing fuel. Russia's grip on Europe's gas will weaken. Improvident Britain may avoid paralysing blackouts by mid-decade after all. The World Gas Conference in Buenos Aires last week was one of those events that shatter assumptions. Advances in technology for extracting gas from shale and methane beds have quickened dramatically, altering the global balance of energy faster than almost anybody expected.  Tony Hayward, BP's chief executive, said proven natural gas reserves around the world have risen to 1.2 trillion barrels of oil equivalent, enough for 60 years' supply – and rising fast. 'There has been a revolution in the gas fields of North America. Reserve estimates are rising sharply as technology unlocks unconventional resources,' he said. This is almost unknown to the public, despite the efforts of Nick Grealy at 'No Hot Air' who has been arguing for some time that Britain's shale reserves could replace declining North Sea output. Rune Bjornson from Norway's StatoilHydro said exploitable reserves are much greater than supposed just three years ago and may meet global gas needs for generations. 'The common wisdom was that unconventional gas was too difficult, too expensive and too demanding,' he said, according to Petroleum Economist. 'This has changed. If we ever doubted that gas was the fuel of the future – in many ways there's the answer.' The breakthrough has been to combine 3-D seismic imaging with new technologies to free "tight gas" by smashing rocks, known as hydro-fracturing or 'fracking' in the trade. The US is leading the charge. Operations in Pennsylvania and Texas have already been sufficient to cut US imports of liquefied natural gas (LGN) from Trinidad and Qatar to almost nil, with knock-on effects for the global gas market – and crude oil. It is one reason why spot prices for some LNG deliveries have dropped to 50pc of pipeline contracts.... The US Energy Department expects shale to meet half of US gas demand within 20 years, if not earlier. Projects are cranking up in eastern France and Poland. Exploration is under way in Australia, India and China. Texas A&M University said US methods could increase global gas reserves by nine times to 16,000 TCF (trillion cubic feet). Almost a quarter is in China but it may lack the water resources to harness the technology given the depletion of the North China water basin..... As for the US, we may soon be looking at an era when gas, wind and solar power, combined with a smarter grid and a switch to electric cars returns the country to near energy self-sufficiency. This has currency implications. If you strip out the energy deficit, America's vaulting savings rate may soon bring the current account back into surplus – and that is going to come at somebody else's expense, chiefly Japan, Germany and, up to a point, China. Shale gas is undoubtedly messy. Millions of gallons of water mixed with sand, hydrochloric acid and toxic chemicals are blasted at rocks. This is supposed to happen below the water basins but accidents have been common. Pennsylvania's eco-police have shut down a Cabot Oil & Gas operation after 8,000 gallons of chemicals spilled into a stream. Nor is it exactly green. Natural gas has much lower CO2 emissions than coal, even from shale – which is why the Sierra Club is backing it as the lesser of evils against "clean coal" (not yet a reality). The US Federal Energy Regulatory Commission said America may not need any new coal or nuclear plants 'ever' again. I am not qualified to judge where gas excitement crosses into hyperbole. I pass on the story because the claims of BP and Statoil are so extraordinary that we may need to rewrite the geo-strategy textbooks for the next half century."
Ambrose Evans-Pritchard - Energy crisis is postponed as new gas rescues the world
Daily Telegraph, 11 October 2009

"Britain faces a return to 1970s-style power blackouts and disruption to its electricity supplies within four years, the energy regulator warned yesterday. Ofgem raised the spectre of a return to the three-day week for British industry as the country scrambles to renovate its crumbling power infrastructure ahead of new EU pollution rules that will force the closure of a quarter of UK power stations by 2015. Alistair Buchanan, Ofgem’s chief executive, said: 'There could be a potential shortfall in the period 2013-18 ... Life might be pretty cold.' In extreme scenarios such as during periods of unusually harsh winter weather, Mr Buchanan said that Britain could be forced to switch off power supplies to large factories to conserve dwindling electricity supplies for households.... Speaking at the publication of Project Discovery, a report from Ofgem on the security of energy supplies, Mr Buchanan said that a failure to tackle the issue had left Britain more vulnerable to energy supply shocks than any other major country in Europe. Germany and France, he said, were 'way ahead of us' in terms of investing in new, lower-carbon power supplies, adding that only 'massive reductions' in demand achieved through energy savings could rescue consumers from swingeing increases in their energy bills of up to 60 per cent. Ofgem said that by 2020 Britain needed to spend between £95 billion and £200 billion on new wind farms, gas, nuclear and biomass power stations, as well as high-voltage transmission networks to ensure reliable supplies and meet tough targets to cut carbon emissions. But Jeremy Nicholson, of the Energy Intensive Users Group, which represents some of Britain’s biggest manufacturers, including Corus, the steelmaker, said Britain was entering 'very dangerous territory'. He warned that such major disruption presented a 'material threat to heavy industry' and added that manufacturers could be facing even bigger rises in their energy bills than consumers — as much as 120 per cent. Ed Miliband, Secretary of State for Energy and Climate Change, acknowledged the need for greater action."
Power cuts forecast to hit UK in four years
London Times, 10 October 2009

"Uranium, the key to nuclear power generation, is in short supply in India. The country’s reserves stand at 75,000 tons of low-grade ore, which requires processing before it becomes fuel for nuclear reactors. This ore contains between 0.03 to 0.2 percent of triuranium octoxide, or U3O8 – an impure mixture of uranium oxides obtained in the processing of uranium ore – as U-238, which is the non-fissionable isotope found in natural uranium. International mines have anywhere from 2 to 14 percent. Four mines in the Singhbhum district of Bihar state produce only 220 tons of uranium concentrate. In addition, 120 tons come from byproducts like tailings from phosphate, zinc and copper mines. India’s 17 operating reactors require 500 to 600 tons of uranium concentrate annually. Additional amounts are needed for its weapons program. Two more mines in Meghalaya and Karnataka state may begin operations in the next four years, boosting output to about 600 tons. This might be enough to feed the existing nuclear reactors, but not enough for the ambitious nuclear power program the government wants to implement. Generating 470,000 megawatts of nuclear energy by 2050, as envisaged by Prime Minister Manmohan Singh, will require huge amounts of uranium. This was a key reason for India to negotiate the Indo-U.S. nuclear deal and seek a waiver from the Nuclear Suppliers Group on the ban it faces on nuclear trade. Although the deal is settled, India still has to go through the international minefield of uranium-producing countries, which have a few hang-ups before they part with the ore. A major initiative by India’s Department of Atomic Energy is also in progress to locate new ore bodies in India. Miners will go as deep as 1,000 meters to mine the ore. If successful, this may save India valuable time in negotiating agreements and deals with foreign suppliers. As much as 100,000 tons of new ore is needed by India, but the chances of finding it in the country are slim. Therefore, it has to look at suppliers elsewhere. Australia has 24 percent of the world’s known uranium reserves of 5.5 million tons. It is followed by Kazakhstan with 17 percent, Russia and Canada with 10 percent each, South Africa and the United States with 7 percent each, Namibia, Brazil and Niger with 5 percent each, and 1 percent each for India, China, Mongolia and Tajikistan. The NSG tightly controls these supplies, to restrict unauthorized trade of this vital and dangerous commodity."
India’s quest for uranium
United Press International, 9 October 2009

"One quarter of China's booming emissions of climate warming gases are from its export trade to Europe and the United States, a report said on Friday, calling for a new way of calculating national carbon emissions. The report for the widely-respected government-funded Tyndall Centre for Climate Change Research by Tao Wang and Jim Watson said the current method of assessing national emissions was unfair to rapidly developing countries....The findings echo those of the New Economics Foundation which earlier this month in its ‘Chinadependence’ report accused the developed nations of ‘carbon laundering’ their economies. It said Britain among others was understating its carbon emissions because it in effect exported its smokestack industries to China in the 1990s and was now importing products it would have been making itself. ‘Because of the way that data on carbon emissions gets collected at the international level, this has the effect of 'carbon laundering' economies like those of Britain and the U.S.,’ said NEF director Andrew Simms."
Quarter of China's carbon emissions due to exports
Reuters, 9 October 2009

"The debate over exactly when we will reach 'peak oil' is irrelevant. No matter what new oil fields we discover, global oil production will start declining in 2030 at the very latest. That's the conclusion of the most comprehensive report to date on global oil production, published on 7 October by the UK Energy Research Centre. The report, which reviewed over 500 research studies, suggests that global oil production could peak any time from right now to as late as 2030. 'Either way, our research shows that the difference between even the most pessimistic and optimistic claims is just 15 to 20 years,' says Steve Sorrell, the report's lead author, who is based at Sussex University in the UK. This is a problem, says Sorrell, because 20 years isn't long enough for governments to prepare well-thought-out policies that would tackle the economic chaos likely to occur when oil production begins to decline. Research in 2005 by the US Department of Energy suggests that policies to reduce the demand for oil while developing large-scale alternatives will take at least two decades to bear fruit, he says. Global production of oil is declining at a rate of 4 per cent per year in existing oil fields and we have very little to replace it with, says Sorrell: 'If we want to maintain global oil production at today's level we would need to discover the equivalent of a new Saudi Arabia every 3 years.' Yet discoveries of new oil fields are in decline. Even the 'giant' Tiber field recently found by BP in the Gulf of Mexico 'will only serve to delay peak oil by a matter of days', he says. '"Of the 70,000 oil fields on Earth, just 100 giant fields account for 50 per cent of the oil we use,' says Sorrell. 'Most of these giant fields are quite old and past their peak of production, and we're not going to find many new ones.'"
Why the 'peak oil' debate is irrelevant
New Scientist, 8 October 2009

"The exact date of 'peak oil' - when the amount of oil being pumped out of the ground every day reaches its highest point before beginning an inexorable decline - has been hotly debated for decades. Environmentalists have tended to warn oil could run out at any moment, while oil companies insist there are plently more oil fields yet to be discovered. The most recent estimation from the International Energy Agency, that advises Governments around the world, said conventional oil would not peak until after 2030.  However an authoriative new study from the Government-funded UK Energy Research Council called this prediction 'at best optimistic and at worst implausible'. The peer-reviewed research looked at 500 studies from around the world and took into account the difficulty of accessing new oil fields as well as growing demand. It predicted oil will begin running out before 2030 and there is a 'significant risk' peak oil will be reached before 2020. 'In our view, forecasts which delay a peak in conventional oil production until after 2030 are at best optimistic and at worst implausible. And given the world's overwhelming dependence on oil and the time required to develop alternatives, 2030 isn't far away,' said the report's lead author Steve Sorrell. 'The concern is that rising oil prices will encourage the rapid development of carbon-intensive alternatives which will make it difficult or impossible to prevent dangerous climate change.' Robert Gross, Head of Technology and Policy Assessment at UKERC, said as soon as oil begins to run out it will make energy more expensive, sparking a knock on effect on industry and economies around the world. Petrol prices would rise and long distance travel become more expensive. 'The age of easy and cheap oil is coming to an end,' he said. 'It doesn't suddenly come to an end, obviously it's a gradual change, but we're moving away from easy and cheap oil to increasingly difficult and expensive oil. At the moment oil is around £44 ($70) per barrel after peaking at around £92 ($147) per barrel earlier in the year during the height of the economic crisis. Dr Gross said the spectre of peak oil should encourage Governments to invest in more energy-efficient vehicles such as electric cars, renewable energy like wind or solar and improving energy efficiency in industry and homes. But he said there was a risk that instead the world will start to look at even more intensive forms of fossil fuels, therefore producing more carbon emisions and causing 'catastrophic climate change'. Alternatives include heating tar sands to produce oil at huge cost both environmentally and financially. 'The danger is high oil prices push us into high carbon resources just as much as they might help push us towards renewables,' he said. 'The challenge for policy makers is to make sure, on a global scale, that that isn't the response to more difficult and expensive oil.' The world produces around 85 million barrels of oil every day. It is estimated this could rise to more than 100 million barrels per day before declining. Oil companies like BP claim billions more barrels are availabe in new oil fields discovered in the Gulf of Mexico. However Mr Sorrell said these new supplies are extremely difficult to access and will only delay peak oil by a few weeks or even days. Even if the new fields are exploited, he said the world needs to move away from oil in order to stop global warming. But Mr Sorrell said the UK Government had no contingency plans for oil peaking before 2020. 'If these problems are ignored and we do not make these changes ahead of time, we are heading for trouble,' he warned....The Department for Energy and Climate Change is currently considering the UKERC report. 'We are already well aware of the significant challenges for investment in future oil production and that there is a role for Governments to play in reducing demand for fossil fuels,' a spokesman said. 'Our climate change, energy efficiency and energy security policies outlined in the UK low carbon transition plan are not only reducing the UK’s carbon emissions, but are consistent with the need to reduce our use of fossil fuels.'"
Era of cheap, easy oil is over, warns study
Daily Telegraph, 8 October 2009
"Environmental activists claimed a major victory last night when plans for Britain’s first new coal-fired power station for 30 years were shelved after a sustained campaign. The announcement by E.ON that it would delay a decision on Kingsnorth for three years is a serious setback for the Government’s principal environmental policy of supporting the capture and storage of carbon emissions from coal plants. The delay also heightens the risk of power cuts after 2015, when EU rules will force Britain to close nine of its largest and most polluting power stations."
Green activists claim victory over coal power
London Times, 8 October 2009

"There is a 'significant risk' that global production of conventional oil could 'peak' and decline by 2020, a report has warned. The UK Energy Research Centre study says there is a consensus that the era of cheap oil is at an end. But it warns that most governments, including the UK's, exhibit little concern about oil depletion. The report's authors also state that the 10 largest oil producing fields in the world are all in decline.... Countries and companies are notoriously reticent about their oil reserves. But the report suggests the easy oil has already been found, and new reserves will become increasingly difficult and expensive to extract, and will not make up for the current major oil fields as they decline. It says: 'More than two-thirds of current crude oil production capacity may need to be replaced by 2030, simply to keep production constant. 'At best, this is likely to prove extremely challenging. This report does not contain new research, but is a review of data already available. But the authors say the risk presented by global oil depletion deserves much more serious attention by the research and policy communities. 'Much existing research focuses upon the economic and political threats to oil supply security and fails to either assess or to effectively integrate the risks presented by physical depletion,' they argue. 'This has meant that the probability and consequences of different outcomes has not been adequately assessed.' Despite the evidence, the report notes with some surprise that the UK government rarely mentions the issue in official publications."
Warning over global oil 'decline'
BBC Online, 8 October 2009

"Suncor Energy Inc. Chief Executive Officer Rick George said Alberta’s oil sands are increasingly important as a supplier of energy. 'As conventional oil worldwide becomes increasingly difficult to find, develop and more costly, the oil sands, the second-largest oil base in the world, will play a bigger and bigger role,' he said in a speech to the Economic Club of Canada in Toronto today. Oil prices, currently above $69 a barrel, will probably not rise as high as $100 before the end of the year, he told reporters after his speech. They may range from $60 to $75 until the global economy recovers, he added. He said demand for energy from India and China in particular 'remains relatively strong.' Led by George, Calgary-based Suncor completed its C$19.2 billion ($18.1 billion) acquisition of Petro-Canada in August, the biggest takeover for a Canadian oil company ever. Suncor has said it may shed natural-gas assets to focus on oil projects such as crude production from the tar sands and will save C$1 billion in capital spending and C$300 million in operational expenditures a year. Those savings may be even higher, George said today. The company is cutting 1,000 jobs as part of the reorganization. Suncor has announced the planned divestiture of 104 gas stations in Ontario."
Suncor Says Oil Sands Becoming Increasingly Important
Bloomberg, 7 October 2009

"The plan to de-dollarise the oil market, discussed both in public and in secret for at least two years and widely denied yesterday by the usual suspects – Saudi Arabia being, as expected, the first among them – reflects a growing resentment in the Middle East, Europe and in China at America's decades-long political as well as economic world dominance. Nowhere has this more symbolic importance than in the Middle East, where the United Arab Emirates alone holds $900bn (£566bn) of dollar reserves and where Saudi Arabia has been quietly co-ordinating its defence, armaments and oil policies with the Russians since 2007. This does not indicate a trade war with America – not yet – but Arab Gulf regimes have been growing increasingly restive at their economic as well as political dependence on Washington for many years. Of the $7.2 trillion in international reserves, $2.1trn is held by Arab countries – China holds about $2.3trn – and the nations interested in moving away from dollar-trading in oil are believed to hold over 80 per cent of international dollar reserves. Saudi Arabia's denials of any such ambitions were regarded by Arab bankers as a normal part of Gulf politics. The Saudis, of course, managed to deny that Iraq had invaded Kuwait in 1990 – even when Saddam Hussein's legions stood along the Saudi frontier, until the US broadcast the news of Iraq's aggression to the world. Saudi bankers are well aware that in nine years' time – the current timeframe for a transition away from the dollar in oil trading to Japanese and Chinese currencies, the euro, gold and a possible new Gulf currency – China will have doubled its national income to $10trn (assuming a growth rate of 7 per cent), at which point the US might hold no more than 20 per cent of the world's gross income. Such massive financial movements, encouraged by the de-dollarisation of oil, will have enormous political effects in the Middle East, especially if economic superpower rivalry between America and China comes to dominate the Arab world."
A financial revolution with profound political implications
Independent, 7 October 2009

"OPEC member Kuwait's plan to raise its oil output capacity to four million barrels per day by 2020 has been delayed by 10 years on manpower shortage, the emirate's oil minister said on Tuesday. 'We have decided to move the target date for raising output capacity to four million bpd to 2030 instead of 2020,' Sheikh Ahmad Abdullah al-Sabah told reporters. The minister cited lack of sufficient manpower as the main reason, adding that 'to achieve that capacity we need foreign oil majors.' Opposition MPs have for years blocked a government project to seek the assistance of international oil companies to raise production at its northern oil fields. The minister declined to answer questions on the fate of the project and if the government still wants to go ahead with it. Kuwait, OPEC's fourth-largest producer, announced in March it had raised its output capacity to three million bpd. The minister said on Tuesday the emirate still has the same capacity and its current production is 2.2 million bpd according to OPEC quota. In December, former oil minister Mohammad al-Olaim said Kuwait may delay some planned investments in the sector due to plunging crude prices but will keep its main projects. The original plan had also stipulated to raise output capacity to 3.5 million bpd in 2010 but it now looks that this target will not be met."
Kuwait delays oil output capacity boost to 2030
Agence France Presse, 6 October 2010

"The U.S. Energy Information Administration on Tuesday raised its outlook for world oil demand at the end of 2009, as the economies of China and other Asian countries begin to improve. In its new monthly energy forecast, the agency said it now expects an increase of 410,000 barrels per day in the fourth quarter of 2009 from the same period a year ago. Its previous forecast estimated just a 240,000 bpd rise in fourth-quarter demand. World petroleum demand is still expected to drop overall in 2009 to 83.67 million bpd, well below the 2008 level of 85.46 million bpd. The EIA estimates world oil consumption will rebound in 2010, climbing by 1.1 million bpd compared with 2009. Last month the agency had projected a smaller increase of 910,000 bpd. 'Sustained economic growth in China and signs of a turnaround in other Asian countries continue to fuel expectations of a global recovery in world oil consumption,' the EIA said....In the United States, the world's largest petroleum consumer, oil demand is expected to fall 330,000 bpd in the fourth quarter from a year earlier. U.S. oil consumption in 2010 was revised upward, with the EIA now expecting a 320,000 bpd increase in demand compared with 2009. On the supply side, the EIA raised its forecast for OPEC crude oil production next year to 29.19 million bpd from its prior estimate of 28.89 million bpd. 'Oil inventories remain high and EIA expects oil production by the Organization of Petroleum Exporting Countries to increase as well,' the agency said. The EIA also raised its projection for oil output from non-OPEC countries in 2010 to 50.26 million bpd from its previous estimate of 50.19 million bpd. 'Over the forecast period, higher output from Brazil, the United States, Azerbaijan, Kazakhstan and Canada should offset falling production in Mexico and the North Sea,' the agency said. "
U.S. EIA raises 2010 world oil demand forecast
Reuters, 6 October 2009

"The dollar has fallen following a report that Gulf states are in secret talks to replace the greenback as the main currency for the trading of oil. Nations including Saudi Arabia and the United Arab Emirates were speaking to Russia, China, Japan and France, said the UK's Independent newspaper. However, Saudi Arabia subsequently said the report was 'absolutely inaccurate'....The Independent's report said the Gulf states wished to replace the dollar over a nine-year period with a basket of currencies including the yen, China's yuan, the euro, and the new unified currency planned for nations in the Gulf Co-operation Council, which include Saudi Arabia, Kuwait, the United Arab Emirates and Qatar. Kuwait also denied the article's claim. 'We have never discussed or proposed this,' said Kuwaiti Oil Minister Sheikh Ahmad Abdullah al-Sabah. China's central bank suggested in March that the dollar should be replaced by a new global reserve currency run by the International Monetary Fund."
Dollar falls on oil plan report
BBC Online, 6 October 2009
"In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar. Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars. The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years....The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China's former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. 'Bilateral quarrels and clashes are unavoidable,' he told the Asia and Africa Review. 'We cannot lower vigilance against hostility in the Middle East over energy interests and security.'....This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil – yet again turning the region's conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves. The decline of American economic power linked to the current global recession was implicitly acknowledged by the World Bank president Robert Zoellick. 'One of the legacies of this crisis may be a recognition of changed economic power relations,' he said in Istanbul ahead of meetings this week of the IMF and World Bank. But it is China's extraordinary new financial power – along with past anger among oil-producing and oil-consuming nations at America's power to interfere in the international financial system – which has prompted the latest discussions involving the Gulf states. Brazil has shown interest in collaborating in non-dollar oil payments, along with India. Indeed, China appears to be the most enthusiastic of all the financial powers involved, not least because of its enormous trade with the Middle East. China imports 60 per cent of its oil, much of it from the Middle East and Russia. The Chinese have oil production concessions in Iraq – blocked by the US until this year – and since 2008 have held an $8bn agreement with Iran to develop refining capacity and gas resources. China has oil deals in Sudan (where it has substituted for US interests) and has been negotiating for oil concessions with Libya, where all such contracts are joint ventures. Furthermore, Chinese exports to the region now account for no fewer than 10 per cent of the imports of every country in the Middle East, including a huge range of products from cars to weapon systems, food, clothes, even dolls. In a clear sign of China's growing financial muscle, the president of the European Central Bank, Jean-Claude Trichet, yesterday pleaded with Beijing to let the yuan appreciate against a sliding dollar and, by extension, loosen China's reliance on US monetary policy, to help rebalance the world economy and ease upward pressure on the euro."
The demise of the dollar
The Independent, 6 October 2009

"Gold prices will hit $1,500 an ounce in 2011 when oil prices move back above $100 a barrel as emerging market growth creates shortages, Bank of America Merrill Lynch said on Monday. 'For the world economy to resume growth of 5 percent, commodity supplies must expand by a similar rate,' said Francisco Blanch, head of global commodity research at the U.S. bank. 'With emerging markets likely to lead the global recovery, too much money chasing too few barrels could bring another spike in oil prices.' Investors use gold as a hedge against inflation, which erodes wealth and is often triggered by rising oil prices."
Gold to track oil, hit $1,500/oz in 2011
Reuters, 5 October 2009

"Global oil supplies are indeed set to peak within a few years, and no, that is not bullish for oil. Quite the contrary—it will spell the end of the 'oil age.' That’s the take from Deutsche Bank’s new report, 'The Peak Oil Market.' In a nutshell: The oil industry chronically under invests in finding new supplies, exemplified both by Big Oil’s recent love of share buybacks and under-investment by big oil-producing nations. That spells a looming supply crunch. That will send oil to $175 a barrel by 2016—and will simultaneously put the final nail in oil’s coffin and send prices plummeting back to $70 by 2030. That’s because there’s an even more important 'peak' moment on the horizon: A global peak in oil demand. That has already begun in the world’s biggest oil-consuming nation, Deutsche Bank notes.... The big driver? The coming-of-age of electric and hybrid vehicles, which promise massive fuel-economy gains for short-hop commuting but which so far have not been economic. Deutsche Bank expects the electric car to become a truly 'disruptive technology' which takes off around the world, sending demand for gasoline into an 'inexorable and accelerating decline.' In 2020, the bank expects electric and hybrid vehicles to account for 25% of new car sales—in both the U.S. and China. “We expect [electric propulsion] will reverse the dynamics of world oil demand, and spell the end of the oil age,' the bank writes. But won’t cheaper oil in the future just lead to a revival in oil demand? That’s what’s happened in every other cycle. Au contraire, says the bank: Just as the explosion of digital cameras made the cost of film irrelevant, the growth of electric cars will make the price of oil (and gasoline) all but irrelevant for transportation. In a report filled with interesting tidbits, one in particular stands out: The cost of the Iraq war at the pump. Deutsche Bank figures the cost of the war at $1.5 trillion. Amortized over 20 years, that works out to $75 billion a year. 'If the US government taxed US gasoline consumers purely to reflect the financial cost of the war in Iraq, gasoline prices should be some 54 cents per gallon higher,' the report notes."
Peak Oil: The End Of the Oil Age is Near, Deutsche Bank Says
Wall St Journal (Blog), 5 October 2009

"Just five hours' worth of gas storage capacity will be built in the UK over the next two years, even though gas imports this winter are forecast to reach record levels. The energy minister Lord Hunt admitted in a parliamentary answer last week that only a tiny fraction of capacity will be added to the 16 days' worth of average supply now available. The new storage, which will come into operation by the end of the year at the Aldburgh site in Yorkshire, amounts to just 0.06bn cubic metres, or just over five hours' worth, compared to the 4.34bn cubic metres already in existence. No additional capacity beyond this is forecast to come on stream until April 2011 at the earliest."
Gas storage capacity will only grow by tiny fraction, minister admits
Reuters, 4 October 2009

"Competition for resources in the Arctic Circle could provoke conflict between Russia and Nato, a newly appointed commander at the alliance warned yesterday. Russia has recently been aggressive in its pursuit of claims to parts of the region and in February sent a submarine to the floor of the sea symbolically to plant a Russian flag. Admiral James Stavridis said that military activity and trade routes would also be potential sources of competition around the polar cap. Speaking at the Royal United Services Institute in London on Nato’s future direction, Admiral Stavridis, Supreme Allied Commander for Europe, predicted that relations with Russia will dominate thinking at the alliance....His assessment comes after warnings from Anders Fogh Rasmussen, the Nato Secretary-General, who said this week that climate change had “potentially huge security implications” for Nato. The thinning ice cap is opening up a new Northwest Passage trade route, while it is estimatedthat previously inaccessible oil worth $90 billion (£56 billion) lies beneath ice in the Arctic Circle."
Nato commander warns of conflict with Russia in Arctic Circle
London Times, 3 October 2009
"Living standards in Britain and other rich countries must fall sharply over the next decade if the world is to avoid catastrophic global warming, according to a leading climate research centre. Consumption of energy-intensive goods and services should be cut and remain capped until low-carbon alternatives are available, said the Tyndall Centre for Climate Change Research. The study says that Britain’s carbon dioxide emissions need to fall twice as fast as planned by the Government. It concludes that global greenhouse gas emissions are rising much faster than previously thought. It says that Britain should commit to making all energy, including for electricity, heating and cars, zero-carbon by 2025, at least 25 years earlier than planned. The centre, a partnership of seven universities including Oxford, Cambridge and Manchester, says that the economies of developed nations will have to shrink and consumption of almost all types of goods will have to fall ‘in the short to medium term’. Speaking to The Times, Professor Kevin Anderson, the centre’s director, said: ‘The wealthier parts of the world, including Britain, will have to seriously consider reducing their levels of consumption over the next 10-15 years while we put in place low-carbon technologies. ‘That may mean having only one car per household, a smaller fridge, buying fewer clothes and electronic goods and curtailing the number of weekend breaks that we have. ‘It’s a very uncomfortable message but we need a planned economic recession. Economic growth is currently incompatible with reductions in absolute emissions.’…. Professor David MacKay, the newly appointed chief scientist for the Department of Energy and Climate Change, said that government figures claiming Britain had cut emissions by 21 per cent since 1990 were an ‘illusion’. He said that the cut had been achieved largely because Britain had exported much of its manufacturing overseas. The figures did not include emissions from goods Britain imported from China and other countries. "
Rich countries 'must slash living standards' to fight climate change
London Times, 2 October 2009

"China's Communist regime is celebrating its 60th birthday this week with a massive parade in Beijing, and another big play for a greater share of the global resource pie. Sovereign wealth fund China Investment Corp. sealed a deal yesterday to acquire an 11-per-cent stake in KazMunaiGas Exploration and Production, Kazakhstan's second-largest oil producer. Also this week, the Nigerian government confirmed that government-controlled China National Offshore Oil Corp. has made a pitch to buy up to six billion barrels of Nigeria's crude oil reserves in a deal that could be worth as much as $30-billion (U.S.)."
China's birthday present: More resources
Globe & Mail, 1 October 2009

"Scientists in the North-East have developed groundbreaking diamond-driven technology, capable of making renewable energy affordable on a mass scale for the first time. Evince Technology Ltd, based in the Printable Electronics Technology Centre, NetPark, Sedgefield, has developed a diode capable of converting electricity, including that from wind turbines and photovoltaics more simply and cheaply than existing devices. At present, electricity has to be converted using numerous silicon devices, each able to take only 3,300volts, and transformers. But the five pence-sized diode developed by Evince only needs a single diamond strip, grown in the lab, to control 15,000volts, the level of voltage coming from the National Grid. Renewable energy sources, such as photovoltaics – power from the sun, wind power and tidal power – are more difficult and expensive than traditional power sources to put into the national grid because the amount of power they create fluctuates. Dr Gareth Taylor, Evince Technology’s chief executive , said: 'What you find with renewables is that they don’t generate power in a way that is designed to go straight into the grid, the power fluctuates. 'Presently you need a box of electronics with these big silicon transistors and you need lots of them to control the power. 'Our technology replaces a lot of those devices with one device and that drives the cost down.'”
Affordable energy is driven by diamond technology
Northern Echo, 1 October 2009
"Chinese sovereign wealth fund China Investment Corp (CIC), fresh from a series of investments
in the global commodities sector, said on Wednesday it had purchased a stake in a Kazakhstan oil and gas company. CIC said it paid $939 million for about 11 percent of the Global Depositary Receipts (GDRs) of JSC KazMunaiGas Exploration and Production RDGZ.KZ (KMGq.L) through its wholly owned subsidiary, Fullbloom Investment Corporation. China's top oil and gas firm CNPC had 16 projects in central Asia and Russia and top refiner Sinopec Group had 8, as of the end of 2007, according to a report by CNPC.
The following are some of the investments or proposed dealsmade by China firms in central Asia in recent years...."
FACTBOX-China's energy ties with central Asia
Reuters, 30 September 2009
"At the moment the UK is committed to cutting greenhouse gases by a third by 2020. However a new report from the Tyndall Centre for Climate Change Research said these targets are inadequate to keep global warming below two degrees C above pre-industrial levels. The report says the only way to avoid going beyond the dangerous tipping point is to double the target to 70 per cent by 2020. This would mean reducing the size of the economy through a 'planned recession'. Kevin Anderson, director of the research body, said the building of new airports, petrol cars and dirty coal-fired power stations will have to be halted in the UK until new technology provides an alternative to burning fossil fuels. 'To meet [Government] targets of not exceeding two degrees C, there would have to be a moratorium on airport expansion, stringent measures on the type of vehicle being used and a rapid transition to low carbon technology,' he said."
'Planned recession' could avoid catastrophic climate change
Daily Telegraph, 30 September 2009

"India announced the world’s boldest nuclear power development plan yesterday, saying that it could boost its atomic capacity by 12,000 per cent by 2050 to end crippling power shortages while limiting carbon emissions. Manmohan Singh, the Prime Minister, predicted that India could produce 470 gigawatts of nuclear power by 2050, compared with the 3.8GW currently produced by its 17 reactors. India’s target is almost five times the current nuclear power capacity of the United States — the world’s biggest producer with 100GW, according to the International Atomic Energy Agency (IAEA). It far outstrips predicted US nuclear capacity in 2050 as well as China’s plans — previously the world’s most ambitious — to increase the power generated by its reactors from the current 9GW to about 300GW by that year."
India promises 12,000% boost in nuclear capacity by 2050
London Times, 30 September 2009

"Russia's Gazprom (GAZP.MM) will cut gas output in 2009 by 13.8 percent to the lowest in history on low demand at home and in Europe and much lower demand in the former Soviet Union, a newspaper reported on Wednesday. The world's largest gas producer, which supplies a quarter of Europe's gas needs, will produce 474 billion cubic metres (bcm) in 2009 with exports to Europe expected to fall by 10 percent to 142.5 bcm, Vedomosti business daily said, citing Gazprom documents. The company has previously only given a range of expected production falls in 2009 -- saying it could fall as much as 18 percent....Gazprom has previously said its investment programme for 2009 will fall by a quarter from the initial plan to around 760 billion roubles and Vedomosti said every major project will undergo a cut in investment this year. It will affect gas projects on the Yamal peninsula, which will see investment slashed by a third to 147 billion roubles. The Prirazlomnoye field on the Kara Sea and Shtokman on the Barents Sea will have investment halved to 10.8 billion and 13 billion respectively."
Gazprom to cut 2009 gas output to all-time low
Reuters, 30 September 2009

"Don't look for Iran to throw up the white flag anytime soon. The Obama administration is scrambling to tighten trade sanctions against Iran after the disclosure last week that Tehran was hiding a heavily fortified facility that many believe is designed to make material for nuclear weapons. But the kind of sanctions that would really hit Iran's economy - sanctions against its energy industry - are thought to be off the table because China and other nations are too reliant on Iran's oil. 'They look to Iran as a major source of future oil supplies,' said James Placke, a senior associate at Cambridge Energy Research Associates who specializes in the Middle East. 'They'd have to go through a substantial policy reversal, and I'd be surprised if they did that.' The United States and its allies can tighten sanctions all they want - The United States already has extensive sanctions against Tehran. But without the Chinese on board sanctions don't have the official weight of the United Nations Security Council, and are thus taken less seriously by the world community."
Chinese oil demand fueling Iranian defiance
CNN, 30 September 2009

"Greenhouse gas emissions created by Britons are probably twice as bad as figures suggest, says the government's new chief energy scientist.   Professor David MacKay told the BBC that reductions in carbon dioxide emissions since 1990 are 'an illusion'. 'Our energy footprint has decreased over the last few decades and that's largely because we've exported our industry,' he said. Developing countries now made the goods that Britain buys, he added. He was speaking unofficially in a previously recorded interview, but his comments will increase pressure on the UK to improve its offer of emissions cuts at the upcoming climate change talks. 'Other countries make stuff for us so we have naughty, naughty China and India out of control with rising emissions but it's because they are making our stuff for us now,' he said. 'It's been estimated by Dieter Helm from the University of Oxford that roughly half of our energy footprint actually lives overseas so our true footprint is twice as big as it looks on paper.' Prof Helm's paper suggests if the UK counted 'embedded' emissions, its total pollution would have gone up not down..... Setting a baseline of 1990 for emissions cuts allowed the UK to cut emissions without trying because 1990 was a peak of coal burning in Britain....Prof Helm's paper says: 'If carbon outsourcing is factored back in, the UK's impressive emissions cuts over the past two decades don't look so impressive anymore. 'Rather than falling by over 15% since 1990, they actually rose by around 19%. And even this is flattering, since the UK closed most of its coal industry in the 1990s for reasons unrelated to climate change. 'No doubt, recalculating the figures for other European countries and the US would reveal a similar pattern.' It is consumption and not production that matters, according to Prof Helm."
Britons creating 'more emissions'
BBC Online, 30 September 2009

"China’s one-child rule had resulted in a sharp decline in population growth but its CO2 emissions had risen very rapidly — 44.5 per cent of the growth in global emissions — largely because of the increasing number of Chinese enjoying Western levels of consumption… The difference in emissions levels between a rich Westerner and a poor African was illustrated in a study this month by the New Economics Foundation. It found that by 7pm on January 4, a typical person in Britain would have generated the same amount of carbon emissions that someone in Tanzania would be responsible for in the whole year. A US citizen would reach the same point by 4am on January 2."
Third World population controls won't save climate, study claims
London Times, 29 September 2009

"Offshore capital expenditure is forecast to increase from last year's $260 billion to $360 billion by 2013 with the long-term outlook for the industry remaining bullish, market consultants Douglas Westwood said today. 'Leading indicators have been improving since the beginning of the year; our view is that offshore expenditure will grow,' Steve Robertson, the director of Douglas Westwood, told the Trends in the Offshore Drilling Industry conference in London. 'From 2011 onwards, delayed projects will come back into the market.' Robertson said deep-water drilling will see particularly strong demand growth. 'There will be increasing reliance on deep-water drilling for supply,' he said, adding that the company forecast around 12% of total global demand will be supplied by deep-water drilling by 2015. Robertson said demand from China being a key driver for oil demand fundamentals remaining strong. 'If China follows Korea’s path - as it has largely to date - oil demand will more than double in the next decade,' he added. Robertson questioned whether supply could meet this demand, with 66 out of 99 producing countries having reached their peak production by 2008. 'Peak oil is not a myth or a scare tactic, in our view it is very much a reality,' he said."
'Brighter days ahead offshore'
Upstreamonline, 29 September 2009

"The U.S. government on Tuesday revised down U.S. oil demand in July to 4 percent below year-ago levels as the struggling economy sent petroleum consumption to the lowest level for the month in 13 years. Oil demand in July was 133,000 barrels per day (bpd) less than the Energy Information Administration previously estimated at a revised 18.771 million bpd, the lowest since 1996. That's down 786,000 bpd from a year earlier when demand was 19.557 million bpd. The EIA report appears to contradict other recent government data that suggest the U.S. economy is on the road to recovery."
U.S. July oil demand lowest in 13 years: Govt
London, 29 September 2009

"At a time of such great challenge for America, no single issue is as fundamental to our future as energy. America’s dependence on oil is one of the most serious threats that our nation has faced. It bankrolls dictators, pays for nuclear proliferation and funds both sides of our struggle against terrorism. It puts the American people at the mercy of shifting gas prices, stifles innovation, and sets back our ability to compete. These urgent dangers to our national and economic security are compounded by the long-term threat of climate change, which, if left unchecked, could result in violent conflict, terrible storms, shrinking coastlines, and irreversible catastrophe. These are the facts, and they are well-known to the American people. After all, there is nothing new about these warnings. Presidents have been sounding the alarm about energy dependence for decades....Today I'm announcing the first steps on our journey toward energy independence, as we develop new energy, set new fuel efficiency standards and address greenhouse gas emissions."
President Barack Obama, Speech At The Whitehouse
Washington Post, 26 January 2009

"I’ve been tracking the number of projects, globally, for a long time both in the Middle East and elsewhere—Russia, Brazil, west coast of Africa, and others. A lot of this information is in the public domain, so there is no mystery there. The International Energy Agency recently reported on the same numbers. The bottom line is that there are not enough projects. There is not enough new capacity coming on line, within say the next five to six years, to make up for global declines. And that’s assuming a very moderate level of declines—6% to 6.5% for non-OPEC, perhaps a 3.5% to 4% decline rate for OPEC. Even at these modest decline rates, we are basically going to see a shortage of capacity within two to three years. We’re being lulled by this current excess capacity, which has more to do with lower demand than anything to do with supply. So we do have a problem in the near term. In the longer term it’s even worse because in the longer term the lead time to discover, develop and put on line production runs into 10 years. And there isn’t enough being done in the long term as well. So it’s both a short and a long-term problem....Saudi Arabia has a very credible and professional record in terms of declaring capacity and meeting its production targets. When the Kingdom announced a target of 12.5 million barrels of capacity, they actually committed funds to develop that capacity and we’ve seen them now commissioning those: 250,000 additional barrels in Shaybah; 1.2 million barrels in Khurais; 500,000 in Khursaniyah; 900,000 coming on stream in a couple of years in Manifa. So these are real projects and real capacities. I don’t think there is an issue that Saudi Arabia can deliver the oil it says it can deliver. The question is, what about the rest of the world? Is the rest of the world able to make up the difference? If we’re looking at 85 to 90 million barrels a day, and Saudi Arabia delivers 12.5 million, who’s going to deliver the rest and how much effort is going into that? And with decline rates of 7% to 8%, that’s four or five million barrels a year of net new capacity that has to come from new projects. So that’s where the challenge is. I don’t think the problem is Saudi Arabia. I think the problem is the rest of the world....if you look at published information—for example, British Petroleum’s annual statistical report—it very clearly shows that from 2003 forward, oil production has hardly increased. So the information is there. If you look at some of the advertising that Chevron has been putting out for years now, they clearly say we’re half-way through the world’s reserves. The information is there. The facts are there. Oil prices did not jump four-fold over a three- or four-year period for any reason other than a shortage of supply. Yes, there may have been some recent volatility in 2008, but the price trend started climbing way back in 2002-2003....This is not going to get any better. This is going to get worse because you have population growth all over the world, you have a standard of living that is improving all over the world, you have aspirations across the globe for a better quality of life, and people want energy, so it’s actually important to talk about the facts and come up with solutions rather than act as if these issues don’t exist and then wait for some solution to materialize out of nowhere....I think it’s very important to understand the difference between conventional oil projects and unconventional oil projects—let’s say, the extra-heavy crudes. The IEA put out their report in 2008 on the long term. They listed a whole lot of projects. If you look at the conventional oil projects, which I have, and plot the cumulative capacity against cumulative cost, what you come up with is $30,000 to $32,000 per barrel of capacity for conventional oil. That’s for projects coming on-stream between 2008 and 2015. If you look at the unconventional—that’s the Canadian extra-heavy, and I included two Qatari gas-to-liquids projects—the cost per barrel of capacity is $92,000 per barrel. It’s three times the cost of conventional oil. That means that if you want 100,000 barrels of unconventional oil (syncrude), you’ve got to invest $9 billion. And those are just at current costs. For the conventional oil, when you can find it, it’s $3 billion per 100,000 barrels/day. But even the conventional has gotten very expensive. If you look at the Tengiz and the Kashagans, they’re running $40 billion to $50 billion to get 500,000 to 600,000 barrels of oil/day. So everything is getting far more expensive and slower to develop. I think, yes, we will have synthetic crude oil. The Germans ran their World War II machine on coal-to-liquids, but that was a very expensive solution; we can’t replace 80 million barrels a day with coal-to-liquids. So they will be important supplements but not replacements....There no doubt that the energy that goes into extracting extra-heavy crudes—be it in the form of fuels such as natural gas to heat the bitumens to get them to flow, be it in terms of the surface process of mining two tons of sand for one barrel of oil, then the cracking and refining to convert them to synthetic crudes—these are very high penalties. The same thing goes with gas-to-liquids; basically it takes one-third of the gas to deliver the other two-thirds as a liquid. So these have diminishing returns. Yes, you will be able to deliver, I think everybody forecasts 4 or 5 million a day from unconventional crudes, maybe going to 8 or even 10 million barrels by 2030. But that 8 million a day is only 10 percent of total consumption. It’s not a solution....we have had discoveries, they are important, they are slow to evolve. If the Tupi discovery, which happened a couple of years ago, is going to take until 2017 or 2018 to be online, that’s a long time to wait. What’s the target? A million barrels a day. Declines will have overcome that rate a long time earlier, certainly in Brazil itself."
Interview with Sadad al Husseini, former production engineer with Saudi state oil company
'The Facts Are There'
ASPO-USA, 28 September 2009

"Mexican oil production fell again in August but state oil company Pemex said it had some early indications the rapid fall in output at its giant Cantarell field may be slowing. Mexico pumped 2.542 million bpd in August, a decline of 7.9 percent on a year ago but production at Cantarell edged higher for the first time in more than two years. A slowdown in the decline at Cantarell would be welcome news for Mexico, which faces a possible downgrade of its credit rating amid concerns the government is overly dependent on revenues from the declining oil industry. However, a Pemex spokesman urged caution, saying the company needed more time before it could be sure that the field had stabilized...The Cantarell unit, which includes the giant field along with several nearby satellite reservoirs, produced 650,154 bpd in August, up from 646,557 bpd in July, according to the energy ministry. Output at Cantarell was 34 percent below what it yielded in August 2008. Mexican President Felipe Calderon fired Pemex's chief executive earlier this month in part due to frustration over the company's repeated failure to meet production goals. The government abandoned its forecast that oil production would rise to 3 million bpd by 2012 earlier this month, projecting in its budget proposal that output would fall to 2.5 million bpd in 2010 and remain at that level for several years. A legacy of years of underinvestment in exploration means Pemex has few options to quickly replace the production capacity lost at Cantarell.... In the medium term Pemex is focusing on developing the unconventional Chicontepec reserve, a huge onshore area where billions of barrels of crude are locked in complex rock formations that do not allow oil to flow easily. However output at Chicontepec remains stagnant despite Pemex executives projections earlier this year that August would be the beginning of an upward trend in production from the area.... Chincontepec produced 30,706 bpd in August, down from 32,405 bpd in July. The area produced around 29,000 bpd at the end of 2008 and Pemex has forecast that Chicontepec production will reach nearly 80,000 bpd by the end of this year. Analysts are skeptical that Pemex has the technical capacity to develop Chicontepec, which requires hundreds of wells to be drilled every year."
Mexico's Cantarell oil field may be stablizing
Reuters, 25 September 2009

"A new study by research firm IHS Herold illustrates why there are fears of a supply crunch: oil is getting much more expensive to find, but investment in finding new oil is falling this year. Exploration spending by listed oil companies rose 21 per cent and development spending 23 per cent in 2008 - but total reserves fell 3 per cent, according to the study. Much of this was due to some existing reserves becoming uneconomic: there was a a 5.2 billion barrel decline in revisions 'due to the steep drop in commodity prices'. It’s not the first time total reserves have fallen, but it makes us wonder what this year, when capital investment is set to fall further, will bring. Meanwhile the average cost of replacing a barrel of oil equivalent rose 70 per cent to $23.44 in 2008....[The report says] 'Over the last three years, investment of more than $750 billion in development capital has resulted in no change in crude oil reserves and production. Recent deepwater discoveries provide hope that future results may be better, but meaningful output from those new projects will be more than five years into the future. Aside from OPEC curtailments, the world has virtually no excess capacity to meet demand growth that could result from synchronous economic expansions. Crude markets could tighten appreciably in a few years time, but current prices seem to be prematurely high.'"
Finding new oil gets ever more expensive
Financial Times (Blog), 23 September 2009

"Vladimir Putin played host to a dozen energy giants in a remote Siberian oil town yesterday, hoping to secure their help with developing the colossal gas reserves of the Yamal Peninsula. Promising friendship and tax breaks, the Russian Prime Minister and former President told chief executives of some of the world’s biggest energy companies, including Royal Dutch Shell, Total, of France, and E.ON, of Germany, that he was inviting them to be long-term partners in developing Yamal. The remote Yamalo-Nenets region contains one of the world’s biggest gas reserves, estimated by Gazprom at 16 trillion cubic metres — ten times the size of the UK’s remaining gas reserves. Mr Putin’s warm welcome to the foreign oil companies was in marked contrast to the Kremlin’s concern only a year ago about conserving Russia’s strategic resources for Russians. Last year, in his final act as President, Mr Putin signed a law restricting foreign investment in 42 sectors, including energy. However, the recession is believed to have focused attention in the Kremlin on the huge cost of keeping the gas flowing. Hosting yesterday’s meeting with the foreign energy companies in Salekhard, the capital of Yamal, Mr Putin said: 'We would like you to consider yourselves participants in our undertaking. The main condition from our side is that partnerships should be stable and long-term.' Also attending the Arctic meeting were ExxonMobil and ConocoPhillips, Mitsui and Mitsubishi, of Japan, Statoil, of Norway, ENI, of Italy, GDF-Suez, of France, Petronas, of Malaysia, and KOGAS, of Korea. Mr Putin indicated that favourable fiscal treatment might be on offer. Russia’s attitude towards foreign oil and gas investors has in the past been less welcoming. In 2006 Shell was forced to give up control of Sakhalin, a big liquefied natural gas project in Eastern Siberia, ceding half of its interest to Gazprom after a dispute over costs and alleged environmental violations. TNK-BP, the joint venture that holds BP’s Russian interests, was also forced to hand over Kovykta, another giant gasfield, to Gazprom. However, in June, Shell appeared to have found its way back into the Kremlin’s favour. The Dutch oil company was invited by Mr Putin to take part in a further development of Sakhalin while in the same month Total was given the chance to join Novatek, a Russian gas company, to develop a gas prospect in Yamal costing $1 billion. Christopher Granville, a Russia analyst at Trusted Sources, the consultancy, said that project management as well as cash was behind the Kremlin’s change of heart. 'There is a growing understanding that the ability to carry out major projects is something that these [foreign] companies can provide,' he said. Gazprom is already investing huge resources developing Bovanenkovskoye, a huge gasfield in Yamal, and an 1,100-kilometre pipeline linking it to Gazprom’s network of pipelines bringing gas into Europe. Gazprom is stretched financially with heavy borrowings and diminished cash flow because of the fall in gas prices in Europe. Last week Yuri Trutnev, the Russian Natural Resources Minister, complained that foreign investment rules were impeding Russia’s resource development. He accused Gazprom and Rosneft, the only two Russian companies engaged in offshore exploration, of underinvestment. Meanwhile, foreign investors have complained that the resource threshold above which foreigners must relinquish control is a meagre 70 million tonnes of oil and 50 billion cubic metres of gas. Too low, they say, to be worth the effort."
Putin thaws on foreign firms as gasfield proves too big too handle
London Times, 25 September 2009

"The government has today formally launched its Marine Renewables Proving Fund, inviting wave and tidal energy developers to bid for £22 million in new grants designed to accelerate the commercial development of marine energy technologies. The fund, which was announced in July as part of the government's renewable energy strategy and will be managed by the Carbon Trust, aims to help marine energy developers get their technologies to a stage where they can be installed, at which point they can apply for further financial assistance from the Marine Renewables Deployment Fund. The government faced criticism last month from Conservative shadow energy and climate change secretary Greg Clark, after it emerged that none of the £50 million Deployment Fund had yet been distributed. Clark said that the government was guilty of providing over 20 times more subsidies to the coal industry than it has delivered to the marine energy sector."
UK launches £22m wave energy fund
Guardian, 23 September 2009

"British alternative energy company Ceres Power moved a step closer to bringing its 'green' fuel-cell boiler to the mass market on Wednesday by signing an outsourcing deal with a Dutch company. Heating appliances maker Daalderop will make the boiler assembly, the white box that houses Ceres's fuel cells parts, in volume, thus saving Ceres having to set up its own facility to do so. Ceres's combined heat and power product, which it is developing in conjunction with British Gas, enables people to use the gas and fuel already coming in to their homes to generate their own electricity, rather than buying it from the grid. The company plans to bring the wall-mounted product to the mass market in the second half of 2011, Chief Executive Peter Bance told Reuters. 'We're giving ourselves a couple of years of getting it right,' Bance said via telephone....He expects the UK's planned feed-in tariff to boost interest in the product further, as it means customers would receive incentives for electricity they generate within their homes."
Ceres Power closer to mass production
Reuters, 23 September 2009

"The oil industry has been on a hot streak this year, thanks to a series of major discoveries that have rekindled a sense of excitement across the petroleum sector, despite falling prices and a tough economy. These discoveries, spanning five continents, are the result of hefty investments that began earlier in the decade when oil prices rose, and of new technologies that allow explorers to drill at greater depths and break tougher rocks....It is normal for companies to discover billions of barrels of new oil every year, but this year’s pace is unusually brisk. New oil discoveries have totaled about 10 billion barrels in the first half of the year, according to IHS Cambridge Energy Research Associates. If discoveries continue at that pace through year-end, they are likely to reach the highest level since 2000....It is not just oil that is benefiting from the exploration boom. Repsol, Spain’s biggest oil company, said this month that it had discovered what could turn out to be Venezuela’s biggest natural gas field. In recent years, companies have found substantial natural gas reserves in the United States, from shale rocks once believed to be impossible to drill.....Exploration remains a risky, and costly, business, where some deepwater wells can cost up to $100 million. From 30 to 50 percent of exploration wells find oil. Some executives are also worried the world might face a shortfall in supplies in coming years if another decline in oil prices causes exploration to falter. The chief executive of the French oil giant Total, Christophe de Margerie, has warned that such a supply crunch is possible by the middle of the next decade. 'There could be a shortage of capacity,' he said. His concerns echoed those of Abdullah al-Badri, the secretary general of the Organization of the Petroleum Exporting Countries, who said that lower oil prices also threatened investments by OPEC nations. Saudi Arabia is also unlikely to expand its production in coming years because of the uncertainty clouding future oil demand, Ali al-Naimi, the kingdom’s oil minister, signaled earlier this month. Saudi Arabia is just completing a $100 billion program to increase its capacity to 12.5 million barrels a day, from around 9 million barrels a day just a few years ago. Although they are substantial, the new finds do not match the giant fields discovered in the 1970s, like Alaska’s Prudhoe Bay, Ekofisk in the North Sea, or Cantarell in Mexico. They are also dwarfed by the last enormous discovery, the Kashagan field in the Caspian Sea, discovered in 2000 and estimated to hold over 20 billion barrels of oil. 'We have not seen another Kashagan, but still these finds are very material,' said Alan Murray, the exploration service manager at Wood Mackenzie, a consulting firm in Edinburgh. Since the early 1980s, discoveries have failed to keep up with the global rate of oil consumption, which last year reached 31 billion barrels of oil. Instead, companies have managed to expand production by finding new ways of getting more oil out of existing fields, or producing oil through unconventional sources, like Canada’s tar sands or heavy oil in Venezuela. Reserve estimates typically rise over the life of a field, which can often be productive for decades, as companies find new ways of getting more oil out of the ground. The industry’s record has improved in recent years, thanks to high prices. According to Cambridge Energy Research Associates, oil companies have found more oil than they produced for the last two years through a combination of exploration and field expansions. 'The appetite for opening new frontiers when prices were low in the 1990s was very small,' said Paolo Scaroni, the chief executive of Italy’s oil giant Eni. 'Today, the biggest discovery of all is technology.' One of the largest finds this year was made by a small producer, Heritage Oil, at the Miran West One field in the Kurdistan region of northern Iraq. It found nearly two billion barrels of oil and plans to drill a second well before the end of the year. While the central government of Iraq has had a hard time attracting investors to develop its huge fields, local authorities in Kurdistan have been successfully wooing foreign producers."
Oil Industry Sets a Brisk Pace of New Discoveries
New York Times, 23 September 2009

"The united front that China and India claim to present on climate change puts the United States in a tough position — but could give President Obama the leverage that he needs to persuade Americans to save energy. In a calculated move, China, which has just overtaken the US as the world’s largest emitter of greenhouse gases, stole the show at yesterday’s special United Nations summit on climate change with plans to pour billions of dollars into energy-saving technology and nuclear power. China, which like the US produces about a fifth of global warming gases, made a strong bid to grab the moral high ground and the claim to world leadership — as well as much of the lucrative new market in green technology. Indian ministers had already jumped the gun with talk of new curbs, although the gesture may be worth more in politics than in science, as analysts are sceptical of their commitment to force through mandatory efficiency standards on vehicles and buildings, renewable energy and stopping deforestation. The pincer movement by the twin giants of the developing world puts pressure on the US to reverse years of political resistance and set targets for cutting its own emissions. The move by China and India 'has a huge political benefit for Obama', said Paul Bledsoe, of the National Commission on Energy Policy in Washington."
Beijing steals the show, but gives Obama an opportunity to act
London Times, 23 September 2009

"Uranium demand will rise and exceed supply in 2014 as China and Russia add nuclear power stations, benefiting producers Paladin Energy Ltd. and Energy Resources of Australia Ltd., the Royal Bank of Scotland said. The price of uranium will double to a peak of $95 a pound in late 2011, from an average of about $47 a pound this year, RBS analysts Warren Edney, Sam Berridge and Lyndon Fagan said in a research report published today. Paladin has surged 84 percent in Sydney trading this year and Energy Resources 36 percent as investors bet uranium will rise along with use of nuclear power. Some 48 reactors are being built, compared with 34 in 2008 and 32 in 2007, RBS said. Supplies are 'inconsistent' with 'logistical, statutory and operating bottlenecks' in Canada, Namibia and Australia. Demand will climb steadily, leading to 'a deficit market from 2014 on,' Fagan said by telephone from Sydney today. Perth-based Paladin and Darwin-based Energy Resources 'are well placed' to gain and 'should see their margins grow,' he said."
Uranium Shortage Looms in 2014, Benefiting Paladin, RBS Says
Bloomberg, 22 September 2009

"The head of oil giant Total has told the BBC the world could face a shortage of oil because of underinvestment. Chief executive Christophe de Margerie warned that too little has been spent trying to tap into new oil reserves because of the economic crisis. 'If we don't move [now] there will be a problem,' Mr de Margerie said. 'In two or three years it will be too late.' He also said he thought oil prices would rise to more than $100 a barrel, from their current level of around $70. "
Total issues oil shortage warning
BBC Online, 21 September 2009

"Recovery is underway in Britain but the economy is vulnerable to future shocks such as rising energy prices, Andrew Sentance, a senior Bank of England policymaker, declared on Monday....He advised caution against expecting a return to the stability experienced between the mid 1990s and mid 2000s, adding the energy market was a prime candidate for providing the 'next big global shock', with energy price hikes and increased emissions likely to follow as global demand picks up. Energy consumption outside the OECD rose by almost 50pc from 2000 to 2008, so that energy consumption among emerging markets now exceeds that in advanced OECD economies - a sign of the shifting balance of global economic power. Global price developments have sent consumer price inflation in the UK on a 'giant rollercoaster', from over 5pc a year ago to 1.6pc now he said.  'Without the impact of food and energy prices, which are heavily influenced by global price developments, UK CPI inflation would have stayed very close to the 2pc in the last few years...Therefore the task of managing inflation has become more challenging for national monetary authorities in the new global economy of the 21st century.'”
BoE's Andrew Sentance warns Britain's recovery at risk from rising energy prices
London Times, 21 September 2009

"Barely a week goes by without a major oil discovery being announced. Recent hot spots include the Gulf of Mexico, Brazil and West Africa. But beware jumping to conclusions about how much this changes the dynamics of energy supply, for oil bears or peak-oil pundits.....impressive as the application of new technologies is, consultancy Wood Mackenzie said the latest discoveries are in line with the underlying exploration trend of the past decade. Given the recent multiyear rally in oil prices, it is surprising oil output from nations not in the Organization of Petroleum Exporting Countries hasn't increased. With the global economy seemingly recovering and energy consumption sure to rise as the industrialization of China and India continues, it is tempting to conclude prices must be squeezed higher. But it is worth remembering some immediate issues. OPEC's production cuts and new Saudi Arabian fields leave the cartel with spare capacity of roughly 6.5 million barrels a day. It might take years of robust global growth to absorb that. Factor in new fuel-efficiency standards and biofuel development, and it could be 2020 before U.S. gasoline consumption, roughly a 10th of global oil demand, returns to 2008 levels, said Edward Morse at Louis Capital Markets. Even China is catching the fuel-efficiency bug, as it realizes energy subsidies stymie competitiveness."
Oil Investors Embark on Voyage of Discovery
Wall St Journal, 18 September 2009

"Oil prices will rebound to $105 per barrel by 2012 due to the upcoming tightening of supply, a new study has found. According to a Morgan Stanley report, most of the scheduled incremental oil capacity from 2009 to 2015 is highly ambitious and unlikely to be achieved due to technical, financial and political setbacks. This will result in tight spare capacity, one of the major reasons for price increases in 2005 until oil prices peaked last year. Energy economists believe price rises in the past years revealed an oil market that has lost a great deal of its flexibility and capacity to deal with supply disruptions or large unexpected increases in global demand. Spare capacity – or extra crude oil stored for emergency cases – is said to have helped offset large demand and supply shocks in the 1980s and 1990s. But this has dipped to record lows in recent years. Current spare capacity is estimated at 6.7 million barrels per day (mbpd). Due to the slump in demand, this is enough to keep the market calm for the time being. However, Morgan Stanley estimates that by 2012, demand will increase by 2.7 mbpd during which time global production capacity will have fallen by 700,000 bpd. This will take the spare capacity down to 3.3 mbpd or less than four per cent of global oil demand. 'We see global spare production capacity staying ample through end-2010, before declining in 2011 and reaching 2007-2008 tightness by 2012,' it said. 'While the high prices of 2004-2008 prompted a flurry of exploration and production activity, the payback for this activity is mostly lagged to 2012 and beyond.' The report, 'Crude Oil: Balances to tighten again by 2012', said oil demand has dropped by two million barrels per day (bpd) this year but it will rebound by one million bpd next year and then grow by one per cent. Even at this marginal demand growth level, it will still create a tight market due to a string of delays in oil producing states incremental output plans. The bulk of the expansion projects are either expensive such as the Canadian oil sands; or technically extraordinarily challenging such as the Tupi in Brazil; or face geopolitical challenges, as in the case of Iraq, Venezuela, Nigeria and Kuwait. If a significant portion of these supplies fails to materialise, global spare production capacity would be drastically reduced, it said. 'As inventories cannot be drawn on indefinitely, this scenario would entail prices moving markedly higher to ration demand,' it added. Much of the incremental capacity and existing spare capacity comes from Saudi Arabia. Its spare capacity stands at 4.5 mbpd or nearly 70 per cent of the 6.7 mbpd of estimated global spare capacity. Saudi, Opec's largest oil producer is the world's largest net oil exporter and second largest producer behind Russia. The kingdom, whose current Opec quota is 8.05 mbpd, is the only country in the Middle East that is poised to increase its capacity to 12.2 mbpd by end of next year, as per its target. This relates largely to the ramp-up of new production at the massive Khurais (1.2 mbpd) and Shaybah (250,000 bpd) fields. Morgan Stanley said a third of the new Saudi capacity in 2009 is likely to remain idled initially, although the Saudis have noted that production from these facilities could reach capacity within as little as 30 days if needed. It has now started commissioning its new fields with priority given to the small Arabian super-light field of Nuayyim. Although the field will only produce 100,000 bpd, it has a high gas-to-oil ratio of 800 cubic feet per barrel of crude – a welcome stream during peak gas demand in summer....Abu Dhabi National Oil Company (Adnoc) had originally announced plans to phase the increase of capacity from 2.85 mbpd to 3.5 mbpd by 2010, with follow-up expansions to raise production to 4 mbpd by 2015. The 3.5 mbpd deadline was later pushed back to 2012 and has now been delayed to an unspecified date, said Morgan Stanley. Major incremental developments such as the Thamama G and Habshan 2 reservoirs in the Bab field and the Huwaila Field development totalling together approximately 390,000 barrels per day have now slipped beyond 2012. A detailed Exxon study of the complexity of the Zakum reservoirs also calls into question whether production can be lifted by 200,000 bpd, while maintaining high levels of oil recovery and overcoming declines from the lower reservoir zones. Adco, the UAE's offshore joint venture company with Shell, BP, ExxonMobil, Total and Portugal's Partex, had plans to increase the output of the Upper Zakum reservoirs in the Zakum field. This development project had aimed to increase Zakum's output from 550,000 to 750,000 bpd. The Zakum Field reservoirs are carbonate rocks with shale separations and reefal developments. The complexity of the project and increases in cost estimates since its approval in early-2006 have now delayed completion from 2010 to beyond 2013....Other delayed projects include the offshore Hail and Bui Tini field developments, which were scheduled to deliver 50,000 bpd, the Quarriers Field (40,000 bpd) and the Bina Al Qumran Field (20,000 bpd)....Kuwait's original plans to invest up to $40 billion (Dh146.8bn) over the next 15 years to rehabilitate its oil sector and boost upstream capacity from 2.65 mbpd to four mbpd over the next 15 years also appear 'unlikely'.....the Kuwait State Audit reported in July 2009 that the government-owned KOC would not be able to achieve its strategic production increase owing to numerous delays in the implementation of specific projects in the northern oil fields and the construction of supporting infrastructure. KOC now plans to increase its rig activity from 25 drilling rigs to 60 before 2011 but the concurrent increase in production remains undefined. This, according to Morgan Stanley, is largely the result of the closure in early-2009 of technical service agreements with all major international oil companies. 'KOC on its own will be hard-pressed to establish technical and organisational resources required to manage the major expansion programme,' it said. In recent months, KOC has focused on its large Burgan oilfield, where production challenges include severe water requirement, reservoir pressure declines, infill drilling requirements and remedial work-overs for older oil wells. 'In order to sustain Burgan's capacity of nearly 1.43 mbpd and due to manpower limitations, KOC has had to defer other expansion in both the north and west of Kuwait,' it said....Iraq's plan to increase production capacity by two mbpd to almost 4.5 mbpd within six years likewise appears 'unachievable', says the report. The combined impact of the disappointing round one bidding process and the lack of centralised plans and supporting infrastructure for round two fields does not portend to a rapid increase in Iraq's production capabilities, it said. Given ongoing declines within its mature reservoirs, the absence of investments over the past three decades, and continued domestic turmoil and tensions, any significant change in Iraq's production capacity is unlikely to materialise until 2014 and beyond....The report dubs Iran's expansion plans are 'ambitious' too. Its target to achieve production capacity of 4.5 mbpd within the next four years and 5.3 mbpd by 2013-2014 has run into a variety of technical, financial and political problems. The National Iranian Oil Company (NIOC) has, in the past, been confident it could achieve its objectives through in-fill drilling and work-overs of existing wells as well as the development of new fields such as Azadegan and Yadavaran. Smaller fields such as Paranj, Jufeir, Khesht, Mansourabad and West Paydar were also scheduled to supplement such capacity expansions. Azadegan has more than five billion barrels of mostly heavy oil reserves across four reservoirs. Its expansion from 20,000 bpd to 260,000 languished for years owing to a reluctance of Japanese partner Inpex to violate US sanctions. NIOC and CNPC have now signed a deal to increase Azadegan's capacity in two phases by 2013. These plans are slow to evolve owing to the extreme reservoir complexity and low commerciality of the heavy crude, which was originally to be shipped to a super heavy crude refinery in Khuzestan. CNPC signed an agreement with NIOC in 2007 to develop the extensive Yadavaran field reported to have more than 17 billion barrels of heavy oil. This field also has technology issues and the targeted production capacity of 300,000 bpd may slip beyond 2012."
Supply constraints to push oil up to $105 a barrel by 2012
Emirates Business 24/7, 18 September 2009

"A flurry of big oil discoveries from Brazil to Sierra Leone undermines those who believe that there are no new oil frontiers to explore but the finds may not be enough to ward off a supply crunch as the world economy recovers. Anadarko, the US company, announced this week that it had found a whole new oil basin stretching 1,100km from the coast of Ghana to Sierra Leone. That came on the heels of a big find in Brazil, one of the world’s most important future oil exporters. The Brazilian find, which was made by Petrobras and BG, came shortly after BP announced that it had discovered oil in a layer of very deep rock in the Gulf of Mexico, establishing a new geological oil zone. In the new west African basin, Tullow, Anadarko’s UK-listed partner, believes it could find several new oil fields to match the size of its Jubilee field in Ghana, believed to hold 1.8bn barrels of oil, the continent’s largest offshore field. BP says it believes the deep waters of the Gulf of Mexico could hold 50bn, rather than 30bn, barrels. Edison Lobão, Brazilian energy minister, told Brazil’s Congress this week that the country’s oil reserves beneath large offshore salt formations could hold 50bn-80bn barrels of oil and natural gas, allowing Brazil to double its output to 3.8m barrels a day within a decade...Are these new discoveries big enough to delay or even avoid the supply crunch that oil executives, leaders of the Group of Eight rich countries and Opec, the oil cartel, all warn could befall the world as it attempts to recover from its worst recession in decades? In the near-term, the answer is probably not. This is because fields take a long time to develop and some forecasters see a crunch happening before 2014. David Fyfe, who heads mid-term supply forecasting at the International Energy Agency, the rich countries’ watchdog, said the speed of the economic recovery would be a major factor. If the economy returns to 4.5-5 per cent growth rates, the world will need about 4m barrels of oil a day more output to meet demand if it does not want to risk a price spike, such as the one that happened in the summer of 2008. That July, spare capacity, which today lies at a comfortable 6m b/d, was reduced so dramatically by demand from China and elsewhere that oil prices rose to a record of $147 a barrel. Oil producers were just not able to keep up, analysts say. In respect of the effect of the recent discoveries on long-term supplies, analysts are split on whether the finds over the past few weeks will make a discernible difference. Bob MacKnight, analyst at PFC Energy, a Washington-based consultancy, says much more oil would need to be found to delay the plateau that global oil production will eventually hit as the world’s biggest fields decline and large oil-rich areas remain untapped because of political hurdles. 'We are really approaching a peak production in deep water. It looks as though with these discoveries we will be able to hold on for longer. We need them,' he says. In terms of overall production, he says the discoveries will shallow the decline rather than move the peak. Ann-Louise Hittle, analyst at Wood Mackenzie, an Edinburgh-based consultancy, warns that supply forecasters already factor into their projections 'yet to be discovered fields' because of the incremental technology advances the industry makes, allowing companies to drill deeper and more challenging wells. But she suggests that the basin on the coast between Sierra Leone and Ghana might not be part of such forecasts and thus could move the goalposts. 'If you do really open up several new Jubilee fields, then you could start having an impact,' she said, referring to the African field. But one thing all the analysts stress is that delaying an oil supply crunch will need more than just a slew of discoveries. 'If action is not taken on the demand side, you will not shift it,' says Ms Hittle. It will be up to governments whether the demand-side effect comes from policies promoting efficiency and oil alternatives or the more painful demand erosion that comes from economies screeching to a halt because oil supply again fails to keep up with demand."
Oil strikes not enough to quench demand
Financial Times, 17 September 2009

"Peak oil supply will be hit this year after the economic crisis and low prices in the first quarter of 2009 slashed much needed investment, a senior executive at Australian investment bank Macquarie said. 'This is our view – capacity has pretty much peaked in the sense that declines equal new resources,' Iain Reid, head of European oil and gas research at Macquarie, told Reuters....Mr. Reid's latest research report – The Big Oil Picture: We're not running out, but that doesn't mean we'll have enough – sees global oil production capacity topping out at 89.6 million barrels per day (bpd) this year, a far more pessimistic view than most other banks or traditional forecasters. Underinvestment in mature fields, rising resource nationalism, and the cost and difficulty of retrieving oil from discoveries in ultra-deep water could see global production capacity fall to 87.3 million bpd by 2015, according to Mr. Reid. Mr. Reid, who spent 16 years with oil firms Shell and Amerada Hess, saw the current spare capacity cushion of around 5.2 million barrels wiped out by 2012....Macquarie saw the potential for a huge supply deficit to emerge, with global oil demand predicted to rise to 90.9 million bpd by 2015 from 84.2 million bpd today because of rising consumption from China and other emerging markets. 'Adding sufficient productive capacity on time is nearly impossible,' Mr. Reid said in his report. Episodes of higher oil prices would be an obvious consequence, without either a greater political push for efficiency savings or new technological advances, he said. But his price forecasts were still relatively conservative. He expected the benchmark U.S. crude contract will average $84 a barrel in 2012, compared with around $71 now. The bank's 'long run' forecast is for an average price of $75. The level of nearly $150 hit last year was unlikely to be repeated, Mr. Reid said, because of its immediate damaging effect on the world economy and on fuel demand. 'One hundred dollars a barrel is perhaps liveable with in certain scenarios, but I would say gasoline will reach the $4 level again and that will naturally force more efficiency in the United States,' Mr. Reid said, adding it was difficult to forecast when such levels would be hit. Eventually, the trend could be towards peak demand, rather than peak supply as higher prices drive the quest for greater efficiency and alternative energy sources. '(Oil near $150) would very soon create another set of global economic drivers which would spell much lower demand in the future,' said Mr. Reid. 'In the very long term, we can see demand for oil falling quite substantially.”
Peak oil expected in 2009: Macquarie
Reuters, 16 September 2009

"Renault SA Chief Executive Officer Carlos Ghosn said the future of electric cars depends on a rebound in oil prices that may boost sales of the battery-powered vehicles he’s spending 4 billion euros ($5.9 billion) to develop.  'If it’s less than $70, we’re going to have a problem,' Ghosn said in an interview at the Frankfurt Motor Show. 'If oil’s at $200 the economic equation’s very easy, and if it’s more than $200, even easier.' Renault pledged yesterday to sell 100,000 electric cars by 2016 in Israel and Denmark, the first two countries to hire the Paris-based company’s U.S partner Better Place to roll out nationwide networks of battery-charging and swapping stations. Ghosn is pitting electric cars from Renault and Japanese affiliate Nissan Motor Co. against a new generation of smaller, cheaper gasoline-electric hybrids from rivals including Toyota Motor Corp. The French company’s Fluence sedan, on show for the first time in Frankfurt, will become the world’s first mass- market electric car if the agreement with Better Place pays off."
Renault’s Ghosn Says Future of Electric Autos Hinges on $70 Oil
Bloomberg, 16 September 2009

"The UK Government is piling on the pressure for a 'Southern Corridor' of energy supplies to avoid over-reliance on Russian gas. Lord Hunt of Kings Heath, the Energy minister, is in Turkey and Azerbaijan this week as part of a concerted British effort to push energy security up the European agenda following last winter's ruckus between Russia and Ukraine over gas supplied through the latter's pipelines. 'Last winter was a wake-up call to Europe because it showed we must develop diverse sources of supply,' Lord Hunt said. 'I am here to encourage progress, talk to government and industry and do everything we can to encourage the development of the Southern Corridor.' A central element of the development of alternative supply routes is the proposed Nabucco pipeline from Azerbaijan, through Turkey, in Europe. The British Government is trying to smooth political negotiations affecting the project, such as the rules governing transit of Azeri gas through Turkey and the price to be paid. Lord Hunt met the Turkish energy minister yesterday and is holding talks with his Azeri counterpart today to try to push discussions ahead. 'If that can be resolved then the way is open for commercial companies to come in with investment and develop the infrastructure,' he said. The Southern Corridor is also potentially big business for British companies. Lord Hunt's tour included meetings with both local energy groups and major British players in the region, including BP, Shell and International Power. 'It is about understanding what the issues are in the region and getting a feel about likely developments in the future,' he said."
Government pushes for non-Russian gas supplies
Independent, 16 September 2009

"When it comes to the future of automotive technology, electric cars get the lion's share of the attention. But hydrogen-powered vehicles are slowly gaining traction, first with an announcement last week that auto companies are spending billions on fuel cell vehicles, and now with news that Germany is planning to launch a countrywide hydrogen fueling network by 2015. A total of eight companies (Daimler, EnBW, Linde, OMV, Shell, Total, Vattenfall and the NOW GmbH National Organisation Hydrogen and Fuel Cell Technology) are working to bring the fueling network to fruition. In its first phase, scheduled for 2009-2011, the companies involved will lobby for public support and begin fuel station installations. The second phase will see the mass rollout of hydrogen-powered cars along with an accompanying fuel network. Germany isn't the only country trying to speed up the adoption of hydrogen fuel cell technology. Canada is working on a hydrogen highway to link Vancouver and Whistler in time for the 2010 Winter Olympics, while Denmark is planning a hydrogen network to connect Denmark, Sweden, Norway and Germany."
Germany to create national hydrogen fuel network by 2015
Guardian, 15 September 2009
"Russia's stranglehold over dwindling global energy resources was dramatically confirmed yesterday when new figures showed that the country has become the world's biggest exporter of oil. With production in August hitting record levels, Russia toppled Saudi Arabia from the number one spot. It is already the world's largest exporter of gas, and supplies around a third of the European Union's consumption. The news is likely to heighten unease in EU capitals over the Kremlin's tightening grip on energy reserves. There are fears of a repeat of January's debilitating gas war between Russia and Ukraine – which saw winter supplies to EU consumers cut off for weeks. Members of Opec agreed to cut oil production last year in response to the economic crisis. Moscow indicated last December that it would follow suit but instead ramped up production in the second quarter of 2009, as new fields in Siberia came on stream. Russia produced almost 10 million barrels of oil a day in August, according to International Energy Agency figures – a post-Soviet record. Relations with other oil producing countries are likely to come under increasing strain, since Russia is now profiting from Opec production cuts. 'The fear is that Russia will get a big head,' Andrew Neff, an oil analyst with Global Insight in Washington, told the Observer. 'Not only is it the world's largest gas exporter but now the world's biggest oil exporter as well. The question is will Russia want to exploit its feeling of superiority and demand a seat not just at the table, but at the head of the table.'"
Europe fears winter energy crisis as Russia tightens grip on oil supplies
Observer, 13 September 2009

"Total SA Chief Executive Officer Christophe de Margerie said there could be a new oil crisis when demand for oil and natural gas outstrips supply around 2014 or 2015, Le Parisien reported, citing an interview. He said oil prices could rise above last year’s record as demand rises and that the company won’t pull out of Myanmar, the newspaper reported."
Total Says 2014/2015 Hydrocarbon Demand Could Outstrip Supply
Bloomberg, 11 September 2009

"Despite the spot price of uranium dropping yet another dollar to $45 per pound, recent reports from the World Nuclear Association (WNA), the International Atomic Energy Association (IAEA) and industry consultant UxC show that uranium demand is set to outpace uranium supply in the coming decade. China and India will be the main drivers behind rising demand levels as together they have 28 reactors currently operating, 22 under construction and 58 new reactors expected to come on line over the next eight years, according to the WNA. The WNA’s latest report, The Global Nuclear Fuel Market Supply and Demand 2009-2030, sees a best case scenario of a 558 GWe in world nuclear capacity by 2020 and 818 GWe by 2030. Uranium mine production has fallen below western demand since the mid-1980’s, says World Nuclear News, but so far, secondary supplies from inventories, stockpile drawdowns and recycled materials have made up the difference. But as demand increases in energy hungry nations like China and India, primary production from mines needs to pick up the pace dramatically. 'Uranium production needs to increase dramatically from its current level,' said Cameco’s Penny Buye, co-chair of the WNA report’s drafting group. The IAEA has also updated its annual projections for global nuclear power capacity. Both its low and high end forecasts for 2030 are much higher than last year’s projections. At the low end, the agency sees worldwide nuclear capacity at about 510 GWe and the high projection is at 810 GWe. Ux Consulting has also published a report forecasting worldwide nuclear growth through 2030. The Nuclear Power Outlook (NPO) report highlights “dramatic growth” in nuclear power usage in China, India, Russia and other regions over the next twenty years. According to the NPO, there are currently 435 reactors with a capacity of 370 GWe in 31 countries and 55 reactors are now under construction in 12 countries. By 2015, Ux forecasts a total of 492 reactors (428 GWe total capacity) in 31 countries, 568 reactors (517 GWe) in 42 countries by 2020 and 697 reactors (702 GWe) in 52 countries by 2030. The report also projects a 78 per cent growth in annual uranium demand over the two decades from today’s level of 183 million pounds to 325 million by 2030. When one considers that 2008 primary mine production only totaled 114 million pounds, says Ux, the 'critical need for increased global uranium production' becomes clear. While several miners are working to bring new mines into production, this is a process that takes many years from the exploration and development stages to acquiring licensing and commencing production. No doubt this disconnect between supply and demand will have an impact on future price trends, notes the report. Hence, demand is likely to outstrip supply making $40 per pound uranium a thing of the past."
Uranium Demand Set to Outpace Supply
Uranium Investing News, 10 September 2009

"Nuclear energy's fuel supply infrastructure should be able to meet world demand in the short term, but expansion will be needed across the entire fuel cycle beyond 2020, warns the latest WNA market report. The newly released report, The Global Nuclear Fuel Market Supply and Demand 2009-2030, is the fifteenth in a series which started in the mid-1970s. Produced by a drafting group drawn from member companies of the World Nuclear Association (WNA), the report is based on the knowledge and opinion of the whole industry. The report uses information gathered via questionnaires from WNA members representing all aspects of the fuel cycle across the globe. A computer model is then used to forecast nuclear fuel supply and demand to 2030.....Production of uranium from mines - primary production - has been far below the amount required to fuel the western world's power reactors since the mid-1908s, with so-called secondary supplies - inventories, stockpile drawdowns and use of recycled materials including uranium from decommissioned nuclear weapons - making up the shortfall. However, although secondary supplies will continue to play an important part, the report warns that the period of primary supply being so far below annual reactor requirements will have to come to an end with a substantial need for new primary production facilities in the longer term. 'Uranium production needs to increase dramatically from its current level,' Cameco's Penny Buye, co-chair of the drafting group, told the Symposium. The market must ensure that conditions be conducive for this to happen, she added."
More U mines needed as nuclear grows
World Nuclear Association, 10 September 2009

"Global oil demand will be almost 0.5 million barrels per day (bpd) higher than previously forecast this year and next on stronger-than-expected U.S. and Chinese fuel consumption, the International Energy Agency said. The IEA, adviser to 28 industrialised economies, said on Thursday world oil consumption would average 84.4 million bpd in 2009 -- down 2.2 percent from 2008 due to the economic downturn...But it said in its Oil Market Report that demand would rally next year, rising almost 1.3 million bpd, or 1.5 percent, as recovery takes hold. Its estimate of the year-on-year rise in demand was 40,000 bpd less than in its previous report. David Fyfe, head of the IEA's oil industry and market division, said oil consumption would pick up again towards the end of this year after a period of extreme weakness, especially in the large, developed economies. 'The year-on-year decline will diminish as we go through the end of 2009, and then from early 2010, we will begin to see year-on-year growth in global demand,' Fyfe said. The IEA report said the upward revisions in estimates of oil demand were largely due to the largest consumers -- the United States and China -- but said developing economies were likely to account for virtually all of next year's rise in global demand.... The Organization of the Petroleum Exporting Countries met in Vienna on Wednesday and agreed to keep its oil production unchanged, with the 11 OPEC members subject to curbs aiming to maintain output at 4.2 million bpd below their September 2008 production levels. OPEC oil output has increased this year, despite promises to restrain production, and the IEA said the group pumped 55,000 bpd more in August than in July, taking OPEC-11 compliance with promised cuts down to 66 percent from 68 percent in July."
IEA sees higher global oil use as economy recovers
Reuters, 10 September 2009

"Mexico's oil output is falling faster than expected, increasing the chance that the country will lose its status as a major oil exporter in coming years and face a worsening budget shortfall. Output at state-owned oil monopoly Petróleos Mexicanos's offshore field Cantarell, once the world's second-largest oil field, has plunged to 500,000 barrels a day from its peak of 2.1 million in 2005....Ratings agency Standard & Poor's revised its outlook for Mexico's sovereign-credit rating to negative in May, citing the decline in oil output as a factor.... Carlos Morales, head of Pemex's exploration and production division, says Cantarell is expected to stabilize at 400,000 barrels a day. The company has offset some of Cantarell's decline by raising output at other fields, notably offshore field Ku-Maloob-Zaap -- now Mexico's biggest field -- which produces roughly 800,000 barrels a day. In coming years, 'when Ku-Maloob-Zaap goes into decline, we have enough other projects to raise overall output slightly,' Mr. Morales says. David Shields, an independent oil consultant in Mexico City who warned about Cantarell's impending collapse years ago, says he is dismayed at the lack of accountability at Pemex. 'Production at Cantarell is almost being allowed to run out without any decent explanation' of the technical reasons, he said....One big bet is Chicontepec, a massive onshore field discovered in the 1920s. It has resisted exploitation because it is made up of small pockets of oil spread out over thousands of square miles. So far, though, output at the field has disappointed. A better long-term bet, say analysts, are oil deposits in the deep waters of the Gulf of Mexico. Pemex, however, lacks the technology to operate in deep water. Last year, Mexico passed a law giving the company greater flexibility to hire foreign oil companies as contractors. But expected legal challenges from nationalist lawmakers have kept Pemex from even publishing the proposed contracts -- a process that could take the rest of this year. Even then, many foreign companies may not bite. Oil from deep waters takes about seven years to develop, and many analysts say Mexico is doing too little, too late."
Mexico's Fading Oil Output Crimps Exports
Wall St Journal, 9 September 2009

"Taxpayers could be forced to provide commercial insurance cover to the nuclear industry to safeguard plans being considered by ministers to build a fleet of new reactors in Britain. Private insurers are refusing to offer energy companies full coverage against the risk of a Chernobyl-style nuclear accident, forcing the Government to consider stepping in itself to act as an 'insurer of last resort'. The Department of Energy and Climate Change confirmed that PricewaterhouseCoopers, the audit firm, had been appointed to draw up recommendations setting out how the Government could do this."
UK taxpayer may be forced to take on nuclear risk after insurers refuse to offer cover
London Times, 9 September 2009

"World oil demand is set to grow next year for the first time since 2007 and is expected to reach pre-recession levels by 2012, IHS Cambridge Energy Research Associates said in its quarterly World Oil Watch report. IHS CERA expects oil demand growth to rise by 900,000 b/d in 2010 and resume its 2007 high of 86.5 million b/d by 2012, which would mark a 5-year turnaround. Oil demand dropped by 2.8 million b/d to reach 83.8 million b/d in 2009. The last time that the world experienced such a severe decline in oil consumption was in the early 1980s, and it took 9 years for demand to return to the 1979 high. 'There are a lot of questions as to whether things will be different this time in terms of the recovery of oil demand,' said IHS CERA Chairman Daniel Yergin. 'While the answer is that it will be shorter, it is still going to take a substantial amount of time.' Jim Burkhard, IHS CERA global oil managing director, said key differences between the current recovery and that of the 1980s are accelerating oil demand growth from emerging markets and fewer options for substituting fuels on a global scale. 'In the 1980s, the largest area of the demand decline came from power generation, where oil was replaced by readily available substitutes like coal, gas, or nuclear,' Burkhard said. 'Today, global demand growth is coming from the transportation sector in emerging markets where there are fewer large-scale options for switching fuels.' Overall, emerging markets will drive the recovery of oil demand. IHS CERA expects oil demand to increase to 89.1 million b/d in 2014 from 83.8 million b/d in 2009. The report anticipates 83% of the oil demand growth will come from countries outside the Organization for Economic Cooperation and Development members. 'This near-stagnation of oil demand growth in the industrial countries of the OECD highlights several structural changes,' Burkhard said. 'Decreasing oil intensity associated with economic growth, higher fuel efficiency, the displacement of conventional oil with renewable energy sources, and a slower pace of growth in transportation fuel consumption—all these point to a leveling off of demand in the industrial world.' While the trajectory of oil demand seems certain, Burkhard said future events always can alter demand. 'While our base case suggests that 2012 will be the year that global oil demand recovers to 2007 levels, we continue to research the alternative scenarios that could alter the balance in the oil market,' Burkhard said."
IHS CERA: World oil demand set to rise next year
Oil & Gas Journal, 8 September 2009

"Russia is surpassing Saudi Arabia in oil exports for the first time since the Soviet Union’s collapse as Prime Minister Vladimir Putin exploits OPEC production cuts to gain market share. Exports of crude and refined products from Russia rose to about 7.4 million barrels a day in the second quarter, according to Energy Ministry data. Saudi shipments fell to about 7 million barrels a day, International Energy Agency estimates of output and domestic demand showed. Investors had expected Russian supplies to decline this year after Putin’s deputy, Igor Sechin, told the Organization of Petroleum Exporting Countries in December that his government was ready to limit production to support prices. Instead, the country is providing tax breaks for new fields in Siberia. OAO Rosneft, OAO Lukoil and BP Plc’s Russian venture TNK-BP pumped more as prices rose 60 percent to $71 a barrel. 'In no uncertain terms, Russia has been the biggest beneficiary of OPEC’s sacrifice,' said Chris Weafer, chief strategist at UralSib Financial Corp., in an interview in Moscow. 'Higher prices have equaled a $20 billion tax windfall.'...Saudi Arabia has about 2.75 million barrels of daily capacity idle. Russia doesn’t have the flexibility to switch wells off for months and turn them back on again, so has minimal spare capacity, said Oswald Clint, a London-based analyst at Sanford C. Bernstein. Russia’s crude oil production climbed 1.3 percent in August from the same month in 2008, to 9.97 million barrels a day, and exports expanded 5.9 percent, according to the Energy Ministry’s CDU-TEK unit. The increase came after the largest producer, Rosneft, began pumping from its new Vankor field in Siberia. In March, while Russian politicians hinted at possible supply cuts, Lukoil Chief Executive Officer Vagit Alekperov said his company aimed to raise output 1.5 percent this year. 'If Russian production had fallen as much as people had forecast, and it were 600,000 to 700,000 barrels a day lower than it is today, the market would be significantly tighter,' said Edward Morse, head of economic research at LCM Commodities LLC in New York. Russia already exports more energy than any other country, when shipments of natural gas from state-run OAO Gazprom, the world’s largest producer, are included. The Moscow-based company’s gas production alone last year was equivalent to 9.9 million barrels of oil a day, compared with Saudi Arabia’s 9.2 million barrels of crude, according to Gazprom and Bloomberg estimates....Saudi Arabia has remained the top oil supplier, until now. The nation exported 7.39 million barrels a day of crude and oil products in the first quarter, beating Russia’s 7.25 million, according to Bloomberg calculations based on IEA estimates of Saudi production and domestic use and Russian energy ministry data. Saudi Arabia was currently producing about 8 million barrels a day, Oil Minister Ali al-Naimi said today in Vienna when arriving for tomorrow’s OPEC meeting, adding the kingdom is complying with the group’s cuts 'as best we can.'.... Russia began selling oil long before explorers found the world’s largest deposits in Saudi Arabia. The region’s first well was drilled in 1847 in Baku, Azerbaijan, then part of Czarist Russia. The Nobel and Rothschild families began carrying oil out of the region, where production rose to more than 400,000 barrels a day by the onset of the Second World War, according to the State Oil Co. of Azerbaijan. Soviet central planners pushed Russian output to 11.48 million barrels a day in 1987. Following the collapse of the Soviet Union in 1991 and Russia’s 1998 financial crisis, production tumbled to about half that amount by 1999. As the economy accelerated in 2000 when Putin was president, London-based BP and ConocoPhillips of Houston formed ventures with Russian partners. Production rebounded by more than 60 percent in a decade as modern drilling technologies reduced costs. The biggest gains ended last year as crude output fell for the first time in a decade, declining by 0.6 percent to 9.78 million barrels a day, according to the Energy Ministry. Companies opening deposits in new regions asked for tax breaks. Russia began cutting taxes Jan. 1 and oil companies expect a group of 13 fields will receive an exemption from export duties this year. Russian Energy Minister Sergei Shmatko said in January that production could fall as much as 4 percent this year and warned in June that half of the nation’s untapped deposits would lose money at $60 a barrel. Whether Russia can sustain the gain 'is a question of considerable controversy,' LCM’s Morse said. 'I’m of the opinion that Russian production is going to grow.' Oil will be needed to fill a Far Eastern pipeline, currently under construction, that will supply China and the Pacific region, he said. The slump in Saudi crude output in the past year allowed Russia to gain share in the U.S. market, the world’s largest. Russian supplies of crude and products to the U.S. jumped 33 percent in the first six months of the year to a record 638,000 barrels a day, according to U.S. Energy Department data. Saudi Arabian shipments to the U.S. tumbled 29 percent during the same period to 1.08 million barrels a day, placing it fourth behind Canada, Venezuela and Mexico and ahead of Nigeria and Russia. The kingdom ranked as the second-biggest petroleum supplier to the U.S. early last year, when Russia was ninth."
Putin Blinking on Exports Signals Lower Oil for OPEC
Bloomberg, 8 September 2009

"Despite the rather pessimistic view generated by the concept of peak oil, new fields are being discovered all the time. One pops up and then another, and another. Each new discovery pushes peak oil just a bit further away and leaves us wondering whether the panic over declining oil reserves is just another bit of eco-hype. In the past couple of weeks alone we have had a 8.8 billion barrel discovery announced at the Soussangerd field in Iran and BP revealed a five billion- barrel find at the Tiber field in the Gulf of Mexico. There have also been some huge discoveries off the coast of Brazil and when modern geological processes are brought to Iraq, Iran, Libya and a host of other countries, we are likely to see a significant jump in known reserves. Improved technology may also mean that older fields nearing their retirement date can be given additional life through more efficient extraction methods. However, before we get complacent and rush out to swap the Toyota Prius for a thirsty Land Rover, none of this new development is going to be easy to exploit. The days of oil bubbling out of the ground, as it used to do in Saudi and Bahrain, are long gone and the new fields are often extremely hard to tap. Take the BP find in the Gulf of Mexico. Its drill hole is a staggering 10,685 metres deep – this is nearly two kilometres more than the height of Mount Everest. The well is also in deep water, which will make it much more expensive to construct a drilling platform and pipeline to shore. Analysts were estimating last week that BP's cost of production from the Tiber field could be as high as $40 (Dh146.92) a barrel, which given that we have seen oil as low as $33 this year may not be very attractive to shareholders. Also, while there may be five billion barrels of oil in the field the chances of BP getting anywhere near that amount out of the ground is zero. Indeed, the company might be lucky to get five per cent to 15 per cent of the total, which would turn Tiber into a pretty mediocre find rather than an exceptional one. It is also worth remembering that while the recent discoveries sound spectacular, they only partially sate the massive demand that exists for oil. Evolution Securities in London said last week that BP would need to find three Tibers a year just to maintain its existing reserves, which demonstrates just how big the challenge is facing the oil industry."
Debate about peak oil is misleading
Business 24/7, 8 September 2009

"The Norwegian Petroleum Directorate has cut by 20 percent its best estimate of how much oil and gas lies in the budding near-arctic oil province of the southern Barents Sea, it was revealed Tuesday. In its Resource Report 2009, the NPD also trimmed by 12 percent the reserves it expects oil companies to find in future, admitting in its Barents-focused reporting that the numbers could yet vary wildly. 'Unfortunately, many of the new finds (in the Western Barents) are small and signficantly less than that which was assumed before drilling started,' the report’s authors wrote. They said the NPD had 'reduced expecations of large, future finds' in the southern part of the Eastern Barents. The good news was that more prospects than expected have been uncovered by state-sponsored surveys and increased oil-company exploration since 2006. But uncertainty reined for the Barents, once-touted as a major oil province in waiting, a conviction given strength by the latest U.S. Geological Survey appraisals of the Arctic that had lifted the reserve count by nearly 10 percent in recent years. 'After 43 years of exploration and 40 years with production, how much of the proven reserves can be produced profitably and how large the undiscovered resources are is still uncertain,' the NPD report said. Producible reserves offshore Norway, including in the Norwegian Sea and North Sea are said to be between 10 billion cubic metres and 17 Bcm of oil equivalents. The lower Barents reserve count comes despite the confirmation of new exploration models by discoveries among the 18 wildcat wells drilled. The news will come as a blow to an oil industry keen to grow large developments such as Snøhvit and Goliat. Both StatoilHydro at the former and Eni at the latter have expressed hopes that satellite discoveries would further bolster their developments in remote, sparsely populated northern Norway."
Norway cuts arctic barrel count
Oil And Gas Magazine, 1 September 2009

"Given how bleak the world looked as this year began, it feels remarkable to be seeing growth again so soon. But it is even more remarkable that the world is emerging from such a severe financial shock and slump with its most basic fuel, crude oil, priced at close to $70 a barrel, seven times its price of a little over a decade ago and double the level it was as recently as March. So this must mean the rebound is even stronger than we think, with demand for oil soaring again? Not at all. Admittedly, this is a pretty opaque market, with many countries treating oil stocks as an official secret. Still, analysts at Banc of America Securities-Merrill Lynch reckon that global oil demand has been three million barrels a day lower in the second quarter of this year than in early 2008. They don’t expect it to get back above that until 2011 at the earliest.... The oil producers’ cartel has deliberately cut production by nearly five million barrels a day, which is more than the drop in global demand, to keep prices high. Opec members account for only about 35 per cent of world supply, but Russia, a non-member, accounts for a further 11.5 per cent and is co-operating with their efforts. Moreover, the Gulf states that dominate Opec have the largest oil reserves and lowest production costs, so can most easily and painlessly turn their taps on and off. In the early years of this decade the kingpins of Opec, Saudi Arabia, used to say that their ideal price range for crude oil was $20-25 a barrel. Now, they say that it is $70-75. Crucially, the nationalists in Opec and the extortionists in Russia have blocked the big Western oil companies from investing as much in developing their oil reserves as they would have liked, driving them into higher-cost fields elsewhere. Investment there, even before the financial crisis, has been slow as the sudden rush to explore and expand drove up the costs of engineers and equipment. Since the financial crisis, it has slumped.... In the 1970s, the rather quotable Saudi Oil Minister, Sheikh Zaki Yamani, had a nice saying: 'The Stone Age did not end because the world ran out of stones. Nor will the oil age end because we have run out of oil.' It will end when oil consumers run out of patience with greedy oil producers, and develop substitutes instead. The Arabs should surely see a warning sign in the fact that the first new product of which Fritz Henderson, boss of the fresh-out-of- bankruptcy (and quasi-nationalised) General Motors, emerged to boast was the Chevrolet Volt, a petrol- electric hybrid, which is claimed to do 230 miles per gallon.... The usual forecasts, based on extrapolation of past trends, do not see electric cars or non-fossil fuel power plants having a really big impact for another 20-30 years. Imagine, though, the effect on innovation of oil at $100-200 a barrel, of hundreds of thousands of Chinese (and Japanese, European and America) engineers trying to do for solar power and for car batteries what has been done in the past decade for mobile phones and computers. Then, the usual forecasts will turn out to be wrong — as usual. The oil age, which began in earnest a century ago in America, will be at an end."
Opec’s greed will herald the end of the oil age
London Times, 20 August 2009
"It is true that in the long run economic development in China, India and elsewhere will drive up the price of oil, but if the price rises too high, then the world economy will go into recession, oil demand will drop and the price will fall again. Last year proved that the US economy cannot live with $4 petrol..."
The brighter side of expensive oil
Financial Times, 16 August 2009
"Britain could be in line for a new North Sea bonanza following research which reveals its suitability to store billions of tons of waste carbon dioxide. Scientists have found the rock formations beneath the sea bed have enough room to store up to 300 years’ worth of emissions from northern Europe’s power stations. It means Britain could potentially earn up to £4 billion a year by allowing countries such as Germany, France and Denmark captured from their power stations into rocksto pump CO2 beneath UK waters....Two new studies have shown that Britain is better placed to exploit the technology than any other European country. One of the studies, by geologists at Edinburgh University, has shown that the parts of the North Sea controlled by Britain overlie vast tracts of sandstone rock strata that are ideal for holding CO2 These rocks are porous, allowing them to absorb large amounts of gas, but are capped by mudstone, a thick, impermeable rock, that stops the carbon dioxide escaping. Professor Stuart Haszeldine, who oversaw the Edinburgh survey, said: 'Our research suggests we could store up to 200m tons of CO2 in those rocks each year for 200-300 years. 'This is far more than Britain needs so we could take all the CO2 generated by power stations in north European countries. The British government needs to realise it has a huge asset here.' The second study was carried out by Stephenson’s colleagues at the BGS who have been probing the fate of 10m tons of CO2 pumped under the sea bed by Statoil, the Norwegian energy company, since 1996. It showed the CO2 is stable and so unlikely to bubble back out as some had feared."
North Sea’s new bonanza
London Times, 16 August 2009
"The Government's long-term plan for decarbonising the UK economy has been hailed as a world leader because it is the first to include national carbon budgets. It has gained credit too from its adoption of an ambitious 80% target for greenhouse gas emission cuts by 2050. What is not not so clear from the Government's glossy 220-page booklet spelling out the strategy is that the manner in which it is proposed to achieve its goals casts it in a very different light. UK greenhouse gas emissions (of which carbon is by far the most significant, accounting for about 70%) have declined by only about 1% a year since the 1990 baseline. That means that cuts of 3.2% per year are needed from now to meet the 80% reduction target by 2050. That's a tall order, both in enormously improved technology and hugely changed behaviour, but it's made all the more difficult by the Government (rightly) accepting under pressure that emissions from international aviation and shipping, which are very substantial, should be included. But the Government has a trick up its sleeve. Its primary policy instrument for delivering the plan targets is the EU Emissions Trading Scheme (ETS) which requires energy-intensive industries to obtain permits for their emissions in a market. Crucially however the ETS allows these big polluters to buy emission credits as a substitute for cutting their own emissions. When they are bought from abroad, they count towards the UK targets. What the Government is proposing is that 70% of UK emissions come from industrial sectors that are within the EU ETS, and that there should be no limit on the number of emission credits that are used to meet this target. Thus the only part of the UK target which will be achieved entirely by in-country reductions is the 30% that derives from non-ETS sectors. Even if some of the 70% ETS cuts are generated at home, it is likely that at least half of the UK target will be purchased from abroad, not earned at home. This puts an entirely different complexion on the Government's Low Carbon Transition plan. It explains why the Government is so relaxed about giving the go-ahead to the third runway at Heathrow and the tripling of airport capacity as well as to a series of new coal-fired power stations beginning at Kingsnorth in Kent without requiring prior installation of carbon capture and storage. Both of these developments will hugely increase UK greenhouse gas emissions, but respectively the airline industry and the big coal-burning generators like E.ON will simply buy whatever emission credits are necessary from abroad."
The Government's low carbon transition scam
Michael Meacher (blog), 15 August 2009
"All around the world, economies seem to be turning a corner, moving out of a period of this global recession in which the good news was just that things were getting bad more slowly into one in which things are actually getting better. Exports are picking up, order books are getting fatter, production is starting to rise in America, China, Germany, Japan and even Britain. No one can know whether just around that corner a mugger might be lurking, ready to give economies a new thump in the solar plexus. Such things could happen because of politics — remember the 1979 Iranian revolution, which delivered a second oil shock — or because some new financial horror is exposed. But let us, in a positive summer spirit, assume that recovery really is beginning.....remarkably, we will be leaving a supposedly historic slump with the price of oil at $70 a barrel, more than double its level of six years ago. In part, that is in anticipation of renewed growth in demand from Asia. But, to have resisted the slump, it must also imply that supply is highly constrained, both by under-investment in new oilfields in the past quarter of a century and by Opec’s renewed grip on production and the markets. As recovery gathers pace, the oil price will surely go higher, unless Opec loses its nerve or Saudi Arabia, newly in possession of surplus capacity, starts to feel charitable. This is bad news for the strength of the Western (and Chinese and Indian) recoveries, as dearer oil is like a tax on growth. But it will be terrific for environmentalists and producers of electric cars, doing more to cut greenhouse gases than a hundred earnest ministerial gatherings."
The recovery will prove Thatcherism right
London Times, 13 August 2009
"World oil demand will rise less than previously thought next year and evidence of a 'bottoming out' of the recession is patchy at best, the International Energy Agency said on Wednesday. The outlook from the IEA, which advises 28 consumer countries, follows two other cautious forecasts on oil demand this week. Oil prices eased following its release and were trading below $70 a barrel. 'Evidence of a bottoming out of the recession is still a bit patchy. The latest data on industrial production for some of the larger countries remains negative,' David Martin, analyst at the IEA, told Reuters. 'There is not clear evidence yet we have seen the worst.' World oil demand will rise by 1.3 million barrels per day (bpd) in 2010 to average 85.3 million bpd, the Paris-based IEA said in its latest monthly report. The increase is 100,000 bpd less than previously forecast. The agency also revised upwards global outright demand in 2010 by 70,000 bpd on the basis of higher fuel use in Asia and made a larger upward adjustment for 2009 demand, which is now assessed at 83.9 million bpd. That barely changes the sharp contraction in world oil demand expected in 2009 because of the recession, the IEA said, forecasting fuel use this year would be 2.35 million bpd lower than in 2008."
IEA trims 2010 oil demand growth, recovery patchy
Reuters, 12 August 2009
"Turkey has agreed to grant access to Russia's South Stream gas pipeline through its part of the Black Sea, in a move which could hurt the prospects of an EU-backed project to reduce Russian energy dependency. The Turkish deal is a major breakthrough for the Russian pipeline, which has to cross the maritime economic areas of either Turkey or Ukraine, but with Ukraine very unlikely to give consent. At a signing ceremony in Ankara on Thursday (6 August), Russian prime minister Vladimir Putin and his Turkish counterpart, Recep Tayyip Erdogan, insisted that South Stream is not a rival to the EU-backed Nabucco pipeline project. 'Even with the construction of South Stream, Nabucco will not be closed,' Mr Putin said at a news conference. 'The more infrastructure projects, the better, because that will create reliability and stability of energy supply to Europe.' The European Commission also officially rejects the idea the two projects are in competition. 'We consider [South Stream] a complementary initiative to our ongoing Nabucco efforts,' commission spokesman Martin Selmayr said at a press briefing in Brussels. South Stream is designed to bring more Russian gas under the Black Sea to Bulgaria and Italy. Nabucco is to bring gas from Caspian Sea area countries to Europe via Turkey, bypassing Russia. Experts warn that if South Stream is built the EU will be forced to buy Caspian gas at a much higher price, however. 'I argue that if South Stream is built, Nabucco will not be, at least not for Caspian gas,' Zeyno Baran, a Turkish-American energy expert with the Washington-based Hudson Institute, told Euobserver. Turkey just last month signed a legal framework agreement for Nabucco, raising hopes of the country's strategic backing of EU energy security interests. 'Europeans need to really understand what's going on in Turkey, how close it has gotten to Russia as opposed to Europe and the US,' Ms Baran said. In terms of geopolitical impact, South Stream would reduce the importance of Ukraine's transit pipeline network, which currently ships 80 percent of Russian gas to the EU. The new situation would make it easier for Moscow to exert political pressure on Kiev by raising the price of its gas exports to Ukraine without the fear of a potential knock-on effect on its EU customers. If South Stream is built before Nabucco, it could also see Azerbaijan sell its extra gas into the Russian pipeline, damaging prospects for Georgia's independence. Georgia currently buys all its gas from Azerbaijan, with the country being forced to go back to Russian suppliers if its Azeri channels were blocked. 'If South Stream is built, all that Caspian gas is going to pour into it. Nabucco is important not only for diversifying Europe's needs, but it's also freeing the Central Asian countries and the Caucasian countries from the hold of Russia. Now with this, Turkey sent a signal, whether it to wanted or not, that it doesn't really care about those countries, it just cares about becoming a gas hub.'"
Turkey Plays Both Sides on Gas Pipelines
BusinessWeek, 11 August 2009
"Mexico’s oil production may fall 4.9 percent next year as the nation faces the greatest 'fiscal shock' in 30 years, Finance Minister Agustin Carstens told a Senate committee today....State-owned oil company Petroleos Mexicanos on July 30 cut its production forecast to 2.65 million barrels a day for this year, from an earlier estimate of as much as 2.8 million. Carstens said Pemex may pump 2.5 million barrels a day next year and output would keep falling through 2012. Output is slumping as production at Cantarell, the company’s largest field, drops at a rate twice as fast as forecast by Pemex. Last year, production slumped at the fastest rate since 1942."
Mexico Oil Production to Fall 4.9%, Drop Through 2012
Bloomberg, 11 August 2009
"From his 44th floor office overlooking La Défense, surrounded by fat art books and bonsai trees, Christophe de Margerie is drawing a typically eccentric analogy. The oil business, he says, peering over his moustache at the sweltering streets below, is a bit like hairdressing, especially during a recession. 'I was talking with a hairdresser the other day. He told me they were having no problems at all. People still need to get their hair cut. Business is good.' In the same way, he argues, while industrial demand for oil and gas has suffered in the downturn, Total’s business is holding up better than many because levels of private car use have fallen only modestly...Few in his position, presiding over a colossus with revenues of €180 billion last year, would speak their mind so comfortably, nor would they openly utter what many in the industry still consider heresies: that global oil production is close to a peak because of a lack of resources and investment; and that consumption in Europe and the United States may already be in terminal decline because of a growing focus on energy efficiency and on the environment.... 'If we are talking about Old Europe,' he said, pondering oil’s future, 'then definitely [demand] has peaked and it will decline, especially if based on consumption per person per year ... In the US, consumption has probably peaked.' Only Asia, he believes, especially India and China, offers big opportunities for oil companies such as Total to earn profits by meeting steadily growing demand. This, in turn, means that the industry urgently needs to find new products beyond fossil fuels in order to continue to prosper. 'We all know there will be a shortage of energy, so, in my view, not to look at other options would be strange,' he says, adding that Total, one of the world’s six oil 'supermajors', along with BP, Shell, ExxonMobil, ConocoPhilips and Chevron, needs to diversify into renewable energy and nuclear power. The commercial imperative is merely amplified by the threat of climate change. Mr de Margerie believes that the North Sea, an important part of Total’s empire where the company remains the fourth-biggest producer, offers a good example of the challenges facing the industry. Production in the UK sector peaked in 1999, but Total has managed to sustain higher levels than expected by what he describes as skilful 'gardening' of resources, ekeing out remaining supplies of oil and gas from smaller, still untapped fields."
Monday Manifesto: Christophe de Margerie asks if oil is offering a Total solution
London Times, 10 August 2009
"Last week, the government published a review of the UK’s energy security situation. In a report commissioned by the prime minister, Malcolm Wicks, the former energy minister, pronounced that 'there is no crisis'. His findings were in marked contrast to those of the UK Industry Taskforce on Peak Oil and Energy Security, which concluded last year that the economy faces a clear and present energy-security threat. The taskforce, a group that includes Virgin, Scottish and Southern Energy, Arup, Stagecoach and Solarcentury, was set up in 2007 on the basis of our shared opinion that peak oil merited serious study as a business risk. Some began with the assumption that the issue was low-risk but high-consequence. Sadly, we are now of the collective view that peak oil is a high-risk, high-consequence issue....The taskforce will produce a second report this November, studying among other topics the impact of the recession on oil production, which we concluded ( last November was most likely to peak in 2013. Early indications are that the recession has moved the peak a little further into the next decade, but steepened the descent in production thereafter. Most leaders in the oil industry put the peak well beyond the next decade, a view that we know senior civil servants share. The Wicks review mentions peak oil only once. The relevant passage concludes: 'Few authors advocating an imminent peak take account of factors such as the role of prices in stimulating exploration, investment, technological development and changes in consumer behaviour.' The UK industry taskforce report ignored none of these things. Prices do stimulate exploration but – we argue – not enough. We discuss the intervals between oil discoveries and bringing capacity to the market. We discuss investment, and conclude that there have been dangerous shortfalls even when prices have been high. We discuss technological developments such as enhanced oil recovery and conclude that they tend only to slow depletion rates. We discuss changes in consumer behaviour and worry that they will not be sufficient, especially in India and China, to shrink global demand in parallel with supply. If we imagine a review of financial security in 2006, the equivalent of the cursory dismissal of peak oil in the Wicks review might have read as follows: 'Few authors advocating the toxicity of derivatives take into account factors such as the investment banking industry’s sophisticated treatment of risk, and the extent of the due diligence involved in awarding triple-A investment grading.' We believe there are profound cultural problems in this debate. The FT’s Gillian Tett has argued that the banking elite cocooned itself in a 'social silence' over the true worth of its assets in the run-up to the financial crunch. We worry that the oil industry is wrapped in a social silence on the depletion of its own assets. If we are right, a dire energy crunch awaits us and we need to act now. The most perplexing thing about this fundamental difference of opinion is this. The UK taskforce held two meetings with Department of Energy and Climate Change officials, one of which Mr Wicks attended himself. Yet his review ignores not just our conclusions, but our very existence."
Do not discount the threat of peak oil
Financial Times, 9 August 2009
"Georgia’s pro-Western President said yesterday that Vladimir Putin remained determined to kill him as part of ambitions to restore Russia’s former Soviet empire. In an interview with The Times, a year after the war between the two countries, Mikhail Saakashvili said that Georgia’s survival as an independent state threatened Mr Putin’s reputation as a strong ruler. Only continued support from the United States and Europe prevented a Russian invasion to install a puppet regime, he warned. With tensions rising along the front line between Georgia and Russian troops in the breakaway territories of South Ossetia and Abkhazia, Mr Saakashvili said that the Kremlin was testing the resolve of the West... Mr Saakashvili said that Mr Putin wanted to destroy Georgia to reassert control over the Caucasus region, the critical conduit for pipelines that bypass Russia and carry oil and gas from Central Asia and the Caspian Sea to Europe."
Vladimir Putin determined to kill me, says Georgian President
London Times, 8 August 2009
"Many [British] power stations are due to close over the coming decade (see chart 1), and supplies are getting tight. The government reckons that, of a total of around 75GW in generating capacity, 20GW will disappear by 2015. The private sector is less optimistic. EDF (a state-owned French firm that wants to build nuclear plants in Britain) puts the size of the hole at 32GW, and E.ON, a German competitor, reckons it will be 26GW. One survey of experts before the recession (conducted by Mitsui-Babcock, another power-station builder) found that three-quarters expected blackouts by the time of the London Olympics in 2012. When the BBC did a similar poll in 2008, the downturn had pushed the date back to 2015. 'There’s a risk of blackouts somewhere between 2013 and 2016, depending on how fast the economy recovers,' says Mr Helm. 'It may not happen,' says an engineer, 'but we’d be lucky'....Britain’s coal and nuclear plants together account for just under 45% of all power generation (see chart 2). But most of the nuclear plants, and around half of the coal plants, are due to close in the near future. The nuclear stations are simply too ancient to carry on: most are over a quarter of a century old. Around half have already shut down and are being decommissioned. Those that remain are increasingly doddery. British Energy, which runs most of the remaining reactors, had to shut two of its eight power stations last year after engineers discovered cracks in components. By 2023 only one nuclear plant will be left, a modern reactor at Sizewell in Suffolk. Some of the power plants may be patched up a bit and granted life extensions (one on Anglesey was recently given a nine-month reprieve), but not for long. New nuclear plants are on the way, but there are worries about how much they cost and how uncertain returns on them are for investors. Even the most optimistic atom-splitters think that 2017 is the earliest date by which the first one can be built. They will come too late to help with the supply crunch....Britain has committed itself to meeting punishing climate-change targets. Its carbon emissions in 2020 must be 34% lower than their level in 1990, and that is only a stepping stone en route to an eventual cut of 80% by 2050. These targets would seem to rule out rebuilding coal-fired power stations, because coal is the most planet-warming of the fossil fuels. Instead, ministers want to see a big expansion in the amount of energy Britain gets from the waves, the sun and the wind—especially offshore wind. They are hoping to see 33GW-worth of maritime windmills (somewhere around 5,000 turbines in all) built over the next 11 years. That is quite an ambition, and many doubt whether it can be realised. Britain’s entire offshore capacity in 2008 was only 0.6GW, although admittedly this was the biggest in the world. History is not reassuring: a combination of nimbyism and poorly-designed state subsidies means that Britain’s previous, less-ambitious renewable targets have all been missed. Even if the windmills are built, they will not in themselves plug the generation gap because they do not generate power on a calm day. National Grid reckons that compensating for that uncertainty of supply will require a huge amount of over-engineering. 25GW of wind power, it reckons, would be worth only around 5GW of fossil-fired generation. Since coal is too dirty, nuclear plants are too slow to build and renewables are of only limited use, investors are turning towards more gas plants, encouraged by rollercoaster power prices that make planning long-term and expensive projects difficult. Gas plants are cheap to build (though expensive to run), so they seem ideal for a market with a murky future, like Britain’s. The first sizeable new power station in Britain for half a decade—built in 2008 at Langage, near Plymouth, by Centrica, a big energy firm—is gas-fired, and there are plenty of others on the drawing board. The Department of Energy and Climate Change reckons that three-quarters of the fossil-fired power stations already planned are to run on gas. The trouble is that Britain already gets 46% of its electricity from gas; over half of its houses use it for heating and cooking. That is a legacy of Britain’s North Sea wealth, which for three decades provided all the energy the country could possibly consume. But the golden goose is showing its age: North Sea production peaked in 1999 and has since been falling faster than all but the gloomiest foresaw. That leads to worries about security of supply. 'The best way to have a secure energy system is to have lots of different fuels,' says Mr Constable. 'It’s hard to see how a system that’s two-thirds gas-fired fits that definition.' In a gas-dominated system, power providers would be unable to hedge easily against changes in the gas price, which tends to shadow the notoriously volatile oil price. Firms can simply pass on price increases to their customers, but voters are unlikely to appreciate unpredictably gyrating bills. Other worries are political. Britain currently imports around a quarter of its natural gas, much of it from Norway; by 2015, according to one estimate from Centrica, that could rise to three-quarters.... Other sources are becoming available, particularly liquefied gas shipped from the Middle East, but the worldwide market is—for now at least—immature and thinly traded, and Britain’s storage capacity is limited. The more gas plants Britain builds, the likelier it becomes that, like much of the rest of Europe, it will be reliant on Russia for a lot of its gas, either directly or indirectly through agreements with continental energy firms. That is a worry: under Vladimir Putin Russia has proved itself an unreliable supplier, cutting gas to countries such as Ukraine and Belarus that have incurred the ire of the Kremlin. All this leaves Britain in a hole. The lights are dimming, but green targets are an argument against new coal plants, security-of-supply concerns make gas dicey, lack of time rules out nuclear, and worries about practicality dog renewables."
Dark Days Ahead
Economist, 6 August 2009
In a report on energy security by Malcolm Wicks, a former energy minister, said the UK needs to nurture better relationships with gas exporters, Norway, Qatar and Saudi Arabia, while tripling nuclear capacity and pushing for renewable energy. The Labour MP said that the UK must avoid a costly ‘dash for gas’ and minimise its exposure to political spats like the Russia-Ukraine row that push up spot prices. The Department of Climate Change last month said energy efficiency means that declining North Sea gas will not result in extra imports beyond next year. But Mr Wicks' report said that ‘such projections are inevitably uncertain and others have estimated higher import dependence’. The MP also advised that state intervention in the energy market would be increasingly necessary. He urged the Government to consider legislation to reserve storage space in offshore gas facilities owned by energy companies for UK needs. This would stop companies diverting gas supplies to other countries in the event of a shortage.”
UK should lock in gas contracts as supply wanes, says PM's aide Malcolm Wicks
Daily Telegraph, 5 August 2009

“Coal has become the ugly sister of power sources, condemned as old-fashioned, ultra-polluting and excessively costly to mine, given that we have exhausted the most easily accessible supplies. Yet beneath the Firth of Forth, in a coalfield of more than 200 square miles, a project is taking shape that, if successful, would offer an affordable means of reaching billions of tons of deep-lying coal deposits without causing irreparable harm to the environment. The Firth of Forth field is so deep – 500 metres or more beneath the surface – that it has not been cost-effective to mine. The attraction of exploiting it has further diminished because of the link between global warming and fossil fuels. The new scheme, however, would couple two recently improved technologies – underground coal gasification and fuel cells. Rather than having the coal dug out, oxygen and water would be pumped down the mine to create a white-hot chemical reaction that turned the coal into gas. This process would not only generate electricity more efficiently than wind, nuclear or conventional gas and coal power plants, but would enable the capture and storage of more than 99 per cent of the CO2 contained in the fuel before it escaped into the atmosphere.  The construction of such a carbon capture and storage (CCS) facility means that environmental objections to using coal as a fuel would be dramatically diluted. Equally, it would enable much more of the world's remaining coal deposits to be mined – in Britain alone there are an estimated 17 billion tons suitable for the CCS process. Coal has been a driving force of the world economy since the Industrial Revolution, and with China, India and the United States sitting on huge reserves, it is expected to remain so for decades, or even centuries, to come. China and the US, the world's two biggest greenhouse gas producers, both rely heavily on coal – China, which burnt 2.74 billion tons in 2008, obtains 80 per cent of its electricity from coal, while the US derives 65 per cent. Annual world consumption of coal is more than 6.5 billion tons, which by 2030 is forecast to rise to 10 billion tons. Scientists have repeatedly given warning that if emissions from fossil fuels continue to rise, there will be little hope of avoiding catastrophic levels of climate change – unless the carbon dioxide can be captured and stored.  At the Firth of Forth field, this could be done quite simply. First, the gas produced from the so-called ‘flash-frying’ of the coal would be piped to the surface and cleaned of contaminants. Then it could be run through a traditional generator. But there is a more effective alternative, which involves the gas being separated into two streams. One would consist of hydrogen, which could be fed into high-efficiency fuel cells to be turned into electricity; the other would be the carbon dioxide, for storage. The key to the process is low-cost, alkaline fuel cells, developed by AFC Energy Ltd, which turn hydrogen into electricity, with water as a by-product. Such is the potential of the scheme that despite its use of coal, usually a guarantee of the environmentalists' ire, it has won the approval of Friends of the Earth. Neil Crumpton, the FoE's energy specialist, describes it as an opportunity to ‘demonstrate carbon capture technologies without the excuse of claiming to need to build a massive, new coal power station’.”
A sustainable future for coal?
Daily Telegraph, 4 August 2009

An ‘interventionist’ approach by the government will be needed if security of energy supply is to be guaranteed, a report commissioned by the prime minister will conclude on Wednesday. Malcolm Wicks, the former energy minister appointed by Gordon Brown as his special representative for international energy issues, will say that ‘the time for market innocence is over’ and that the government needs to do more to safeguard electricity and gas supplies. His report, published by the Department of Energy and Climate Change, raises concerns about a new 'dash for gas' that could make Britain more dependent on imports from countries such as Russia, Algeria and Nigeria. The warning comes as figures compiled by New Power, an industry journal, show that gas-fired power stations account for the majority of planned generation capacity, far exceeding any other fuel. Mr Wicks’s report emerged out of concerns that, while energy policy was addressing the threat of climate change – as seen in the white paper launched by Ed Miliband, the energy secretary, last month – security of supply was being relatively neglected. The recession, which has cut oil prices to less than half their peak of $147 a barrel a year ago and has sent wholesale gas and electricity prices tumbling, has eased immediate fears about energy shortages.Dorothy Thompson, the chief executive of Drax, the operator of Europe’s biggest coal-fired power station, said there had been an 'unprecedented' drop in demand for electricity. National Grid, which owns the electricity and gas transmission networks, published forecasts in May suggesting that power demand by 2016 would still be well below its 2008 level. But as the world economy recovers, energy demand is expected to pick up again, led by emerging economies such as China and India, and that is expected to push oil and gas prices higher. Meanwhile, Britain’s oil and gas production from the North Sea is in decline as its mature fields are sucked dry. As a result, the country, which was self-sufficient in gas as recently as 2004, is expected to have to rely on imports for between 45 per cent and 70 per cent of its needs by 2020. Mr Wicks argues that this shift to import dependency means the prevailing model of energy policy since the 1980s – that the market should be allowed to work freely as far as possible – is no longer workable. ‘The era of heavy reliance on companies, competition and liberalisation must be re-assessed,’ he said. ‘We must still rely on companies for exploration, delivery and supply but the state must become more active: interventionist, where necessary.’ Mr Miliband and his Labour predecessors had already begun to shift policy in that direction, but Mr Wicks’ recommendations, if implemented, would push the government further than it has so far been prepared to go. Among his proposals, he suggests that the government should look at setting objectives for the fuel mix for the country’s electricity generation, specifying a set proportion, perhaps within bands, to come from energy sources such as gas, nuclear, coal and wind.  The government has signed up to that approach for renewables, which are supposed to provide about 30 per cent of Britain’s electricity by 2020, but not for other technologies. Other ideas put forward by Mr Wicks include the possibility of government-backed strategic gas storage, to run alongside commercial storage sites, which could release gas to cope with supply disruptions such as the problems caused by Russia’s dispute with Ukraine in January. “
Call for more intervention on energy
Financial Times, 4 August 2009

"The world is in danger of a uranium supply shortfall as the global nuclear industry speeds up, chief executive of Energy Resources Australia (ERA) Rob Atkinson told MINING DAILY. 'While there are an awful lot of nuclear reactors being built around the world, uranium mines are not keeping pace,' he said. 'With 30 countries in the world operating nuclear reactors, as well as another 14 countries planning reactors, that leaves open quite a significant supply opportunity.'”
Uranium supply could be in danger, ERA
Australian Mining, 3 August 2009

"The world is heading for a catastrophic energy crunch that could cripple a global economic recovery because most of the major oil fields in the world have passed their peak production, a leading energy economist has warned. Higher oil prices brought on by a rapid increase in demand and a stagnation, or even decline, in supply could blow any recovery off course, said Dr Fatih Birol, the chief economist at the respected International Energy Agency (IEA) in Paris, which is charged with the task of assessing future energy supplies by OECD countries. In an interview with The Independent, Dr Birol said that the public and many governments appeared to be oblivious to the fact that the oil on which modern civilisation depends is running out far faster than previously predicted and that global production is likely to peak in about 10 years – at least a decade earlier than most governments had estimated. But the first detailed assessment of more than 800 oil fields in the world, covering three quarters of global reserves, has found that most of the biggest fields have already peaked and that the rate of decline in oil production is now running at nearly twice the pace as calculated just two years ago. On top of this, there is a problem of chronic under-investment by oil-producing countries, a feature that is set to result in an 'oil crunch' within the next five years which will jeopardise any hope of a recovery from the present global economic recession, he said. In a stark warning to Britain and the other Western powers, Dr Birol said that the market power of the very few oil-producing countries that hold substantial reserves of oil – mostly in the Middle East – would increase rapidly as the oil crisis begins to grip after 2010.  'One day we will run out of oil, it is not today or tomorrow, but one day we will run out of oil and we have to leave oil before oil leaves us, and we have to prepare ourselves for that day,' Dr Birol said. 'The earlier we start, the better, because all of our economic and social system is based on oil, so to change from that will take a lot of time and a lot of money and we should take this issue very seriously,' he said. 'The market power of the very few oil-producing countries, mainly in the Middle East, will increase very quickly. They already have about 40 per cent share of the oil market and this will increase much more strongly in the future,' he said. There is now a real risk of a crunch in the oil supply after next year when demand picks up because not enough is being done to build up new supplies of oil to compensate for the rapid decline in existing fields. The IEA estimates that the decline in oil production in existing fields is now running at 6.7 per cent a year compared to the 3.7 per cent decline it had estimated in 2007, which it now acknowledges to be wrong. 'If we see a tightness of the markets, people in the street will see it in terms of higher prices, much higher than we see now. It will have an impact on the economy, definitely, especially if we see this tightness in the markets in the next few years,' Dr Birol said. 'It will be especially important because the global economy will still be very fragile, very vulnerable. Many people think there will be a recovery in a few years' time but it will be a slow recovery and a fragile recovery and we will have the risk that the recovery will be strangled with higher oil prices,' he told The Independent. In its first-ever assessment of the world's major oil fields, the IEA concluded that the global energy system was at a crossroads and that consumption of oil was 'patently unsustainable', with expected demand far outstripping supply. Oil production has already peaked in non-Opec countries and the era of cheap oil has come to an end, it warned. In most fields, oil production has now peaked, which means that other sources of supply have to be found to meet existing demand. Even if demand remained steady, the world would have to find the equivalent of four Saudi Arabias to maintain production, and six Saudi Arabias if it is to keep up with the expected increase in demand between now and 2030, Dr Birol said. 'It's a big challenge in terms of the geology, in terms of the investment and in terms of the geopolitics. So this is a big risk and it's mainly because of the rates of the declining oil fields,' he said. 'Many governments now are more and more aware that at least the day of cheap and easy oil is over... [however] I'm not very optimistic about governments being aware of the difficulties we may face in the oil supply,' he said. Environmentalists fear that as supplies of conventional oil run out, governments will be forced to exploit even dirtier alternatives, such as the massive reserves of tar sands in Alberta, Canada, which would be immensely damaging to the environment because of the amount of energy needed to recover a barrel of tar-sand oil compared to the energy needed to collect the same amount of crude oil."
Warning: Oil supplies are running out fast
Independent, 3 August 2009
"Although Russia and the United States are most often mentioned as the contestants of the 'new Great Game' that began after the fall of the Soviet Union, other players have also entered the arena. Central Asia, possessing billions of barrels of recoverable oil and trillions of cubic meters of natural gas, is located fortuitously between Europe and China -- two massive consumers of energy resources. The region also sits on the frontier of the Islamic world, and Beijing and Brussels are among those who see Central Asia as a potential bulwark against potential security threats emanating from Iran, Afghanistan, and Pakistan. China has multiple motives in Central Asia, and has adopted an ingenious policy for dealing with the region, according to James Nixey, manager and research fellow for the Russia and Eurasia program at Chatham House. 'I would assess it as being a considerable degree of genius,' Nixey said. 'Chinese foreign policy is very long-term and they're much happier as they were -- just to give an example of Hong Kong -- to sit back and wait for things to come their way, as they know it will.' As for security concerns, Beijing has found success in exerting its influence through a regional alliance. China, Russia, and four of the Central Asian states -- Uzbekistan, Tajikistan, Kyrgyzstan, and Kazakhstan -- compose the Shanghai Cooperation Organization (SCO), formed in 2001 after Uzbekistan joined a grouping known as the Shanghai Five....Although security issues often make the headlines, China's main interest is gaining access to its neighbors' energy resources, and there too it enjoys a number of advantages over regional player Russia, and outsiders such as the United States and the European Union. Central Asian states see neighboring China as a potential consumer of their own exports, and Beijing never seems to be short of money. China also refrains from criticizing the internal politics of Central Asian governments, something that can't be said of the West. Chinese companies have been active in building the pipelines, roads, and railways needed to carry the resources back to China. Chinese companies, which enjoy a reputation for completing projects on time, train and employ local workers as well as bringing in their own labor. The approach is bearing fruit, Clements explains. China is 'starting to receive oil and gas and also uranium and other minerals, so natural resources are coming from the region,' he said. Russian companies had a near monopoly over the export of Central Asia's energy resources in the 1990s, but much has been done to even the playing field. China has helped build an oil pipeline from western Kazakhstan that is already in operation, and a gas pipeline from Turkmenistan that is expected to go online at the end of this year.... The European Union, too, is looking to break Russia's monopoly over Central Asian energy resources. Europe receives Central Asian oil and gas via Russia, and some in the EU have raised concerns about a heavy reliance on Russia for energy supplies. Incidents such as the suspension of Russian gas supplies at the start of this year, owing to a dispute between Ukraine and Russia, reinforce the view that the EU needs urgently to diversify its energy import sources. To help offset such fears, the EU is supporting the 3,300-kilometer Nabucco pipeline project to bring gas from Azerbaijan and some Central Asian nations to the heart of Europe. This year, the EU unveiled its 'Southern Corridor-New Silk Route' strategy that aims to greatly develop and enhance road and rail links and pipelines between the Caspian area and Europe. The EU strategy is having some success, Clements said, but 'they're still limited in the progress they've made in terms of trying to engage Turkmenistan into a trans-Caspian pipeline deal. We have seen some progress there. We've seen states that previously turned away from the West, especially Uzbekistan, again maybe altering its course into a sort of middle path between the West and Russia.' The recent signing of an agreement between Nabucco transit countries brings the project closer to realization. The EU will pay the cost of construction so that the Central Asians have a new export route to one of the most valued energy customers in the world -- the EU. The EU's strategy also serves to strengthen Central Asia's hand in dealing with Russia. A pipeline explosion that cut off Turkmenistan's gas exports to Russia in April is one example. Turkmen officials blamed Russia, and Moscow rejected the blame. But the events may have helped lead Turkmenistan to pursue other energy partners. Turkmenistan has since signed a deal with Germany's RWE for rights to explore a bloc on the Turkmen Caspian shelf. In July, Turkmenistan's foreign minister went to Brussels and Washington for energy talks. The same month, Turkmenistan said it would sell gas to Nabucco. 'If you look at the trends I tend to think there's a bit of ebb and flow,' says Nixey of Chatham House. 'At the moment [the EU is] on a bit of a high so they may be feeling quite pleased with themselves.' 'The fact that the Kyrgyz have reversed their decision on Manas air base or that the Uzbeks are making more overtures toward the EU right now is a good thing in so many ways,' he said. 'But the fact of the matter is what is given can just as easily be taken away.'"
China, EU Wait In The Wings For Access To Central Asia
Radio Free Europe, 2 August 2009
"Eighteen years after the five former Soviet republics of Central Asia became independent, outsiders continue to jockey for position in the traditional contest for influence in the region. The great powers -- Russia, the United States, China, and Europe -- follow two main strategies to gain or hold sway in the region: the provision of mutual security, and the use of financial measures and trade incentives in exchange for access to enormous energy reserves. The five states of Central Asia -- Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan -- are majority Muslim states that mark the northern limits of the Islamic world. To the south are Afghanistan and Iran, countries that outside actors and the Central Asian countries themselves view as potential sources of security problems. Neighboring Russia and China, meanwhile, see Central Asia as a hotbed of movements linked with opposition elements within their own borders. Central Asia's vast deposits of oil, natural gas, and uranium are the modern-day lures of a region that has an ancient history as a crossroads for trade between the East and the West. And the five nations are showing an increased readiness to play that role again, but are finding they can now demand security and trade partnerships in exchange....A relative newcomer on the scene, the United States was among the first countries to open embassies in all five Central Asian states after the collapse of the Soviet Union, and U.S. companies quickly descended on the region. Chevron, for example, signed a joint partnership in 1993 with Kazakhstan to develop the enormous Tengiz oil field, among the top 10 producing fields in the world. With a wary eye on fighting in Afghanistan and Pakistan, the Central Asian states have also established new security partnerships, primarily involving the Russia-dominated Collective Treaty Security Organization (CSTO), as well as the United States. Since the September 2001 terrorist attacks, Washington's primary interest in Central Asia has been cooperation in ridding Afghanistan of the Taliban and extremist groups such as Al-Qaeda.  The Central Asians were eager allies, remembering that Afghanistan's problems spilled into Central Asia several times in the 1990s. The U.S-led coalition was allowed to use bases in Kyrgyzstan (Manas), Tajikistan (Dushanbe), and Uzbekistan (Khanabad). A weakened Moscow grudgingly accepted the U.S. military presence in what it considered its backyard. But as Russia gained strength, it worked to remove, or at least curtail, U.S. influence in the region."
Shifting Tides Of Influence In Central Asia
Radio Free Europe, 1 August 2009
"As the global economy recovers from the current downturn, there is a significant risk that resurgent energy demand will coincide with tight supply, vaulting oil prices higher again. Indeed, prices are already on the rise. Research by the McKinsey Global Institute (MGI), combining macroeconomic modeling with an understanding of industry dynamics, finds that unless business leaders and policymakers act decisively on both oil supply and demand, there is a risk that a second oil shock could follow economic recovery—indeed, one that could be lengthier than the second price spike that hit the world economy in the 1970s. In the 1970s there was a silver lining to the twin shocks. For a long time after, energy demand remained subdued and the world saw a revolution in energy efficiency and substitution. Never again, policymakers vowed, would they allow soaring energy prices to take their economies hostage. As it did in the 1970s, energy demand likely will surge once the world economy expands again. MGI expects demand to grow more than 2% annually between 2010 and 2015, nearly a full point faster than in the period from 2006 to 2010. At the same time, we face a supply picture that is less promising than it was in the 1970s....Today, tight credit as well as uncertainty about oil price levels is compromising investment in new supply. Even after the credit crunch eases, producers could remain cautious in the face of strenuous efforts by markets such as the U.S. to lessen their dependence on imported oil, adding uncertainty to the demand outlook. In any case, even in a more benign investment environment, producers will find adding supply capacity more difficult than they did in the 1970s because of the challenge of producing oil from rapidly maturing oil fields and the difficulty of finding new low-cost oil fields. One way to avoid imbalance in the oil market in the face of constrained supply is higher prices that dampen demand—but the transmission mechanism is much weaker today than it was in the 1970s due to energy subsidies and the lower energy intensity of many economies. In this context, fuel substitution and higher energy efficiency become vital checks on demand. Here, too, the prospects appear less promising than they did in the 1970s. Back then, the twin oil shocks triggered improvements in energy efficiency and a substitution to different types of fuel, spearheaded by developed countries. These moves reined back demand for a long time. Such efforts continue today and are paying dividends—in the U.S., for example, both demand for fossil fuels and per capita energy consumption will fall between 2006 and 2020. Overall OECD fossil fuel demand will be almost flat. But decisive action by developing regions is vital this time because they will account for 90% of energy demand growth between now and 2020. Even if the current recession proves to be deeper than the downturn in the 1970s, rapid growth in developing economies would boost global energy consumption significantly. There are many actions that policymakers can take, even in the short term, to abate energy demand in parallel with measures to ensure supply, and these need not come at a high cost. We calculate that investments to increase energy productivity that offer investors a return of 10% or more could reduce global oil demand by as much as 10% by 2020, or between 6 million and 11 million barrels per day—the amount required to keep demand and supply in balance. But although some developing countries have taken action on energy efficiency—China's fuel-efficiency standards, for instance—these efforts are not yet sufficiently broad-based or robust. Moreover, it is unlikely that developing countries will substitute fuels at the rate witnessed in the 1970s when developed economies were able to make 'easy' switches. Today, for example, residual fuel oil comprises only 12% of total petroleum-products demand, and nearly half of the total is used for marine bunkers where no real substitute is available. Finally, one potential quick win—the removal of fuel subsidies, largely in the Middle East—could cut 2 million to 3 million barrels per day of demand in 2020 but is unlikely to materialize for political reasons. It may already be too late to avert a second oil shock that could develop as early as 2010, depending on how quickly the global economy recovers."
Scott S. Nyquist, director in McKinsey & Co.'s Houston office
Are We Headed for Another Oil Shock?
Business Week, 29 July 2009
"U.K. utilities may need to mothball power plants and cut investment plans as the country faces the biggest electricity glut in almost 20 years. National Grid Plc, the manager of Britain’s power network, predicts this year’s 6 percent drop in consumption may leave some plants unneeded to meet demand. The oversupply will increase because the country’s six biggest energy suppliers, led by Centrica Plc and Scottish & Southern Energy Plc, are developing more natural gas-fueled stations. From Didcot in Oxfordshire to Longannet in Scotland, power generators are shuttered. Profits from gas-fed plants may fall by 30 percent in the winter heating season that starts in October 2010, compared with the same period this year, futures markets show. The result will be cheaper energy for U.K. consumers and an earnings squeeze for utilities including E.ON AG and RWE AG....There’s a 'danger' the utilities and government will treat slowing demand as a reason to delay plans to increase energy efficiency and build renewable energy plants, said Tony Ward, a partner in Ernst & Young LLP’s power and utilities team. He predicts utilities will need to ax 35 billion pounds of investment plans because of the slowdown in energy demand. That will reduce expenditure to 199 billion pounds through 2025, the accountant said in a report published July 21. The oversupply may linger for six years because the slump in energy use is prolonging the lives of 12,000 megawatts of capacity that is allowed to run for a maximum 20,000 hours, or about 29 percent of the time, between 2008 and 2015. By spacing out their operations rather than using up the hours immediately, producers are leaving the market saturated for longer....Use of coal-fed generators with a cap on their remaining operations dropped 30 percent in the five months through May compared with the year-earlier period, according to the England and Wales Environment Agency. The U.K. Nuclear Decommissioning Authority is also extending the operating life of its oldest atomic reactors, and EDF’s British Energy division got approval on July 1 to extend the use of its Hartlepool and Heysham-1 plants for another 10 years."
Power Glut Forces U.K. Utilities to Idle Plants
Bloomberg, 29 July 2009
"Europe's largest onshore windfarm project has been thrown in severe doubt after the RSPB and official government agencies lodged formal objections to the 150-turbine plan, it emerged today. The setback adds to the problems facing the government's ambition to install 10,000 new turbines across the UK by 2020 as part of its plan to cut the carbon emissions causing climate change. The proposed 550MW windfarm, sprawling across the centre of Shetland's main island, would add almost 20% to existing onshore wind capacity. But the objectors say the plans could seriously damage breeding sites for endangered birds, including a rare wader, the whimbrel, which was unexpectedly discovered by the windfarm developer's own environmental survey teams. Other species at risk include the red throated diver, golden plover and merlin."
Latest protest leaves climate strategy twisting in the wind
Guardian, 29 July 2009
"It was meant to be the world's first demonstration of a technology that could help save the planet from global warming – a project intended to capture emissions from a coal-fired power station and bury them safely underground. But the German carbon capture plan has ended with CO2 being pumped directly into the atmosphere, following local opposition at it being stored underground. The scheme appears a victim of 'numbyism' – not under my backyard. Opposition to the carbon capture plan has contributed to a growing public backlash against renewable energy projects, raising fears that Europe will struggle to meet its low-carbon commitments. Last week, the Danish firm Vestas blamed British 'nimbies' opposing wind farms for its decision to close its turbine factory on the Isle of Wight. Many countries continue to use coal for generating power as it is the cheapest and most readily available fuel in the world. It will probably power the development of China and India. But coal is also seen as the dirtiest fuel. So, Vattenfall's Schwarze Pumpe project in Spremberg, northern Germany, launched in a blaze of publicity last September, was a beacon of hope, the first scheme to link the three key stages of trapping, transporting and burying the greenhouse gases. The Swedish company, however, surprised a recent conference when it admitted that the €70m (£60.3m) project was venting the CO2 straight into the atmosphere. 'It was supposed to begin injecting by March or April of this year but we don't have a permit. This is a result of the local public having questions about the safety of the project,' said Staffan Gortz, head of carbon capture and storage communication at Vattenfall. He said he did not expect to get a permit before next spring: 'People are very, very sceptical.' The spread of localised resistance is a force that some fear could sink Europe's attempts to build 10 to 12 demonstration projects for carbon capture and storage (CCS) by 2015. The plan had been to transport up to 100,000 tonnes of carbon dioxide from the power plant each year and inject it into depleted gas reservoirs at a giant gasfield near the Polish border. Scientists maintain that public safety fears are groundless: the consequences of escaping CO2 would be to the climate, not to public health. Many big environmental groups support CCS, both off and onshore, as a necessary evil in the battle against climate change. But Jim Footner, a Greenpeace climate campaigner, said the German protests were 'a stark warning to those that think CCS is an easy solution to the huge climate problems of coal-fired power stations'. The first wake-up call came in March, when a Dutch council objected to Shell's plans to store CO2 in depleted gas fields under the town of Barendrecht, near Rotterdam. This was despite a successful environmental impact assessment and the enthusiastic backing of the Dutch government, which, in September, must decide whether to give Shell the green light, despite the council's opposition."
Not under our backyard, say Germans, in blow to CO2 plans
Guardian, 29 July 2009
"The Iraqi cabinet Tuesday approved a law providing for the establishment of a national oil company for the first time in decades, a government spokesman said. Ali al-Dabbagh said that the cabinet submitted the new draft law to the country's parliament for final approval. He didn't provide any details about the content of the new law. The Iraqi National Oil Co., or INOC, was set up in 1964 but ousted leader Saddam Hussein scrapped the company in late 1987. The reinstated national oil company would act as the parent of the existing three major Iraqi oil operators - the South Oil Co., Iraq's largest petroleum company in Basra; North Oil Co. in Kirkuk; and Missan Oil Co. in Ammarh in southern Iraq. Thamir al-Ghadhban, an energy adviser to Prime Minister Nouri al-Maliki, confirmed that the law was passed by the cabinet Tuesday and would be sent to the parliament for approval.... The previous law stated that the INOC would have authority to conclude service and management contracts with international oil companies to improve oil recovery from producing fields. It isn't known if that provision was retained in the new law. Iraq sits atop the world's third-largest proven crude reserves after Saudi Arabia and Iran, but is desperate for oil revenue to rebuild its war-shattered economy, especially with global prices down. Iraq's pre-U.S.-led-invasion production ceiling was about 3 million barrels a day, but it now produces only 2.4 million barrels a day, of which 1.8 million is for export, according to Oil Ministry figures. Crucial to improving Iraq's broken infrastructure and returning production to pre-2003 levels are security guarantees that major international oil companies' operations won't be disrupted by sectarian power struggles. Last month Iraq held its first licensing auction, offering six oil and two gas fields to international companies. Only one, the giant Rumaila field in southern Iraq, was awarded to an alliance of BP PLC (BP) and China National Petroleum Corp. The country is planning to hold a second licensing auction by the end of this year, covering 10 groups of oil and gas fields."
Iraq's Cabinet Approves Law Establishing National Oil Co
Dow Jones Wires, 29 July 2009
"Saudi Aramco’s oil production capacity has reached 12 million barrels per day (bpd), which could allow it to set records for crude output once global energy demand recovers. The national oil company accounts for nearly all crude production in Saudi Arabia, the world’s biggest oil exporter. 'Production capacity of the company was 12 million bpd in June, when output started from three fields,' said Khalid al Falih, the chief executive of Aramco, according to the Saudi newspaper Al Hayat. Those deposits included Khurais, at which production capacity was raised by 1.2 million bpd, or roughly seven-fold, in the biggest completed oilfield expansion project in the world. The field is located in the most prolific Saudi onshore oil-producing region, east of Riyadh, near the giant Ghawar field, which has the world’s biggest deposit of conventional crude oil.The output capacity at Khurais was less than 200,000 bpd before the expansion, according to US government data. The other Saudi oil projects completed last month included a 250,000 bpd capacity expansion at the Shaybah oilfield, in the kingdom’s remote Empty Quarter near its border with the UAE, which previously could produce up to 550,000 bpd. Aramco also developed an initial 100,000 bpd of output capacity at the Nuayyim field, south-east of Riyadh. In total, the three projects have raised Saudi oil production capacity by 1.55 million bpd or about 15 per cent. That has boosted the kingdom’s spare capacity to a record 4 million bpd, as Saudi Arabia has led the way in delivering the record 4.2 million bpd of output cuts that OPEC pledged last year in an attempt to stem a steep slide in the price of oil...In 2007, amid predictions by 'peak oil' theorists that Saudi output was about to decline, Aramco announced a bold plan to add more than 2 million bpd of new oil production capacity to bring the kingdom’s total capacity to 12.5 million bpd this year. The company said a further 2.5 million bpd of additions were possible next year and in 2011, potentially bringing output capacity to 15 million bpd. Aramco has now delivered most of the increases promised for this year, even as global oil demand has fallen because of the economic crisis. Mr al Falih said the drop in oil demand was temporary and he predicted consumption growth would eventually resume. If the world failed to invest in new oil production during the downturn, global capacity would fall, causing another sharp rise in crude prices that could again destabilise the economy, Mr al Falih said. In the long term, Saudi Arabia planned to maintain spare production capacity of 1.5 million to 2 million bpd, he said."
Saudi Aramco gears up for record oil production
The National (UAE), 28 July 2009
"Prince Andrew, who is the UK's special representative for trade and investment, told politicians from the Central Asian nation this week that Britain would be willing to provide 'substantial support' to help the country pipe its gas to Europe. The country used to pipe its Caspian gas to Russia, but recently stopped following a row over contracts. It is now hoping to send gas to Europe through a pipeline funded by the European Union. 'The prospect of sending Turkmen natural gas to European markets, including Britain, is fully in line with Turkmenistan's plans to diversify its exports to world markets,' Gurbanguli Berdymukhamedov, the country's president, said. Britain will become increasingly dependent on expensive imports over the coming years. However, utility companies are anxious to source gas from more politically friendly regimes than Russia, which has the one of the world's most plentiful supplies. Other European countries were hit by gas price rises during the row between Ukraine and Russia over a pipeline last winter. The UK gets the majority of its gas from the North Sea and Norway, plus cargos of liquefied natural gas from countries such as Qatar. Domestic gas production is dropping by 5pc per year. Turkmenistan, which sold 70bn cubic meters of gas last year, already supplies Iran and is currently working on a pipeline to China expected to come online soon. However, there remain question marks over the reliability of the Turkmen supplies, with some experts casting doubt on whether it has the resources to supply the European market."
Britain targets Turkmenistan gas as North Sea resources deplete
Daily Telegraph, 28 July 2009
"The cost of pumping a barrel of oil out of the ground depends on a variety of factors, including the size and accesibility of the field. Oil companies are often reluctant to give precise cost information. The following provides estimates of the cost of running a field for OPEC members and other individual countries, obtained from traders and industry analysts. It also gives the International Energy Agency's more general assessment of costs for the oil-producing regions of the world. Saudi Arabian crude is the cheapest in the world to extract because of its location near the surface of the desert and the size of the fields, which allow economies of scale. The operating cost (stripping out capital expenditure) of extracting a barrel in Saudi Arabia has been estimated to be around $1-$2, and the total cost (including capital expenditure) $4-$6 a barrel. Extraction of Iraqi oil is in theory also very cheap, although there are political and security challenges. Industry analysts estimated total costs at between $4-6, although they said some fields could be more expensive. In the United Arab Emirates, operating and capital costs combined were estimated to be around $7 a barrel. Oil extraction from mature and deep water offshore fields is much more expensive than from the accessible hydrocarbon territory of the Gulf. In Nigeria, production in ultra-deep water fields can reach $30 a barrel compared with onshore costs of around $15, according to analysts. In offshore Angola, it costs around $40 to produce one barrel of oil (operating and capital costs), traders told Reuters. Operating and capital costs in Algeria, Iran, Libya, Oman and Qatar were all estimated to be around $10-15 a barrel. In Kazakhstan, where reserves are big and largely unexploited, the cost to produce a barrel for medium-sized producers, such as Kazakh state oil company KazMunaiGas is around $15-18, and for Kazakhstan's largest operator Tengizchevroil, it is about $10-12, the Kazakh-British Chamber of Commerce said. Analysts said these were operating costs, probably including transport, as it is expensive to move the oil to distant ports. In Venezuela, where fields tend to be mature and small and it is difficult to make new discoveries, production costs were generally estimated at $20 a barrel (operating and capital costs). Those figures do not include the more expensive Orinoco oil from the country's sand deposits. One analyst said the extraction of one barrel of Orinoco was around $30 (operating and capital costs). Ecuador, where fields are also small and the distance to ports add to costs, analysts pegged extraction costs at $20 a barrel.  In the mature British North Sea, where the remaining oil is difficult to access, the industry body Oil & Gas UK said the break-even cost was around $50 a barrel. One analyst said operating and capital costs were $30-40 a barrel.  The International Energy Agency (IEA) -- in its latest November 2008 world energy outlook -- gave the following estimates for the all-in costs of producing oil from various types of hydrocarbons in different parts of the world: oilextractioncosts2009.JPG (31235 bytes)
Source: International Energy Agency World Energy Outlook 2008 Compiled by Martina Fuchs, Christopher Johnson, Karen Norton, Joe Brock and Barbara Lewis, Editing by James Jukwey"

FACTBOX-Oil production cost estimates by country
Reuters, 28 July 2009
"The demand for oil has hit a short-term peak in the west and industry predictions of how long it will take to recover are getting longer, research from Greenpeace shows. The Shifting Sands report pulls together oil demand forecasts from Opec and the International Energy Agency (IEA). The report found both have cut their medium and long-term forecasts - partly due to the impact of the current recession, but also down to new government policies. 'In the longer term, the impact of two key policy instruments adopted in the US and EU are cited as gaining in influence. These are the US Energy Independence and Security Act and the EU Climate and Energy package. These policies, and the fact that there has been a degree of saturation in these markets, have led to the unanimous conclusion among these agencies that oil demand in the OECD has peaked.' The report adds that, although demand in countries such as China and India will continue to grow, 'a global peak in oil demand may be within sight'. Greenpeace says this could put at risk the tens of billions of dollars major oil companies have invested in carbon-intensive tar sands projects. The report also contains data showing how the oil majors have become increasingly reliant on tar sands, with Shell emerging as the most heavily involved."
Oil demand: Is a global peak in sight?
The Guardian, 28 July 2009

• DATA: Revisions to oil demand forecasts
• DATA: Carbon intensity of oil and gas production by company

“Much has been written about how the UK needs to become a low- carbon economy, but less about how that will be achieved. On 15 July the Government provided some answers. The UK Low Carbon Transition Plan sets out how the UK will meet the cuts in greenhouse gas emissions set down in the new carbon budgets, and is supported by three sector-specific strategy documents: the Low Carbon Industrial Strategy, the Renewable Energy Strategy and 'Low Carbon Transport: A Greener Future'. The policy announcements amount to some 750 pages, so it is impossible to do them justice in anything less than a lengthy article, but they are ambitious to say the least. If the Government's ambitions are realised, we will get 40 per cent of our electricity from low-carbon energy by 2020….the Government has pledged to provide financial support for up to four commercial-scale carbon capture and storage (CCS) demonstration projects and will be requiring that all new coal-fired power stations have CCS capabilities. Capturing and compressing CO2 uses a large amount of energy, estimated at between 10 and 40 per cent of the energy produced by a power station. On average this will require the construction of a fifth power station for every four new ones that use CCS…. Another argument used by the Government to support CCS is security of supply and to reduce dependence on imported gas (principally from Russia), but this argument carries little weight when one considers that the UK imports approximately 35 per cent of its coal from Russia. This may lead to a resurgence of the UK's coal industry, but even if CCS does not succeed in the UK, the UK will have the project management, financial and legal expertise to develop CCS projects globally, so there will still be opportunities for business.”
Carbon Capture: a Waste of Time and Energy
PennEnergy, 28 July 2009
"Fuel oil, the waste left after making gasoline and diesel, is becoming as valuable as crude for the first time in six years. Prices have doubled this year to the equivalent of $66.47 a barrel in Singapore, approaching the $70.30 of Arab Light crude, which has been more expensive since July 2003. Fuel oil output at refineries in the developed world fell 18 percent in April from a year earlier, the International Energy Agency estimates. China’s imports climbed 46 percent in June from a year earlier, Barclays Capital said in a July 22 report. The increase is squeezing Hamilton, Bermuda-based Frontline Ltd. and A.P. Moeller-Maersk A/S, the world’s biggest shipping companies, while rewarding Exxon Mobil Corp. and Reliance Industries Ltd., owners of the largest refineries in the U.S. and Asia. The shortage is growing as the oil industry builds new plants that obtain more gasoline and diesel from each barrel....Frontline, the world’s biggest operator of oil tankers, has ordered captains to slow their ships to conserve fuel, said Chief Executive Officer Jens Martin Jensen. The average vessel consumes about $40,000 of the fuel, known as bunker, a day. 'With bunker prices going up, it has a strain on the bottom line,' Jensen said in a telephone interview. 'We are slow steaming, it makes sense to slow down.' Fuel oil is what remains after propane, jet fuel, gasoline and diesel are distilled from crude. Refiners can build plants that take that residue and process it again to strip out more fuels for cars, trucks, trains and airplanes. Every 42-gallon barrel of Arab Light crude yields 19 gallons of fuel oil when run through a typical refinery, according to New York-based Energy Intelligence Group. Plants equipped with so-called cokers and hydrocracking units produce almost no fuel oil. Fuel oil cost $10.15 a barrel less on average than crude during the past five years. The discount to Persian Gulf benchmark Dubai oil narrowed to $1.56 a barrel July 24 from $30.46 in June 2008, according to data compiled by Bloomberg. Refineries are limiting production as the first global recession since World War II curbs oil consumption by 2.8 percent this year, the fastest decline since the early 1980s, according to the IEA. Crude oil dropped 78 percent to a low of $32.40 a barrel on Dec. 19 in New York from a record $147.27 on July 11, 2008. The Organization for Petroleum Exporting Countries agreed since October to reduce output by 4.2 million barrels a day, or 14 percent, to support prices. Members cut sales of the lowest- quality crudes, which cost the least and yield the most fuel oil, Asian refinery officials said. Saudi Arabian Oil Co., OPEC’s biggest producer, will supply 20 percent less than contracted volumes to Asian refiners in August, with the deepest cuts in heavy and medium crudes, according to a survey of refinery officials on July 9..... Exxon and Reliance can increase production of gasoline and diesel by putting fuel oil through hydrocrackers, catalytic crackers and cokers. A refinery with these units can make $1.38 from each barrel of Dubai crude, compared with the 91 cent-a- barrel profit from a plant without them, data compiled by Bloomberg show. BNP Paribas estimates that refinery units capable of breaking down an extra 1.4 million barrels of fuel oil are being built in Asia that will come on line by the end of 2011. Refiners 'think fuel oil is low so they are cracking more,' said Simon Neo, a deputy managing director at Singapore- based Equatorial Marine Fuels. 'This means higher costs for the marine industry.' The fuel expense of running the biggest oil tankers is $40,280 a day, based on the $424 a metric ton costs in Singapore. That’s more than three times the $12,270 that London-based Drewry Shipping Consultants Ltd. estimates for paying crew, insurance, repairs and related operating expenses.....Fuel oil production is also falling as Saudi Arabia and the rest of OPEC cut output of the lowest-quality crudes. Saudi Arabia’s Arab Heavy yields 22 gallons of fuel oil per barrel, three more than what comes from Arab Light. Saudi Arabia has reduced production this year by about 400,000 barrels a day, or 4.5 percent, to about 8 million barrels a day, according to data compiled by Bloomberg.”
Maersk Hit With Frontline as Fuel Oil Beats Crude
Bloomberg, 27 July 2009

“A long-term decline in the demand for oil could undermine the huge investments in Canadian tar sands, which have been heavily opposed by environmentalists, according to a report published today. The report, by Greenpeace, will make uncomfortable reading for the companies that are investing tens of billions of pounds to exploit the hard-to-extract oil in the belief that demand and the price would climb inexorably as countries such as China and India industrialise. Citing projections from the oil producers' cartel Opec and the International Energy Agency, as well as various oil experts, the report casts doubt on the conventional assumption that consumption and prices will begin gathering pace once the world pulls itself out of recession. It argues that alongside the cyclical fall in the oil price there are more fundamental structural changes taking place. These are driven by advances in energy efficiency and alternative energy, cleaner vehicles, government policies on climate change and concerns over energy security. Greenpeace has posted the report to 200 shareholders in Shell and BP, including pension funds, in an effort to put pressure on the companies to think again. BP reports quarterly results tomorrow and Shell on Thursday. Lorne Stockman, the author of the report, said: ‘A peak in oil demand was barely discussed even a year ago, but now it is a viable idea. When it happens, I wouldn't want to guess, but it will happen sooner than we thought. There has been lots of talk about a supply peak, but it is good to start talking about a demand peak, and that has huge implications for these companies. ‘All of the international oil companies as you look beyond 2020 need a high oil price to be profitable, because they are increasingly being pushed to develop expensive resources in not just the tar sands, but in deep water and offshore Arctic sites. ‘But there is something more structural going on,’ he added. ‘Governments are beginning to act, and not just the Obama administration. In the EU, the policy driver is climate change, and in China and the US, it is about energy security and the vulnerability of the economy to volatility in the oil price.’…. The report notes that Opec and the IEA have been revising projections for oil demand downwards since 2006, with by far the sharpest revision this year. Opec has revised its 2025 oil forecast down by 12% within the past four years. Peter Hughes, who spent much of his career at BP and BG, and is now director for global energy at consultancy firm Arthur D Little, recently wrote a report titled 'The Beginning of the End for Oil?' He supports the Greenpeace view and said the correlation between oil demand and GDP growth has been weakened. ‘It is widely accepted that demand in OECD countries has plateaued and is going into decline but it has also been thought that would be massively outweighed by growth in China. But the Chinese think long-term and identified some time ago that the biggest threat to their economic growth was an increasing dependency on imported energy, which is anathema to them. The conclusion is clear – to reduce the reliance on hydrocarbons through energy efficiency and fundamental technology change. I think we will reach peak oil demand in the middle of the next decade.’ About 50% of oil demand in the US fuels cars and the report takes hope from the Obama administration having tied recent bailouts for the industry to the development of cleaner vehicles. But it notes the US is far behind China, where government mandates mean new Chinese cars are 56% more fuel-efficient than those built in Detroit. Fuel-efficient cars in China attract 1% sales tax and sports utility vehicles, 40%. Greenpeace also contends that a high oil price is simply unsustainable. It cites research from Cambridge Energy Research Associates, which suggests that economies become constrained when the price moves into a band between $100 and $120 a barrel, causing the price to fall back. Another report from energy business analysts Douglas Westwood puts the ‘recession threshold’ even lower, at $80 a barrel…..There are contrary views. The Saudi oil minister warned in May that the world could be facing another oil shock, with prices above $150 within two to three years through a lack of investment in new capacity. The International Monetary Fund has expressed similar concerns. Even Greenpeace does not suggest that there will not be temporary squeezes on demand and price spikes. But it believes that the world might fast be approaching a tipping point that could have profound implications.”
Greenpeace study finds oil companies may be doomed
Guardian, 27 July 2009

“China consumed 33.35 million metric tons of crude oil in June, which was up nearly 2.6% from the corresponding month of 2008, and the third month in a row to register a year-on-year increase in demand, a Platts analysis of official data showed July 22. Collective crude oil throughput at Chinese refineries rose to a new high of 31.92 million metric tons in June, or an average of 7.8 million barrels per day, dwarfing the previous record of 31.19 million metric tons processed in May. The government raised domestic fuel prices twice in June, providing refiners an incentive to step up production. The price hikes on June 1 and June 30 lifted gasoline prices by a total of Yuan 1,000 per metric ton ($17 per barrel) and gasoil also by Yuan 1,000 per metric ton ($19.65 per barrel). Domestic crude production in June, however, failed to keep pace with the rise in refinery runs, inching up 1.8% from a year ago to 15.71 million metric tons (3.83 million barrels per day). Meanwhile, China's year-to-date oil demand is slightly below 2008 levels, as the strength in the second quarter 2009 (Q2) could not fully offset the slump in the first quarter (Q1). Chinese oil demand in the first half of 2009, at 186.32 million metric tons, was 0.23% below the same period of 2008, Platts estimates.
China oil demand rises again in June, establishing new growth phase

Platts, 22 July 2009

BP Plc, Europe’s second-largest oil and gas company, said its North Sea output will drop about 9 percent this year, almost double the U.K.’s estimated overall decline. Production from BP’s fields in Norway and the U.K. will be the equivalent of about 320,000 barrels of oil a day in 2009, compared with 350,000 barrels a day last year, the London-based company said on its Web site. BP said it plans to maintain output at 300,000 barrels a day for the next decade. ‘For the majors like BP, Shell and Exxon, the North Sea is becoming less important,’ said Alex Kemp, professor of petroleum economics at Aberdeen University. ‘The fields are relatively small. They are not terribly exciting for a mega- major.’….Once the world’s fourth-largest oil and gas producer, the U.K. has been in decline since 1999, with energy output shrinking 5 percent last year as oil prices fell and the credit- market crisis hurt investment in energy exploration. The U.K. government is counting on North Sea oil and gas for tax revenue as the financial industry suffers in the worst recession since World War II. Industry lobby group Oil & Gas UK forecasts that oil and gas production will average about 2.5 million barrels a day in 2009, down 5 percent from 2008. Norway, the world’s fifth-largest oil exporter and third- biggest natural-gas supplier, is seeking to boost output of natural gas and is opening more of its unexplored northern waters to drilling to counter a decline in oil output at maturing fields. Norwegian crude output will fall to about 1.9 million barrels a day in 2009 from about 2.11 million barrels a day last year, according to Bloomberg calculations based on data from the country’s Petroleum Directorate. Natural gas output is forecast to rise to 102.9 billion cubic meters this year, the directorate said in January.
BP Says North Sea Oil, Gas Production Will Drop 9% This Year
Bloomberg, 21 July 2009

"Britain — and Europe — measure carbon emissions on the basis of the production of carbon in their geographical areas. And, on paper, the performance in cutting emissions seems impressive. By 2005 Britain had reduced emissions by 15 per cent compared with 1990 — and the recession has cut them further still. But this tells a very distorted story: while we have been producing less carbon, we have been consuming a lot more. If we add in emissions caused by producing goods imported from overseas (many of which used to be produced here) and take account of aviation and shipping, Britain’s record is awful: carbon consumption since 1990 had gone up 19 per cent by 2005."
Don’t blow our £100 billion on wind power
London Times, 17 July 2009

“Thousands more wind turbines, millions of ‘smart’ electricity meters for homes and new cars emitting 40 per cent less pollution than they do now all are on the way in the next decade under ambitious plans to slash CO2 emissions from every sector of the economy. They form part of the UK Low Carbon Transition Plan, a national government strategy for cutting greenhouse gas emissions in the fight against climate change, which was launched by the Energy and Climate Change Secretary, Ed Miliband, yesterday. Although the detail may sound familiar – many of these projects are already on the drawing board – it is the bringing them together into an all-inclusive society-wide plan which is new, as the Government faces up to its legally-binding target of cutting UK carbon emissions to 34 per cent below 1990 levels by 2020. Under last year's Climate Change Act, ministers have bound themselves to hit the target with a system of rolling five-year ‘carbon budgets’, and the strategy shows in detail for the first time how they intend to do this. Its central component is a seven-fold increase – in just a decade – in the amount of Britain's energy for power generation, transport and home heating supplied from renewable sources such as wind, wave and solar power (from just over 2 per cent to 15 per cent). This leap will mean that by 2020 about 30 per cent of electricity alone will come from renewables (up from 5.5 per cent today) and this huge expansion will derive principally from much more wind power. Although no precise figure was given yesterday, this will involve, Mr Miliband said, ‘thousands’ of new wind turbines, both onshore and offshore (one current estimate is about 7,000). By the 2020 date another 10 per cent of electricity will come from non-renewable low-carbon energy sources, principally the new nuclear power stations whose construction the Government is backing, and the infant technology of carbon capture and storage (CCS), which takes the CO2 emissions from power stations and buries them underground. Demonstration power plants fitted with CCS should be coming onstream by 2020. The Government accepts that low-carbon energy will be more expensive for consumers and yesterday gave two sets of estimated increases on power bills. Just paying for the new system might add £77 to electricity and £172 to gas bills each year but when all climate change measures are taken into account – such as home insulation which will save consumers money – the total addition is likely to be between £75 and £92 by 2020, the Government said. On the other hand, the White Paper foresees a substantial increase in employment from the changes, with as many as 400,000 new green jobs being created.“
Miliband's manifesto to make Britain a low-carbon economy
Independent, 16 July 2009

Homeowners who install solar panels and wind turbines will be paid for any electricity that they feed back into the National Grid, the Government confirmed yesterday. The payments will be based on a fixed price per unit of electricity and will be set high enough to encourage hundreds of thousands of homes to invest in renewable sources of power. Local energy suppliers will adjust the bills that they issue according to the number of units fed back into the grid. Homeowners with low energy consumption and a solar panel could receive net payments from their energy company. Ed Miliband, the Energy and Climate Change Secretary, said that the ‘feed-in tariffs’ would be available from next April.”
Money back for homeowners with solar panels and wind turbines
London  Times, 15 July 20099

“…a very interesting document produced by Ofgem, the regulator, which describes the UK's energy needs and our position in the national and international energy markets that might satisfy them. Its evidence is shaping Ofgem's Project Discovery, a major piece of work looking ahead at the challenges to our energy supplies on behalf of consumers. In the document it refers to the ‘2016 cliff face’ – the point when 35pc of our traditional oil and coal-fired power stations will be closed under the EU's Large Combustion Plant Directive. So, seven years to go….Sounds impressive. But here's a bit of context. At the moment we generate 75GW of power in the UK, of which wind accounts for about 2.2GW. The Government wants us to generate 33GW from wind by 2020. The 630MW to be generated by the London Array first comes on stream only in 2012. You can see the enormous investment still needed, and needed very soon, if wind power is going to hit its target. New nuclear stations, which the Government is right to back, won't appear until 2017 at the earliest. And as for clean coal technology, we'll only have demonstration sites by 2014. So we'd better get spending or we risk closing the old power stations without the new, clean ones being up and running. Except we are in the mother of all credit crunches. The Government hasn't got the money to pay for the capital expenditure itself, so needs the markets to deliver the cash…..The economics of the wind power business, for instance, is fragile to say the least. The UK's only large-scale manufacturer of wind turbines, Vestas, is closing its Isle of Wight factory. One large energy company after another has announced a scaling back in wind investment over the past 12 months including British Gas-owner Centrica. So hitting environmental targets and ensuring a secure supply of energy isn't merely a challenge but a crisis in the making. You heard of the credit crunch, and its devastating effects, after the event. We can't afford to wait that long to discover the energy crunch. The disruption to society of even brown-outs, never mind black-outs, could be far worse than rising unemployment. ”
Green energy is great, but we need investment to keep the lights on
Daily Telegraph, 15 July 200

“The UK has today announced its strategy for meeting carbon emissions targets and to a massive increase in renewable energy.  Plans announced this morning by UK Energy and Climate Change Secretary, Ed Miliband have been met with cautious praise by industry and environment groups. The plan has three components: The UK Low Carbon Transition Plan sets out how the UK will meet the cut in missions set out in the budget of 34% on 1990 levels by 2020. (According to figures from the government, emissions have already fallen by 22% from 1990.) Also published today is the Renewable Energy Strategy which maps out the UK Government's strategy for reaching the EU target of 15% of the UK's total energy consumption from renewables by 2020, from around 2% today. And finally, the Government's Low Carbon Transport Plan which sets out how to reduce carbon emissions from domestic transport by up to 14% over the next decade. The strategy identifies a range of low carbon sectors with potential for job creation and growth. These include: wave and tidal power; civil nuclear power; offshore wind; and ultra-low carbon vehicles. It also sets out the Government's strategy for removing barriers that are blocking the development of Britain's full potential in these areas. Publication today of the Renewable Energy Strategy follows a year-long consultation process. It recommits the Government to a massive increase in renewable electric power generation going up from 5% today to 30% by 2020. Among key points of the Low Carbon Transition Plan are a huge increase in employment in the low-carbon sector, energy efficiency measures in buildings and transport, and for an increase in low-carbon power: *More than 1.2 million people will be in green jobs *7 million homes will enjoy pay-as-you-save home energy makeovers, and more than 1.5 million households will be supported to produce their own clean energy  *40% of electricity will be from low carbon sources, from renewables, nuclear and clean coal . The Government announcements said that around 50% of the annual emissions cuts between now and 2020 will be achieved by further greening of the electricity mix. ‘We expect 40% of the electricity we use in 2020 to come from low carbon sources - 30% from renewables, the rest from nuclear (including new build) and clean coal. We need to all-but eliminate carbon from electricity by 2050. The UK Renewable Energy Association said that ‘While delivery will be the crucial test, and concerns remain, the announcements made today undoubtedly demonstrate a step-change in political leadership that is desperately needed to ensure renewables can tackle the serious threats of UK energy security and climate change.’ The strategy also sets out the first investments from the £405 million for low carbon industries and advanced green manufacturing announced at Budget 2009. Key investments related to renewables include: Up to £60 million to capitalise on Britain's wave and tidal sector strengths, including investment in Wave Hub ? the development of a significant demonstration and testing facility off the Cornish coast ? and other funding to make the South West Britain's first Low Carbon Economic Area.  Up to £120 million to support the development of a British based offshore wind industry. Up to £10 million for the accelerated deployment of electric vehicle charging infrastructure. £11.2m to help regions and local authorities prepare for and speed up planning decisions on renewable and low carbon energy whilst protecting legitimate environmental and local concerns. Up to £6m to start development of a 'smart grid', including a policy road map next spring. Other related actions include: DECC (Department for Energy and Climate Change) to take direct responsibility from Ofgem for establishing a new grid access regime within 12 months. Launch of the new Office for Renewable Energy Deployment in DECC to speed up the growth of renewables in the UK. … While the focus is on electric power generation on transport, heat is also an important issue. The Renewable Energy Association said that the announcement that renewable heat projects being built today will be eligible for the forthcoming Renewable Heat Incentive (RHI) should help ease the paralysis in the renewable heat industry. A similar announcement has been made for Renewable Electricity Tariffs. However REA is still pressing for the RHI to be expedited as heat is the biggest single use of energy in the UK and renewable heat still has no dedicated support.”
UK announces long-term carbon reduction strategy
Penn Energy, 15 July 2009

The Organization of Petroleum Exporting Countries expects world oil consumption will grow a modest 500,000 barrels a day in 2010 after two years of shrinkage, fueled by a stronger economy and demand in China, India, the Middle East and Latin America. In its monthly oil market report, issued Tuesday, OPEC reaffirmed its view that world demand will fall about 1.6 million barrels a day this year to 83.8 million barrels a day, compounding a small decline in 2008 as the world economy stagnates. OPEC revised demand projections for the second half of the year, however, and now anticipates declines less severe than projected last month. ‘World oil demand is settling down in line with the current world economic situation,’ the report said. Energy forecasters have regularly revisited assumptions in the past year as the fast-changing economic landscape altered consumption patterns and toppled crude prices from highs above $145 a barrel. OPEC has struggled to cope with rapidly declining demand, cutting official production among its 11 quota-bound members by 4.2 million barrels a day. The cartel's report follows similar forecasts issued last week by the U.S. Energy Information Administration and the International Energy Agency, a watchdog group for most heavily industrialized countries. The EIA also expects oil demand will spring back by 940,000 barrels a day in 2010, while the Paris-based IEA forecasts a 1.4 million barrel-a-day demand rebound. In its June report, OPEC said the worst appeared to be over in the oil markets. Tuesday's update estimated world oil demand declined a ‘steep’ 2.5 million barrels a day in the second quarter. OPEC still sees declines for the rest of the year, but now predicts declines of 980,000 barrels a day in the third quarter and 140,000 barrels a day in the fourth quarter. That's smaller than earlier forecast declines of 1.22 million barrels a day and 370,000 barrels a day in the third and fourth quarters, respectively. According to the report, emerging economies will make up the bulk of the demand increase next year, adding 800,000 barrels a day. China's demand is projected to increase by 300,000 barrels a day, up from minimal growth this year. U.S. consumption is expected to rebound somewhat, rising by a daily 200,000 barrels after a sharp decline of 700,000 barrels a day this year, though OPEC warned it will be a ‘wild card in 2010 given the uncertainty about the pace of the economic recovery.’ Overall, demand among the developed economies of the Organization for Economic Cooperation and Development, or OECD, is forecast to contract by 300,000 barrels a day in 2010 after an anticipated decline of 1.8 million barrels a day this year. ‘The pace of the global economic recovery continues to be the main risk for the outlook for next year,’ OPEC said. Non-OPEC supply is forecast to increase by 300,000 barrels a day in 2010 to 50.9 million barrels a day, driven by Brazil, the U.S., Azerbaijan, Kazakhstan, Canada, China and India. Mexico, the U.K., Norway and Russia are expected to experience the largest declines, according to the report. OPEC said it expects demand for its crude in 2009 to fall at a daily rate of 2.3 million barrels a day to 28.5 million barrels a day versus last year's levels. OPEC members' crude demand is seen dropping by 400,000 barrels a day to 28.1 million in 2010 from this year. OPEC's reference basket fell to $59.66 per barrel on July 13 after surging by almost 20% to average $68.36 a barrel in June. Also in June, OPEC's crude production averaged 28.4 million barrels a day, up 39,000 barrels a day from the previous month, 1.18 million barrels a day above the group's output quota of 24.845 million barrels a day.”
OPEC: World Oil Demand To Rebound In 2010
Dow Jones Newswires, 14 July 2009

“With memories of freezing houses, schools and offices still looming large, five countries will sign up to an ambitious pipeline project intended to break Russia’s grip on European gas supplies. The Nabucco project, a 2,000-mile (3,300km) pipeline to pump gas from Azerbaijan to Europe via Turkey, has been given extra urgency by the ongoing payment dispute between Russia and Ukraine, which saw supplies to a dozen EU countries suspended in the depths of last winter. Turkey, Bulgaria, Romania, Hungary and Austria will sign a transit agreement today to give Nabucco — which has hit investment problems during the recession — fresh impetus and increase credibility with suppliers. The project has been dogged by fears that it could turn out an €8 billion (£6.8 billion) white elephant. Delays in securing start-up funding and political agreement mean that Nabucco will not be ready until 2015. Even then Russian efforts to buy up Azerbaijan’s reserves and the unpredictability of potential suppliers, including Iran and Turkmenistan, mean that there may not be enough gas to make the pipeline viable. Furthermore, Russia is planning its own €10 billion Caucasus pipeline, called South Stream, to bypass Ukraine and deliver gas to southeastern Europe under the Black Sea, although it is still struggling to forge agreements with transit countries over the route and ownership rights. Gazprom, the state-owned Russian company, has done a deal for 50 billion cubic metres of Azerbaijan’s gas but the EU believes that once Nabucco is built it will draw in supplies from Egypt, Iran, Iraq and Turkmenistan if there is not enough from Azerbaijan. ‘Major obstacles to Nabucco still stand, and supply is number one,’ said Ana Jelenkovic, an analyst at Eurasia Group. ‘Without securing the supplies you cannot have the pipeline — but without the pipeline you cannot secure the supplies.’ Nabucco was conceived to diversify Europe’s gas supply after Russia turned off the taps during the winter of 2006 in a dispute with Ukraine, through which the gas flows. With a capacity of 31 billion cubic metres a year it would supply only 5 to 10 per cent of EU demand, but it would break Russia’s monopoly over countries that have suffered the worst during the winter cut-offs, such as Bulgaria, Slovakia and Romania. In some cases schools and factories were closed as heating was severely rationed to conserve fuel; several countries, mostly in eastern Europe, reported a halt in Russian gas shipments while others — including Austria, France, Germany, Hungary and Poland — reported substantial drops in supplies. The project is rich in geopolitical significance, not least because Russia is quick to use its huge energy reserves as a political tool. In May, Turkmenistan, Kazakhstan and Uzbekistan — all in Russia’s ‘backyard’ — held off their support for Nabucco at a meeting in Prague Azerbaijan signed an agreement in June to export gas to Russia from its Shakh Deniz reserve. However, after a dispute with Russia which has seen Moscow halt gas imports, Turkmenistan said last week that it was now ready to provide gas for Nabucco. ‘Currently Turkmenistan has excess gas for trade. We are ready to send it abroad to any customer. This includes Nabucco,’ President Berdymukhamedov said. EU officials insist that there is enough gas from the Caucasus region to supply both Nabucco and South Stream, which they see as Russia’s attempt to escape reliance on the Ukrainian transit routes. ‘A lot of fanfare was made about the deal for 500 million cubic meters of gas between Azerbaijan and Russia, but that is one sixtieth of the size of Nabucco. It is a very small deal,’ said a European Commission gas expert. ‘Our strategic aim is to reach new sources of gas, and for every deal in gas and oil you get agreement on the pipeline first. Even Russia does it that way around.’ José Manuel Barroso, the European Commission President, said: ‘The Nabucco project is of crucial importance for Europe’s energy security and its policy of diversification of gas supplies and transport routes.’”
European countries sign up for Nabucco deal to break Russia’s gas monopoly
London Times, 13 July 2009

"The number of wind turbines is set to quadruple over the next decade under government plans to force through wind farm planning applications. Ministers have put wind power at the heart of a Renewable Energy Strategy, which is due to be released on Wednesday. It will outline how Britain is to meet its target of a 34 per cent cut in CO2 emissions by 2020. The Government’s plans are likely to include more than 4,000 additional onshore turbines by 2020, many built at beauty spots and on high ground which would make them visible across miles of open countryside. Another 3,000 turbines would be installed at sea — some of them visible from the coast, though others could be up to 100 miles offshore. Ministers are considering several measures to push wind farm planning applications through more quickly. Of the 93 applications submitted for onshore wind farms in the past three years, only 35 were approved by local authorities. Another 14 were eventually passed after an appeal but almost half of the original applications failed. In England, the South East, South West, East Midlands, London and the North West regions have all set targets for installing a combined total 1,310 megawatts of wind turbine capacity by 2010. So far they have installed only 340 megawatts (MW) and have another 66MW under construction. The worst performing area is the South West, which has so far achieved only 15 per cent of its 2010 target of 355MW and has no wind farms under construction. There are 2,327 onshore wind turbines in Britain, each with an average capacity of 1.5MW — enough to power 840 homes. Offshore there are 210 larger turbines, the latest of which have a capacity of 5MW.... The CBI has also thrown its weight behind the anti-turbine lobby by calling on the Government to focus less on wind power and more on building new nuclear power stations and coal plants with carbon emission-capturing technology. It said Britain was sleepwalking towards an unhealthy reliance on gas for electricity generation if the wind targets could not be met."
Number of wind turbines to quadruple under Renewable Energy Strategy
London Times, 13 July 2009

The US is increasingly reliant on oil from West Africa for its daily energy needs and forecasts that up to 25 per cent of imports will hail from the Gulf of Guinea by 2015.Ghana, which discovered oil offshore only recently, is set to become a producer next year. Some Ghanaians say Barack Obama’s choice of the country for his first presidential visit to sub-Saharan Africa was partly related to ambitions to ensure an interest in the country’s estimated 3-4bn barrel reserves. The US is still Africa’s foremost trading partner ahead of the European Union and China. But the vast majority of US investment in Africa is in oil and gas, and to a lesser extent mining. Given its growing strategic importance to the US economy, African security has become a growing priority for Washington too, with spending on training and operations rising to nearly $1bn in recent years. In 2008, George W.Bush launched the first separate command structure for Africa, but neither he nor Mr Obama have persuaded any African country to host the base. Only Liberia has offered and for now Africom is in Germany. There has been widespread opposition on the continent to the militarisation of relations and suspicion that the US wants to pursue the war on terror and fend off rivalry for resources from China.
US seeks to underpin oil supply from Africa
Financial Times, 12 July 2009

"Household energy bills will rise by more than £200 a year under the Government’s low-carbon strategy being announced next week. Meeting Britain’s targets for cutting emissions could push another 1.7 million households into fuel poverty, meaning that seven million homes would be spending more than 10 per cent of their income on fuel.The Renewable Energy Strategy, to be published on Wednesday, will state that more than £100 billion will have to be invested in renewable energy infrastructure, including 7,000 wind turbines, by 2020. The Government has bound itself legally to cutting CO2 emissions by 34 per cent by 2020 and 80 per cent by 2050. To achieve this, it must increase the amount of energy generated from renewable sources from 2 per cent at present to 15 per cent by 2020. The strategy estimates that energy bills will have to rise by about 20 per cent to pay for the investment. The average household currently pays about £1,150 a year for electricity and gas, a small decline on last year but still double the amount paid in 2003. The cost of converting to renewable energy and modernising Britain’s power supply would add about £230 to annual bills. Costs are likely to ratchet up quickly as the investment is made, with the increase reaching 20 per cent within three years."
Low-carbon strategy will raise household energy bills by £200 a year
London Times, 11 July 2009

“The developed world's demand for oil will not recover from the effects of global recession for another four years, the cartel of producing nations predicted yesterday. Consumption will rise slower than expected over the short- and medium-term, the 13-strong Organisation of Petroleum Exporting Countries (Opec) says in a report. Global demand will drop to 84.2 million barrels per day (bpd) this year – compared with 85.6 million bpd in 2008 – only recovering to last year's levels by 2011. By 2013 it will still be at 87.9 million bpd, 5.7 million bpd less than previously thought. But for OECD countries, the outlook is more depressed. Demand will drop from last year's 47.5 million bpd to just 45.5 million bpd in 2010, and remain stagnant until 2013, Opec says. … Mr Al-Badri described the current $60-plus oil price as 'comfortable', but still below the $75-plus Opec says it needs to secure investment. London Brent Crude slipped below $63 yesterday but the price has more than doubled this year, peaking at nearly $72 last week and rising faster in May than at any time for a decade. Against a background of dismal fundamentals, the rises have prompted renewed claims that speculators are skewing the market.”
Demand for oil in the OECD will not recover until 2013, says Opec
Independent, 9 July 2009

The most comprehensive report of its kind has identified the UK's best locations for households to install micro-wind turbines, say its authors. The Energy Saving Trust (EST) said some households could generate in excess of £2,800 worth of electricity a year. However, it also concluded that other locations would actually lose money if a small-scale turbine was installed. The EST is advising homeowners to visit its website, which will show whether a turbine will help them cut their bills. The performance of domestic turbines have come under the spotlight in recent years, with critics saying the devices failed to generate the amount of electricity outlined by manufacturers. ‘Because the turbines are seen as a new, emerging technology, there has been very little proper monitoring and performance assessment,’ explained author Simon Green, the EST's head of business development. ‘Our study was not tested in the lab, or based on computer modelling, but on real homes in order to independently assess their performance.’ The two-year study involved 57 locations, ranging from south-west England to the Orkney Islands, and tested a range of turbines that fell within two categories: building-mounted and free standing pole-mounted. ‘Building-mounted turbines were generally smaller ones with a 50cm diameter, which were fitted to roofs on a bracket similar to TV aerials,’ Mr Green told BBC News. ‘The others - pole-mounted turbines - were generally larger, with bigger power outputs, and were remotely mounted in a field or at the end of a garden.’ At the sites, the researchers recorded wind speed and measured the net generation of electricity every five minutes. The team could then work out, over the course of a whole year, exactly how much electricity was produced and the overall performance of the wind turbine. Mr Green said the study's findings revealed that there were a complex range of factors that influenced the effectiveness of a wind turbine's performance. ‘The fundamental conclusion is location, location, location,’ he said.‘It is critically important that wind turbines are located in an area with sufficient wind resources. ‘We believe that a minimum average wind speed needs to be at least five metres per second (18km/h; 11mph).’"
Study pinpoints UK wind hotspots
BBC Online, 9 July 2009

“For two years the price of oil has been dangerously volatile, seemingly defying the accepted rules of economics. First it rose by more than $80 a barrel, then fell rapidly by more than $100, before doubling to its current level of around $70. In that time, however, there has been no serious interruption of supply. Despite ongoing conflict in the Middle East, oil has continued to flow. And although the recession and price rises have had some effect on consumption, medium-term forecasts for demand are robust. The oil market is complex, but such erratic price movement in one of the world's most crucial commodities is a growing cause for alarm. The surge in prices last year gravely damaged the global economy and contributed to the downturn. The risk now is that a new period of instability could undermine confidence just as we are pushing for recovery. Governments can no longer stand idle. Volatility damages both consumers and producers. Those who rely on oil and have no substitutes readily available have been the victims of extreme price fluctuations beyond their control -- and apparently beyond reason. Importing countries, especially in the developing world, find themselves committed to big subsidies to shield domestic consumers from potentially devastating price shifts. In Britain and France we also know how the price of crude dictates the price of petrol at filling stations and the effect on families and businesses. For countries heavily reliant on income from oil exports, the windfalls from brief price surges are offset by the consequent difficulties of planning national budgets and investment strategies. Extreme fluctuations in price are encouraging energy users to reconsider their reliance on oil. The International Energy Agency, for instance, has cut its long-term forecast of oil consumption by almost a quarter. Producers are in danger of finding that their key national resource loses both its market and its long-term value. More immediately, we as consumers must recognize that abnormally low oil prices, while giving short-term benefits, do long-term damage. They diminish incentives to invest, not only in oil production but also, in our own countries, in energy savings and carbon-free alternatives. As such, future problems are stored up in the form of shortages, greater dependence and an acceleration of global warming. Upstream investment worldwide is already down by 20% over the past year. And with some sources of supply in decline, such as Alaska and the North Sea, the resource we will all need as the economy recovers is being developed in neither an adequate nor a timely way. … The world's economy is still reliant on secure supplies at prices that are not so high as to destroy the prospects of economic growth but not so low as to lead to a slump in investment, as happened in the 1990s.
Gordon Brown and Nicolas Sarkozy
We Must Address Oil-Market Volatility
Wall Street Journal, 8 July 2009

The UK is heading for an ‘energy crunch’ after new oil and gas exploration in the North Sea dropped 57pc in the first half of this year. A report by Oil & Gas UK, the industry group, showed that companies are cutting back on new projects as costs rise and funding is scarce during the recession. Investment in the industry fell to £4.8bn last year, down £1.2bn over the last two years, and it could drop below £3bn next year. The report estimates that £5bn a year is needed to maintain exploration. Malcolm Webb, chief executive of UK Oil & Gas, said billions of barrels may never be extracted if the lack of investment causes oil and gas fields to shut prematurely. ‘Last year, we had the credit crunch, next year we are looking at an energy crunch,’ said Mr Webb, whose organisation represents 85 oil and gas companies. ‘I'm still very concerned about the lack of investment.’ Domestic reserves still account for about two-thirds of all the UK's primary energy needs, but reliance on foreign imports is increasing as domestic production is currently dropping by 5pc a year. Mike Tholen, economic adviser for Oil & Gas UK, said the fall was likely to accelerate to 7.5pc over the next few years. In the worst case, the North Sea could provide just 500,000 barrels of oil equivalent per day by 2012 – or just 12pc of the UK's energy demand. If investment is maintained, domestic production could still meet 40pc of Britain's needs. Oil producers believe it is still possible to extract 37bn barrels from the North Sea. However, declining investment means as little as 11bn barrels may be recovered before fields are decommissioned. ‘Ministers say it would be regrettable if production is at the lower end of estimates. We think this is an understatement,’ Mr Webb said.”
UK facing 'energy crunch' as North Sea oil and gas cash dries up
Telegraph, 8 July 2009

The U.S. Energy Information Administration on Tuesday once again raised its world oil demand forecast for this year as the global economy gradually improves. In its monthly energy outlook, the EIA increased its 2009 global oil demand projection to 83.85 million barrel per day (bpd), up 170,000 bpd from its June estimate of 83.68 million bpd. World oil demand this year is still well below 2008 levels of 85.41 million bpd. The agency said consumption will rebound to 84.79 million bpd in 2010, up 380,000 bpd from the previous estimate of 84.41 million. The slumping economy had prompted months of major downward revisions before the agency increased its oil demand projection for 2009 by 10,000 bpd last month. The change reflects some positive economic news from the world's largest petroleum consuming countries, including the United States and China. ‘In particular, there has been stronger economic activity in Asia than was previously anticipated, and the current forecast reflects higher expected oil consumption in that region,’ the EIA said. Optimism that a potential economic recovery could lift flagging fuel demand has helped lift crude prices from below $33 a barrel in December to more than $70 a barrel last month. While the price gains have fueled concerns that higher energy costs could dampen any economic recovery, oil has fallen back to around $63 a barrel due to weaker economic data, including last week's grim jobless data. The agency actually lowered its 2009 U.S. demand forecast by 10,000 bpd to 18.85 million bpd, down from 18.86 million bpd in a previous forecast."
EIA raises 2009 world oil demand forecast
Reuters, 8 July 2009

Russian oil production is likely to fall 0.9 percent this year from last year’s average of 9.78 million barrels a day amid declining drilling, Sanford C. Bernstein analyst Oswald Clint said in a research note. While second-quarter production showed unexpected strength, the performance of individual companies, fields and assets ‘does not provide enough evidence to suggest that this strength is permanent,’ the report said. New Russian projects such as OAO Lukoil and ConocoPhillips’ Arctic Yuzhno-Khylchuyu field, which began production last year, and OAO Gazprom and Royal Dutch Shell Plc’s Sakhalin Energy venture have helped offset declines in West Siberia. OAO Rosneft expects to begin output from the Vankor field later this year. ‘Expectations for new and longer term growth will be met with disappointment,’ Clint wrote. ‘Across the larger oil producers, production is actually down 0.9 percent, or around 80,000 barrels per day, despite six new fields on stream.’ Russia’s average first-half rig count was about 3 percent below last year’s levels, after rising between 2004 and 2008, the report said. Cost pressures remain an issue in the oil sector with increases in pipeline tariffs across Russia, a higher crude export duty and climbing electricity charges, according to the report.”
Russian 2009 Oil Output May Fall 0.9%, Bernstein Says
Bloomberg, 6 July 2009

"There is still a looming shortage of uranium. The 400 or so reactors in the world now in operation get about 40% of their fuel from Soviet-era nuclear warheads being converted to fuel grade. The agreement under which Russia is converting uranium and supplying material to the West runs out in 2013. Russia does not intend to extend that agreement, as they will need more material internally. Another hundred reactors are planned over the next decade or so. Uranium mines can't be developed fast enough to bridge that gap. Nuclear energy will continue to increase, but it is unlikely to increase as a percentage of energy output. It will do little more than keep pace with the overall increase in energy output."
Lawrence Roulston: Challenges and Enormous Opportunities in Alternative Energy
The Energy Report, 2 July 2009
"Canada is doing the least of any of the world's wealthiest countries to fight climate change, says a damning report card released Wednesday by the World Wildlife Foundation. Of the G8 countries -- Canada, France, Germany, Italy, Japan, Russia, the United Kingdom and the United States -- Canada is one of the few whose emissions are still increasing, the 2009 Climate Scorecard said, blaming an 'expanding exploitation of the tarsands' in Alberta. 'Nowhere else on Earth do fewer people steward more resources, yet Canada now stands dead last among the G8 Nations in protecting our shared home from the threat of dangerous climate change,' said foundation spokesman Keith Stewart. The report found the country's emission rates per capita were very high compared to the other industrialized countries' averages. The report measures countries' performance and trends in areas such as development of greenhouse gas emissions since 1990, the distance to their Kyoto targets, their share of renewable energies and the efficiency of their climate policies. The evaluation is based on their progress and improvement made since 1990, the current status of emissions, and the intended policies for the future. According to the report, Germany, the United Kingdom and France have already achieved their Kyoto targets. But the report says the efforts of those countries won't be enough to keep the global temperatures below the so-called danger threshold -- which has been defined by scientists as a two-degree rise of average temperatures around the planet when compared to pre-industrial times. To prevent climate change to these danger levels, the WWF estimates global emissions must peak and decline well before 2020 and be reduced by 80% by 2050."
Canada fails climate change report
Calgary Herald, 1 July 2009
"Having forecast late last year that OPEC capacity would grow by 3.2 million b/d by 2014, the International Energy Agency now sees OPEC capacity growth at just 1.7 million b/d between 2008 and 2014. Indeed, the IEA sees capacity in two key producers, Iran and Venezuela, actually shrinking over the period. 'Weaker demand, contract renegotiation, reduced cash flow, geopolitical turmoil and increased resource nationalism underpin this year's more modest outlook,' the IEA said in its Medium-Term Oil Market Report released June 29. 'Saudi Arabia, the UAE, Algeria, Libya, Iraq and Angola all see capacity expansion, but these are largely offset by decline elsewhere.' Oil production capacity in Iran, Venezuela and Ecuador is expected to drop by a collective 1 million b/d by 2014 as a consequence of growing resource nationalism, the IEA said. 'The increasing trend towards resource nationalism among some OPEC countries over the past few years is having a marked impact on crude capacity expansion plans for the outlook period,' it said. 'The upward oil price trend from 2004 to mid-2008, and expectations that capacity constraints would make oil ever more costly, empowered several OPEC members such as Algeria, Ecuador, Iran and Libya to alter production sharing contracts in an effort to capture more of the revenue stream,' it said. 'In the case of Venezuela oil assets have been nationalized. As a result, sharply lower production profiles emerged for some countries in the medium term, with Ecuador, Iran and Venezuela now collectively envisaged posting a 1 million b/d drop in production capacity by 2014,' it said. Iranian capacity, seen at 3.97 million b/d in 2008, is forecast to drop by 490,0000 b/d to 3.48 million b/d by 2014. Venezuelan capacity is seen dropping from 2.62 million b/d in 2008 to 2.2 million b/d in 2014. Ecuador's capacity is forecast to drop from 500,000 b/d in 2008 to 390,000 b/d by 2014. Nigerian capacity is also forecast to drift downward from 2.48 million b/d in 2008 to 2.46 million b/d by 2014. 'Iran's challenging political and commercial operating environment, coupled with sharply lower oil revenues, continues to undermine the country's ambitious production expansion plans,' the IEA said. 'Already plagued by persistent delays and cancellations of planned projects, IOC interest in developing projects in the country has cooled along with the downturn in the outlook for oil demand,' it said, adding that for cost capacity was now around 100,000 b/d below that of a year ago, largely because of stalled plans for Darkhovin lll and Azadegan ll. 'New capacity additions over the 2008-2014 period are a net 470,000 b/d but the escalating decline rates at older onshore fields more than offset the gains,' the IEA said. The IEA said it had been 'extremely difficult to develop a robust production capacity forecast for Venezuela given the acute lack of available data and increasingly cloudy investment outlook due to the ongoing nationalization of oil industry assets.' 'Because of these issues we have previously retained a 'current capacity extended forward'approach until a clearer picture emerged,' it said. 'Venezuela has recently released some unaudited data on the country's oil exports, aiming to augment third-party estimates of production levels. Not only does considerable uncertainty over baseline production persist, but so too for future developments in the oil sector and investment plans.' The agency said it was increasingly apparent that the global downturn was likely to have a detrimental impact on Venezuela's oil sector. It noted that, in response to lower oil revenues and the continued need to fund the government's social welfare programs, Caracas had slashed the budget for Petroleos de Venezuela by 65% this year to $6.1 billion. 'As a result, we have amended our outlook to reflect the acute shortage of investment capital for PDVSA, with capacity expected to decline by 420,000 b/d, from 2.6 2 million b/d in 2008 to 2.2 million b/d in 2014. The IEA said the outlook for Ecuador had been clouded by the government's severe shortage of investment capital and, given stricter operating terms, it's inability to attract foreign partners. OPEC kingpin Saudi Arabia's capacity is forecast to rise to 11.22 million b/d this year from 10.74 million b/d in 2008, but the agency said it believed the Kingdom could 'surge' to 12.5 million b/d by the end of this year 'if the need arose.' The IEA sees Saudi capacity rising to 12.16 million b/d in 2010 before falling back to 12.04 million b/d in 2011 and to 11.83 million b/d in 2012. It rises again to 11.86 million b/d in 2013 and to 11.97 million b/d in 2014. 'Saudi Aramco will register the largest single incremental capacity increase in history this year with the startup of the massive 1.2 million b/d Khurais development in June 2009,' the IEA said, noting that the 250,000 b/d Shaybah expansion and the 100,000 b/d Nuayyim project were also brought on stream in June. '...combined, the three projects are designed to raise the kingdom's total installed capacity to 12.5 million b/d,' it said. 'However, given weak near-term demand, it is unlikely that Saudi Aramco will maintain immediately operable capacity at such elevated levels, and we have assumed operations at some fields could be shut in for rehabilitation or extensive maintenance work during this weaker demand period,' it said. 'As a result, a net 1.23 million b/d increase in capacity, to 12 million b/d by 2014, is projected,' it added. 'That said, we assume that Saudi Arabia could surge to 12.5 million b/d by end-2009 if the need arose.'UAE capacity is forecast to climb by 330,000 b/d to 3.1 million b/d in 2014, but the IEA said reaching the targeted 3.5 million b/d 'will require considerable investment and technological expertise given the Emirates' mature fields and challenging geological basins.' In Kuwait, where capacity is seen rising by just 60,000 b/d to 2.69 million b/d by 2014, 'longstanding internal political disagreements between ... parliament and the ruling family over the future role of [international oil company] involvement in the country's oil industry are having a serious impact on the medium-term oil production outlook,' the IEA said. Iraq, it said, 'remains the OPEC wild card given constitutional and security issues, and we maintain a cautious view on its supply capacity growth.' The IEA's base case or 'higher GDP' scenario sees demand for OPEC crude increasing by around 3.8 million b/d between 2009 and 2014, from 27.68 million b/d this year to 31.45 million b/d in 2014. Under the alternative, 'lower GDP' outlook, however, demand for OPEC crude is forecast to average 27.82 million b/d this year--140,000 b/d more than the base case projection for 2009--and to rise by just 60,000 b/d over the period to 2014."
IEA sees OPEC capacity growth at just 1.7 million b/d between 2008-2014
Platts, 30 June 2009
"The worst recession in decades will curtail oil demand for years to come, the International Energy Agency predicted on Monday as it cut sharply its forecasts for world consumption and declared that the threat of a supply crunch had receded. The consuming countries’ oil watchdog said it expected global demand to grow at an average annual rate of just 0.6 per cent or 540,000 barrels a day from 2008-14, raising consumption from 85.8m b/d to 89m b/d. This latest forecast is 3.3m b/d lower than the previous forecast for 2013 volumes. If the agency’s most pessimistic economic scenario proves correct, oil demand could contract, with consumption falling to 84.9m b/d by 2014, it said in a report. The slowdown in demand growth means the crucial cushion of spare supply the Opec oil producers’ cartel holds is now expected to reach 7.78m b/d next year, or 8 per cent of global demand. Last year, the IEA expected surging energy usage to reduce that supply cushion to 1.67m b/d. The size of the Opec cushion has been an important driver of international crude prices. The cushion’s diminishing size has stoked fears that Opec has too little spare supply to bring on to the market to plug shortfalls and contributed to last year’s surge in benchmark Nymex West Texas Intermediate to a record $147 a barrel. On Monday, WTI futures for August delivery rose 49 cents to $69.65, after an attack on a Royal Dutch Shell oil platform by a Nigerian militant group. The IEA cautioned against putting too much faith in hopes of a swift economic recovery, which have pushed the oil price back up towards $70 a barrel from half that level in February. It said that economic 'green shoots' could be accounted for by stock rebuilding across industries after a steep drawdown of inventories. Nobuo Tanaka, the group’s managing director, said it had become difficult to make predictions and that the watchdog’s assumptions, based on April data, were getting old. 'If the economy grows much faster, the market could be much tighter, and we could see much smaller spare capacity in 2014.'"
Oil watchdog cuts demand forecasts
Financial Times, 30 June 2009
"Only one of the bidders for the eight contracts to run oil and gas fields in Iraq has accepted oil ministry terms. Six oil fields and two gas fields were available in a televised auction that was the first big oil tender in Iraq since the invasion of 2003. BP and China's CNPC agreed to run the 17 billion barrel Rumaila field after Exxon Mobil turned it down. Iraq has asked the rest of the companies to consider resubmitting bids for the other seven contracts. The oil ministry is offering 20-year service contracts. Other fields have failed to find buyers, either because there were no bidders or because terms were declined. Thirty-two oil companies had been approved as potential bidders. For each field, the ministry specified a minimum production level, which was close to the amount that is currently being produced. The bidders will not be paid for anything up to the minimum production level - but they say how much they want to be paid for each barrel produced above the minimum, and also predict how much oil they will be able to produce. From that, the auctioneers pick a winning bidder. However, there is another twist. In a red envelope, the auctioneers have the maximum amount that the oil ministry is prepared to pay. Those amounts were significantly less than the oil companies were asking for, so the winning bidders were asked to cut their prices. In the case of the Rumaila field, Exxon Mobil declined to accept the ministry's maximum payment, but BP and CNPC, which had originally asked for $4 a barrel, agreed to do the work for $2 a barrel. They will also be able to charge the ministry for the costs of the work they have to do on the production facilities. The contracts are subject to approval by the cabinet. Other winning bidders declined to accept the ministry's maximum payments.Before the auction, Iraqi officials said companies from nations involved in the 2003 invasion would be neither favoured nor disadvantaged. The auction was originally planned for Monday, but had to be delayed because of sandstorms in Baghdad. 'Our principal objective is to increase our oil production from 2.4 million barrels per day to more than four million in the next five years,' Oil Minister Hussein al-Shahristani told Iraqi public television."
Oil companies reject Iraq's terms
BBC Online, 30 June 2009
"Wind has the power to revolutionise the UK's electricity industry, according to a study published on Wednesday. Research from analysts Poyry says that the UK can massively expand wind power by 2030 without suffering power cuts or a melt-down of the National Grid. The cost of electricity would then be determined not by consumer demand, but by how hard the wind is blowing. When it is windy power will be so cheap that other forms of generation will be unable to compete, the report says. If accepted by government, these key findings could strongly influence the UK's future energy supplies. The study was done for National Grid, Centrica and others. The researchers reviewed 2.5 million hourly weather reports on wind speeds all around the UK. If the wind were to drop everywhere round the UK (as happened during the January high pressure cold snap), other generators would make their money by switching on back-up fossil fuel power stations for a very short time, charging extremely high prices, it predicts. Dr Phil Hare from Poyry said these back-up generators might stand idle for years without making a profit - so the government might need to find a new way of ensuring they were funded. The study bases its assumptions on current levels of subsidy. It concludes that, thanks to the wind subsidy through the 'Renewable Obligations Certificates' issued by regulator Ofgem, electricity prices would be negative if the wind were blowing hard. 'The market will have to evolve to accommodate the wind. The average output of a wind turbine is only about a third of its full capacity. So when the wind is blowing strongly you'll have to turn some of the wind power off; otherwise it will swamp the system,' Dr Hare said.  'Nuclear power stations will have to be built with variable output so they - like gas and coal plants - can occasionally cut their power when the wind is blowing most strongly. It does look as though nuclear, coal and gas are competing for the same share of the market.' Dr Hare said the study answered another key question: whether we could move to widespread intermittent power from the wind, waves and tides together. 'Some people were worried that the complexity stemming from intermittent wind with an overlay of tidal power peaking twice a day might simply have been too much change for the grid to bear. But our research shows the grid can cope.' The study investigated a scenario for 2030, in which electricity is more than 40% renewable - mostly from wind. But some experts urge caution. Dr John Constable, from the Renewable Energy Foundation, said: 'The study confirms that while very high levels of uncontrollable renewable generation are theoretically manageable, the practical difficulties are significant, and the cost will be high. 'Less ambitious levels of wind would almost certainly result in a system which is not only just as clean but is also more robust and affordable.' The study amplifies a recent paper from National Grid itself stating that a move towards wind power would not necessitate widespread investment in expensive back-up power plants fuelled by gas or coal. This is a key finding which helps remove one of the main barriers to the advance of wind, although some will remain sceptical. But it comes with a warning. Dr Hare said: 'It will cost more. There is no such thing as cheap green power - that is a myth.' The authors of a report from the Royal Society this week made the same point. But politicians are still reluctant to pass on this message to the public."
Wind 'can revolutionise UK power'
BBC Online, 30 June 2009
"The International Energy Agency, an adviser to oil-consuming nations, cut five-year forecasts for global crude demand because of the economic slump, predicting consumption won’t regain last year’s levels until 2012. The IEA cut its oil demand estimates for every year through 2013 by about 3 million barrels a day, it said in its Medium- Term Oil Market Report today. Consumption will average 86.76 million barrels a day in 2012, the first year it will rise above 2008’s level of 85.76 million barrels a day, according to the Paris-based agency. The worst global economic crisis since World War II has crimped oil demand in developed economies and slowed growth in China and India. While the drop in consumption has postponed the threat of a potential oil supply shortfall, risks remain as the recession forces companies to cut spending on new production, according to the IEA’s executive director Nobuo Tanaka. 'There is so much uncertainty about the economic recovery and how fast it may happen,' Tanaka said in an interview after the report’s release in Paris today. 'We may have a supply crunch again, just like last year, in 2014 to 2015. If the economic recovery is slower, we could have ample supply capacity.' Crude oil has climbed 59 percent this year to more than $71 a barrel in New York on increasing optimism the global economic slump may be ending. Still, the World Bank said June 22 the recession will be deeper than it expected three months ago. Analyst estimates compiled by Bloomberg show the rally may reverse over the next three months as supply outstrips demand and speculators sell. Oil demand in 2014 will rise to 88.99 million barrels a day, according to the IEA. From 2009, when oil demand will fall the fastest since the early 1980s, that represents an average annual increase of about 1.4 percent, or 1.2 million barrels a day. From 2008 levels it represents an average increase of 0.6 percent, or 540,000 barrels a day. The IEA’s oil demand estimates reflect a 'higher GDP scenario' based on the International Monetary Fund’s forecasts for global economic growth made in April. The IMF expects world economic expansion to reach nearly 5 percent a year between 2012 and 2014, the IEA said. In its 'lower GDP scenario,' which assumes that a rebound in the global economy will be 3 percent a year, the IEA said global oil demand could fail to reach last year’s levels by 2014, standing at 84.92 million barrels a day, 6.34 million barrels less than predicted in December. 'Many see the lower variant, or something close to it, as a more likely outcome, so profound could be the fallout from the recent financial and economic market turmoil,' the IEA said in the report. Consumption in developed economies will shrink 1.1 percent a year to 44.4 million barrels a day in 2014, even under the higher GDP scenario, according to the IEA estimates. According to the lower economic growth estimate, OECD demand may shrink as much as 1.5 percent. Demand in developing economies outside the Organization for Economic Cooperation and Development will rise through 2014. Oil use in those countries will increase an average 2.6 percent a year to 44.6 million barrels a day, according to the IEA. While the economic slump tempers global demand growth, it may also cause supply to shrink as lower exploration and production spending delays projects and reduces spare capacity, according to the IEA. Supplies from outside OPEC are forecast to decline by 0.4 million barrels a day between 2008 and 2014, compared with six- year growth of 1.5 million barrels a day forecast in the last report, the IEA said. The biggest revisions are in the former Soviet Union and North America, where projects to develop Canada’s oil sands are being delayed, the IEA said. The group predicts that non-OPEC supply will peak at 51.12 million barrels a day in 2011 and start declining thereafter, reaching 50.22 million barrels a day by 2014. As new oil projects are delayed, the IEA estimates global oil capacity to increase 4 million barrels a day by 2014, compared with its previous estimate of 5.5 million barrels a day. Spare production capacity in OPEC countries will drop 'substantially' below 5% of global demand in the following two years, it said. 'Supply capacity growth is going to be constrained over the next five years,' David Fyfe, head of the IEA’s oil industry and markets division, said in an interview in Paris today. 'With lower prices and lower spending in 2009, we think supply-capacity growth is going to be very sticky.'"
IEA Cuts 5-Year World Oil Demand Outlook on Economy
Bloomberg, 29 June 2009
"Global demand for gas is expected to fall in 2009 marking the first annual decline since the Fifties, a new report warns. The International Energy Agency's (IEA) annual Natural Gas Market Review said: '[We] project that for the first time in 50 years, the world will witness a drop in global gas demand.' It says that after a 1% increase in gas consumption in 2008, gas demand among OECD countries fell by 4% during the first quarter of 2009 - January to March - and is expected to decline further this year. 'The global financial crisis has turned the economic landscape upside down, with huge implications for the oil and gas sector,' said Nobuo Tanaka, IEA executive director. 'In the natural gas sector, we have moved from a tight supply and demand balance with extremely high gas prices to an easing one with plummeting prices. Both markets [oil and gas] face enormous uncertainty surrounding the timing, pace and extent of any economic rebound, which affects all prognoses for oil and gas market fundamentals over the next five years.' The report serves as a fresh reminder of the severity of the current world recession despite coming amid some early signs of recovery. The IEA said said prices soared in the first half of 2008 but that was followed by demand weakening and spot prices plummeting. The report added that the combination of weak demand and lower prices could undermine future investment with exploration companies, which already face financing problems from the credit crunch, reluctant to push ahead with projects until they can foresee rising demand. That could create a price squeeze in the medium-term when demand recovers, the IEA said. It also said climate change awareness 'puts a question mark on the future role of gas' and that Russia, the world's largest producer, faces 'considerable' technical and financial 'challenges'."
Gas demand set for first fall in 50 years
This is Money, 29 June 2009

“The first half of 2008 saw strong gas demand growth in most IEA regions of up to 10% in some countries. This began to slow in mid year, then to reverse dramatically late in 2008, and continue to fall into 2009… Of particular note is the continuing growth in unconventional gas production in the United States. Gas production in 2008 showed a near 8% increase over a year earlier, despite destructive hurricanes in the late summer, and has continued to show around 4% increases in the early months of 2009. Growth at these levels represents a major turnaround from the production declines of about 2% per year observed earlier in the decade, challenging the wisdom that United States production would inevitably decline, increasing the need for large-scale LNG and pipeline imports. Indeed LNG imports in 2008, at less than 10 bcm, were less than half the level of 2007. LNG was thus freed up for other markets, and over the course of 2008, some 20 bcm of ‘Atlantic’ LNG was shipped to Pacific markets, double the levels of 2007, in response to the strong demand in those regions in the first half of 2008. Hence United States unconventional gas production is of global significance. However, low gas prices have reduced the gas rig count by nearly half in April 2009 compared to the year before, and it seems inevitable that growth in output will slow. The future of United States gas output remains one of the major uncertainties in global gas markets. Globally, LNG capacity continued to grow, although various problems restricted output, so actual production grew only modestly to 240 bcm in 2008. However, a massive increase in new LNG capacity is already underway in 2009, and the next three years will see capacity grow to at least 370 bcm, an astonishing increase, without precedent in the LNG world. Thus, 2009 and 2010 will test the flexibility and resilience of the global LNG market. Norway also continued its export led expansion, with gas output in 2008 growing by 10% to almost 100 bcm…Falling gas prices and volumes have taken a heavy toll on all producers’ cash flows, adding to the already serious problems in gas investment throughout the value chain identified in earlier Natural Gas Market Reviews. Large investments continue to be needed to meet growing demand in the medium to longer term, and to offset falling output in many consumer countries. For example, UK gas output in 2008 was two thirds of 2003 levels, and declines at the end of 2008 and early 2009 were around 10%.....financing problems are likely to bedevil all new construction projects in 2009 and even into 2010, especially for the long lead time, high capital intensity projects found in many parts of the gas sector. as the global recession hit gas hard….. In the LNG sector, notwithstanding the massive increases in capacity that will be seen in the next few years from projects under construction, very few new projects have been sanctioned in recent years. Unless 2009 and 2010 see a number of new project approvals, there will be a dearth of new capacity in the period after 2012. Financing problems, plus uncertain demand growth will impact such approvals adversely, although these projects are to meet medium to longterm demand. Globally there is nearly twice as much regasification capacity operating or well under construction, compared to liquefaction capacity. This imbalance is likely to remain an ongoing feature of the LNG trade well into the medium term….. gas demand from the powersector through 2009 is likely to be weak, although the outlook in the medium term remains strong. Most power plants under construction and planned in OECD countries are gas-fired. Gas power has shorter lead times, lower capital cost, a smaller footprint and the lowest carbon emissions of any fossil fuel. New gas-fired capacity is also being developed in many non-OECD countries, although generally coal remains the dominant fuel in the power sector there. Current investment and financing uncertainty may actually favour gas further, with its smaller unit size and shorter lead times responding to an uncertain demand recovery path. Greater deployment of renewables over the medium term may also enhance the role of gas to balance intermittent sources such as wind….. In the medium to longer term, Europe also needs greater investment in more varied sources and routes for gas supply, enhanced gas storage, and much more diversity in its electricity sector, embracing renewables, nuclear and coal, with improved environmental performance….. Many gas producers are consuming more gas in their own domestic markets, notably Iran and other Middle Eastern countries. Iran, as the second biggest gas reserve holder, seems unlikely to be a significant exporter before 2015, at the earliest. Other gas suppliers such as Qatar are imposing moratoria on further gas development. Both China and India are emerging as major gas users, although their energy mixes seem certain to be dominated by coal for the foreseeable future. Both countries will be able to import around 30 bcm of LNG within the next few years on the basis of regasifi cation terminals being built and contracts concluded, and both could exceed 100 bcm of annual gas consumption in the near to medium term, bigger than any OECD European or Pacific gas user.”
Natural Gas Market Review 2009
International Energy Agency, 29 June 2009

"Russian gas giant Gazprom has signed a deal to import natural gas from Azerbaijan and then pipe it to Europe. Gazprom will import 500 million cubic metres of Azeri gas from 2010, and it expects import levels to rise. The move is being seen by observers as an attempt by Moscow to extend its grip on potential European energy supplies. Europe gets about 20% of its gas from Russia via pipelines in the Ukraine - though last winter rows between Kiev and Moscow saw supplies being cut. Gazprom chief executive Alexei Miller said that his firm had also been promised priority in buying gas from the second phase of the Shakh Deniz Caspian Sea field. This is seen as a potential key source of gas for the EU-backed Nabucco pipeline, which circumvents Russia."
Gazprom in Azerbaijan gas deal
BBC Online, 29 June 2009
"Consumers will need to pay more for energy if the UK is to have any chance of developing the technologies needed to tackle climate change, according to a group of leading scientists and engineers. In a Royal Society study to be published today, the experts said that the government must put research into alternatives to fossil fuel much higher among its priorities, and argued that current policy in the area was 'half-hearted'. 'We have adapted to an energy price which is unrealistically low if we're going to try and preserve the environment,' John Shepherd, a climate scientist at Southampton University and co-author of the report said. 'We have to allow the economy to adapt to higher energy prices through carbon prices and that will then make things like renewables and nuclear more economic, as carbon-based alternatives become more expensive.' Shepherd admitted higher energy costs would be a hard sell to the public, but said it was not unthinkable. Part of the revenue could be generated by a carbon tax that took the place of VAT, so that the cost of an item took into account the energy and carbon footprint of a product. This would allow people to make appropriate decisions on their spending, and also raise cash for research into alternatives. 'Our research expenditure on non-fossil energy sources is 0.2% of what we spend on energy itself,' said Shepherd. 'Multiplying that by 10 would be a very sensible thing to do. We're spending less than 1% on probably the biggest problem we've faced in many decades.'"
Energy bills 'too low' to combat climate change
Guardian, 29 June 2009
"Russia has been forced into an embarrassing climbdown on resource nationalism, as the credit crunch has left it unable to invest in the development of its assets. In a surprise move, Russian prime minister Vladimir Putin invited Royal Dutch Shell to help develop two new oil and gas fields on Sakhalin Island, just three years after the government forced the company to cede majority control in the Sakhalin 2 project to state-controlled group Gazprom."
Russia invites Shell back to Sakhalin as finances plummet
Daily Telegraph, 28 June 2009
"...the growth of global ­carbon dioxide emissions fell by half in 2008 as a result of the recession, high oil prices and an increase in renewable energy. In addition, the figures show that, for the first time, carbon dioxide emissions from the developing world account for more than half of the global total. The analysis, by the Netherlands Environmental Assessment Agency, shows that the rise in the world's emissions from fossil fuel burning and cement production in 2008 was just 1.7%, compared with 3.3% in 2007. The slowdown in emissions growth was caused primarily by a 0.6% fall in the consumption of oil – the first decline in global oil use since 1992. This trend was uneven around the world. In China, oil use continued to rise, but at only 3%, down from an average of 8% since 2001. In the US, oil consumption fell by a massive 7%. By contrast, global coal use continued to creep up and the rise in the consumption of natural gas remained unchanged. Increasing renewable energy capacity and improving energy efficiency in many countries also contributed to the reduced rise in carbon dioxide emissions. NEAA's Jos Olivier said: 'The impact of energy and climate policy is hard to distinguish from those of fuel prices and the recession, but policies encouraging renewable electricity generation will have helped avoid around 500m tonnes of carbon dioxide from fossil fuel power stations.' It remains to be seen how the rate of emissions will change in 2009. If the recession continues to bite through the year, global emissions could flatten off entirely. Meanwhile, policymakers are likely to be particularly struck by the revelation that, in 2008, the developing world accounted for 50.3% of carbon dioxide emissions, exceeding developed nations and international travel combined for the first time. This fact will provide ammunition for those arguing in favour of binding emissions ­targets for all nations, not just industrialised ones. Furthermore, the data does not take into account the carbon dioxide released by deforestation, which accounts for almost 20% of all greenhouse gas emissions and takes place overwhelmingly in the developing world."
Gordon Brown and Ed Miliband's blueprint for global warming deal
Guardian, 26 June 2009
"Technology to capture carbon emissions from coal-fired power plants and store them underground will be ready by 2015 and could be in wide use in the United States by 2020, according to the top executive at American Electric Power Co Inc. Mike Morris, CEO of Columbus, Ohio-based AEP, one of the largest U.S. utilities, said his company's work in West Virginia on carbon capture and sequestration (CCS) gives him more insight than skeptics who doubt the technology."
AEP sees carbon capture from coal ready by 2015
Reuters, 25 June 2009
"A year ago prices rose to the previously unimaginable high of almost $150 a barrel. Oil producers made one last effort to keep up with demand and in doing so may have pushed world oil production to an all time high - the 'peak' in peak oil. While it took six years for oil prices to climb, it only took six months for them to plunge into the $30's causing panic amongst the exporters of OPEC. This led to a series of OPEC production cutbacks which were supposed to reach 4.2 million barrels a day (b/d) but petered out around 3 million due to quota-cheating by several of the more desperate and less honorable OPEC members. In the world outside of OPEC oil production has been steady in the last year with some notable drops in production. In Mexico, output from its largest oil field has been dropping much faster than expected due to depletion. In Nigeria insurgent attacks on oil facilities have brought production down to about 1 million b/d when the country should be producing closer to 3 million. In Venezuela, President Chavez has been busy expropriating the remaining pieces of the oil industry still owned by foreigners. Drops in production can be expected soon. The net result of all these voluntary and involuntary cuts is that world oil production has dropped significantly since reaching an all-time high last year. This drop in production when coupled with the normal declines in output from aging oil fields and the prospects that less oil will be coming into production from new fields than expected, has led many to declare that the all time peak in world oil production took place last year. While it will take several years to verify that this was indeed the case, inability of the world's oil industries to ever again increase production has unfathomable implications which are not as yet widely recognized. A corollary of the low oil prices and the lack of easy credit have led to a slowdown in the investment going into new oil production projects. While this has little immediate impact on the availability of oil, some years down the line it means that all of the new oil needed to offset depletion will simply not be there and that world production will decline faster than expected....The latest estimates from the International Monetary Fund say that world-wide GDP will be down about 2.7 percent this year. The world's spare oil production capacity currently is around six million b/d. This, however, is not a static number as the world's capacity to produce oil from existing sources is withering away at 3 or 4 million b/d each year and unless this much new supply is opened, then total world supply must inevitably shrink. Now there is no question that very high oil prices would quickly choke off economic growth. Every dollar per gallon increase in the price of oil products drains about $800 million each day from the pockets of consumers in America. Worldwide it drains about $3.5 billion each day. Most observers believe that as soon as worldwide demand for oil gets ahead of supply there will be multi-dollar per gallon increases in the prices of oil products. There seems to be little doubt that over the next few years, the world's oil supply will be forced into irretrievable decline from a combination of geologic and geopolitical reasons coupled with a lack of adequate investment. Should the demand for oil increase in the next year or so, there will still be some room for increased production without unacceptable prices increases for a while. The longer a recovery is delayed, however, the better the chances that oil prices will quickly surge to recovery-choking levels. While there are long-term solutions to this problem they will take decades to implement."
The Peak Oil Crisis: Stifling a Rebound
Falls Church News-Press, 24 June 2009
"Britain needs to pump up investment in gas storage facilities because increased dependence on imports poses a serious threat to the nation's security, a think tank said on Tuesday. Higher dependence on gas supplies from mainland Europe will also leave Britain vulnerable to the manipulation of energy for political purposes, the Institute for Public Policy Research said it will warn in a final report to be issued next week. The think tank -- whose findings cited tensions between gas producer Russia and transit state Ukraine as a major risk -- will publish the two-year review next week to coincide with an expected government report on a national security strategy. 'Our national circumstances have changed radically in supply terms in recent years, bringing new risks,' said Paddy Ashdown, former head of Britain's Liberal Democratic Party, who co-chaired the panel that compiled the report. 'We need to build strategic gas storage capacity as a matter of urgency, while bringing on stream new technologies that are both climate friendly and can make us more energy independent and resilient,' Ashdown said in a statement."
UK must expand gas storage for security -think tank
Reuters, 23 June 2009
"Oil markets may face a supply crunch by 2014 if global GDP growth hits 5% in the coming years, the head of the International Energy Agency said Tuesday. 'If economic GDP growth gradually rises through 2011 and 2012 ... then oil demand will come back and by 2014 you will maybe have a supply crunch,' Nobuo Tanaka said at the Renewable Energy Finance Forum in New York, noting economic growth would have be around 5%. The global economic crisis has battered fuel demand, knocking crude off record peaks near US$150 a barrel hit last July and causing inventories to swell. Prices have rebounded from below US$33 in December - trading around US$67 on Tuesday - on signs of an economic recovery that could lift oil consumption. Mr. Tanaka said that if the global economy grows at a slower rate, any oil supply crunch could be delayed. 'If GDP only grows 3% we will probably see a postponing of the supply crunch until after 2014,' he said."
IEA says potential for oil supply crunch by 2014
Reuters, 23 June 2009
"Recession will cut investments in the energy supply sector in 2009 by more than the $100-billion (U.S.) quoted in the International Energy Agency's report released in May, its chief economist said on Tuesday. The agency, adviser to 28 industrialized countries, said in a report presented to the G8 energy ministers in May that oil and gas upstream investment would fall 21 per cent, or about $100-billion in 2009 from 2008 due to the global recession. 'The information that we are getting... may well mean that we are going to revise the numbers downwards,' Fatih Birol told Reuters in an interview. Mr. Birol said the IEA had not made a comprehensive update of the G8 report but that the agency was getting signals the drop in investment would be worse than initially feared. A more detailed update will be released for the IEA world energy outlook in November, he added. Mr. Birol cited three reasons for the worse-than-feared decline in investments. 'The first thing is that the oil price prospect is still uncertain with most companies not having yet increased their price assumption to base their projects from $40-45 [a barrel],' he said. He cited as other reasons the fact firms did not foresee demand picking up, and that key producing countries still had some spare capacity to be used. 'For those reasons I think it would be wrong to say that the investment appetite of the oil companies has returned,' he said. Asked whether $75 a barrel, a price branded by Saudi Arabia as a target, would be fair for consumers and producers, Mr. Birol said: 'In a normal world, when the global economy is running in order,..., to bring new investments in the offshore and oil sands to the market, you need a price level of $75 a barrel.' But in the current economic context, any strong price rise from the current oil price of $68 a barrel would hurt the economic recovery, he said."
Energy investment to lag further: IEA
Reuters, 23 June 2009
"Oil markets risk another speculative bubble unless the financial sector is reformed and transparency increased, but prices are not yet a threat to economic recovery, the EU and OPEC said after joint talks on Tuesday. U.S. oil was trading at around $68 a barrel on Tuesday, far below a record of nearly $150 hit last year and also below the $75-$80 OPEC officials have said they seek.... OPEC's leading producer Saudi Arabia said at the group's last conference in May oil prices of $75 a barrel could be achieved this year and the economy was ready to cope. Members of the group have since nudged their price aspirations even higher and Angolan Oil Minister Jose Botelho de Vasconcelo, who is also OPEC president, said on Tuesday he 'would love to reach $80 per barrel.' For the fragile world economy, $80 could be alarming, but representing the European Union, Energy Commissioner Andris Piebalgs said a price approaching $70 was not damaging. 'What we also discussed in our meeting is that $70 per barrel, the current price, definitely does not impede the recovery of the economy,' he said. 'We really believe the current situation has some good stability. If it continues it will be a chance for (economic) recovery and also guarantee that upstream investments will continue' OPEC has often argued too low an oil price chokes off investment in new supplies and Tuesday's joint statement said any inability to invest in new production capacity 'could lead to a perpetuation of damaging boom/bust cycles.' At its last two meetings, OPEC has kept existing output curbs in place, saying it wanted to prevent overly high prices that could jeopardise economic recovery, even though the amount of excess oil supply meant there was a case to cut production."
OPEC, EU say regulation needed to stop oil bubble
Reuters, 23 June 2009
 “Continued reliance on oil is unsustainable and this has resulted in interest in alternative fuels. Coal-to-Liquids (CTL) can supply liquid fuels and have been successfully used in several cases, particularly in South Africa. This article reviews CTL theory and technology behind CTL. Understanding the fundamental aspects of coal liquefaction technologies are vital for planning and policy-making, as future CTL systems will be integrated in a much larger global energy and fuel utilization system. Conversion ratios for CTL are generally estimated to be between 1-2 barrels/ton coal. This puts a strict limitation on future CTL capacity imposed by future coal production volumes, regardless of other factors such as economics, emissions or environmental concern. Assuming that 10% of world coal production can be diverted to CTL, the contribution to liquid fuel supply will be limited to only a few Mb/d. This prevents CTL from becoming a viable mitigation plan for liquid fuel shortage on a global scale. However, it is still possible for individual nations to derive significant shares of their fuel supply from CTL, but those nations must also have access to equally significant coal production capacities. It is unrealistic to claim that CTL provides a feasible solution to liquid fuels shortages created by peak oil. For the most part, it can only be a minor contributor and must be combined with other strategies.”
A review on coal to liquid fuels and its coal consumption
International Journal of Energy Research, 23 June 2006
"Fortunately, Iraq no longer depends on its own agriculture to feed itself. Instead it has become one of the world's largest food importers. The rationing system, at a cost of $6bn a year, gives Iraqis just enough cheap food to fend off starvation. But this food is paid for by oil revenues and these have been going down at frightening speed. A reason for this is the decline in the price of crude from $140 last year to less than half that today. But more devastating to Iraq is that production from their great oilfields is falling. These are the so-called super giants, nine oilfields with reserves over five billion barrels, which hitherto have been some of the most productive in the world. Oilfields like Kirkuk and Bai Hassan in the north and North and South Rumaila, West Qurna and Zubair in the south, appeared an endless resource which, in the long term, would bail Iraq out of whatever trouble it was in. But now even they are beginning to fail because of neglect, under-investment and mismanagement. Last year this did not seem to matter so much because the price of oil was high and the government supposed it was going to stay that way. It happily raised salaries and wages and increased the number of state employees to about two million, twice the number under Saddam Hussein. The Oil Minister Hussein Shahristani said in an interview with the oil expert Ruba Husari last July: 'Iraq is in desperate need of modern technologies, not of capital investment, to arrest the decline in those fields [the super giants] and introduce enhanced recovery.' Note that at this time Shahristani, a former nuclear scientist who was imprisoned and tortured under Saddam Hussein, thought that Iraq did not need capital investment. A year later the country is broke, has frozen government hiring, including extra police, and is negotiating a $5.5bn standby loan from the IMF. Oil production at the end of May was 2.41 million barrels, which is still less than the 2.58 million produced immediately before the 2003 war or the 3.5 million produced in 1979. This is the background to an immensely important change in Iraq. On 29 and 30 June Mr Shahristani will award 20-year-long contracts to international oil companies to work in already developed oilfields, first to restore production to what it once was, and then to increase it. The companies will be paid in crude oil at a fixed price as a fee for extra output and will put up all the investment. Critics within the Iraqi oil industry say that the government is selling the farm, and that it should have confined the international oil companies to oilfields which had been discovered but not developed. The big producing fields it should have kept for itself, using the services of foreign engineering companies, consultants and contractors to raise output. At this stage, the government does not believe it has much choice but to go ahead with the contracts being awarded at the end of June, and even then it will be three years before any new oil is produced. Surprisingly, these epoch-making developments in the way Iraq's oil wealth is controlled and exploited are hardly noticed abroad outside the oil industry and the specialist business press. Yet their outcome will do much to determine how people live in Iraq over the next century and will have an impact on the energy supply of the whole world. Iraq is currently estimated to have the third-largest oil reserves in the world, but the western and southern deserts are largely unexplored and may contain another 45 to 100 billion barrels of recoverable crude. 'According to independent consultants,' says the US Department of Energy, 'the cluster of super-giant fields of south eastern Iraq forms the largest known concentration of such fields in the world and accounts for 70 to 80 per cent of the country's proven oil reserves.' No wonder the determination of the international oil companies to get a stake in Iraqi oil development, even if the precise terms of the present contracts are not to their liking. Just how much oil the world possesses will be determined as they explore what deposits lie beneath the dreary deserts and salt marsh around Basra."
Iraq: The final countdown
Independent, 23 June 2009
"Oil prices have remained in the vicinity of $68 to $70 a barrel for nearly three weeks as the markets weigh conflicting signals. In the short term there is clearly adequate production and all indications are that the OECD economies are still contracting. Optimists continue to interpret indications of slower contraction as signals that economic growth will resume soon....Among the many interesting aspects of last week’s Iranian elections is that five days of nearly continuous demonstrations have had no discernable impact on world oil markets. Only a few years ago, this situation would have resulted in an instant price spike of several dollars a barrel. Tehran has issued reassuring statements that the demonstrations pose no threat to oil production. More important is the surplus production capacity of a reported 6 million b/d that currently exists within OPEC. There appears to be more than enough productive capacity available to replace all of Iran’s 4 million b/d should the situation ever deteriorate to the point where Iranian oil production is threatened."
Peak oil notes
ASPO USA, 18 June 2009

"The U.S. oil and gas industry’s costs of finding resources rose 35 percent last year amid the wild rise and fall in commodity prices, an Ernst & Young study released Thursday showed. The three-year average cost per barrel of oil equivalent, excluding acquisitions of proved reserves, was $27.22. But in 2008 that spiked to $51.96. 'This validates that finding oil and gas reserves is very, very expensive,' said Marcela Donadio, oil and gas sector leader for the Americas. She noted that cost also demonstrates why some companies have delayed final investment decisions on costly expansions or new projects, such as those in Canada’s oil sands or deep-water exploration."
Expense of finding oil and natural gas jumps
Houston Chronicle, 18 June 2009

"A global shift toward nuclear power is prompting countries to rush to lock in long-term access to tight supplies of uranium, and China and India look to be the next players to get in on the action. A tie-up between Rosatom, the Russian state-owned producer, and Canada-based miner Uranium One announced this week is just the latest in a series of moves on the part of Asian and European countries to lock in uranium supply to fuel construction of dozens of new reactors over the next decade. 'I think increasingly the supply of reactors is being tied to security of supply of nuclear fuel,' said Divya Reddy, an energy analyst with the Eurasia Group in Washington. Rosatom secured a 17 percent stake in Uranium One and a long-term supply deal in exchange for a half stake in the Karatau mine in Kazakhstan....the most likely sources of demand in the longer run will come from Asia, including India, which last year signed a deal ending a three-decade ban on nuclear trade with the United States....China, with the most ambitious nuclear power expansion plans, has been in talks with top uranium miner Cameco about a potential supply deal, a company spokesman confirmed. Australia is also mulling selling uranium from BHP Billiton's Olympic Dam mine to China, provided it is not used in Beijing's weapons program. Led by China, India and Russia, more than 100 new reactors will be built over over the next decade, Cameco estimates, all part of a global push to reduce dependence on greenhouse gas-producing power sources such as coal. With new reactors expected to be larger on average than the 426 currently in operation, generating capacity would grow by 28 percent, the company says....Kazakhstan has leveraged its massive reserves into a rapidly expanding industry, while Australia is also ramping up production with several mines in the planning stage. Uranium One CEO Jean Nortier said last week that Africa could emerge as the next hot spot for the mineral, where uranium is often found in copper and gold deposits. Equinox Minerals , for instance, plans to build a uranium mill to process ore from its Lumwana copper mine in Zambia. Increases in production will be necessary to keep afloat an industry that is already sharply in deficit. Mined production last year fell short of consumption by about 60 million pounds, with the shortfall made up largely by recycled material and diluted enriched uranium from decommissioned nuclear weapons, sold by Russia under an agreement with Western producers that will end in 2013."
Nuclear nations rush to lock in uranium deals
Guardian, 18 June 2009
"Russian Ambassador to Namibia, Nikolai Gribkov, said the forthcoming visit of Russian President, Dmitry Medvedev, to Namibia provides an ideal opportunity for the two countries to transform their political cooperation into strong economic and trade ties.Medvedev’s visit could re-ignite the two governments’ intentions to set up a nuclear power plant in Namibia, as proposed by Russian Prime Minister Mikhail Fradkov during his visit to Namibia in 2007. With Namibia having just leapfrogged Russia as the fourth largest uranium producer in the world, the Kremlin may take full advantage of Medvedev’s visit to exploit the African country’s uranium reserves. In 2007, three Russian mining giants Techsnabexport, Renova and Vneshtorgbank established a joint venture to mine uranium in Namibia, after acquiring prospecting licences."
Medvedev visit watershed for Namibia’s energy and trade
Informante (Namibia), 18 June 2009
"Furious protests threaten to undermine the Iraqi government's controversial plan to give international oil companies a stake in its giant oilfields in a desperate effort to raise declining oil production and revenues. In less than two weeks, on 29 and 30 June, the Iraqi Oil Minister, Hussain Shahristani, will award service contracts to the world's largest oil companies to develop six of Iraq's largest oil-producing fields over 20 to 25 years. Senior figures within the Iraqi oil industry have denounced the deal. Fayad al-Nema, the director of the South Oil Company, which comes under the Oil Ministry and produces most of Iraq's crude, said on the weekend: 'The service contracts will put the Iraqi economy in chains and shackle its independence for the next 20 years. They squander Iraq's revenues.' Mr Nema is reported to have since been fired because of his opposition to the contracts, which he says is shared by many other officials in Iraq's state-owned oil industry....The development of Iraq's oil reserves is of great importance to the world's energy supply in the 21st century. They may be even larger than Saudi Arabia's, as there was little exploration while Iraq was ruled by Saddam Hussein. International oil companies are desperate to get their foot in the door. 'Everyone wants to be in Iraq,' says Ruba Husari, an expert on Iraqi oil. 'Together with Iran, this is the only oil province in the world that has great potential. It is a great opportunity for oil companies because nobody knows the size of Iraq's reserves. Iraq itself needs to know what is under its soil.' But Iraqis are wary of the involvement of foreign oil companies in raising production in super giant fields like Kirkuk and Bai Hassan in the north and Rumaila, Zubair and West Qurna in the south. They suspect the 2003 US invasion was ultimately aimed at securing Western control of their oil wealth. The nationalisation of the Iraqi oil industry by Saddam Hussein in 1972 remains popular and the rebellion against the service contracts has been gathering pace all this week. Parliament is demanding that bidding be delayed.... Critics of the deal in parliament say that Iraq has already invested $8bn (£4.9bn) in developing its super giant fields. But Mr Shahristani needs $50bn over the next five or six years to raise current production levels from 2.5 million barrels a day of crude and knows the money and expertise can only come from outside Iraq."
Iraqi Oil Minister Accused of Mother of All Sell-Outs
Independent, 18 June 2009

"(Steven Chu, Obama Secretary of Energy) was my boss. He knows all about peak oil, but he can't talk about it. If the government announced that peak oil was threatening our economy, Wall Street would crash. He just can't say anything about it."
David Fridley, Lawrence Berkeley National Laboratory (US Department of Energy)

Cheer Up, It's Going to Get Worse, 17 June 2009

"The US Department of Energy estimates that Opec’s production spare capacity has surged to a seven-year high of 4.7m barrels a day – up from 1.5m b/d last year – as demand for oil has dropped because the impact of the economic recession. The cushion is enough to cover twice the level of Iran’s oil exports, analysts said. 'There is a lot of spare capacity out there,' said Michael Wittner, global head of oil research at Société Générale in London. Opec’s production spare capacity hit a record low of 1m b/d in 2005 but, as the economic crisis has reduced oil demand worldwide over the last year, the cartel’s idle pumping capacity has surged. In the past, the oil market has reacted with panic to geopolitical events in Iran as spare capacity was not enough to cover even a relatively small disruption in supplies. This time, however, the largest demonstrations in Iran since 1979 have not hit prices because of the production cushion and record high inventories. West Texas Intermediate, the US oil benchmark, was hovering at the $70 a barrel mark on Wednesday, down from last week’s 8-month peak of $73.23 a barrel. The coolness of the oil market in the current Iran turmoil signals that the increase in spare capacity will allow Opec, the oil cartel, to manage oil prices more effectively during a geopolitical crisis. From 2005 until early- 2008, the cartel almost lost control of the market as razor-thin spare capacity meant the threat of a supply disruption in countries such as Nigeria, Iraq or Venezuela pushed prices higher. Commercial stocks of crude oil are also extremely high as result of low demand. Oil traders in the physical market said Iran’s oil exports were running at normal levels in spite of the turmoil, noting that the country’s oil fields and export terminals were far away from the capital, Tehran, the centre of the demonstrations. Iran last month produced about 3.65m b/d, according to the International Energy Agency, the western countries’ oil watchdog. As Iran’s domestic demand absorbs about 1.4m b/d, the country’s oil exports are running just above 2.2m b/d. Mr Wittner, a former intelligence official at the CIA, said Saudi Arabia, Opec’s most reliable member, has alone almost 3m barrels a day of spare production capacity of a 'crude oil of similar quality to the one pumped by Iran'. Riyadh spare capacity is set to increase further as the country is bringing into stream this month a new oil field, the massive 1.2m b/d Khurais development."
Crude ignores Iran effect
Financial Times, 17 June 2009
"An international plan to build a nuclear fusion reactor is being threatened by rising costs, delays and technical challenges. Emails leaked to the BBC indicate that construction costs for the experimental fusion project called Iter have more than doubled. Some scientists also believe that the technical hurdles to fusion have become more difficult to overcome and that the development of fusion as a commercial power source is still at least 100 years away. At a meeting in Japan on Wednesday, members of the governing Iter council reviewed the plans and may agree to scale back the project....Iter was formally launched in 2006 as collaboration between the European Union, the United States, Russia, Japan, China, India and South Korea. The plan was to build the world's most advanced fusion experiment within 10 years for a budget of $6bn (£3.6bn). But the grand scheme has been dogged by soaring costs caused by more expensive raw materials and increases in staff numbers. Emails seen by the BBC indicate that the total price of constructing the experiment is now expected to be in excess of $16bn (£10bn).... Costs are not the only problem; Iter is also beset by huge technical challenges. Fusion takes place when a superheated gas called a plasma reaches a stage called ignition, where hydrogen atoms start to fuse with each other and release large amounts of energy. Iter aims to achieve this but only for a few minutes at a time. MIT professor Bruno Coppi has been working on fusion research in Italy and the United States for many decades. He believes that Iter is the wrong experiment; it is too costly, will take too long and may not deliver fusion. He says we should be looking at other options....Another huge hurdle is how to contain gases that are 10 times hotter than the Sun. The materials required simply haven't been invented yet. Professor Balibar explained: 'The most difficult problem is the problem of materials. Some time ago I declared that fusion is like trying to put the Sun in a box - but we don't know how to make the box....Dr Norbert Holtkamp is the man tasked with building the machine....Dr Holtkamp says the view that the project is to be scaled down is wrong. 'Fusion is not going to be the alternative in the next 20, 30 or 40 years, that is correct. But there needs to a long term plan; 40 years is little more than a generation. We need to think about the next generation and the many after that.'...Ultimately fusion may be a technological dream that is just too hard to turn into reality. And Iter, in a beautiful setting in the south of France, may become the graveyard of a good but impossible idea."
Fusion falters under soaring costs
BBC Online, 17 June 2009
"Crude oil will rise to an average $80 to $85 a barrel in the coming year as inventories decline, billionaire investor T. Boone Pickens said in Calgary today.... The hedge-fund manager is promoting an energy plan that relies on U.S.-produced natural gas to cut the country’s dependence on foreign oil. 'In this market you’re going to see oil inventories work off,' Pickens said. 'There’s no question what the Saudis want; they want a balanced market and they want $75 minimum for their oil.'... Plans to build a pipeline to bring natural gas from Alaska to the lower 48 states don’t make sense, Pickens said. Gas found in shale deposits in Texas is more accessible, he said. Shale gas is locked in non-porous rock that made the reserves inaccessible until producers perfected new drilling technologies in the 1990s. 'I don’t think the pipeline from Alaska, through Canada and down to the lower 48 makes sense,' Pickens said. 'You’ve got 50 trillion cubic feet in the Barnett and then another twice that, maybe, over in Haynesville in north Louisiana. I don’t see quite how that pipeline gets built right now.' Other U.S. shale fields, including the Marcellus in Pennsylvania, West Virginia, New York and Ohio and the Woodford in Oklahoma will provide ample supplies in the coming years, he said.”
Pickens Says Oil Will Average $80 to $85 a Barrel
Bloomberg, 17 June 2009
"Alexei Miller, Gazprom's chief executive, warned in a speech in Italy last week of a looming 'supply crunch' in the oil market after 2012, caused by under-investment today, which could send oil and gas prices soaring. A few days later, he drove that warning home in the most vivid way possible, with Gazprom's investment cuts and production delays raising the spectre of a gas supply crunch in Europe. The decision to defer the flow of gas from Gazprom's first development of the huge reserves in the Yamal peninsula, in northern Russia, makes perfect sense in the short term. All the talk in the industry is of a global 'gas glut', fostered by a surge in supplies of liquefied natural gas, particularly from the mega-projects in Qatar now coming on stream. 'Barely a year ago everyone was saying Gazprom would not be able to keep up with demand,' says Jonathan Stern of the Oxford Institute for Energy Studies. 'The speed of the turnround has been extraordinary.' The global recession has hammered Europe's gas consumption, particularly for industrial users. The car industry, for example, uses gas-fired heaters to dry paint, and many assembly lines have fallen silent. Cedigaz, the gas industry association, has estimated that industrial demand in developed economies, including the European Union, the US and Japan, will be 17 per cent lower this year than last year. Residential consumption is more stable, but the EU's overall demand could fall 5 per cent this year, even after an unusually cold January. Gazprom, which is the biggest gas importer into the EU, has been forced to cope with that downturn at the same time as Russian demand has been plunging. Prof Stern estimates that EU demand will be 20bn cubic metres lower than last year, Russian demand 40bn cu m lower and demand from Ukraine and other former Soviet states also 20bn cu m lower. Gazprom has responded by cutting its own production and forcing independent Russian gas producers to cut theirs. It has also told Turkmenistan, one of its main central Asian suppliers, to cut its export price. An explosion in April cut the gas pipeline from Turkmenistan to Russia, and it has not yet reopened. The causes are disputed. The rate at which gas demand picks up will depend on the pace of economic recovery. Tony Hayward, chief executive of BP, said last week that although demand had steadied after dramatic falls earlier in the year, there were as yet no signs that it was rising again. So Gazprom's forecast that even in 2012 its production is likely to remain lower than last year is a plausible assumption. The alarming prospect for Russia is that western European demand will never recover. If the EU could meet its objective of raising energy efficiency by 20 per cent by 2020, then its gas consumption could fall through the decade. Cambridge Energy Research Associates, a consultancy, argued recently that even going halfway to the EU target could cut gas demand back to early 1990s levels by 2030. However, other experts are sceptical those savings can be achieved, or that other fuels can substitute for gas in the next decade. Colette Lewiner of Capgemini, the consultancy, argues that European gas demand is set to rise until at least 2020. 'I don't think renewables will be able to do enough,' she says. 'If you take all the other energy sources, you are still left with a rising need for gas.' European production, meanwhile, is in decline. The International Energy Agency estimates western Europe's gas production will fall by 30 per cent over the next two decades. The search is on for new sources of gas to bring to Europe. The EU has high hopes for Azerbaijan and Turkmenistan, and recently there has been growing optimism about gas from northern Iraq. But the reality is that the EU cannot do without Russia, and sooner or later that gas from Yamal will be needed."
Russian move raises supply crunch fears
Financial Times, 17 June 2009
"For decades, crude oil prices have gone to extremes, for instance, the $147-per-barrel peak last summer, followed by an overcorrection. But 2009 is puzzling. Prices are going in the opposite direction of demand. In the midst of a global meltdown, anyone who bought crude oil futures at the beginning of the year, in the low $30 range, has more than doubled their money. Meanwhile, natural gas continues to wallow in the trench. On Tuesday, oil nearly reached $73, as it reportedly continues to climb on news of a weakening dollar, despite ample oil supply and weak demand."
Oil's Paper Bubble
Forbes, 16 June 2009
"The UK is third from bottom in a league table of renewable energy across Europe, with only Luxembourg and Malta sourcing less of its energy from clean sources such as wind or sun. The table, showing the percentage of renewables in EU countries, was published by the government in response to a parliamentary question by the former environment minister Michael Meacher. It showed that the UK received 1% of its energy from renewables in 1995 and just 1.3% a decade later. Only Luxembourg, at 0.8% and 0.9%, and Malta, which has no renewable energy, came lower on the list. The numbers show the scale of the challenge facing the UK as it attempts to meet a commitment to source 15% of its energy from renewable sources by 2020, part of binding European climate targets. Top of the EU list was Sweden, with 35.7% of its final consumption of energy coming from renewables in 1995 and 40.8% in 2005. Romania jumped from 9.3% to 19.2% over the same period, while Denmark went from 8.3% to 17%. Portugal dropped from 22.8% to 17% and France from 11.4% to 9.5%, though both are still comfortably ahead of the UK. A spokesperson for the Department of Energy and Climate Change said several wind farms had become operational in the UK since 2005 and that the proportion of renewable energy in the country had risen from 1.3% in 2005 to about 1.8% now. 'Our [2020] target is ambitious but achievable. It's good for the climate to have more low-carbon energy, and good for our energy security to have more home-grown energy. 'We've started from a low base, but we have made big progress. There was an increase of 26% in onshore wind power generation from 2006 to 2007 and a 20% increase in offshore wind. The UK is now the world's leader on offshore wind, underlined by the green light given to the world biggest offshore wind farm, the London Array, thanks to the extra support in the budget."
UK trails EU league for renewables
Guardian 15 June 2009
"The price of oil has been extraordinarily volatile. At the beginning of the recession it fell by about 80 per cent as world expectations were lowered. In the past six months, the price has recovered by about 100 per cent, taking oil back to $70 a barrel. These price gyrations need to be explained, particularly the strength of the price recovery in 2009; the recession may have reached bottom but it has certainly not reached this level of recovery. Part of the explanation is the shift of the global economy from mature to emerging countries, particularly to the four biggest emerging markets of Brazil, Russia, India and China, the so-called Bric countries, which are holding their own economic summit in Yekaterinburg this week. In coming years Bric is expected to soar above the US and Europe; China alone will catch up with the US in five to ten years' time. The big emerging countries have continued to increase their demand for oil, even during the recession. The swing of effective demand to the emerging countries is not in dispute, but there are different views about an even greater shift in the oil market, so-called 'peak oil'. That is the point in time when flows of new production are fully cancelled out by declines in existing production. That does not mean that oil is running out; but it does mean that demand will outstrip new supply, as has happened in the North Sea and North America. This time it will be a universal shortfall. Many experts believe that the recession has indeed passed its low point; in that case demand for oil will recover in the countries worst hit, but will also continue to increase in the emerging countries, particularly the Bric countries. Much of the discussion in Yekaterinburg will centre on the future of oil supplies and particularly on the possible diversion of Russian oil from Europe to China. If the peak oil theory does prove correct, the present recovery in prices will only be the beginning. Those oil economists who accept the peak oil argument tend to expect the price to reach $150 a barrel, probably in 2010. This might be accompanied by a rise in the gold price above $1,000 an ounce. Oil and gold prices tend to move together, and the emerging countries have larger dollar reserves than they would altogether like. Gold is the one real alternative to paper currencies as a reserve asset. The old assumptions are being undermined. It is only too clear that most politicians are still living in the 20th-century world, the world in which they grew up. The peak oil market may already have been reached, but in any case it will be reached eventually. The only question is when. Power is passing from the North West to the SouthEast, from the US to China."
Lord Rees-Mogg - Rising oil prices will buy off democracy
London Times, 15 June 2009
"The UK is third from bottom in a league table of renewable energy across Europe, with only Luxembourg and Malta sourcing less of its energy from clean sources such as wind or sun. The table, showing the percentage of renewables in EU countries, was published by the government in response to a parliamentary question by the former environment minister Michael Meacher. It showed that the UK received 1% of its energy from renewables in 1995 and just 1.3% a decade later. Only Luxembourg, at 0.8% and 0.9%, and Malta, which has no renewable energy, came lower on the list. The numbers show the scale of the challenge facing the UK as it attempts to meet a commitment to source 15% of its energy from renewable sources by 2020, part of binding European climate targets....Top of the EU list was Sweden, with 35.7% of its final consumption of energy coming from renewables in 1995 and 40.8% in 2005. Romania jumped from 9.3% to 19.2% over the same period, while Denmark went from 8.3% to 17%. Portugal dropped from 22.8% to 17% and France from 11.4% to 9.5%, though both are still comfortably ahead of the UK...A spokesperson for the Department of Energy and Climate Change said several wind farms had become operational in the UK since 2005 and that the proportion of renewable energy in the country had risen from 1.3% in 2005 to about 1.8% now."
UK trails EU league for renewables
Guardian, 15 June 2009
"Russian state-owned nuclear giant Rosatom has secured a 17 percent stake in Canadian rival Uranium One (UUU.TO), acquiring another toehold in North America in exchange for a 50 percent stake in the Karatau uranium mine in Kazakhstan....The deal comes as several countries have sought to lock in supply of nuclear fuel to feed growing power industry demand...'You're not going to spend billions of dollars in building nuclear power stations and not have uranium to feed them, or more importantly be held at ransom,' said David Davidson, an analyst at Paradigm Capital in Toronto.
Russia swaps mine stake for 17 pct of Uranium One
Reuters, 15 June 2009
"The latest edition of the excellent BP Statistical Review of World Energy, published last week, shows that, for the first time, total oil demand in the emerging markets now outstrips the West. That's an important milestone. From now on, the Western world can slump but global oil prices can stay 'fundamentally' strong...These economies are home to no less than two-thirds of the world's population. They're in the midst of the fastest, most widespread industrial revolution the world has ever seen."
Oil prices will be driven upwards by the needs of developing nations
Daily Telegraph, 14 June 2009
"This month an Iraqi politician will appear on television to open envelopes and reveal the winners of a long and hard-fought contest. In the balance hangs the wellbeing of 28m people, tens of billions of dollars of contracts and how much you and I pay for everything from yoghurt pots to petrol. It should make good viewing. For the hopeful contestants, it has been a long wait — since 1972 to be exact. That was when the Iraqi oil industry was nationalised and foreign operators were booted out. Now the oil giants have been invited back. At the ceremony on June 29 and 30, Hussain al-Shahristani, the oil minister, will reveal which of them will be the first to be let back into the south of the country, where most of its oil and gas resources are found. ...At a time when explorers are going to great lengths to get at new sources, Iraq’s is the 'easiest' oil in the world. It costs between $2 and $4 a barrel to extract, compared with $50 or more for tar sands or deep-sea drilling. In its annual review of world energy, BP announced last week that global reserves fell for the first time in more than a decade. Lambert Energy, a consultancy, predicts that at present rates of decline the world will need 40m barrels a day of new production capacity within a decade just to keep up with current demand. Philip Lambert, its founder, said: 'The world needs Iraq, both the north and the south, to work. There is nothing else that can fill the gap.'... The deals offered to the oil giants in the south won’t be nearly as attractive as those in Kurdistan. They are technical contracts, under which companies are paid a fee to increase production. Oil groups have found such deals in other countries such as Iran unappealing. However, the contracts do provide for additional payments if production targets are passed. ”
Rush for ‘easiest oil in the world’
LondonTimes, 14 June 2009
"Over the past six years of violence in Iraq, oil has been the flashpoint in Kirkuk, a city forever home to a combustible mixture of races. Kurds have always claimed Kirkuk as a homeland; Turkomans, Assyrians and Arabs have at various times based empires here. The resulting melting pot of races and clans has never mixed comfortably. Since the US declared its invasion a success in mid-2003, Kirkuk has seen its biggest population shift in centuries, with Kurds capitalising on a power vacuum in Baghdad and Arabs rushing to reinforce their foothold. Kurds have been accused of ethnically engineering Iraq's most divided city to lay the foundations for a nascent Kurdistan. Arabs have been accused of doing anything - including bombings - to stop the city from escaping their grasp. All along, Kirkuk has had the feel of a boom-town-in-waiting, sitting on a subterranean lake of fabulous wealth that would one day create fortunes. 'That day is closer than ever,' said Sharlet Yohana, 50, an Assyrian woman who works in the Iraqi government-owned oil extractor, the North Oil company. 'The real conflict here is about oil,' she said from the sitting room of her middle-class home in an Assyrian Christian neighbourhood. 'Oil may well provide our future wealth and comforts, but it will also be our damnation. 'We will never have peace until the political problems surrounding the oil are solved. Everyone will suffer, far more than we are now: Kurds, Arabs, Turkmen, Christians. Already we have a curfew from midnight to 5am, and many Christians are blown up or assassinated. They are bringing this to a head now, before the foreign contractors come in.'....Advocates of the Arab claim to Kirkuk, among them an outspoken Sunni MP, Osama al-Najafi, insist the programme, which is authorised by article 140 of Iraq's constitution, is no longer relevant, because it has expired. 'The UN in its final report said article 140 was not suitable to solve this problem in its present form,' al-Najafi said. The UN report was released in April after two years of searching for a solution for Kirkuk. The UN recommended a jointly administered region and a referendum to decide the city's future racial complexion. But with the population and mix having changed so markedly and with Baghdad fearing it is now on the wrong side of the ledger, it is highly unlikely to endorse such a ballot. 'The report was unjust and one-sided,' al-Najafi complained. 'They dealt with the Kurdistan province and Iraq as distinct areas, not one country. And they compared the situation to Northern Ireland and the UK. And when they dealt with the Arab perspective, they put inside quotes and added question marks. 'The Kirkuk problem comes down to oil,' he said. 'The Kurds want the funds to finance the proposed state of Kurdistan. It is enshrined in the constitution that oil and gas is for all Iraqis. But they have signed a range of contracts from those that are without agreement from the central government. 'This situation cannot continue for long. The tensions are growing and there is no agreement about the shape of the future Iraqi state. There are deep divisions and they are not drawing any closer' To many Kurds, the divisions are indeed becoming more entrenched. 'We don't see this so much as Northern Ireland as a new Jerusalem,' said one senior member of the Kurdish parliament. 'This is a conflict with a history and we are prepared to play a long game on it. The oil is bringing things to a head rapidly and Baghdad feels it is starting to lose significant ground. 'The Turks remain uneasy in the north, but we will do nothing to provoke them. Time is on our side."
Kurds lay claim to oil riches in Iraq as old hatreds flare
Observer, 14 June 2009
"One way to know that the end of the Age of Oil will soon be upon us is the current excitement and chatter about going—literally—to the ends of the earth to find more oil. The Arctic Circle, which circumscribes about 6% of the earth’s total surface, is one of the last regions of any significant size to be explored for oil, and for good reason: It’s locked in ice for much of the year, far from support and distribution lines, and is one of the most extreme environments on earth. Whatever oil and gas is extracted from the top cap of our planet will be the most expensive and difficult oil ever produced. Yet the prospect of new oil production from the Arctic is attracting renewed attention as the world becomes increasingly cognizant of the end of cheap, easy oil, and the security and economic risks associated with the expensive, difficult oil that remains.... The important question now is: How much remains to be discovered up there? In an effort to answer this question, the United States Geological Survey (USGS) in cooperation with an international group of geological experts from Canada, Demark, Greenland, Norway, Russia, and other governmental agencies has just completed an effort to round up the available data on the Arctic region and assess its potential, known as the Circum-Arctic Resource Appraisal (CARA). Their summary report, 'Assessment of Undiscovered Oil and Gas in the Arctic,' was released last week. Much of the area is as yet unexplored, so an innovative approach to assessing the area and extrapolating from the limited data available was required. In order to have some way of evaluating the 'very sparse geological data' on the area, the evaluators used 'analogs' from the real world as comparison samples.... Maps of the resources reveal their uneven distributions: Sixty percent of the oil is concentrated in just six AUs, predominately in Alaska, and two-thirds of the undiscovered gas is in just four AUs, predominately in Russia.... A range of probabilistic estimates were developed for the assessment units, which were then aggregated into the summary report. Estimates of undiscovered resources are customarily stated in terms of a range of probabilities. The median, P50 estimates (50% probability) are usually reported in the press, but they’re often shown to be optimistic once a given resource is analysis by respected petroleum geologist Jean Laherrère in March 2008 on The Oil Drum estimated that the Arctic would contain 50 billion barrels of oil and 1000 TCF of gas, putting his estimates just above the P95 estimates offered by the USGS. Laherrère is one of the fathers of the modern peak oil study, a man with deep experience in the global oil and gas exploration and production industry, and his estimates are usually quite accurate. To give a sense of scale to these numbers, world oil consumption is around 30 billion barrels per year, and world gas consumption is about 110 TCF per year. So the Arctic may contain anywhere from a 1-3 year supply of oil and a 7-27 year supply of gas. However, these are merely estimates of  'original oil and gas in place.' Typically, only 25-35% of that amount is economically recoverable using current technology. So the Arctic may in fact have perhaps a 4-month world supply of recoverable oil, and around a 2-year supply of gas. In reality of course, the resources wouldn’t be found or produced all at once, but rather in chunks, over time, and would have far greater implications for the nations that lay claim to it (for example, Greenland) than for the world as a whole. 'With respect to oil, there’s nothing that we see in the Arctic that suggests this preeminence of oil within and around the Gulf states would be significantly shifted,' said geologist Donald Gautier, lead author of the survey.... In terms of the all-important production rate however, it seems safe to assume that although the Arctic’s resources will be most welcome to the nations that possess them, they will amount to little more than a trickle of very expensive hydrocarbons within the context of enormous world demand.Exploration and development of oil and gas from the Arctic Circle is a foregone conclusion. The world simply needs hydrocarbons too much, and the remaining prospects are few. But to exploit it will require technologies that don’t yet exist, enormous amounts of capital, and a high tolerance for risk. In other words, the price of oil will have to be high, and stay high, to make the effort worthwhile."
How Much Oil Is In The Arctic?
Business Insider, 13 June 2009
"The steady rise in the oil price has prompted a sharp increase in predictions for the crude price. With oil now above $70 a barrel, Goldman Sachs has raised its forecast for the end of the year from $65 to $85 and says prices could touch $100 by the end of next year. The Chancellor this week singled out rising oil prices, along with the failure of other European countries to clean up their banks, as serious threats to the recovery. The oil price had 'the potential to be a huge problem,' he said. Economists argue about how much impact a big rise in the oil price has on the British economy these days, although they agree that it is much less than it used to be. It is also less important than for the US. The doubling of the price in the past four months has put paid to hopes that British households will see further cuts in their utilities bills. If it increases much further, there will be fears that those bills could start rising again, though it takes some time for a rise in the oil price to feed through into long-term gas prices. The strengthening of sterling has also taken some of the sting out of the rise in the oil price in dollar terms."
Scrambling for green shoots
London Times, 13 June 2009
"For a tiny, teardrop-shaped fragment in the Indian Ocean, Sri Lanka punches far above its weight. Its location off the southeastern coast of India may have put it right in the line of the 2004 tsunami, but it also puts it in pole position to exploit the growing geopolitical struggle unfolding in the Indian Ocean. China’s role in the Sri Lankan civil war is well known. Its deal to build a major port at Hambantota in southern Sri Lanka is part of a regional strategy to create a 'string of pearls' of friendly harbours in Pakistan, Bangladesh and Burma, along key shipping routes through the Indian Ocean. ... Next month, for the first time, Sri Lanka will attend the Shanghai Co-operation Council as a dialogue partner, a blessing bestowed by Russia and China in recognition of its importance in the new Indian Ocean great game. Russia, which continues to growl over Nato expansion in Eastern Europe, is also observing keenly any activity in the Indian Ocean. Already Nato has encroached up to the Persian Gulf. In October 2007 it conducted its first ever naval exercises in the Indian Ocean, part of an American strategy to establish Nato’s presence in this crucial region. Russia, Iran — and even China — fear Nato’s expanding alliance with Pakistan will give it a foothold in the region. Despite Delhi’s friendly relations with the West, India is desperate not to allow Pakistan to gain any more influence there. Sri Lanka’s prime location in prime maritime real estate has elevated it to the jewel in the crown of the new Indian Ocean paradigm."
Sri Lanka's crucial role in Indian Ocean power struggle
London Times, 12 June 2009

"The uranium industry says Australia has slipped down the rankings of the world's biggest producers and that is threatening its position as an exporter. Industry leaders told a conference in Darwin they were determined to pressure governments to remove more barriers to the expansion of mining. The Uranium Association's executive director, Michael Angwin, said Australia had dropped from being the world's second biggest producer of uranium to the third biggest, behind Canada and Kazakhstan. He said Australia would be in a stronger competitive position if Queensland followed Western Australia and allowed uranium mining. 'We can't just store that up and think that on the strength of that uranium endowment we'll capture the world's uranium market whenever we want to,' he said. The Uranium Association says there is the potential for uranium exports to increase from 10,000 to 40,000 tonnes a year."
Australia slides down list of uranium exporters
ABC News (Australia), 12 June 2009

"As recently as 2007, the IEO projected that the global production of conventional oil (the stuff that comes gushing out of the ground in liquid form) would reach 107.2 million barrels per day in 2030, a substantial increase from the 81.5 million barrels produced in 2006. Now, in 2009, the latest edition of the report has grimly dropped that projected 2030 figure to just 93.1 million barrels per day - in future-output terms, an eye-popping decline of 14.1 million expected barrels per day. Even when you add in the 2009 report's projection of a larger increase than once expected in the output of unconventional fuels, you still end up with a net projected decline of 11.1 million barrels per day in the global supply of liquid fuels (when compared to the IEO's soaring 2007 projected figures). What does this decline signify - other than growing pessimism by energy experts when it comes to the international supply of petroleum liquids? Very simply, it indicates that the usually optimistic analysts at the Department of Energy now believe global fuel supplies will simply not be able to keep pace with rising world energy demands. For years now, assorted petroleum geologists and other energy types have been warning that world oil output is approaching a maximum sustainable daily level - a peak - and will subsequently go into decline, possibly producing global economic chaos. Whatever the timing of the arrival of peak oil's actual peak, there is growing agreement that we have, at last, made it into peak-oil territory, if not yet to the moment of irreversible decline. Until recently, Energy Information Administration officials scoffed at the notion that a peak in global oil output was imminent or that we should anticipate a contraction in the future availability of petroleum any time soon. '[We] expect conventional oil to peak closer to the middle than to the beginning of the 21st century,' the 2004 IEO report stated emphatically. Consistent with this view, the EIA reported one year later that global production would reach a staggering 122.2 million barrels per day in 2025, more than 50% above the 2002 level of 80.0 million barrels per day....In 2025, according to this new report, world liquids output, conventional and unconventional, will reach only a relatively dismal 101.1 million barrels per day. Worse yet, conventional oil output will be just 89.6 million barrels per day....[Unconventional] fuels include Canadian oil sands, Venezuelan extra-heavy oil, deep-offshore oil, Arctic oil, shale oil, liquids derived from coal (coal-to-liquids or CTL), and biofuels. At present, these cumulatively constitute only about 4% of the world's liquid fuel supply but are expected to reach nearly 13% by 2030. All told, according to estimates in the new IEO report, unconventional liquid production will reach an estimated 13.4 million barrels per day in 2030, up from a projected 9.7 million barrels in the 2008 edition."
It's Official - The Era of Cheap Oil Is Over: Energy Department Changes Tune on Peak Oil
Tom Dispatch, 11 June 2009
"British production in the North Sea is set to drop to levels not seen since the late 1970s, BP statistics suggested. Chief executive Tony Hayward said output will fall by at least 5 per cent a year in the coming years, and if investment is not stepped up the declines could be even steeper. Just 1.54million barrels of oil were produced in 2008, compared with a peak of 2.9million in 1999, and continued declines will leave output at its weakest since 1978. Combined oil and gas production has fallen to 2.6million barrels a day.  'The North Sea is a mature and declining province,' said Hayward. 'It will decline for sure at 5 per cent per year, and if the investment doesn't go in - and this year it is not going in - it will probably decline at a faster rate.'...At the current rate of production, the UK has six years of oil left and just under five years of gas, BP's annual Statistical Review of Energy showed. Making matters worse, the credit crunch is likely to lead to a halving of North Sea investment in 2010 compared with last year, according to industry lobby group Oil and Gas UK."
BP's grim warning over growing cost of North Sea oil
Daily Mail, 11 June 2009
"Output from Alberta's oil sands region, the largest crude reserves outside the Middle East, will rise to 3 million barrels per day by 2018, the province's energy regulator said on Wednesday, even as it slightly lowered its estimate of the region's reserves. In its annual estimate of the province's oil and gas reserves, Alberta's Energy Resources Conservation Board (ERCB) said it expects production of the tar-like bitumen contained in the oil sands to more than double over the next nine years, from about 1.3 million barrels per day last year. The forecast is more bullish than one released just days ago by the Canadian Association of Petroleum Producers. Cutting its production estimate for the third time in a year, CAPP estimated that by 2020, oil sands output would only be 2.9 million barrels per day in its most optimistic case. Both the CAPP and ERCB estimates were based on current and planned projects in the oil sands region of northern Alberta. The board could not immediately account for the discrepancy between the two forecasts. The regulator also lowered its estimate of the remaining recoverable oil sands reserves to 170.4 billion barrels from its 2008 estimate of 172.7 billion barrels due to more detailed technical data. Alberta's conventional oil reserves were pegged at 1.5 billion barrels, down 3 percent from last year and continuing a multi-year decline as new oil discoveries replaced only 77 percent of production. However the ERCB estimates that 3.7 billion barrels of oil will ultimately be found and recovered in Alberta through conventional methods. Total output of conventional and oil sands crude in 2008 fell 1 percent to 1.85 million barrels per day as planned and unplanned maintenance shutdowns at oil sands projects crimped production."
Alberta oil sands output pegged at 3 mln bpd by 2018
Reuters, 11 June 2009
"The International Energy Agency on Thursday forecast that the slump in global oil demand in 2009 would be slightly less severe than previously expected, the organization's first upward revision to its estimates in 10 months as economic indicators suggest the recession may be past its peak. The Paris-based agency said in its closely watched monthly survey that global oil demand would fall by 2.9 percent to 83.3 million barrels a day this year, or 2.5 million barrels a day less than in 2008. In May, the IEA was expecting a 3 percent annual fall in demand, the sharpest rate of decline since 1981. 'These revisions do not necessarily imply the beginnings of a global economic recovery and may only signal the bottoming out of the recession,' the IEA said in its report....Since predicting in August that 2009 global oil demand would reach 87.8 million barrels a day, the IEA has steadily lowered its forecasts as the financial crisis plunged the world into the deepest global recession since the Great Depression. Oil prices have been gaining quite steadily over the past weeks, rising from near $35 a barrel in March to highs above $72 on Thursday. Analysts say the rise can be attributed in part to hopes for a global economic recovery but mainly to the U.S. dollar's fall against other major currencies, as investors turn to commodities as a hedge against inflation and a safeguard from dollar weakness. The IEA mentioned rising refinery activity and OPEC's decision in late May to stick to its current production targets as contributing factors to higher crude futures."
International Energy Agency makes first upward revision to 2009 global oil demand in 10 months
Associated Press, 11 June 2009
"Crude oil rose for a third day, climbing above $72 a barrel for the first time in seven months, after China’s net imports jumped to a 14-month high and U.S. crude and gasoline stockpiles unexpectedly fell. China, the world’s second-biggest energy user, increased its net crude purchases to 16.62 million metric tons in May, or 3.9 million barrels a day, according to data released by customs on its Web site today. Oil was also supported by a 4.38 million barrel drop in U.S. stockpiles.... China’s spending on factories, property and roads surged a more-than-estimated 32.9 percent from a year earlier, the statistics bureau said today, helping to drive a recovery in the world’s third-largest economy and drive up demand for fuel. The Organization of Petroleum Exporting Countries will only consider increasing output when the price of crude rises to $100 a barrel, according to Kuwaiti Oil Minister Sheikh Ahmed al- Abdullah al-Sabah. OPEC is scheduled to meet on Sept. 9. U.S. fuel demand in the past four weeks averaged 18.3 million barrels a day, down 6.9 percent from a year earlier, the Energy Department said. There was a 7.7 percent deficit in the week ended May 29. Gasoline use averaged 9.2 million barrels a day during the period, up 0.4 percent from a year ago. Fuel imports to the U.S. dropped 379,000 barrels a day to 2.55 million, the department said. Crude-oil imports slipped 676,000 barrels to 8.97 million."
Oil Climbs Above $72 as China Imports Rise, U.S. Supplies Drop
Bloomberg, 11 June 2009
"Global natural gas resources could be more than quadrupled, helping tackle climate change, if the world adopted US technology and expertise to tap unconventional sources, according to a report by PFC Energy, a consultancy. For Europe, which geological surveys show has vast unconventional shale gas, coal bed methane and hard to access gas, this could ultimately lead to reduced dependence on Russia. Globally, it could ease the transition from high carbon coal to cleaner burning natural gas in electricity production. 'This is a game changer,' said Robin West, PFC chairman. PFC says that global unconventional natural gas resources, based on 1997 geological estimates that could rise with new technologies, total 3,250,000bn cubic feet. To contrast, the world's conventional natural gas reserves are 620,000bn cubic feet. PFC does not put a timetable on how quickly these resources could be developed - indeed, some may be left in the ground forever. There are political, economic and bureaucratic obstacles to recovering this natural gas. But the technology is available and for the first time companies are considering the potential. 'You're talking about massive new resources,' said Nikos Tsafos, PFC's upstream and gas group senior analyst. 'Even if you only got 10 per cent of that, given the need for economic viability at each formation, you would increase the reserve base globally by 50 per cent.' The growth in unconventional gas in the US underlines the potential. Richard Ranger, analyst at the American Petroleum Institute trade association, said accessing US shale had increased domestic natural gas supply estimates from 90 years' worth to 116 years. 'Unconventional gas has already transformed the supply picture in the US,'' Mr West of PFC said. US unconventional gas supplies have doubled from 2000 to 2008, to 8,000bn cubic feet, PFC says, which is about two-thirds the gas volume that Europe imports from Russia. Michael Steinhacker, project manager for Unconventional Gas Service at Wood Mackenzie consulting, said Europe's higher population density created problems in terms of the transportation of rigs and other equipment. Supporting infrastructure, which is already in place in the US, would also have to be built. The development of technologies to recover gas from shale - such as fracturing it with high-pressure water - has been led by independent natural gas company Devon Energy. Devon has formed a joint venture with Total, which is attempting to get a concession in France for 1.4m acres to produce shale gas. While there is no active shale development project outside the US, testing is continuing on the commercial viability of some shales, said Bill Van Wie, Devon's senior vice-president of exploration."
Unconventional sources promise rich natural gas harvest
Financial Times, 10 June 2009
"A game-changing moment could be upon us. In recent years, the world has grown used to condemning China as a climate criminal. But over the next few weeks and months, don't be surprised if you hear the same nation being hailed as the planet's first green superpower. The State Council, China's cabinet, will soon release the details of a staggeringly large 'new energy' programme that could propel the world's biggest greenhouse gas emitter past Europe and the US into a global leader in renewable energy and low-carbon technology. This is no short-term economic boost or sop for climate change negotiations; it is a long-term investment aimed at making China a dominant force in the global low-carbon economy for decades to come. Power plays do not come much bigger. The size of the energy stimulus has not yet been revealed, but reports in the domestic media and from foreign diplomats suggest between 1.4 trillion (US$200 bn) and 4.5 trillion yuan (US$600bn) will be invested over the next ten years in nuclear power plants, solar and wind farms, hydroelectric dams, 'green transport', 'clean coal' and super efficient electric grids. The consequences will be staggering. If the bigger figure proves correct, China will be spending the equivalent of its 2009 military budget on 'new energy' for each of the next ten years. ....China already makes most of the world's solar panels and wind turbines. Its carmakers, such as BYD, are pushing ahead faster than established Japanese and American rivals to mass produce electric vehicles. Its carbon capture technology and high-efficiency 'ultrasupercritical' coal plants are close to the global cutting edge. With the new package, the government will commit itself to developing domestic markets for these 'sunrise' industries....If a substantial amount of the new package goes on renewables and efficiency, Julian Wong, an energy analyst at the Center for American Progress in Washington DC, says the potential is enormous. He says: 'If those expectations are fulfilled, China could emerge as the unquestioned global leader in clean energy production, significantly increasing its chances to wean [itself] off coal, and at the same time ushering in an era of sustainable economic growth by exporting these clean-energy technologies to the world.' This is not being done because of international obligations, but as an investment in national security. Renewable energy eases China's dependence on foreign fuel supplies, which are a growing concern. In an age of soft power, asymmetric warfare and carbon anxiety, an investment in solar and wind energy will help the country to stake a claim to the moral high ground. Todd Stern, the top climate change envoy for President Barack Obama, recently warned that the US could fall behind. 'We need to recognise that if we aren't careful, we may spend the next few years chasing China to do more, but then spend all the years after that chasing them,' he said before heading to Beijing for talks with his Chinese counterparts this week."
China makes renewable power play to be world's first green superpower
Guardian, 10 June 2009
"The price of oil burst through the $71 a barrel mark today amid revelations that proven reserves had fallen for the first time in 10 years and predictions that the price could eventually hit $250....Kuwait's oil minister, Sheikh Ahmad al-Abdullah al-Sabah, put some of the rise down to signs of recovery in Asia but warned that overall demand was still weaker than last year. Opec would not raise supply at current oil prices but did not rule it out 'if it reached $100', he said...The latest surge has also raised fears that higher energy costs could snuff out the nascent economic recovery....The febrile atmosphere in oil markets was fed by the publication of BP's Statistical Review of World Energy, which showed that the world's proven crude reserves had fallen by 3bn barrels to 1.258tn by 2008 from a revised 1.261tn in 2007. Declines in important producers such as Russia and Norway offset rises in new areas such as Vietnam, India and Egypt. The figures did not include Canada's tar sands, which are put at 150bn barrels. The drop is partly attributed to a drop in exploration drilling due to the precipitous fall in oil prices last year but also to the end of 'easy' oil....Global oil consumption fell 0.6% to 81.8m barrels a day in 2008, the first decline since 1993 and the largest drop for 27 years. North Sea output dropped 6.3% to its lowest level for three decades."
Oil price leaps to year's high
Guardian, 10 June 2009
"The giant Russian energy company, Gazprom, which controls the world's largest reserves of natural gas, has issued a stark warning to the European Union saying it must decide if it wants to continue receiving supplies of Russian gas. Speaking in an interview for the BBC's Newsnight programme, Gazprom deputy chairman Alexander Medvedev warned that Europe was now at a crossroads. 'Only three countries can be suppliers of pipeline gas in the long-term - Russia, Iran and Qatar. So there is no other choice than to deal with these suppliers,' he said. 'Europe should decide how to handle this situation… and if Europe doesn't need our gas, then we will find a way of selling it differently.' The threat comes as the EU scrambles to find alternative energy suppliers following the crisis in January, when Russia shut down the main pipeline into Europe for two weeks in a price dispute with the key transit country, Ukraine. The EU currently relies on Russia for a quarter of its total gas supplies. Of the bloc's 27 member states, seven are almost totally dependent on Russian gas....But is it already too late for Bulgaria and Europe as a whole to escape the addiction to Russian gas?  It is now a vital issue for the EU and it is leading to increasing friction with Moscow in what being described as a new 'Great Game' between Russia and the West over energy supplies. Gazprom is already manoeuvring cleverly in this game, pushing ahead with highly ambitious plans which would strengthen its hold over Europe. Despite the sharp fall in oil and gas prices which have hit Gazprom hard, the company is determined to build two new pipelines to Europe at a total cost of at least $20bn (£12.5bn)....The first pipeline, called Nord Stream, would go from western Russia under the Baltic Sea to Germany, while the second, called South Stream, would go from Russia's south coast under the Black Sea to Bulgaria, eventually ending up in Italy. Gazprom wants to pump gas under the sea directly to Europe so it can avoid transit countries such as Ukraine which lie along the existing land routes. It argues this will improve Europe's energy security. But it will also give Russia the ability to pump much more gas to Europe. Mr Medvedev of Gazprom believes that by 2020, Russia's share of the European gas market will increase from 26% to 33% 'because local production is going down and demand is increasing'...While the Commission seems unconcerned by the long-term implications of Nord Stream, there is real worry about Gazprom's other big pipeline project, South Stream. No construction work has begun on it yet, but Gazprom insists feasibility studies will be completed this year and the pipeline will be built across the Black Sea to Bulgaria and into the heart of Europe by 2015. For Europe this could spell disaster. It could kill off one of its most important schemes for breaking away from its dependency on Russia. For five years, the EU has been pushing for a pipeline to be built from the Caspian region to Austria which would carry gas from Central Asia, the Caucasus and Middle East. Crucially, the pipeline called Nabucco would not go across any Russian territory. But like South Stream it would enter Europe via Bulgaria and possibly use several of the same European transit countries. There are serious doubts that both Nabucco and South Stream are viable. One European Commission official told the BBC that there was now a 'war of gas pipelines' going on with Russia, with 'harsh competition as each side tries to gather support for its plans'....And Moscow itself is now openly saying that competition for energy supplies in areas including Central Asia and the Caspian Sea could lead to military conflicts along its borders over the next decade. A security strategy document, published in May, was signed by the Russian President Dmitry Medvedev."
Energy fuels new 'Great Game' in Europe
BBC Online, 9 June 2009
"The U.S. will get more than half of its natural gas supplies from so-called tight reservoirs by 2020, Royal Dutch Shell Plc estimates. New technology will allow tapping 500 trillion cubic feet of unconventional gas resources in North America, enough to supply the U.S. for two decades, said Malcolm Brinded, executive director for the upstream business at Europe’s biggest oil company. Shell expects to more than triple tight gas output to more than 300,000 barrels of oil equivalent a day in 2020. 'Having picked much of the low-hanging fruit, our industry is now focused on more difficult resources, tight reservoirs, fractured carbonates, oil shales, oil sands, and ultra-heavy oil,' Brinded said in a speech posted on the Hague-based company’s Web site today. 'Tight gas in North America has rapidly developed into a real game-changer.' The world holds 3,000 trillion to 10,000 trillion cubic feet of technically recoverable tight gas, according to Shell. It competes with StatoilHydro ASA and BP Plc, which are also developing unconventional gas projects in North America. Tight gas is methane locked in impermeable sandstone rock, which prevents the gas from flowing to well."
U.S. to Get Half of Gas From ‘Tight’ Fields by 2020, Shell Says
Bloomberg, 9 June 2009
"Last year, the U.S. Geological Survey completed an extensive analysis of Wyoming's Gillette coal field, the nation's largest and most productive, and determined that less than 6% of the coal in its biggest beds could be mined profitably, even at prices higher than today's. 'We really can't say we're the Saudi Arabia of coal anymore,' says Brenda Pierce, head of the USGS team that conducted the study. No one says the U.S. is facing a coal shortage. But the emerging ranks of 'peak coal' theorists argue that current production levels may be unsustainable and, if anything, create a false sense of security. David Rutledge, an electrical-engineering professor at the California Institute of Technology who has studied global coal production, figures the U.S. has about half as much recoverable reserves as the government says, which would work out to about 120 years' worth. The Energy Information Administration, part of the Department of Energy, says it is reassessing its coal tally in light of the new Geological Survey data. It intends to create a new coal baseline from which it will begin its annual subtraction 'as soon as we can,' says William Watson, a member of the energy analysis team at EIA in Washington, D.C. In the field, challenges are becoming more apparent. Mining companies report they have to dig deeper and move more earth to extract coal from aging mines, driving up costs. Utilities have grown skittish about whether suppliers can ship promised coal on time. American Electric Power Co., the nation's biggest coal buyer, says it has stepped up its due diligence to make sure its suppliers can make deliveries after some firms missed shipments last fall. It even bought a mine to lock down supplies. 'We are very much concerned, and it's getting worse,' said Tim Light, senior vice president for AEP....The country's coal supplies have been seen as a bulwark of energy security. In 1979, as the U.S. was reeling from an oil shock, President Jimmy Carter pushed for projects to create liquefied gas from America's vast coal reserves. Today the U.S. produces 1.1 billion tons of coal annually, more than any nation but China. Concerns about supplies are out of the spotlight now, masked by what could be a short-term lull in the appetite for coal. Recession has reduced demand from the two biggest users of coal, electricity producers and steelmakers....Experts expect coal production to drop this year by 5% to 10%, or as much as 100 million tons. Prices for coal from Wyoming's Powder River Basin are down nearly 30% from a year ago, to about $8.50 a ton.... The U.S. isn't the only nation employing improved drilling data and computer modeling to reassess its supplies. Germany cut its proven hard-coal reserve estimates by more than 99% in 2004 as it explored reducing mining subsidies, which would make coal more expensive to extract. Overall, assessments of total world reserves dropped by half from 1980 to 2005, according to a study by Energy Watch Group, an independent group based in Germany. The U.S. Geological Survey, the Department of the Interior's science agency, attempted to get a clearer picture of the nation's coal supplies beginning in 2004. Its full study of the Powder River Basin in Wyoming and Montana will be completed next year. The agency began with the Powder River's rich Gillette coal field, an 80-mile-long strip in northeastern Wyoming that contains the nation's 10 top-producing mines. About one-third of all coal in the country is produced there. Some 1.2 million short tons leave the field daily, a river of coal filling more than 75 trains of 125 to 150 cars each. For the Gillette study, USGS engineers, geologists and economists spent three years analyzing data from 10,200 drill holes, the most comprehensive study ever attempted of the region. The team concluded there are 201 billion short tons of coal in the Gillette field. Environmental rules and physical challenges put much of that out of reach, leaving what they figured were 77 billion short tons of recoverable coal. Little is presently worth mining. Analyzing coal beds that contained 82% of the Gillette deposits, the team determined that with coal selling for $10.50 a ton, the prevailing price two years ago, less than 6% of the coal could be extracted profitably enough to leave mining companies an 8% rate of return. If Powder River prices were to hit $60 a ton in current dollars, as much as 47% could be extracted. But at that price, coal would have a tough time competing with other fuels and technologies.... After many decades of mining, some of the country's coal fields are showing their age. 'What's left to mine is not as easy as what we mined even 10 or 20 years ago,' says Janine Orf, spokeswoman for Patriot Coal Corp. in St. Louis. 'The seams are getting thinner and there are more limestone intrusions.'"
U.S. Foresees a Thinner Cushion of Coal
Wall St Journal, 9 June 2009
"Three British companies have been shortlisted to bid for contracts to work on Iraq's oil and gas fields, pitting themselves against 32 other non-Iraqi companies in a televised, two-day bidding procedure revealed at Baghdad's Oil Ministry. BP, which provided technical assistance to the Iraqi state oil company in 2004-2006, BG International and Premier Oil were among the 120 companies who put themselves forward in June last year, and which now appear on the shortlist of 35 companies who are invited to submit proposals for consideration by a panel of experts at the Ministry. Along with other oil majors including Exxonmobil and Total, they are due to present proposals on June 29 and 30 to work on one of six oil fields and two gas fields. It will be the first major foreign investment in Iraqi oil for 40 years, which has the world's third-largest oil reserves but needs massive foreign investment to resurrect the country's energy infrastructure....Oil Minister Hussein al-Shahristani gave Iraq's current oil output as 2.4 million barrels per day, the highest since 2003, and anticipated that after this round of contracts is awarded, production would increase to 4 million barrels per day. Three fields in this round of bidding are in Basra, two in Kirkuk in the north, and one in Maysan, also in the south. The two gas contracts are for sites in Anbar and Diyala provinces. There are none in Iraqi Kurdistan, the northern region where revenue from resources is heavily disputed. However, Mr al-Shahristani slammed the semi-autonomous Kurdish Regional Government (KRG), who began exporting oil at the beginning of this month, calling the deals 'illegal' as they had not been seen by the Iraq Oil Ministry. 'The KRG has signed some contracts and created a backlash,' he said, adding that the revenue from the oil would go directly to central government, who would not pay firms who signed independent deals with the KRG. The KRG would continue to receive 17 per cent of oil revenue, he said, and no more. Companies, including Norway's DNO International, Toronto-listed Addax Petroleum and Turkey's General Enerji who signed independent deals with the KRG must be paid by the KRG, he said, adding that, 'we will not discuss any compensation for these companies under any circumstances.'"
Iraq unveils foreign oil contract shortlist
London Times, 10 June 2009
"Oil and gas players are slashing spending on new projects amid the current recession, but as energy demand climbs over the long term, 'the next [oil] price spike may already be in the making,' the chief executive of Royal Dutch Shell, Jeroen van der Veer, warned Monday. The steep slide in oil prices from their historic peak of July 2008 was 'only a dent in a graph that goes up all the time,' van der Veer said in an address to the 14th Asia Oil and Gas Conference in Kuala Lumpur. Citing the International Energy Agency's estimate of a 20% drop in oil and gas project investment this year compared with 2008 and a 40% slump in renewable energy sector investment, van der Veer said the current overcapacity in the market would disappear as in the long term, energy demand was bound to climb. As the world's population increases from 6 billion to 9 billion by 2050, 'energy demand, even taking into account energy saving, will double,' he said. Oil and gas would not be able to supply the incremental demand, 'in what I call more of the same,' van der Veer said. 'You need renewables, unconventionals and conventionals.' The Shell executive, who retires at the end of this month after 38 years with the oil and gas giant, reminded delegates that construction of oil and gas projects, be they in the LNG sector, refining, or the proposed development of oil reserves in the Arctic, takes 'at least four to five years' after the final investment decision. 'The system is very slow to react,' he said. While Shell itself plans to maintain investments 'at a relatively high level' in 2009, the same might not be true for the whole sector, van der Veer said....Shell estimates renewables could meet around 30% of global energy demand by 2050, but that means the remaining 70% would still come from fossil fuels and nuclear energy, van der Veer said."
Shell CEO warns next oil spike 'may already be in the making'
Platts, 8 June 2009
"Most believe our current economic problem was caused by the extension of too much credit, too freely, and to the wrong people, over the last 30-40 years. Some, however, are suspicious that the many-fold run-up in oil prices from their historic $10 or $20 a barrel that sopped up so much consumer purchasing power may have had more than a little to do with our current economic problems. While the consequences of the economic downturn are well understood, we are just starting to appreciate that the massive governmental effort to keep a recession from turning into a depression is threatening unprecedented repercussions of its own. In the last 10 months, the U.S. government and its central bank have spent or issued guarantees approaching $12 trillion in efforts to boost the economy. During the current fiscal year, the US will sell $3.25 trillion in new securities vs. $892 billion worth last fiscal year. Some are already calling this phenomenon the 'bailout bubble' and are worried that deficit financing on this scale could destroy the dollar and take much of the U.S. economy with it....Any increase in demand from a revitalized economy is almost certain to drive oil prices higher. In the last eight months, OPEC has reduced its oil production by about three million b/d which has kept production closer to demand for the time being. Although a few members of OPEC currently have surplus production capacity that could be turned into increased production, every year we are extracting some 30 billion barrels of mostly easy and cheap-to-produce oil. The simple message is that in three to four years excess production capacity is likely to be eaten up by depletion. After that increased oil production will become very expensive and take considerable effort. Much higher prices and considerable economic damage are virtually certain."
The Peak Oil Crisis: Watching a Mega-Crisis
Falls Church News-Press, 4 June 2009
"Uranium prices are probably too low to spur the development of new mines, leaving a potential shortfall in supply in the years ahead, Rio Tinto Group and Cameco Corp. officials said. Uranium prices peaked at $136 a pound in 2007 and have fallen as low as $40 this year, according to Roswell, Georgia- based Ux Consulting Co. Demand for uranium is expected to outstrip supply from next year through 2012, pushing prices up to $75 in 2011, Macquarie Group Ltd. estimates. 'The market is relatively balanced and utilities are well covered, but if you go out several years there has got to be some concern about where supply is going to come from,' George Assie, Cameco’s senior vice-president of marketing and business development, said in an interview in Edinburgh on June 1. The Saskatoon, Saskatchewan-based company is the world’s largest uranium producer. Uranium prices plunged partly on concern that countries including China and India would delay nuclear-power projects because of the global economic crisis. That spurred companies including Uranium One Inc., which operates in Kazakhstan, to cut exploration and spending. Uranium supply will expand by 5.8 percent this year and growth will slow to 1.2 percent in 2010 and 4.1 percent in 2011, Max Layton, an analyst at Macquarie, said in an e-mail. Uranium for immediate delivery is trading at about $49.50 a pound, according to Ux Consulting. 'It is possible we’re not at a level yet that will support the necessary amount of incremental production that we are going to need over the next five to 10 years,' Clark Beyer, managing director of Rio Tinto Uranium Ltd., said in an interview in Edinburgh. London-based Rio mines the metal in Australia’s Northern Territory and Namibia. Beyer and Assie declined to give specific forecasts for what prices would be needed to encourage new supply, saying that it depended on the project. Since 2003, the price of uranium has risen fourfold while output of the radioactive metal has advanced by about 24 percent, Kim Goheen, Cameco’s chief financial officer, said today at an investor conference in New York. Forecasts of additional gains in output have been tempered by lengthy regulatory processes and other challenges, including the October 2006 flooding of Cameco’s Cigar Lake mine, the world’s largest undeveloped high-grade uranium deposit. 'The current financial turmoil is likely to put additional pressure on the development of new production capacity,' Goheen said. Supply gains will also be curbed after 2013 when a program to convert Russian nuclear warheads into fuel ends. The 20-year plan to recycle bomb-grade metal into low enriched uranium suitable for reactors converted the equivalent of 14,000 warheads into 10,200 metric tons of fuel through the end of 2008, according to USEC Inc. The end of the program will sap so-called secondary supplies of uranium, said Gerard Pauluis of Synatom SA, the Brussels-based company that buys as much as 1,200 tons of uranium a year for Belgium’s reactors."
Uranium Price Slump May Hurt Supplies, Producers Say
Bloomberg, 3 June 2009
"Green energy overtook fossil fuels in attracting investment for power generation for the first time last year, according to figures released today by the United Nations. Wind, solar and other clean technologies attracted $140bn (£85bn) compared with $110bn for gas and coal for electrical power generation, with more than a third of the green cash destined for Britain and the rest of Europe. The biggest growth for renewable investment came from China, India and other developing countries, which are fast catching up on the West in switching out of fossil fuels to improve energy security and tackle climate change. 'There have been many milestones reached in recent years, but this report suggests renewable energy has now reached a tipping point where it is as important – if not more important – in the global energy mix than fossil fuels,' said Achim Steiner, executive director of the UN's Environment Programme. It was very encouraging that a variety of new renewable sectors were attracting capital, while different geographical areas such as Kenya and Angola were entering the field, he added. The UN still believes $750bn needs to be spent worldwide between 2009 and 2011 and the current year has started ominously with a 53% slump in first quarter renewables investment to $13.3bn....Wind, where the US is now global leader, attracted the highest new worldwide investment, $51.8bn, followed by solar at $33.5bn. The former represented annual growth of only 1%, while the latter was up by nearly 50% year-on-year. Biofuels were the next most popular investment, winning $16.9bn, but down 9% on 2007, as the sector was hit by overcapacity issues in the US and political opposition, with ethanol being blamed for rising food prices. Europe is still the main centre for investment in green power with $50bn being pumped into projects across the continent, an increase of 2% on last year, while the figure for America was $30bn, down 8%. But while overall spending in the West dipped nearly 2%, there was a 27% rise to $36.6bn in developing countries led by China, which pumped in $15.6bn, mostly in wind and biomass plants. China more than doubled its installed wind turbine capacity to 11GW of capacity, while Indian wind investment was up 17% to $2.6bn, as its overall clean tech spending rose to $4.1bn in 2008, 12% up on 2007 levels."
Green energy overtakes fossil fuel investment, says UN
Guardian, 3 June 2009
"Iraq’s self-governed Kurdish region began exporting oil for the first time yesterday, pumping crude through a pipeline to Turkey for sale to foreign markets. Iraq’s Kurdish President, Jalal Talabani, and Massoud Barzani, the president of the Kurdish regional government, opened a ceremonial valve in Arbil, the regional capital. Pointedly, there were no non-Kurds from the federal Government at the ceremony. Kurds and Arabs in Iraq are in a dispute over the division of the country’s mineral resources that could still spill into bloodshed. Mr Barzani said: 'This achievement will serve the interests of all Iraqis, especially the Kurds.' Turkey has long feared that the generation of Kurdish oil wealth from Iraq could spark secessionist violence among its own Kurds. However, the Turkish Genel Enerji is jointly developing the Taq Taq oilfield with Addax Petroleum, an oil and gas company based in Calgary, Canada. Economic ties between Turkey and Iraq have strengthened enormously in the past year, with Turkish exports to northern Iraq increasing by 76 per cent. Yet discord over oil rights between Baghdad and Arbil continues to delay the exploitation of much of Iraq’s massive proven oil and gas reserves. Kurdish officials recently unveiled an $8 billion (£5 billion) plan that could supply natural gas from northern Iraq to Europe via the Nabucco pipeline, a key element in the endeavour by the European Union to cut its reliance on Russian gas. Hussein al-Shahristani, the Iraqi Oil Minister, rejected the deal as illegal, saying that it was done without the participation of the Oil Ministry. Baghdad opposes Arbil signing its own contracts, a position Kurdish officials have ignored. Baghdad has said in response that it will award production rights to the Kirkuk oilfields — disputed between Arabs and Kurds and reputed to be the location of bigger oil reserves than the whole of Alaska — to the highest-bidding international oil company this month. Kirkuk’s constitutional status remains contested. The UN has recommended a referendum to decide the issue. 'Iraq has had a revenue shortfall of $10 billion due to the incompetence of Iraq’s Oil Ministry,' said Ashti Hawrami, the Iraqi Kurds’ natural resources minister, in a speech during which he vowed that the region would continue to seek partners without the approval of the central Government. More American soldiers died in Iraq in May than at any time in the past eight months, weeks before US forces are due to withdraw from Iraqi cities. Twenty-four US soldiers lost their lives last month, the highest number since September."
First oil exports for Iraq’s Kurdish region despite resources clash
London Times, 2 June 2009
"Gazprom, Russia’s state-controlled energy group, has told Turkmenistan to reduce its gas export price after saying it did not need central Asian gas. The statement marks an escalation in a dispute that has prompted Turkmenistan to intensify its efforts to find other export routes for its gas. Gazprom offered last year to pay central Asian gas suppliers high prices to outbid rival buyers in China and Europe. But Valery Golubev, deputy chairman of Gazprom, has now said it would be unprofitable to sell highly priced Turkmen gas in Europe and Ukraine where energy demand has fallen as the economic recession has taken hold....Gazprom has cut gas production by more than 20 per cent this year as demand slumped in Europe and Ukraine. It is determined that central Asian producers should share the pain of lost revenues."
Gazprom escalates Turkmen gas price dispute
Isabel Gorst in Moscow, Financial Times, 2 June 2009
"A report from one of the world’s top energy consultancies says oil production in Canada’s tar sands could see a five-fold increase by 2035. 'The oil sands have moved from the fringe to the center of energy supply,' notes the report 'Growth in the Canadian Oil Sands: Finding a New Balance' released by IHS Cambridge Energy Research Associates (CERA) on May 18.  Environmentalists and some aboriginal groups want the oil sands to stay on the fringes because extracting heavy oil produces more greenhouse gas emissions than convention crude. Meanwhile, the Council on Foreign Relations (CFR) issued a report titled 'The Canadian Oil Sands: Energy Security vs Climate Change' on May 22 arguing that both the negative environmental impacts and benefits to U.S. energy security from Canada’s tar sands are overstated. 'Smart regulation can place a fair and reasonable price on the oil sands’ greenhouse gas emissions, providing the right incentive to reduce them,' said Michael Levi, an author of the CFR report. Levi told IPS that lifecycle green house gas emmissions from the tar sands are 17 percent worse than conventional U.S. oil imports. Environmentalists dispute this claim, stating oil production from the tar sands is at least three times worse than conventional oil. 'The development of Canadian oil sands encapsulates the complexities that the world faces on energy, environment and security,' said IHS CERA chairman Daniel Yergin in a statement. Yergin won a Pulitzer award for his book 'The Prize', a history of the oil industry. CERA did not respond to interview requests from IPS. Oil today accounts for 35 percent of global energy supply - the largest share of any form of energy. In 2008, world oil demand was 85.2 million barrels per day. CERA estimates global oil demand in 2035 could range from 97 million barrels per day (mbd) to 113 mbd.  If the global economy stays in recession or a slow growth scenario, production from Canada’s tar sands will reach about 2.3 million barrels per day by 2035, an increase of about 1 million barrels a day from present levels, according to CERA.  In 2008, Canada supplied the U.S. with 19 percent of its oil imports. That number could rise to 37 percent by 2035, according to CERA."
Oil Economy Driving Growth of Controversial Tar Sa
Inter Press Service, 1 June 2009
"Oil is the world’s most important commodity, and the need to understand the long-term supply is widely recognized. In some way, all energy projects—whether they involve conventional or green alternatives—will be measured against oil....Primary contributing factors to the present inadequacy of energy investment are price volatility and uncertainty of future delivery capacities, which are the byproducts of tightening supply. The authors confirm the work of others that the energy future depends upon a handful of irreplaceable and aging fields, many of which are in unknown states of depletion. It is time for the world to better understand global oil productive capacity in order to take appropriate measures.... The authors propose that the key to this understanding is the modeling of the largest fields.... As these largest fields diminish in productivity there is little prospect that the loss of their capacity will be offset by new discoveries. The historic trend is that new discoveries do little more than keep pace with depletion of nongiant fields....Compared to the period between 1940 and 1980, when 70% of the reserves of the largest fields were discovered, the 3 subsequent decades have contributed only 12%, even with the advantage of greatly advanced technology and access to a large portion of the world’s prospective areas. Considering the advanced depletion and large portion of global supply coming from the few giants and supergiants of the world, a sensitivity analysis will identify these fields as the critical variables in the future delivery of oil. The unanticipated decline of the largest fields poses the greatest risk to future delivery, and the loss of their production without replacement or energy alternatives would be economically catastrophic. The contribution of the smaller fields and future additions will not have the capacity to mitigate the significant disruption of the global economy brought on at some point by the decline of the largest fields. Therefore, a widely accepted method of forecasting supply is required.... Continuing to do what has been done before will not secure future global oil deliveries or deploy alternative technology on a large scale. Continued delay makes solutions increasingly difficult. By changing tactics, it is possible to create a world body with the mandate to forecast oil deliverability. The authors have proposed conventional modeling methods that require access to primary data that can reliably forecast future oil supply. Though the World Energy Council has taken tentative steps in this regard, a higher profile body with the capacity to cause appropriate cooperation is warranted. In the US, the Obama administration has the opportunity to take the initiative in calling for such a world body. In addition to the US, the OPEC countries, Japan, China, India, the Euro zone, Brazil, and Russia need to cooperate. Energy industry leaders can raise the level of awareness of the world’s energy peril and the need for a new approach. The inevitable transition from an oil-based economy is one of the greatest global challenges and deserves a similar level of attention to nuclear proliferation, global warming, and the current economic crisis. The stakes are too high to choose inaction or further delay."
Proposition: global effort to model largest oil fields
Oil & Gas Journal, Vol 7, Issue 22, June 2009
"Russian state uranium trader Techsnabexport has said it would sign contracts worth atleast a billion dollars for the supply of low-enriched uranium to a number of major US energy companies before the end of the year. This uranium would be processed from highly-enriched uranium retrieved from nuclear warheads.....Russian state uranium trader Techsnabexport has said it would sign contracts worth atleast a billion dollars for the supply of low-enriched uranium to a number of major US energy companies before the end of the year. This uranium would be processed from highly-enriched uranium retrieved from nuclear warheads. The contracts are being signed under the HEU-LEU contract, also known as the Megatons to Megawatts agreement. Under the provisions of this agreement, signed in February 1993, some 500 metric tons of highly-enriched uranium (HEU), the equivalent of approximately 20,000 nuclear warheads from dismantled Russian nuclear weapons, would be converted into low-enriched uranium (LEU). This would then be converted into nuclear fuel for use in US nuclear reactors. The agreement expires in 2013. Under the contracts signed this week, enriched uranium will be supplied to the US companies from 2014 through 2020."
Megatons to Megawatts: Russia to supply uranium to US companies, 30 May 2009
"The earth has been shaking for a few days now all across Pipelineistan - with massive repercussions for all the big players in the New Great Game in Eurasia. United States President Barack Obama's AfPak strategists didn't even see it coming. A silent, reptilian war had been going on for years between the US-favored Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline and its rival, the Iran-Pakistan-India (IPI) pipeline, also known as the 'peace pipeline'. This past weekend, a winner emerged. And it's none of the above: instead, it's the 2,100-kilometer, US$7.5 billion IP (the Iran-Pakistan pipeline), with no India attached. (Please see Pakistan, Iran sign gas pipeline deal, May 27, 2009, Asia Times Online.) This whole saga started way back in 1995 - about the time California-based Unocal started floating the idea of building a pipeline crossing Afghanistan. Now, Iran and Pakistan finally signed a deal this week in Tehran, by which Iran will sell gas from its mega South Pars fields to Pakistan for the next 25 years. According to Iranian energy officials speaking to the ISNA news agency, the final deal will be signed in less than three weeks, slightly after the first round of the Iranian presidential election. The last 250 km of a 900-km pipeline stretch in Iran between Asalouyeh and Iranshahr, near the border with Pakistan, still needs to be built. The whole IP pipeline should be operational by 2014. The fact that Islamabad has finally decided to move on is pregnant with meaning. For the George W Bush administration IPI was simply anathema; imagine India and Pakistan buying gas from 'axis of evil' Iran. The only way to go was TAPI - an extension of the childish neo-conservative belief that the Afghanistan war was winnable.... Pakistan is the absolutely ideal transit corridor for China to import oil and gas from Iran and the Persian Gulf. With IP in place and with multi-billion-dollar, overlapping Tehran-Beijing gas deals, China can finally afford to import less energy via the Strait of Malacca, which Beijing considers exceedingly dangerous, and subject to Washington's sphere of influence. With IP, not only China wins; Russia's Gazprom also wins. And by extension, the Shanghai Cooperation Organization (SCO) wins. Russian deputy Energy Minister Anatoly Yankovsky told the Kommersant business daily, 'We are ready to join the project as soon as we receive an offer.' The reason is so blatant that Gazprom officials have not even bothered to disguise it. For Russia, IP is a gift-from-above tool in rerouting gas from Iran to South Asia, and away from competing with Russian gas. The big prize, in this case, is the Western European market, dependent almost 30% on Gazprom and the source of 80% of Gazprom's export profits. The European Union is desperately trying to keep the Nabucco pipeline project - which bypasses Russia - afloat, so it may reduce its dependence on Gazprom. But as anyone in Brussels knows, Nabucco can only work if it is provided enough gas by either Iran or Turkmenistan. The Turkmenistan distribution system is controlled by Russia. And a deal with Iran implies no more US sanctions - still a long way away. With IP in place, Gazprom reasons, Nabucco is deprived of a key supply source....As for gas from the Daulatabad fields in Turkmenistan, assuming TAPI ever gets built though war-torn Afghanistan, that's much more unlikely. This all raises the crucial question: how will Islamabad deal with ultra-strategic Balochistan - east of Iran, south of Afghanistan, and boasting three Arabian sea ports, including Gwadar, practically at the mouth of the Strait of Hormuz? The New Great Game in Eurasia rules that Pakistan is a key pivot to both North Atlantic Treaty Organization (NATO) and the SCO, of which Pakistan is an observer. Balochistan de facto incorporates Pakistan as a key transit corridor to Iranian gas from the monster South Pars fields, and not to a great deal of the Caspian wealth of 'gas republic' Turkmenistan. For the Pentagon, the birth of IP is mega bad news. The ideal Pentagon scenario is the US controlling Gwadar - in yet one more prime confluence of Pipelineistan and the US Empire of Bases."
Pipelineistan goes Iran-Pak
Asia Times, 29 May 2009
"Economically viable concentrations of rare earths are known to exist in only a handful of places -- mainly in China, Australia, and North America, with smaller deposits in India, Brazil, Malaysia, and South Africa. China's reserves, which are located mainly in Inner Mongolia and in soft clay ores in southern China, are, by a wide margin, the world's largest. Realizing their strategic significance, Chinese leader Deng Xiaoping said in 1992, 'There is oil in the Middle East; there is rare earth in China.' He clearly understood the West's growing dependence on rare metals for high-tech industries and put China on course to become the world's dominant supplier...A single three-megawatt wind generator (modest, as utility-scale wind turbines go) contains more than a ton of super magnets, more than 700 pounds of which is neodymium. A typical hybrid car, such as a Toyota Prius, contains around 25 pounds of rare earth metals -- mostly lanthanum in its rechargeable battery and neodymium in its drive motor. 'The global annual production of neodymium, essentially all of which is mined in China, is today at an all-time high,' Lifton says. 'There is no surplus -- the existing demand uses up all that's produced each year. So to build more wind turbines and hybrid cars, you'll need more neodymium. Where are you going to get it?'"
Renewing Our Dependence
OnEarth, 28 May 2009
"Texas oilman and former corporate raider and Republican financier T. Boone Pickens brought his plan to slash the United States' dependence on foreign oil to the Mackinac Policy Conference Thursday and seemed to find a mostly receptive audience.  In remarks immediately following Gov. Jennifer Granholm's energy remarks. Pickens criticized the United States for not having an energy plan for 40 years, and ever-increasing percentages of American oil being imported from overseas. But he said there had been little leadership on changing that because until recently, 'we had cheap oil. Consequently America was never tasked to look at what would happen if it was cut off from us.' When it comes to oil, Pickens said, 'at some point we are going to have to face the fact that we are the problem.' He said the United States uses 25 percent of the world's oil, despite only having 4 percent of the world's population and 3 percent of its oil reserves, and needs to get its 'appetite in line with the rest of the world.' Pickens also pointed out that America is importing its oil from America-hating nations. 'We are importing oil from Venezuela, and we hear what that guy says about us. Yet we need his oil, one million barrels a day. The Mideast, I don't know who there likes us, dislikes us or hate us, there are countries in all three categories but I would guess not so many like us.' Pickens' solution? A major push toward wind power, along with transforming America's vehicle fleet to electric and compressed natural gas power, along with clean coal and nuclear power. 'I'm for anything that's American,' Pickens said. 'What your governor is talking about, I'm on board.' Pickens said America has abundant natural gas becuase it has developed technology that can convert carboniferous shale into natural gas. It's also easy to convert vehicles, combining to make 'a window of opportunity that we cannot pass up.' He said that without changes, America within 10 years will be importing 75 percent of its oil at $300 a barrel."
Pickens On Mackinac: Natural Gas Plus Wind Equals Less Foreign Oil
WWJ Radio, 28 May 2009
"The International Energy Agency on Wednesday repeated its warning that reduced investment in energy could result in future supply shortages and a new oil price spike in a few years' time. In a report prepared for last weekend's meeting of G8 energy ministers in Rome, the IEA said it saw 'clear evidence' that energy investment across the world would drop sharply this year, with global upstream oil and gas investment budgets already cut by around 21% or almost $100 billion from 2008 levels. 'Between October 2008 and end-April 2009, over 20 planned large-scale upstream oil and gas projects, valued at a total of more than $170 billion and involving around 2 million b/d of oil production capacity and 1 bcf/d of gas capacity, were deferred indefinitely or cancelled,' it said. A further 35 projects, involving 4.2 million b/d of oil capacity and 2.3 bcf/d of gas capacity, had been delayed by at least 18 months, the agency said. IEA chief economist Fatih Birol had already told Platts in a May 20 interview that lower investment as a consequence of the global economic crisis threatened future energy security as well as the effort to combat climate change. The paper prepared for Rome, entitled 'The impact of the financial and economic crisis on global energy investment,' said the sharpest cuts in spending were likely to be focused on exploration. 'It is likely that the upstream industry will reduce spending on exploration most sharply in 2009--largely because the bulk of spending on development projects is associated with completing projects that had already been launched before the slump in prices,' the IEA said. Canadian oil sands projects account for the bulk of the postponed oil capacity, the agency said, with the drop in upstream spending most pronounced in regions with the highest development costs and where the industry is dominated by small players and small projects. 'For these reasons, investment in non-OPEC countries is expected to drop the most. In addition, cuts in spending on existing fields risk pushing-up decline rates,' the IEA said. The agency said falling investment would have 'far-reaching and... potentially grave effects on energy security, climate change and energy poverty.' It said cutbacks on infrastructure spending 'will only affect capacity with a lag, often amounting to several years,' so that the current demand weakness was likely to see spare production capacity increase in the near term."
IEA repeats warning of possible new oil price spike
Platts, Petroleumworld, 27 May 2009
"Global energy demand is expected to soar 44 percent over the next two decades with most of the demand coming from developing countries such as China and Russia, the U.S. government's top energy forecasting agency said on Wednesday. The worldwide economic downturn has hit energy consumption, but an expected recovery next year could respark demand and boost prices, the Energy Information Administration said in its new forecast. U.S. oil prices are forecast to rise from an average $61 barrel this year to $110 in 2015 and $130 in 2030. Oil prices 'begin to rise in 2010-2011 period as the economy rebounds and global demand once again grows more rapidly than non-OPEC liquid supply,' EIA acting administrator Howard Gruenspecht told a news conference. Global oil demand is expected to rise to 107 million barrels per day over the next two decades from nearly 84 million bpd this year. Oil will account for 32 percent of the world's energy supply by 2030 from about 36 percent in 2006. Almost 75 percent of the rise in global energy demand through 2030 will occur in developing countries, particularly China, India, Russia and Brazil, the agency said...The EIA's report also found that global natural gas demand will increase by almost 50 percent to 153 trillion cubic feet. The agency said that unconventional natural gas production, particularly from gas shale, will make the United States 'virtually self sufficient in natural gas supply in 2030.'"
Global energy demand seen up 44 pct by 2030-EIA
Reuters, 27 May 2009
"It may seem a strange idea in the region of the world that is richest in hydrocarbons, but it is one that has been raising increasing concerns: the possibility of a critical gas shortage in Middle East. The countries of the region, particularly the wealthy Arab Gulf states, have one of the fastest growing rates of energy demand, as populations swell and the accumulation of petrodollars during the recent oil boom has driven rapid economic expansion. But they are finding to their cost that, after years of focusing on oil production, too little attention was paid to gas, which is now needed for power generation, desalination plants and to provide feedstock to the energy-intensive industries they have been seeking to lure. By some estimates, the cumulative supply shortfall for the six countries of the Gulf Cooperation Council up to 2015 will be at least 7,000bn cubic feet. Of the GCC members – Saudi Arabia, Qatar, Kuwait, Oman and Bahrain – only Qatar, which has the world’s third largest proven gas reserves and the largest natural gas field, can avoid the problem. The recent economic slowdown, which has caused a swathe of projects to be put on hold, will alleviate some of the short-term pressures. But, experts say, the medium and long-term outlook remains critical. 'The long-term issue of ensuring adequate gas supplies to fuel growth has not gone away,' says Rajnish Goswami, an analyst at Wood Mackenzie, the consultants. 'We see, with the exception of Qatar and Iran, every other country in the region facing challenges in ensuring supply growth.' Qatar is already piping 2bn cu ft a day to the United Arab Emirates, and is expected to provide around 1m tons of LNG to Dubai from 2010, analysts say. Kuwait has also been in talks with Qatar over gas imports, while Bahrain has been in discussions to buy gas from Iran – in spite of concerns from the US. Yet, neither Qatar nor Iran will necessarily provide answers to their neighbours’ predicament. Qatar has a moratorium in place on new projects in its North Field that is expected to remain until at least 2013 while a study is conducted into the reservoir. And even when it is lifted, there will be no guarantees that Qatar will look to the region. When recently asked if Qatar would be under pressure to help meet gas demand from its neighbours, Abdullah bin Hamad al-Attiyah, the energy minister, was straighttalking. 'If this study [in the North Field] shows we can produce more gas, then we will put this gas in a judgment where we should use it. Then we will see what is the added value, what is the best for us to sell it in the region or convert it to LNG or GTL,' Mr Attiyah says. 'At the end of the day I am concerned about what is the best revenue for the country,' he explains. 'I’m not in a social security game. I’m business-oriented here and we will see.' Iran is unlikely to provide a solution in the near future, because of global and regional politics. Observers believe that Bahrain’s discussions with Iran are in part designed to get its key allies, the US and Saudi Arabia, to press Qatar to help Manama meet its demand. Mr Goswami says Gulf policymakers are aware of the gas issue, but warns that much needs to be done. 'In our view, the steps that have been taken may be adequate in terms of near- to mid-term planning, but, on a 10-year view, the supply challenge is pretty enormous and more still needs to be done,' he says. Gulf countries, including Saudi Arabia, the UAE and Kuwait, already burn fuel for power generation, and they are expected to have to divert more oil to domestic use rather than exports. This creates an opportunity cost, has impact on global supply and an obvious environmental effect. Saudi Arabia has been boosted by discoveries in the Karan field – its first non-associated offshore gas discovery – which it hopes will produce 1.8bn cu ft a day. Contracts for the field’s development were awarded this year. But a second project involving international companies in the Empty Quarter has yet to produce discoveries, and experts warn that gas shortages will become a serious issue for the kingdom. 'It will not be an issue for the next couple of years,' says John Sfakianakis, chief economist at SABB Bank. 'But if they continue to build like this, develop industry and do not become more efficient and do not find more gas, it will become a crisis.'
Middle East: Oil-rich region faces gas shortfall
Financial Times, 26 May 2009
"The next generation of nuclear power stations will not be built unless the Government steps in with financial assistance, the head of the UK's biggest nuclear generator has warned. Energy companies fear generous subsidies for wind farms will make investing in new reactors risky and might not bother. Vincent de Rivaz, UK boss of power giant EDF Energy, said in a newspaper interview that a 'level playing field' had to be created to make building the power stations attractive. His comments are an embarrassment to Energy Secretary Ed Miliband, who recently promised that the new generation of nuclear plants could be achieved without subsidy. The Government announced in April it had identified 11 potential sites for the new power stations....EDF is also worried that incentives for wind power will lead to so many wind farms that nuclear power stations will have to be shut down at times, jeopardising their chances of making a profit. The new generation of nuclear power stations are intended to maintain Britain's ability to generate its own energy after existing nuclear and coal-fired stations are shut down. The first station could go live in 2017. While critics warn that the move could mean a £75billion clean-up bill to deal with the waste produced by the new facilities, there is hope that the planned stations will bring jobs. A spokesman for EDF Energy was unable to comment."
Subsidise nuclear power stations or they won't be built, energy giant warns ministers
Daily Mail, 26 May 2009
"Russia's state uranium trader said on Tuesday it would sign a landmark deal to supply uranium directly to U.S. utilities, including PG&E Corp (PCG.N), from 2014. Russia's Techsnabexport (Tenex) said it would sign the deal on Tuesday with a structure partly created by Californian utility Pacific Gas and Electric Co, a unit of PG&E Corp (PCG.N), and two other partners, which were not identified. 'The contract we are signing today comes into force immediately,' Tenex CEO Anatoly Grigoryev told reporters. 'Supplies will start from 2014. Russia, one of the world's biggest sellers of uranium enrichment services, currently sells the United States only uranium recovered from dismantled Russian nuclear weapons under a programme known as 'megatons to megawatts'. Those sales are carried out through U.S. uranium trader USEC Inc (USU.N). All other sales of uranium to U.S. companies have been subject to U.S. anti-dumping measures but Moscow and Washington signed a deal last year to allow direct sales to other U.S. firms. Tenex is a unit of Russia's state atomic company, Atomenergoprom, one of the world's biggest players on the nuclear market."
Russia to sell uranium directly to U.S. utilities
Reuters, 26 May 2009
"The site, at Whitelee on Eaglesham Moor, has cost ScottishPower, its developer, £300 million, but this is a tiny fraction of what will be required to upgrade Britain's power network. According to Ernst & Young, the total cost of doing so and meeting tough targets to cut carbon emissions by 34 per cent by 2020 will be no less than £233.5 billion. Although some of that burden is likely to be shared with power companies, the figure, divided among the UK's 26million households, implies a total bill of up to £8,977 each — or £598 a year for the next 15 years. Tony Ward, power and utilities partner at Ernst & Young, said that about half of the total, or £112 billion, will need to be spent building new supplies of renewable energy, including vast new offshore wind parks - each many times the size of Whitelee — as well as biomass-fired power stations, tidal and wave-energy projects. Britain must also renew almost all of its ageing nuclear power plants, which account for about 20 per cent of the country's electricity supply, a project that is expected to add £38.4 billion to the cost. A further £28 billion or so will have to be poured into the grid to build a transmission network capable of supporting new reactors and remote wind parks sited as far north as the Shetlands and in the North Sea. This excludes the cost of building new coal-fired stations equipped with carbon capture and storage technology (CCS), bolstering the UK's gas storage facilities, new gas-fired power plants and a rollout of “smart meters” in every home and business in the country.  Steve Holliday, chief executive of National Grid, whose company will be at the centre of this effort, said: 'It's very clear from the renewables and new nuclear stations being planned that there is going to be a need for a substantial increase in investment to build a modern, 21st-century grid.' He expects National Grid alone to spend up to £5 billion a year from 2012 and he is already drawing up plans for a network of seabed cables feeding renewable electricity from Scotland to consumers in the South, as well as sweeping reinforcements to conventional high-voltage lines that criss-cross the country....Ernst & Young's figures might underestimate the total expense because they do not include regular maintenance costs, Mr Marchant said, suggesting that a figure of £300 billion could be closer to the mark. However, he is optimistic that dramatic improvements in energy efficiency could mean that consumer bills will remain stable or even fall in the long term. The fear is that in Britain's liberalised energy market this tidal wave of required investment simply will not materialise. Dr Lowrey believes that, under its current structure — which relies on market forces plus consumer-funded incentives designed to boost investment in renewable energy — the scale of investment needed is unlikely either to meet expectations or to be allocated in the way that the Government or society wants. It is a concern that has been compounded in recent months by a collapse in funding that has accompanied the credit crunch and the plunging value of the pound, forcing up the cost of imported power-generating equipment. The falling prices of oil, coal and gas have also undermined the economic rationale of many investments in more costly, alternative forms of energy. 'There is a need for greater intervention to make this investment a reality,' Dr Lowrey said. 'We need a guiding hand from government.'”
Whitelee's wind of change merely heralds stormy debate
London Times, 25 May 2009
"Britain has signed up to an ambitious EU plan to generate 35 per cent of its electricity from renewable energy, such as wind and wave power, by 2020 — a dramatic increase from today's figure of less than 5per cent. Many in the industry doubt that this target is achievable, given the funding and planning wrangles faced by the wind developers and the complexity of linking schemes to the National Grid. Nevertheless, the Government is pushing hard for as many of these schemes to be built as possible. Meanwhile, a host of new gas-fired power stations is also on the way. The share of Britain's electricity produced by burning gas has already risen from 2 per cent in 1992 to 35 per cent. The figure is expected to rise further, with gas-fired plants under construction at Pembroke in West Wales, the Isle of Grain in Kent and Langage, outside Plymouth. Cheap and relatively quick to build, they may emit carbon but tend not to stoke the public ire against new coal plants. However, they do raise other problems. With domestic supplies of North Sea gas being depleted fast, the UK is becoming increasingly reliant on imports of the fuel from countries such as Russia, Qatar and Algeria, a trend that has raised concern about UK energy security."
Striking a balance between urgency, climate change and energy security
London Times, 25 May 2009
"Russia, already a large supplier of nuclear-reactor fuel to Europe and Asia, is expected on Tuesday to sign its first purely commercial contract to supply low-enriched uranium to United States utilities. With the signing, Russia’s nuclear-fuel trade with the United States will shift to a commercial footing, similar to Russia’s dealings with other consumers of fuel, like France and the Netherlands, both longtime buyers of Russian uranium. For the United States, the change is a sign that Washington is acquiescing to the idea of a major Russian role not only in the international nuclear power market, but also in the domestic market. Russia’s outsize role in supplying uranium to American utilities had previously been justified because the fuel was a byproduct of a program to eliminate nuclear weapons. Now the Russians will be selling nuclear fuel from virgin uranium. Yet the contract signing, after North Korea’s nuclear test on Monday, also underscores a counterintuitive element of American nonproliferation policies. The policy of buying diluted, or blended-down, Russian weapons-grade uranium yielded a clear nonproliferation benefit. The new mode — of having the Russians enrich new uranium for United States markets — is not directly beneficial for nuclear security because it does not remove weapons-grade uranium from stockpiles....Techsnabexport, the Russian state company that exports low-enriched uranium, is expected to sign the contract in Moscow with a consortium of American nuclear companies. Techsnabexport declined to identify its American partners or the size of the contract on Monday. The new contract is separate from a program to dilute surplus weapons uranium into civilian fuel for use in American reactors. Under that so-called megatons to megawatts program, begun in 1993, Russia is already the largest supplier of enriched uranium to American utilities and provides about half of all uranium consumed in civilian reactors in the United States. Yet Russia has been prohibited from selling directly to the utilities by provisions of American law to prevent dumping at below-market prices, and it was compelled to deal only through a monopoly importer, the United States Enrichment Corporation....In a negotiated settlement in February 2008, the United States agreed to allow Russia to sell low-enriched uranium directly to domestic utilities without the involvement of the enrichment corporation. But all sales of diluted weapons uranium will still go through the corporation. A spokeswoman for the company said the initial direct Russian sales will be small and will not harm its business. Nuclear reactors run on uranium that is composed of 3 to 5 percent uranium 235. In nature, uranium is only 0.7 percent uranium 235. Uranium used in weapons and in the reactors that power nuclear submarines use more than 90 percent uranium 235. “Enrichment” means raising the proportion of 235 compared with the dominant type, 238, and the Russian industry was set up to provide large volumes of high-enriched uranium for weapons and marine reactors."
Russian Uranium Sale to U.S. Is Planned
New York Times, 25 May 2009
"The world may witness a new crude oil price spike in two to three years - potentially worst than a peak of $147 a barrel seen last year - if oil producers don't invest enough, Saudi Arabia's oil minister said Monday. The world's largest oil producer is the latest to warn about the risk associated to under-investment after the International Energy Agency, which represents energy consumers, voiced similar concerns. Speaking at a G8 Energy ministers summit in Rome, Saudi oil minister Ali Al- Naimi said his country is 'continuing to invest now in both the upstream and downstream to help ensure an uninterrupted supply of energy when the global economy recovers.' But 'if others do not begin to invest similarly in new capacity expansion projects, we could see within two to three years another price spike similar to or worse than we witnessed in 2008,' he added."
Saudi Oil Min: Price Spike In 3 Yrs If Investment Lags
Dow Jones Newswires, 25 May 2009
"The Organization of the Petroleum Exporting Countries (OPEC) meets on Thursday to review its oil supply policy. The group has already pledged to curb output by 4.2 million barrels per day (bpd), around 5 percent of global supply, since September to match the sharpest fall in demand since 1981....Oil stocks stand at around 62.4 days of forward cover, the most since 1993 according to the International Energy Agency (IEA) and around 10 days more than OPEC considers comfortable. More than 100 million barrels of oil is estimated to be stored on tankers at sea....The rally in oil prices to a six-month peak of more than $60 a barrel, from a low of $32.40 shortly after OPEC last cut output in December, could encourage higher, rather than lower, production from less disciplined OPEC members....Apart from oil producers' dependence on oil revenues, OPEC -- as well as international oil companies -- have consistently said prices of around $75 a barrel are required to ensure new production is brought onstream. Of 165 planned projects between now and 2013, OPEC has said it has delayed 35, although it has not specified which ones. While the biggest international oil companies, such as Exxon Mobil, have said they have continued to invest through the downturn, others have abandoned more costly oil production projects and the International Energy Agency has said oil prices could surge after demand recovers."
OPEC meets to decide supply policy
Reuters, 25 May 2009
"When oil collapsed more than 70 per cent from its July 2008 record high, many major oil firms slashed their exploration budgets because the lower prices did not cover the expenses of today's high-cost reserve plays. The worldwide credit scarcity didn't help. In nations within the Organization of Petroleum Exporting Countries (OPEC), as many as 35 new projects have been delayed to 2013. About $100 billion worth of Alberta tarsands expansion projects are on hold....Officials at the International Monetary Fund are especially concerned about the impact of an oil-price rebound on impoverished economies. They regret that the current period of lower drilling costs was not seized upon as an opportunity to get long-term projects underway. 'The lower that oil prices drop now the greater the negative impact on future supply,' John Lipsky, first deputy managing director of the IMF said at an OPEC summit in Vienna in March. As oil prices were peaking last spring, Yergin's firm was projecting an increase in world oil capacity to 109 million barrels a day. The subsequent 'capital strike' by exploration companies has forced Yergin to revise that figure down to a current 101.4 million barrels a day. That's a 'squeeze' scenario similar to the recent years of escalating prices, when the gap between supply and demand became been razor-thin. French oil producer Total S.A., one of the few companies to maintain an aggressive exploration program, including efforts to build a large presence in the Athabasca tarsands, is gloomier still. Christophe de Margerie, Total's CEO, said the proliferation of project cancellations means the world's producers will be struggling by the middle of the next decade to keep supply at even 90 million barrels a day."
Is $100 oil coming soon?
Toronto Star, 25 May 2009
"Imperial Oil Ltd (IMO.TO) on Monday said it would go ahead with its C$8 billion ($7.1 billion) Kearl oil sands project, the first major new development to be approved in the region of northern Alberta since the recession forced a spate of cancellations. Imperial, Canada's biggest oil exploration and refining firm, said it expects to complete the project's first 110,000 barrel per day stage by late 2012."
Imperial to go ahead with C$8 bln Kearl project
Reuters, 25 May 2009
"Falling energy investment will have far-reaching and, depending on how governments respond, potentially grave effects on energy security, climate change and energy poverty. Cutbacks in investment in energy infrastructure will only affect capacity with a lag, often amounting to several years. So, in the near term at least, weaker demand is likely to result in an increase in spare or reserve production capacity. But there is a real danger that sustained lower investment in supply in the coming months and years, could lead to a shortage of capacity and another spike in energy prices in several years time, when the economy is on the road to recovery. The faster the recovery, the more likely that such a scenario will happen.... These concerns justify government action to support investment in energy efficiency and clean energy. Many countries recognise this: a small but significant share of the additional public spending in short-term economic stimulus packages announced to date (about 5% of a total of $2.6 trillion) is directed at energy efficiency and clean energy – either direct investment or fiscal incentives for low-carbon power technologies and the development and commercialisation of more energy-efficient end-use technologies. These moves are a positive step in the right direction, potentially killing three birds with one stone: tackling climate change, enhancing energy security and combating the recession. But much more needs to be done. The investment needed to put the world onto an energy path consistent with limiting the rise in global temperature to around 2C far exceeds the additional investments that are expected to occur as a result of the stimulus packages so far announced. Our analysis suggests that, relative to their recent announcements, governments should be looking to increase the level of new funds they commit to energy efficiency and low-carbon energy policies by a factor of around four. And, at a minimum, this level of investment would have to be sustained each and every year for decades to come. The IEA, therefore, encourages world leaders attending the 2009 G8 Summit under the Italian Presidency to push for such action on a global scale – a Clean Energy New Deal – to exploit the opportunity the financial and economic crisis presents to improve energy efficiency and effect a permanent shift in investment to low-carbon technologies including carbon capture and storage. This must be seen as a long-term commitment that extends well beyond the limited time horizon of the economic stimulus packages."
The Impact of the Financial and Economic Crisis on Global Energy Investment
IEA Background Paper For The G8 Energy Ministers' Meeting 24-25 May 2009
"The UAE, which has got an approval from the United States to proceed with its nuclear plans, is expected to have its first nuclear reactor completed by as early 2015, making it the first operator of a nuclear plant in the region, experts told Emirates Business....Mahmoud Nasreddine, Advisor to the Secretary General of the League of Arab States expects the first plant to be completed by early as 2015. This is substantially shorter as the IAEA guidelines calls for about 10 to 15 years of planning, preparation and execution, before a nuclear power plant is online. On March 23, 2008, the UAE became the first country to approve nuclear plans although on the next day, Bahrain also penned a deal with the United States to co-operate on a civil nuclear power. The US State Department held out the deals as model for nations seeking to to meet their energy needs and cut their greenhouse gas emissions....One of the UAE's fast-tracking measures was its voluntary renunciation of its rights to enrich uranium under the non-proliferation treaty (NPT)....Nasreddine, said the UAE government's decision to adopt a nuclear option is based on the rapid increase in demand for electricity and fresh water. He said as many as 2,300 nuclear scientists, technicians and support staff will be needed to run the UAE's proposed three-reactor civil nuclear programme....In the past, Arab countries, especially oil-rich countries have not been in favour of electricity generation by nuclear energy. Such option has been excluded due to the abundance of cheap fossil fuels. 'As they undergo economic growth, their needs for fresh water and electricity increased. Decision makers are obliged to consider their energy strategies and to agree on different available options – nuclear and renewable energies,' Nasreddine said."
UAE to have first Arab nuclear power plant in 2015
Emirates Business 24/7, 24 May 2009
"OPEC has announced three separate rounds of production cuts since September in a bid to steady prices. In all, it has vowed to trim its output by 4.2m barrels a day (b/d). That leaves them with as much as 6m b/d of spare capacity. Despite this growing glut, however, the price of oil has been rising steadily in recent weeks (see chart 2). On Wednesday May 20th it closed above $60 a barrel for the first time in more than six months. That marks an increase of more than 75% since February. The price of futures contracts suggests that energy traders see the price rising higher still in the coming months and years. (During the day on Friday it appeared to be nearing $62 a barrel.) The explanation is simple. Oilmen are worried because they believe that many of the factors behind the record-breaking ascent last year remain in place. Much of the world’s 'easy' oil has already been extracted, or is in the hands of nationalist governments that will not allow foreigners to exploit it. That leaves firms to hunt for new reserves in ever more inhospitable and inaccessible places, such as the deep waters off Africa or the frozen oceans of the Arctic. Such fields take a long time and a lot of expensive technology to develop. Worse, new discoveries tend to be smaller than in the past and to run dry faster. So oil firms must work doubly hard to replace declining fields and to increase output. Yet the oil industry is short of equipment and manpower, thanks to underinvestment in the 1980s and 1990s, when prices were low. As soon as the world economy starts growing again, the theory runs, demand for oil will once again outstrip the industry’s ability to supply it. In other words, the global recession has only interrupted the 'supercycle' of which many analysts used to speak, during which the normal boom-and-bust cycle of oil and other commodities would give way to a protracted period of high prices, as ever-growing demand from emerging markets swallowed everything the extractive industries could produce. Oil bosses, OPEC ministers and anxious bankers all agree on what is needed to prevent this scenario becoming reality: lavish investment in the development of new fields and in exploration. Yet the reverse is happening. The oil industry is cutting its spending, bringing fewer new fields into production and exploring less. The International Energy Agency reckons that overall investment will drop by 15-20% this year....Saudi Aramco, the world’s biggest oil producer, recently completed a five-year scheme to expand its production capacity from 10m b/d to 12.5m b/d, at a cost of $70 billion. But in Russia, the world’s second-biggest oil producer, output is falling largely because private capital has been scared off by a series of expropriations, while the state starves the firms it controls of sufficient cash for investment. And most oil-rich states, naturally enough, are happy to see the price rise. Many have become used to bumper revenues in recent years and have struggled to balance their budgets since the price slumped last year.....there is little sign that governments are willing to grant oil companies easier access to the most promising territory for exploration. Iraq’s plans to sign big new contracts with foreign firms are years behind schedule, as is its new oil law. American sanctions continue to impede investment in Iran. The Nigerian government has been unable to quell the insurgency in the Niger delta, making it difficult for oil firms to operate there. Even in America, despite years of debate, most coastal waters and much of Alaska remain off-limits to drilling. So when demand begins to revive, a sharp rise in prices is inevitable. That does not mean that a price spike is just around the corner, however. The speed with which it arrives will depend on the strength of the global recovery."
The oil price: Bust and boom

The Economist, 23 May 2009
"Europe's economic slowdown has led to a collapse in demand for natural gas, while January's crisis has triggered a new push by EU states to find alternatives to Russian imports. Added to that, many industry analysts are revising down their long-term projections for natural-gas use in Europe, with far-reaching implications for Russia's resource-based economy. 'The days of high growth rates for European gas consumption are surely over,' Bernhard Reutersberg, chief executive of German energy company E.ON Ruhrgas AG, told a conference in Berlin this week....As oil and gas prices rose, Gazprom's ambitions grew. It talked of increasing its share of the European gas market from 25% to a third by 2015. Last summer, it boasted it would be the world's most valuable company by 2015, with a capitalization of $1 trillion. But as recession demolished Europe's appetite for gas, Gazprom's fortunes turned. IHS Global Insight says it expects gas demand in Europe to fall nearly 10% this year. Gazprom has responded by slashing production: Output fell 28% in April, to the lowest level in a decade. Gazprom's market cap is now around $85 billion. 'The bottom line is Gazprom's revenues will fall 30-40% this year,' said Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies. 'We've never had a decline in demand as dramatic as this.' Gazprom's exports should start to rise again later this year. The gas price in its long-term supply contracts is linked to the price of a basket of oil products, but with a six-to-nine month lag -- so the price Gazprom charges its customers will fall sharply in a few months' time. Many of them are delaying purchases till then. But the gas monopoly could find itself under pressure from customers to renegotiate some of those traditional long-term contracts, especially as alternative sources of gas emerge. A huge wave of liquefied natural gas from countries like Qatar will hit global markets over the next two years, much of it finding its way to Europe. Many analysts expect rising competition between LNG supplies and pipeline gas in the years to come. 'If the global recession lasts, or the recovery is slow, the market will be awash with LNG,' says Pierre Noël of EPRG, an energy research group at Cambridge University. 'The timing couldn't be worse for Russia.'"
Russia Faces Uncertain Times Selling Natural Gas to Europe
Wall Street Journal, 23 May 2009
"Energy policymakers should not waste the opportunity that lower oil prices provide to address US supply concerns, two experts told the congressional Joint Economic Committee on May 20. 'The recent rise in oil prices again underscores the present reality of long-term challenges. Even if we see significant short-term gains in global oil production capabilities, if demand from China and elsewhere returns to its previous rate of growth, it will not be too long before the same calculus that produced the oil price spike of 2007-08 will be back to haunt us again,' warned James D. Hamilton, an economics professor at the University of California at San Diego. 'Once global economic growth resumes, so will growth in oil demand. That will once again put energy security, and the relation of energy to economic well-being, back at the top of the agenda. Given the lead times to develop new supplies, policy decisions made today should take into account the likelihood of future cycles, and what they mean to the American economy and to American consumers,' added Daniel Yergin, chairman of IHS Cambridge Energy Research Associates. The two experts returned to testify amid dramatically different conditions from their last appearance, observed Rep. Carolyn B. Maloney (D-NY) who chairs the joint House-Senate committee. 'The most recent estimate from the Energy Information Administration is that regular gasoline prices will average $2.21/gal over this summer's driving season and that diesel fuel prices will be $2.23/gal. That's a far cry from the $4 or more a gallon for gasoline and diesel that drivers faced last summer,' she said in her opening statement. 'When I had the opportunity to testify to the committee almost a year ago, oil prices were on a sharp upward trajectory. Sixteen days after that very timely hearing, they reached an all-time peak of $147.27/bbl. Although some people then were talking about $200, $250 or $500/bbl oil, it seemed clear to use at IHS CERA that a 'break point' was nearing on prices that would market the beginning of a reversal, which we have seen,' said Yergin. When oil's price hit its peak on July 11, it was more than two months before Lehman Bros. Holdings collapsed on Sept. 15, taking the US economy from 'moral hazard' to the much more frightening world of 'systemic risk,' with the threats of credit freezes, economic free fall, and overall breakdown, Yergin said. 'It is well-recognized that the main drive of the deepest recession since the Great Depression was the failure of the US and global debt and credit systems. But the surge in commodity prices, notably oil, was a very significant contributing factor,' Yergin said. High oil prices hit consumers hard, notably those with lower incomes, making them reduce spending, he said. They also put an unexpectedly heavy burden on many businesses, both large and small. Most notably, they helped knock the US auto industry 'flat on its back,' reducing consumers' ability to buy cars and leaving Detroit stranded with a product mix that it could not change quickly enough as motorists quickly moved away from what if offered. 'The automobile industry was knocked flat on its back not by the collapse of Lehman Bros. but by the price at the gasoline pump,' Yergin said. Oil prices doubled between June 2007 and June 2008, Hamilton observed. 'In my mind, there is no question that this latest surge in oil prices was an important factor that began in the US in 2007's fourth quarter,' he said. He disputed assertions that financial speculators pushed crude oil prices higher, saying that several other factors contributed to the run-up. 'World oil production decreased slightly between 2005 and 2007. Declining production from mature oil fields in the North Sea and Mexico played a role, as did political instability in Nigeria. Saudi Arabian production, which many analysts had expected to increase to meet rising demand, fell by 850,000 bbl a day between 2005 and 2007. These declines were enough to offset production gains in places such as Angola and Central Asia, with the result that total global oil production dropped slightly,' he said. Meanwhile, demand continued to grow, according to Hamilton. 'World petroleum consumption increase by 5 million b/d during 2004 and 2005, driven largely by a 9.4% increase in global [gross domestic product]. Over the next two years, 2006 and 2007, world GDP grew an additional 10.1% which, in the absence of an increase in the price of oil, would have produced further big increases in quantities consumed,' he said. 'Even with price increases, Chinese oil consumption increased by 870,000 b/d between 2005 and 2007. With no more oil being produced, that meant that residents of the US, Europe, and Japan had to reduce our consumption by a comparable amount. The price of oil needed to rise by whatever it took for us to do so,' Hamilton said. Consumers finally began to respond when gasoline's US average price was more than $4/gal, he said. The abrupt spending changes which resulted can seriously disrupt certain key parts of the economy and seemed to be part of the mechanism by which earlier oil price shocks contributed to previous economic recessions. 'The kinds of economy responses we saw between the fourth quarter of 2007 and the third quarter of 2008 were, in fact, quite similar to those observed following previous dramatic oil price increases,' Hamilton indicated.....Policymakers should pursue all options, the two analysts agreed. 'As part of a longer-term view, we need to get beyond the 'either/or' energy debate and take a more ecumenical approach, ensuring that combination of conventional energy, renewables and energy efficiency are all developed with appropriate environmental and climate-change considerations,' Yergin said. Major initiatives in research and development, innovation, and what he called the 'green stimulus' can have significant long-range impacts, he said. 'Indeed, we have never seen anything like the embrace of energy efficiency that is taking place today all across the spectrum,' he said. 'But there is no single answer to the energy needs of our $14 trillion economy. Today, fossil fuels (oil, natural gas, and coal) supply over 80% of our total energy. Oil by itself is about 40%. That alone makes clear the importance of oil, and the evolution of the oil market, to our economy and security in the decade ahead,' Yergin said."
Experts urge US policymakers to address long-term challenges
Oil & Gas Journal, 21 May 2009
"Mexican oil exports plunged 18.2% in April to levels unseen since 1990 outside hurricane seasons, in more grim news for a key economic motor relied on for a major chunk of government revenues. Crude export volumes tumbled to 1.177 million barrels per day as yields at Mexico's aging Cantarell field continued to plummet, state oil monopoly Pemex said today. Oil production declined 4.2% year-on-year to 2.642 million bpd in April, the fourth month in a row that it has been below a targeted level of 2.7 million bpd, according to a Reuters report....Mexico is a top three oil supplier to the United States but production has declined steadily since 2004 as the country struggles to replace capacity lost at Cantarell. The United States risks becoming more dependent on less politically stable sources of oil as Mexico's output dwindles. Cantarell, which was pumping more than 2 million bpd in 2004, yielded only 713,000 bpd in April, down more than 35% from a year ago, according to energy ministry data. The latest fall at Cantarell was partially offset by increased output at the nearby Ku Maloob Zaap offshore heavy oil field. Ku Maloob Zaap, which recently overtook Cantarell as Mexico's biggest producer, yielded a record 814,000 bpd in April, near the maximum 820,000 bpd Pemex thinks it can produce. Output at Ku Maloob Zaap is expected to begin to decline to 810,000 next year, however. Pemex has vowed to end this year with oil output at 2.7 million bpd. Executives say meaningful increases in production from the Chicontepec onshore project starting in July should reverse the trend of declining output in the first half of the year. Analysts remain skeptical that Pemex will be able to achieve its production goals at Chicontepec, where billions of barrels of crude oil are tightly locked in isolated geological formations, making oil production costly and challenging."
Mexico oil exports plummet
Upstream Online, 21 May 2009
"What do you get from an Austrian, a Hungarian, a Kurd and two Emiratis? If you believe in the deal signed at the weekend between OMV, the Austrian energy group, MOL, its Hungarian neighbour, the Sharjah-based Crescent Petroleum and Crescent’s affiliate Dana Gas, you get the most important energy project to come out of Iraq since the removal of Saddam Hussein. With luck and a following political wind, the $8 billion (£5 billion) investment by Pearl Petroleum in Kurdish Iraq could be the most significant since the discovery of oil at Kirkuk by the Iraqi Petroleum Company in the 1930s. It could equally well be sunk by squabbling Baghdad politicians, dysfunctional ministers in Brussels and bellicose generals in Ankara. That would be a pity, because the Pearl partners have a plan to extract gas from Khor Mor and Chemchemal, two giant fields in Kurdish Iraq, and pipe it across the Turkish border. From there, the gas would be carried by Nabucco, an as-yet-unbuilt European Union flagship pipeline, into Central Europe. This may be the last chance for Nabucco, a project to bring Central Asian and Middle Eastern gas into Europe that has been on the drawing board for seven years. Last week, Gazprom, arch-foe of Nabucco, was trumpeting a deal with Eni, the Italian energy group, that would double the size of South Stream, a rival pipeline project that would bring Russian gas across the Black Sea and into the Balkans, avoiding troublesome transit through Ukraine. Until Sunday, Nabucco’s prospects seemed bleak. Backed by the former Bush Administration, as well as by Brussels, Nabucco has been a pipeline seeking a gasfield. One by one, initially enticing gas reserves in Central Asia vanished as geopolitics and geography intervened. Turkmenistan grew tired of talk about trans-Caspian pipelines and looked to China for an alternative customer. After years of debate and the sight of Russian tanks entering Georgia, Kazakhstan and Azerbaijan decided that discretion and Gazprom’s offer of a better gas price were better than valour and a speculative deal with Nabucco’s partners. Until Sunday, there was no other supplier bar Iran, still a bridge too far. Iraq’s gas reserves are unknown, but sure to be big. The old regime never bothered to develop its gas. There are small gas recovery projects in the south and Shell is toying with a plan to win gas from the Kirkuk oilfield. The Pearl partners reckon that their two fields alone could deliver three billion cubic feet a day into pipelines heading north, equal to a third of UK daily consumption. Swift to protest, the Oil Ministry in Baghdad denounced the deals, insisting that Kurdish Iraq could not export gas without central government consent. There is jealousy in Baghdad over the upstart Kurdish regional government’s success in developing an independent oil industry. Baghdad initially blustered over exploration licences for tiny foreign explorers in Kurdistan, arguing that the Kurds were giving away too much oil profit to foreigners. But a fortnight ago, Baghdad granted export licences for two Kurdish projects. Meanwhile, impatience with the failure of Iraq’s central government to bring oil output to even the levels before the 2003 invasion is turning to anger. A petition signed by 140 Iraqi MPs last week criticised the Oil Ministry. The mood is also changing in Ankara, where Turkish distrust of Kurds is giving way to realpolitik and business deals. Turkey’s Government wants stability in Iraq, but also aspires to the role of Europe’s eastern energy hub. In a future Iraq, without the iron glove of American security, the Kurdish region is an oil and gas prize, lonely, unprotected, bordered by a hostile Iran and a chaotic cauldron to the south and west. If not Turkey, who will protect Kurdistan?"
Old enmities are put aside in fight for gas
London Times, 20 May 2009
"The Obama administration plans to set tougher fuel economy and emissions rules for car manufacturers in a move likely to please environmentalists but add to the industry’s challenges. A senior administration official on Monday said that the new plan would bring 'historic levels of fuel efficiency', introducing the first rules designed to reduce carbon emissions from cars and accelerating by four years an existing plan for new vehicles to achieve an average of about 35 miles per gallon by 2020. The corporate average fuel economy standard, which was first introduced in 1975 as a response to the oil embargo imposed on the US by Arab oil producers, had been due to rise from 25.3mpg today to 35mpg by 2020 but the new efficiency target would rise to 35.5mpg between 2012 and 2016."
Obama to unveil tough fuel rules for cars
Financial Times, 19 May 2009
"In the post-war years, there has been a clear link between oil prices and global growth: the long boom of the 1950s and 1960s was an era when crude was dirt cheap; all four major recessions (1974-75, 1980-82, 1990-92 and 2007 to now) followed a spike in oil prices. The last trough in oil prices occurred at the end of the 1990s, coinciding with the dotcom bubble and talk in the US of the new paradigm economy. Since then, the trend has been inexorably up, with supply struggling to keep up with strong demand from the mature markets of the developed world and the big emerging economies such as China and India. Chris Sanders, of Sanders Research Associates, traces the origins of the current crisis back to the turn of the millennium, when the fall in production from the big finds of the late 1970s – Alaska, deepwater Mexico and the North Sea – ended the era of cheap oil. A serious recession in the wake of the dotcom bubble was only averted because policymakers – Alan Greenspan in particular – manipulated interest rates to create another unsustainable boom. This did not mean the problem had been solved; indeed, putting it off for another day simply meant the problem grew bigger. Seen from this ­perspective, what we are witnessing is not the early stages of a new bull market, but a ­temporary lull in a much longer ­crisis that will see recovery hampered by high and volatile energy prices. Indeed, the volatility of crude over the coming years is likely to be as damaging as the fact that fuel will be becoming steadily more expensive....Price signals do matter, and oil companies are far more likely to beef up their spending on exploration and new refineries if the oil price is $100 a barrel than if it is $10 a barrel. That's the good news. The bad news is that even if the peak oil sceptics are right and there is plenty of untapped crude in the South Atlantic, Canada's tar sands or Central Asia, it is going to be more expensive to extract it. Oil has been critical to the development of industrial societies but energy firms, unsurprisingly, went for the oil that was easiest to get at and of the highest quality, since that meant low extraction costs and high profits. In other words, the energy required to get fuel out of the ground was small; the energy return on energy investment (EROI) was high. But as companies have moved to tougher environments, the EROI on oil and gas production has fallen – one estimate is from 33:1 in 1999 to 19:1 in 2005. This global trend mirrors what happened in the US, where oil is still produced in large quantities but much less efficiently than it was 75 years ago. From an estimated 100:1 in 1939, the EROI for American oil production dropped to 30:1 by 1970 and 11:1 in 2000. As Sanders puts it: 'Today we are attempting to extract oil and gas in commercially viable quantities from offshore deposits that lie under more than 25,000 feet of water, rock and hot salt. It may well be possible to do so, but what is highly unlikely is that it will be possible to do so in sufficiently large flows to make a material difference to general prosperity. Another way of putting this is that economic growth rates are going to have to slow.' On the basis of what has happened in the recent past, we are likely to see oil prices on an upward trend but with wild gyrations. Frequent oil spikes when the global ­economy appears to be on the mend will be ­followed by a crash in prices as the impact of dearer energy raises business costs and bites into consumer spending power."
Brain power can meet the energy crisis
Guardian, 18 May 2009
"A group of retired senior U.S. military officers has concluded that the country's reliance on fossil fuels undermines its capacity to defend itself. Citing a 'serious and urgent threat to national security,' the group has urged the Pentagon to take the lead in shifting to a new age in energy. The dependence on oil-based fuels left the U.S. military seriously over-extended in Iraq and Afghanistan, according to the officers' report, issued on May 18 by CNA, a military think tank based in Alexandria, Va. The 62-page report asserts that the true cost of fuel, including logistics and the military protection of sea lanes, can run to hundreds of dollars a gallon. 'Our energy posture is not sustainable. It can be exploited by those who want to do us harm,' retired Air Force Lieutenant General Larry Farrell, a co-author of the report, said in an interview. Finding a suitable alternative fuel and scaling it up to the size of the U.S. economy 'is a 30-year project,' Farrell said. 'We've got to get started now.' The report, called 'Powering America's Defense: Energy and the Risks to National Security,' was written by CNA's military advisory board, comprised of 12 retired generals and admirals. It's a follow-up to a 2007 report by the advisory board called 'National Security and the Threat of Climate Change.'...Jim Jones, President Barack Obama's national security adviser and a former marine general, is expected to create a new senior slot on the National Security Council for global energy."
U.S. Reliance on Oil an 'Urgent Threat'
Steve LeVine, Business Week, 17 May 2009
"The Jordanian government on Sunday signed an agreement with Royal Dutch Shell for the exploitation of the country's huge oil shale reserves. The accord, which could involve an eventual multi-billion-dollar investment, was signed by the Minister of Energy and Mineral Resources Khaldoun Qteishat and Shell's Vice Chairman Malcolm Brendid. Under the agreement, Shell pledged to spend 540 million dollars in the course of preliminary exploration operations, which could take at least 10 years before commercial production begins, Qteishat said. The concessionary agreement will cover about 22,000 square kilometres and involves four stages at the end of which Shell will evaluate the outcome of its operations and decide whether to proceed to the next stage or halt the project, Maher Hijazin, director of the natural resources authority said. 'If Shell completes all stages it could arrive at a marathon project involving an investment of multi-billion dollars, whereby the country will not only reach self-sufficiency in energy but becomes an exporter of oil,' he added. Jordan currently imports more than 95 per cent of its energy needs, estimated at about 110,000 barrels of oil per day, from Saudi Arabia at market prices. Official estimates put Jordan's oil shale reserves at about 40 billion tons."
Jordan signs accord with Shell for oil shale exploitation
Deutsche Presse Argentur, 17 May 2009
"Russia and Italy agreed on Friday to increase the capacity of the planned South Stream gas pipeline under the Black Sea, in a move that will intensify concerns about the European Union’s reliance on Russian supplies. The South Stream project is intended to open a new route for Russian gas to reach the west, avoiding Ukraine. Disputes between Russia and Ukraine have disrupted Europe’s gas supplies, most seriously in January this year when 20 countries suffered shortages. Vladimir Putin, the Russian prime minister, and Silvio Berlusconi, his Italian counterpart, oversaw a deal between Gazprom, the Russian gas export monopoly, and Eni of Italy to double South Stream’s capacity to 63bn cubic metres a year – enough to supply more than four-fifths of Italy’s total gas consumption. Paolo Scaroni, Eni chief executive, said South Stream would improve Europe’s energy security. 'What is the meaning of this capacity extension of South Stream? It means 1bn cubic meters more here will be 1bn cubic meters less gas crossing Ukraine.' South Stream is a rival to the Europe-backed Nabucco project to bring Caspian gas to Europe across the Caucasus and Turkey, easing Europe’s dependence on Russian supplies. But Nabucco investors have struggled to secure gas supplies for the pipeline, a drawback underscored last week when Turkmenistan and Kazakhstan refused to join Azerbaijan, Turkey and Greece in committing to the project."
Russia and Italy sign gas supply deal
Financial Times, 15 May 2009
"Top oil exporter Saudi Arabia needs to rein in fast-growing power demand that threatens to eat into future exports, Saudi Oil Minister Ali al-Naimi said in remarks published late on Wednesday. An economic boom fuelled by record oil revenues this decade and subsidised domestic prices have led to a rapid rise in electricity consumption in the kingdom. Gas supplies were insufficient to meet all demand for power, so Saudi Arabia burns oil products and some crude to meet demand. 'If this trend in power consumption in the kingdom continues it will impact the size of exports and will affect the kingdom's income, which necessitates the implementation of a national programme to rationalise power consumption,' Naimi said in remarks published by the official Saudi Press Agency. Power demand grew at an average of around 5.6 percent per year from 2001-2008, up from 3.6 percent in 1995-2000, due to industrial expansion and cheap prices, he said. Demand for gas and refined products was also growing quickly, he said. Gas demand grew at around 7 percent per year and oil product demand around 5 percent per year since 1990. Those rates outstripped the average real GDP growth of 3.4 percent since 1990, he said. Saudi Arabia was studying the use of solar energy to replace oil and gas for power generation."
Saudi must rein in soaring power consumption
Reuters, 14 May 2009
"The International Energy Agency cut its oil-demand forecast for a ninth consecutive month, predicting consumption this year will fall the most since 1981 as the recession lingers. The Paris-based adviser to 28 nations cut its global oil demand estimate 'slightly' to 83.2 million barrels a day this year, down 3 percent from 2008, it said today in its monthly report. That is 230,000 barrels a day lower than it forecast last month. The revision comes a day after OPEC reduced its 2009 forecast, predicting oil demand of 84.03 million barrels a day. 'Demand continues to look very, very weak,' David Fyfe, head of the IEA’s oil industry and markets division, said in a phone interview from Paris. 'Although there has been a lot of talk about the green shoots of economic recovery, we think it is still a little bit early to be flagging any start of a full blown recovery.'   Oil prices have climbed 34 percent this year, trading above $60 in New York this week for the first time in six months on increasing optimism about an economic recovery and record production cuts by the Organization of Petroleum Exporting Countries. Still, U.S. crude stockpiles remain near the highest since 1990 as the recession saps fuel demand. OPEC crude production is beginning to rise as higher prices encourage members to pump more than their quotas. Demand is weakest in the world’s most developed nations, where consumption will drop by 5.1 percent this year, the IEA said. The IEA cited 'very weak' demand data in April for the U.S., and to a lesser extent, Europe. Crude inventories in developed nations are at their highest since 1993. Stockpiles were equivalent to 62 days of consumption as of the first quarter of the year, according to the IEA...The energy adviser said it expects consumption in developing economies to contract for the first time since 1994 as China and Russia 'continue to exhibit sustained weakness.' Demand in these economies will average 38.1 million barrels a day this year, a decline of 0.4 percent, or 140,000 barrels a day compared with 2008. The IEA demand estimate is based on a forecast that global GDP will shrink 1.4 percent in 2009 and the world economy won’t start to markedly recover until 2010 at the earliest, it said. Should the world economy see 'strong' economic recovery this year, the IEA’s oil demand could be 'too pessimistic,' according to the group. 'If we get an economic bounce in the second half of the year, demand could be stronger than we are showing,' Fyfe said. Non-OPEC supply will fall by 300,000 barrels a day this year, a second annual decline, to about 50.3 barrels a day. The IEA increased its forecast 50,000 barrels a day compared with last month because of 'stable' supply from the North Sea and higher-than-expected Russian output. Supply from OPEC rose for the first time in eight months in April as members backtracked on production cuts, according to the IEA."
IEA Cuts Oil-Demand Forecast, Projects Biggest Drop in 28 Years
Bloomberg, 14 May 2009
"At some point, the message that Jeff Rubin wanted to give began to diverge from the message he was expected to deliver as CIBC's chief economist. You could see it in his research reports over the past 18 months – talk about the urgent need for energy conservation, the inevitability of carbon pricing, oil at $225 (U.S.) a barrel by 2012, and how the high cost of transportation as a result of peak oil will throw the machinery of globalization into reverse....Rubin had just completed a new book, Why Your World Is About to Get a Whole Lot Smaller, much of it based on his research at the bank. An ambitious book tour was being planned, and Rubin had to choose between Bay Street and Main Street....In chapter 7, Rubin lays out in detail how high oil prices, which peaked near $150 in July 2008, led to inflation and rising interest rates that triggered the U.S. mortgage crisis and sent the economic dominoes, including global trade, falling....Why should anyone believe Rubin? He accurately predicted oil's rise to $50, then $100, and most recently $150. In 2005 he said the Canadian dollar would reach parity with the U.S. dollar, and it did....Rubin acknowledges in the book that many considered him 'out to lunch' when oil plunged back down to earth. He reminds, however, that it wasn't that long ago that oil was considered expensive at $40, and that it will shoot back up once the economy begins to recover and fast-rising demand bumps up against slow-moving supply. Easy, cheap oil is gone, regardless of what the oil giants tell you. One thing he's learned, he writes, 'is that it is pretty much impossible to convince anyone of something they just don't want to believe.' More are believing. Analysts at Raymond James said earlier this month that global production of petroleum actually peaked early last year. They called it a 'paradigm shift of historic proportions' and urged society to 'get ready to live in a peak-oil world.'"
A maverick's message on oil
Toronto Star, 16 May 2009
"Russia raised the prospect of war in the Arctic yesterday as nations struggle for control of the world’s dwindling energy reserves. The country’s new national security strategy identified the intensifying battle for ownership of vast untapped oil and gas fields around its borders as a source of potential military conflict within a decade. 'The presence and potential escalation of armed conflicts near Russia’s national borders, pending border agreements between Russia and several neighbouring nations, are the major threats to Russia’s interests and border security,' stated the document, which analysed security threats up to 2020. ' 'In a competition for resources it cannot be ruled out that military force could be used to resolve emerging problems that would destroy the balance of forces near the borders of Russia and her allies.' The Kremlin has insisted that it is not 'militarising the Arctic' but its warnings of armed conflict suggest that it is willing to defend its interests by force if necessary as global warming makes exploitation of the region’s energy riches more feasible. The United States, Norway, Canada and Denmark are challenging Russia’s claim to a section of the Arctic shelf, the size of Western Europe, which is believed to contain billions of tonnes of oil and gas. An earlier Kremlin document declared the Arctic a strategic resource for Russia and said that development of its energy reserves by 2020 was a vital national objective. It set out plans to establish army bases along the Arctic frontier to 'guarantee military security in different military-political situations'. The strategy published yesterday was approved by President Medvedev and drawn up by the Russian Security Council, which includes the Prime Minister, Vladimir Putin, and heads of the military and intelligence agencies. Mr Putin accused the West last year of coveting Russian energy reserves, saying: 'Many conflicts, foreign policy actions and diplomatic moves smell of oil and gas. Behind all that there often is a desire to enforce an unfair competition and ensure access to our resources.'... Dmitri Rogozin, the Russian Ambassador to Nato, warned the military alliance in March not to meddle in the Arctic, saying that there was 'nothing for them to do there'. The Foreign Minister, Sergei Lavrov, also criticised Norway, a Nato member, over military exercises based on 'a conflict over access to resources'. Norway responded that Russia was expanding its military presence in the region. A team of explorers led by Artur Chilingarov, the Kremlin’s special representative to the region, used mini-submarines to plant a titanium flag on the Arctic seabed in 2007 to stake Russia’s claim to the massive Lomonosov Ridge....The strategy document predicted that the struggle over energy resources would increasingly dominate international relations. It identified the Barents Sea and Central Asia, where Russia and China are vying for influence, as further areas of friction. The Caspian Sea is critical to the European Union’s hopes of breaking its dependence on Russian gas by building export routes for alternative supplies from Central Asia. Russia, Kazakhstan, Azerbaijan, Turkmenistan and Iran are locked in talks on dividing the seabed and its energy riches. The strategy paper also condemned as unacceptable threats to Russian securityAmerican plans for a missile defence shield in Eastern Europe and the expansion of Nato into the former Soviet republics of Ukraine and Georgia."
Russia warns of war within a decade over Arctic oil and gas riches
London Times, 14 May 2009
"Russia has warned that military conflicts over energy resources could erupt along its borders in the near future, as the race to secure oil and gas reserves gains momentum. A Kremlin policy paper, which maps out Russia's main challenges to national security for the next decade, said 'problems that involve the use of military force cannot be excluded' in competition for resources. The National Security Strategy's release coincides with a deadline for countries around the world to submit sea bed ownership claims to a United Nations commission, including for the resource-rich Arctic. The paper, signed off by Dmitry Medvedev, Russia's president, says international relations in the next 10 years will be shaped by battles over energy reserves. 'The attention of international politics in the long-term perspective will be concentrated on the acquisition of energy resources,' it said. 'Amid competitive struggle for resources, attempts to use military force to solve emerging problems can't be excluded. 'The existing balance of forces near the borders of the Russian Federation and its allies can be violated,' it added. The document said regions including the Middle East, the Barents Sea, the Arctic, the Caspian Sea and Central Asia could all be at the centre of competing claims for resources. Russia, the world's biggest natural gas producer, has already accused the United States, with which it shares a small sea border, of coveting its mineral wealth. But Moscow is also finding its control over natural gas exports under threat, as the European Union seeks alternative supply routes that would bypass Russia and the Ukraine. The country is also embroiled in a territorial dispute with Norway over claims to the Arctic sea bed, where around  25 per cent of the world's untapped reserves are believed to lie underneath the ice. The National Security Strategy also pointed to the US and Nato as major threats to global security. It criticised a US plan to deploy a global missile shield in Eastern Europe, which has already infuriated Russia."
Moscow warns of future energy wars
Al Jazeera, 13 May 2009
"Oil rose above $59 a barrel on Wednesday, a day after hitting a six-month high, supported by a U.S. government report that showed a surprise drop in crude stocks in the world's top consumer....'The amazing run over the last months on building crude stocks had to come to an end. We're starting to feel the impact of OPEC production cuts,' said Phil Flynn, analyst at Alaron Trading in Chicago....A forecast from the Organization of the Petroleum Exporting Countries that world oil demand in 2009 would be even weaker than previously thought and a fall in U.S. retail sales in April limited the upside for prices. OPEC also said in a monthly report said its production rose in April for the first time since July 2008, suggesting higher prices prompted some members to relax adherence to agreed output targets."
Oil rises over $59, EIA says US crude stocks fell
Reuters, 13 May 2009
"Kazakhstan approved its participation in a Moscow-led gas pipeline, which could divert potential supplies away from Europe's Nabucco project, days after refusing to commit to the EU-backed plan to cut reliance on Russia. President Nursultan Nazarbayev signed Kazakhstan's agreement with Russia and Turkmenistan into law on Wednesday, according to the presidential website Diplomats who attended a summit in Prague last week said Kazakhstan, Turkmenistan and Uzbekistan had refused to sign a final declaration to speed up work on the European Union-backed Nabucco project to bring Caspian gas to Europe. Russia agreed with Central Asian producers in 2007 to carry more of their gas to Russia by increasing the capacity of the Central Asia-Center pipeline system, which would allow Moscow to keep regional gas flows under its control....Russia could sell the additional Caspian gas on to Europe through its proposed South Stream pipeline project which is seen as a direct rival to Nabucco. Gazprom currently buys about 50 bcm of gas a year from Turkmenistan, about 15 bcm from Uzbekistan and less than 10 bcm from Kazakhstan using a Soviet-era pipeline. All countries in the region plan to boost output in the future but the West hopes that these additional volumes would be exported through new routes bypassing Russia. A source close to the Nabucco project told Reuters the three countries wanted guarantees and tangible incentives to supply the pipeline. Turkmenistan, the region's biggest gas exporter, which also plans to begin shipments to China through a new link later this year, has said it could fill all the planned pipelines."
Kazakhstan commits to Russian-led gas pipeline

Reuters, 13 May 2009
"The first super-tanker from Qatar has begun delivering frozen gas at –160C to the South Hook LNG Terminal in the south-west Wales port of Milford Haven, which was formally opened on Tuesday. The biggest and most advanced LNG terminal in Europe, it will boast five giant storage tanks as large as the Albert Hall by the end of the year. The hi-tech project is a joint venture by Qatar Petroleum, ExxonMobil and Total. Qatar's LNG fleet will send one ship to Wales every three days, each supplying enough to meet Britain's gas needs for 24 hours. It is hoped that the new trade from Qatar's vast fields in the Persian Gulf will guarantee Britain a reliable source of gas as the North Sea basin goes into rapid depletion. As the world's biggest exporter of LNG, Qatar provides a counter-weight to Russian control of pipelines feeding Europe's grids – prompting Moscow's frantic efforts to rope Qatar into an OPEC-style gas cartel. The revolution in LNG technology over the last decade has opened up Qatar's off-shore gas fields, transforming the tiny sheikdom of 1.5m people (240,000 citizens) into the planet's richest country per capita. By 2013, Qatar aims to produce 5.5m barrels per day of oil equivalent, half as much as Saudi Arabia but with a fraction of the population. The task for Britain is to ensure that the fleet of LNG tankers keep sailing to Wales rather going East, where prices have been higher. Abdullah Al-Attiya, Qatar's energy minister, said yesterday: 'Asia demand for LNG now, in other parts such as India and China, is becoming very high. 'China's needs are still not satisfied. They need huge amounts of gas. So now China is the centre of the new LNG compass.'"
Qatari gas to reduce Russian dominance
Daily Telegraph, 13 May 2009
"Norway, the world’s fourth biggest crude exporter, said Monday that its oil production fell a sizeable 7% in April to 1.99 million barrels a day last month from 2.15 million barrels a day in March. Though preliminary, the data highlight one of the big underlying supply problems in non-OPEC states that many oil analysts believe is likely to send crude prices back over the $100 a barrel mark in coming years. Oil closed Friday at $58.63, its highest settle since mid-November. It is trading around $57.75 a barrel this morning. The Norwegian situation is being replicated in other non-OPEC oil producers, such as Mexico and the U.K. These regions are mature and giving up less oil, meaning that keeping production flat is getting harder and harder."
Oil Prices: Norwegian Supply Falls; Is $100 Oil Far Away?
Wall Street Journal, 11 May 2009
"Common knowledge about coal is that major producing nations like China, the United States and Australia, have enough to last hundreds of years, far beyond the reach of oil, which may already be in its twilight years. But worldwide coal production could plateau as early as 2025, according to one new estimate, and a growing group of scientists are concerned that fossil fuel supplies may begin dwindling by mid-century. Last year, David Rutledge of the California Institute of Technology analyzed the coal production patterns of five regions around the world -- eastern Pennsylvania, France, Germany's Ruhr Valley, the United Kingdom and Japan -- each of which was producing at less than a tenth of its peak levels. He found that each of the depleted regions followed a rough bell curve of production; initial production was followed by a steep ramp-up, a plateau near peak levels, and then a consistent decline.When he applied the same formula to coal data from around the world, the results were startling: the United Nations Intergovernmental Panel on Climate Change's maximum estimate for extractable coal is about 3,400 billion tons. Rutledge's calculations suggest just 666 billion tons. The problem with the IPCC estimate is that it lumps coal 'reserves' which are easy to mine with coal 'resources,' which may be impossible to mine. And Rutledge's study shows that, historically, national governments in the five regions have overestimated their reserves by a factor of four on average. 'These appraisals are large-scale issues,' he said. 'But they're done by governments. What's the incentive for governments not to give a number that is too high?' James Murray of the University of Washington agrees. In a talk being presented later this month at the American Geophysical Union Joint Assembly, he plans to call for a re-evaluation of IPCC emissions scenarios, all 40 of which overstate humanity's ability to emit the greenhouse gas carbon dioxide, according to Rutledge's numbers. The committee's projections call for CO2 levels in the atmosphere to approach 500 parts per million by 2050, if emissions continue on their current trend. But Rutledge's work suggest that even if humans burn all the coal and oil we can get our hands on, we won't be able to push CO2 past 450 ppm. Oil sands and other unconventional fossil fuels probably won't add much to that total. Murray and Rutledge diverge on the question of climate effects, though. Using IPCC models, Rutlgedge argues that global temperatures won't get higher than 2 degrees Centigrade (3.6 Fahrenheit) above preindustrial levels, at the lower end of what scientists think might spark 'dangerous' climate change. 'We're still going to have global warming, and it's a serious threat,' Murray said. 'I have no doubt the IPCC dramatically underestimates climate sensitivity.' Regardless of climate impacts, the concern over looming energy scarcity may be more acute than ever. 'I think we'll see peak coal somewhere between 2025 and 2035,' Richard Heinberg of the Post Carbon Institute in California said. 'This has huge economic implications. Without growth in our energy supplies, it's very difficult to see how we're going to grow the economy.'"
Coal Supply May Be Vastly Overestimated
Discovery News, 11 May 2009
"The government’s latest plans to turn coal into a 'clean' fuel are coming under increasing attack by climate-change activists and scientists. They say the technology to be used (see below) would miss the majority of new coal-plant emissions – if it works at all. Carbon Capture and Storage (CCS) has been proven only on small power stations that generate about 30MW of electricity, but new coal plants would produce 50 times that power. CCS-fitted plants also require more coal to operate, using up 25% to 40% of the total power generated to run the carbon capture equipment. Even the government’s former chief scientific adviser is perplexed by the plan. 'The energy needed to run CCS is significant and that of itself is a real problem,' said Sir David King. The bigger concern, said King, is that most of the emissions from new coal plants could go unabated. 'All new coal plants should be fitted with precombustion technology, where 90% of carbon emissions are captured, if we are to meet our climate-change targets,' said King. The government wants to experiment with different types of CCS. According to a letter from Downing Street obtained by The Sunday Times, of the four new coal stations planned, at least one would be fitted with the precombustion system. Eon has drawn up plans for a 400MW precombustion plant in Lincolnshire, though there are a number of other candidates. Another station would be fitted for postcombustion, where the carbon is removed after the coal is burnt, capturing only 20% to 25% of emissions. The other two plants are undecided. A Downing Street official said testing various technologies is the best way of working out the costs of CCS – currently estimated to add £800m to each new coal station. 'Britain can lead the global CCS market, but we need to make it cost-effective. If we demonstrate different technologies then we have a wider range of expertise to sell to the world.' Under the government’s proposal, no new coal-fired power station will be licensed unless at least 400MW of gross capacity is fitted with CCS. However, this represents only about 25% of the total generating capacity of proposed coal plants. The government said the entire capacity of the plant must convert to CCS within five years of the technology being technically and commercially proven. But nobody knows how long it will take to prove CCS works on a large scale. The government is banking on it working by 2025, but it could take longer. There is also the question of how the government will enforce its plan. It is unlikely to pull the plug if a power company argues CCS is not a commercially viable option and delays installing it."
You just can’t clean coal, warn activists
Sunday Times, 10 May 2009
"The relentless rise of white van man has been halted by the recession, with the first fall in van mileage for more than 15 years. A decline in overall traffic, which began last year amid high fuel prices, accelerated in the first three months of this year, with 2.7 billion fewer miles driven than in the same quarter in 2008. With fewer vehicles on the roads, average journey times became considerably quicker on motorways and A-roads. Boosted by the trend towards shopping online and home deliveries, van traffic increased by 40 per cent in the past decade. Boosted by the trend towards shopping online and home deliveries, van traffic increased by 40 per cent in the past decade. But as the recession took hold, falling consumption of goods and services resulted in a 2 per cent decline in van traffic in the three months to March 31, the first quarterly fall since records began in their current form in 1993. HGV traffic, which has fluctuated in recent years, fell by the steepest amount on record in the first quarter, down 12 per cent. The number of HGV drivers claiming jobseeker’s allowance also rose fourfold in the past year, up from 3,280 in March last year to 15,255, according to the Office for National Statistics....The Department for Transport said part of the reason for the 3.5 per cent decline in overall traffic in the first quarter was the heavy snow in February when millions of people stayed at home for one or two days. However, traffic has now fallen for four successive quarters. Some transport analysts believe that this may be the beginning of a permanent shift in travel habits, with people choosing to make fewer journeys and travel shorter distances. Journey times on the most congested tenth of the motorway and A-road network have fallen by 12 per cent since 2007. Drivers on these roads are saving 30 seconds for every ten miles they travel compared with two years ago."
White van man halted by credit crunch and higher fuel prices
London Times, 8 May 2009
"One of the few good pieces of news in the current economic crisis (maybe the only one) is that oil prices have gone from the 147$ a barrel of July 2008 more than 100$ down to less than $50 a barrel on the international markets. However, in the last days we have seen oil prises rising and reaching the price of $58 a barrel for the first time in nearly six months. Nevertheless low oil prices are also good news for gas, since gas prices are normally linked to those of oil....However, we should not be under any illusion. The current fall of oil prizes is just the consequence of an even more dramatic fall in demand due to economic crisis....But the fundamentals that drive the energy markets have not changed. Once the economic crisis is over demand for hydrocarbons will soar again, particularly in the developing world. And some countries are preparing for that.  For example the Chinese government has granted a credit to Russian State owned oil companies Rosneft and Transneft $25 bn. against daily supplies of 48,000 tonnes of oil for the next 20 years. The world is aware that the production of the existing oil wells is decaying and that new discoveries are more scarce and more expensive....The lower prices that we are enjoying now can be in fact bad news. At this price oil producers have been forced to postpone many necessary investments in new production capacity. These investments take decades to be accomplished. In consequence, if the current economic crisis finished and demand recovers we could be facing huge shortage of supplies that can lead to extremely high prices....The current relatively low oil prices give a respite to prepare for the coming new oil crisis. We have to reduce our dependency in all those areas in which black gold is not indispensable, such as heating, or electricity production. For those areas which will have to continue to depend on it, like transport, we need to accelerate the research for alternatives, like biofuels, electric cars or hydrogen. And in all sectors, we have to accelerate our efficiency being aware that every barrel of oil that we are using is one of the last."
Are we moving towards a new oil crisis?
EU Energy Commissioner Andris Piebalgs (European Commision Blog), 8 May 2009
"The European Union will provoke fury in Moscow when it begins an unprecedented drive to forge a new pact with former Soviet states. Ignoring Russian condemnation, EU ministers will effectively open up a third front in an escalating East-West row on Thursday by meeting ex-Soviet bloc leaders in Prague for two summits that could reduce Moscow's energy stranglehold over Europe and its political influence over neighbouring states. Kremlin anger with the West has grown steadily in recent days, culminating with the formal expulsion on Wednesday of two Canadian diplomats assigned to the Nato mission in Moscow. The ejections took place after Nato withdrew the accreditation of two Russian diplomats at its Brussels headquarters after accusing them of spying.   Further stoking tensions in what Moscow calls its 'near abroad', Nato meanwhile began a military exercise in Georgia, a move denounced by Dmitry Medvedev, the Russian president, as 'blatant provocation'. Russia and Georgia fought a five-day war last year that some commentators said was partly caused by the Kremlin's opposition to the Nato membership ambitions of Georgia and Ukraine. Western aspirations for an improved relationship with Russia have been further dented by Kremlin objections to the EU's summit with its recently created 'Eastern Partnership', a six-member bloc incorporating the ex-Soviet states of Belarus, Ukraine, Moldova, Armenia, Georgia and Azerbaijan. Mr Medvedev, outlining his foreign policy doctrine last year, insisted Russia was entitled to a sphere of 'privileged interest' in the former Soviet Union....Until this year Moscow appeared to have beaten the West in the 'New Great Game' to secure control over the gas resources of Central Asia, seen as a vital alternative for Europe to Russian energy. But a rare show of European unity over a long-stalled pipeline project in the Caspian sea region and the blossoming of relations with gas-rich Turkmenistan have revived hopes that a last-minute deal to cut out Russia could be secured at the summit. 'It is a make or break summit,' one European diplomat said. 'If there is no deal, the gas goes to Russia or China."
EU to forge pact with ex-Soviet states
Daily Telegraph, 7 May 2009
"Power capacity in Britain is sufficient to charge electric cars in the medium term, according to a new report. The study, which was carried out by a team of representatives from companies such as Ricardo, Jaguar-Land Rover, E.ON and Amberjac Projects, suggested that a ten per cent increase in electric cars and plug-in hybrids would raise power demand by less than two per cent. It also revealed that the increase in demand for energy would most likely be spread over the market and be distributed evenly. Neville Jackson, group technology director at Ricardo, said: 'The increasing electrification of road vehicles is likely to be a key enabler for future significant reductions in transport-related CO2 emissions. 'While the provision of publicly accessible street level infrastructure in the form of recharging points remains a challenge, the research findings published today show that existing UK power grid capacity will be sufficient in the medium term to support a significant expansion of plug-in hybrid and electric vehicle use and is therefore not a constraint on implementation.'"
UK power capacity 'sufficient for electric cars'
Energy Saving Trust, 6 May 2009
"Britain is facing an energy crisis as a rise in renewable power is pushing the 'outdated' National Grid to breaking point, experts warned yesterday. Analysts say the network cannot cope with the extra electricity generated by wind, wave and solar sources. They fear the increase in renewables will overload a system that was not designed to accept so much incoming power. Inenco, the UK's largest energy analyst, said Britain could be plunged into darkness unless the infrastructure was updated. Inenco analyst Ian Parrett said the overhaul could cost the government between £5 billion and £10bn. He said: 'The UK's electricity infrastructure is so outdated and expensive that the renewables push towards wind farms and other forms of micro-generation is going to place an impossible strain on the network. 'It was not designed for two-way power generation, where smaller generating sources put energy back into the grid, and this will continue to be the case unless the government invests heavily in upgrading the grid.'"
Surge in renewable power fuels fears of energy crisis
The Scotsman, 5 May 2009

"Oil production in the Gulf of Mexico could peak at more than 1.8 million barrels per day by 2013 under the industry’s best-case scenario, but natural gas production will likely continue its decadelong decline, according to a government study released Monday at the Offshore Technology Conference. About 1.1 million barrels of oil per day were produced in the Gulf in 2008, according to the Minerals Management Service, with about 829,000 coming from deep-water fields — those drilled in more than 1,000 feet of water. Natural gas production was about 6.43 billion cubic feet per day, with about 2.6 bcf coming from the deep water. Oil production from projects the industry has currently or is committed to starting up could peak at 1.6 million barrels by 2011, according to the agency’s forecast, but if announced discoveries and undiscovered resource estimates are included, the peak could reach 1.8 million barrels by 2013. 'The deep-water frontier has entered a new phase,' said Mike Prendergast, chief of staff for the agency’s Gulf of Mexico region, with technology developments leading the charge to larger and deeper projects. The Gulf of Mexico accounts for about 25 percent of domestic oil production and 15 percent of natural gas output, according to the agency. Royal Dutch Shell’s Perdido platform, in 8,000 feet of water 200 miles south of Freeport, represents the trend’s cutting edge and will be the new oil and gas deep-water champion when it comes on next year with a 130,000-barrel-per day capacity. The Anadarko Petroleum-operated Independence Hub is also in 8,000 feet of water about 185 miles from New Orleans. It just pumps natural gas. The number of production projects operating in depths greater than 1,000 feet grew 8 percent last year to 141, according to the report, while 57 percent of Gulf oil and gas leases in 2008 were in the deep water, up from 54 percent a year ago. Gulf natural gas production peaked in 1997 at 14.1 bcf but has dropped since then due to both the decline in production in mature shallow-water fields and the fact that the deepest formations tend to have much more oil than natural gas. Of the deep-water finds under development, it’s predicted that 84 percent of the output will be oil and only 16 percent natural gas."
A new phase in the Gulf
Houston Chronicle, 4 May 2009

"An average of analysts' predictions reckons on a reduction in demand of 1.5m barrels a day for 2009 over last year, while the International Energy Agency is predicting a fall of 2.5m barrels, but an estimate based purely on current economic growth figures would put the overall decline at 3m."
Rising reserves of unused oil put strain on storage
Daily Telegraph, 4 May 2009
"A new generation of engineers hover over their computers, making the refinements needed to produce an estimated 11,500 of the machines by 2012 to form what engineers call a 'cascade,' or a plant that produces enriched uranium. Rebuilt with super high-strength carbon fiber components and fashioned by computers and robotics not even imagined in 1985, the machine is the U.S.-built centerpiece for a high stakes, five-way race to see who will dominate the globe's nuclear fuel business....The competition USEC faces, both here and abroad, is formidable. Three competitors with foreign connections are setting up operations here to compete directly with USEC for the U.S. nuclear fuel. In addition, Russia -- which currently supplies about half of the U.S. nuclear fuel market with uranium fuel whose enrichment is blended down from dismantled nuclear weapons -- has its own global nuclear market ambitions....If it works, the laser enrichment process could open up vast new supplies of enriched uranium because, unlike centrifuge technologies, lasers might be able to extract more U-235 out of old uranium mining and processing wastes, which are called uranium 'tails.' The United States has a great abundance of them. While other parts of the picture of a nuclear 'renaissance' may still seem somewhat murky, industry officials are elated about future fuel supplies. 'With four planned new enrichment facilities in the works, we are approaching a robustness of fuel supplies that we have not seen in decades,' said Alex Flint, senior vice president for government affairs at the Nuclear Energy Institute. Thomas Neff, a senior researcher at the Massachusetts Institute of Technology who has followed the nuclear fuel industry for 30 years, is not that sanguine. He worries that not all these timetables will work out, and that there could be a fuel shortage as early as 2013, when the Russian government has said it will pull out of the U.S. market. Russia wants to use its uranium fuel to feed a growing internal need for nuclear fuel and to compete in other rapidly growing nuclear markets, such as India and China. The end of the fabled 'Megatons to Megawatts' deal, which Neff helped inspire, will leave a big hole in the U.S. market. Neff is particularly skeptical of USEC's ability to compete in the future enrichment market, where he thinks it could be underpriced by more advanced competitors. That could leave the United States, the pioneer of both centrifuge enrichment and the nuclear power plant, without a totally domestic source of enriched fuel. Referring to the 40-foot-high centrifuges, dredged out of past U.S. experiments and much larger than either the Russian or the European versions, Neff worries they may prove to be too expensive to compete. 'The other problem with these 40-foot monsters is that nobody knows how long they will last,' he adds. Still, Neff and others involved with the nuclear fuel cycle have difficulty seeing a coherent U.S. energy policy without a future nuclear component."
A 'robust' new fuel supply for nuclear power plants is emerging
New York Times, 4 May 2009
"Russia is planning a fleet of floating and submersible nuclear power stations to exploit Arctic oil and gas reserves, causing widespread alarm among environmentalists. A prototype floating nuclear power station being constructed at the SevMash shipyard in Severodvinsk is due to be completed next year. Agreement to build a further four was reached between the Russian state nuclear corporation, Rosatom, and the northern Siberian republic of Yakutiya in February. The 70-megawatt plants, each of which would consist of two reactors on board giant steel platforms, would provide power to Gazprom, the oil firm which is also Russia's biggest company. It would allow Gazprom to power drills needed to exploit some of the remotest oil and gas fields in the world in the Barents and Kara seas. The self-propelled vessels would store their own waste and fuel and would need to be serviced only once every 12 to 14 years."
Russia to build floating Arctic nuclear stations
Observer, 3 May 2009

"China, with ambitious plans to boost the amount of electricity produced from nuclear power, is in talks with Cameco Corp. [CCO-T] about a potential uranium supply agreement. The Asian giant has become a significant buyer of the radioactive metal on the spot market as it increases its nuclear power capacity, and has entered talks with Saskatoon-based Cameco, the world's largest uranium producer. China is actively taking advantage of weak prices to secure supply of the metal used to make nuclear fuel....Cameco spokesman Lyle Krahn said the company is currently in discussions with China regarding a potential uranium supply agreement. The Asian superpower expects to have 75 gigawatts (a gigawatt is one billion watts) of nuclear power generating capacity by 2030. That represents just three-quarters of current capacity in the U.S. – the largest nuclear power producer – and only 10 per cent of China's total electricity demand. 'The uranium market potential in China is absolutely huge,' Mr. Krahn said. Scotia Capital Inc. China strategist Na Liu said the market is underestimating the speed at which China is adding nuclear capacity. He is forecasting that China will have total nuclear capacity of 35 gigawatts by 2015 and 75 gigawatts by 2020, up from the 9.068 gigawatts operating today. China is currently building 20 new nuclear reactors, with approximately one gigawatt of capacity each. Scotia Capital predicts that by 2020, China will consume 15,700 tonnes of uranium a year. 'At this rate, China's currently known uranium resources can only last for five to 10 years. Clearly, in our opinion, it is imperative for China to secure long-term supply through imports or investment,' Mr. Liu said in a recent note to clients. China has also recently held discussions with Australian producers regarding potential supply agreements."
China seeking supply deal with Cameco
Globe and Mail, 1 May 2009

"Kazakhstan will supply over 2,000 tonnes of uranium to India for its existing nuclear plants. Both sides are negotiating the price. India could also take up equity stake in Kazakh uranium mines and join the nuclear research centre being set up with active Japanese collaboration. These issues were discussed during a recent telephonic conversation between Prime Minister Manmohan Singh and Kazakhstan President Nursultan Nazarbayev, said reliable sources. The leaders were due to interact when Mr. Nazarbayev was here as the chief guest at Republic Day, the first Central Asian President conferred the privilege. But the meeting did not happen as Dr. Singh was indisposed. The uranium supply will be for five years and comes with no strings attached."
Kazakh to supply 2,000 tonnes of uranium
The Hindu, 1 May 2005
"The worldwide rig count dropped dramatically in March, to 2,313, its lowest level since June 2004. According to Baker Hughes, the total was down by nearly 16% compared with February and by 29% against March 2008, with North America showing the biggest declines (see Figure 1). But despite Opec secretary-general Abdullah El-Badri's announcement in February that 35 drilling projects across the organisation's member states would be scrapped this year, the Middle East's rig count remains relatively healthy. The region saw a fall of just 2.6%, to 262, in March 2009 compared with the same period a year earlier."
Mideast still drilling despite world rig-count slump
Petroleum Economist, May 2009
"Lockheed Martin is best known for building stealth fighters, satellites and other military equipment. But since late 2006 the company has taken on a different kind of enterprise — generating renewable power from the ocean. The technology is still being developed in the laboratory, but if it succeeds on a large scale, it could eventually become an important tool in the nation’s battle against global warming and dependency on foreign oil. Lockheed and a few other companies are pursuing ocean thermal energy conversion, which uses the difference in temperature between the ocean’s warm surface and its chilly depths to generate electricity. Experts say that the balmy waters off Hawaii and Puerto Rico, as well as near United States military bases on islands like Diego Garcia in the Indian Ocean or Guam in the Pacific, would be good sites for developing this type of energy. Hawaii and many other islands rely on imported oil to generate most of their electricity, which is expensive, and last year’s spikes in oil prices have reinvigorated their search for homegrown alternatives.  In the approach that Lockheed is pursuing (with another company, Makai Ocean Engineering), the water on the ocean’s surface is used to heat a pressurized liquid, usually ammonia, which boils at a temperature slightly below that of warm seawater. That liquid becomes gas, which powers a turbine generator. Cold water is then pumped from the ocean’s depths through a giant pipe to condense the gas back into a liquid, and the cycle is repeated. An important advantage of this method of producing energy is that it could run all the time, unlike solar plants, which cannot work at night, or wind turbines, which stop in calm conditions. In the approach that Lockheed is pursuing (with another company, Makai Ocean Engineering), the water on the ocean’s surface is used to heat a pressurized liquid, usually ammonia, which boils at a temperature slightly below that of warm seawater. That liquid becomes gas, which powers a turbine generator. Cold water is then pumped from the ocean’s depths through a giant pipe to condense the gas back into a liquid, and the cycle is repeated. An important advantage of this method of producing energy is that it could run all the time, unlike solar plants, which cannot work at night, or wind turbines, which stop in calm conditions."
Generating Energy From the Deep
New York Times, 29 April 2009
"It is a dazzling vision of a clean energy future. An entire continent powered by solar panels, wind and wave turbines, geothermal and hydroelectric power stations — and all stitched together by a European 'supergrid' stretching from the sunbaked deserts of the south to the windswept North Sea, from the volcanoes of Iceland to the lakes of Finland. It may sound like the stuff of science fiction but this is a vision that the European Union wants to make a reality. The concept is gaining ground among policymakers, including leaders such as President Sarkozy and Gordon Brown, who are concerned about Europe's carbon emissions and its steadily growing dependence on Russian gas. Adam Bruce, chairman of the British Wind Energy Association (BWEA), is convinced that a European supergrid that could eventually banish polluting fossil fuels altogether, is only a matter of time. 'We are only limited by our own ambition,' he says. 'The capacity is there. There is the potential for wind alone to supply 50 per cent or more of our energy needs.'....Such dreams of renewable energy certainly catch the imagination but for Britain, which generates just 1 per cent of its electricity from renewables — the least in the European Union after Malta and Luxembourg — the gap between ambition and reality seems particularly stark. The truth is that, despite the Government's talk of a green energy revolution, Britain's renewable energy industry is in crisis. About 40 per cent of the UK's power stations were built before 1975 and urgently need to be replaced. But the combined impact of the credit crunch, falling oil and coal prices and the weaker pound now threaten to hold up wind projects just as the UK has raised its commitment to green electricity....In last week's Budget, the Government announced incentives designed to bolster investment in huge offshore windfarms and ensure that Britain hits its target of raising the share of electricity produced from renewable sources to 35 to 40 per cent by 2020. So will they work? Not according to Jim Skea, director of the UK Energy Research Centre. He has just undertaken a big research project into how the UK can slash its carbon emissions by 80 per cent by 2050. 'In none of the scenarios we looked at were renewables picked up nearly fast enough to meet the 2020 targets,' said Professor Skea. 'It will be a big struggle. We are not spending nearly enough.' Wind power, easily the most economically attractive form of renewable energy in the UK, remains hugely expensive when compared with gas and coal. A recently approved gas-fired station in Pembroke will cost £1 billion and will be the largest in the UK, producing 2,000MW. It would cost six times as much to build a windfarm of similar capacity."
Europe's green energy vision puts UK in dark
London Times, 30 April 2009
"Government plans to generate more than a third of Britain's electricity from green energy sources, such as wind and solar power, by 2020 are doomed to failure without a dramatic increase in state support, according to a leading energy research group. Despite fresh incentives to increase investment in offshore wind parks announced in last week's Budget, the UK Energy Research Centre (ERC) said on Wednesday that it was virtually impossible for the UK to meet the target imposed by Europe of generating 15 per cent of total energy from renewable sources by 2020 — which equates to about 35 per cent of total electricity. Jim Skea, research director, said: 'Renewables can make a significant contribution, but if you look at the scale of what is required, I think that is very, very challenging and 2020 is almost tomorrow when you look at what needs to be achieved.' Professor Skea said that Britain urgently needed to set a higher carbon price to hasten the adoption of low carbon technologies and to boost investment in energy research — which has collapsed from £700 million a year in the 1970s and 1980s to just £100 million annually."
UK Government green goals face failure
London Times, 30 April 2009
"William Hague yesterday became the first member of the Tory leadership to predict a Conservative victory next year and said that his party was psychologically prepared for government.... In a sign of the leadership’s increasing confidence about the election, Mr Hague disclosed details of handover talks with the Civil Service — and contrasted them with the 'fantasy politics' that marked the talks he had held as Conservative leader in 2001. Mr Cameron’s team has instructed the Permanent Secretary of the Foreign and Commonwealth Office to prepare for a 'national security council'. Headed by Mr Cameron, it would include the defence, foreign, home and energy secretaries.... There was consensus with the Government on much foreign policy, but a Cameron administration would give higher priority to relations with the Gulf states and India."
We'll win the next election, says William Hague
London Times, 29 April 2009
"The world can burn only a quarter of proven reserves of oil, gas and coal to be confident of staying within safer climate limits, unless untested carbon fixes work, experts said on Wednesday. In two studies published this week in the journal Nature, scientists honed the basis for urgent climate action as the world tries to map by the end of this year agreement on a new treaty to replace the Kyoto Protocol. People could burn no more oil, gas and coal in their homes, cars and factories after 2024, at current rates, to limit to one in five the chance of exceeding 3.6 degrees (Fahrenheit) warming worldwide, one article found. 'It really casts doubt on whether any investment into more fossil fuel exploration is really a good investment,' said the Potsdam Institute's Malte Meinshausen, who led the study."
Study: World can 'safely' burn only 25% of oil
Reuters, 29 April 2009
"With oil prices stuck at less less than $50 a barrel, Tony Hayward, BP’s chief executive, is confronting perhaps the most difficult choice of his career. Should he cut the dividend and face the wrath of investors – and run the risk of losing his job – or curb the group’s spending plans at the expense of future production and growth? Yesterday, he appeared to offer his answer to this familiar industry dilemma. BP, he claimed, could hold its dividend and spending plans with oil at $55-$60 a barrel. But in the meantime it will set out to rein in its $20 billion capital expenditure programme this year. 'We believe we can do $20 billion of work for less than $20 billion,' he said. It sounds like a tempting idea and BP is right to try to force down costs during the downturn, when suppliers are squeezed and the cost of raw materials such as steel and cement are tumbling. But there are risks in taking this approach too far. BP had already announced plans to whittle down its spending plans from $22 billion in 2007 to as low as $20 billion this year. Now it says it wants to spend less than this, although it would not be drawn yesterday on how much less. The danger for BP is that forcing suppliers to reduce costs too much could threaten their ability to carry out the work properly or even to stay in business. Cheap deals struck with desperate subcontractors are often bad news for everyone, with corners cut and projects delayed – or worse. At BP, the results of this approach may take a while to feed through. But if Mr Hayward is not careful, their impact will come in the end in the form of lower oil production and engineering problems on key pieces of kit."
Danger of having BP contractors over a barrel
London Times, 29 April 2009
"Kazakhstan's national nuclear corporation, Kazatomprom, has signed a deal to supply 24,200 tonnes of uranium to China Guangdong Nuclear Power Co (CGNPC) by 2020, Zhou Zhenzing, the general director of CGNPC Uranium Resources Co, told reporters in Almaty. Kazatomprom and CGNPC signed a memorandum on Wednesday to form a joint venture to build nuclear power plants in China. This does not include uranium that a joint venture, Semizbai-U, will ship to China. Kazatomprom owns 51% and CGNPC has 49% of the joint venture. Semizbai-U will develop the Irkol uranium field in the Kyzyl- Orda region in southern Kazakhstan and the Semizbai field in the Akmola region. The fields should produce 750 tonnes and 500 tonnes of uranium per year, respectively. CGNPC intends to develop another uranium mine in Kazakhstan with reserves of 40,000 tonnes."
Kazatomprom to Supply 24,200 Tonnes Uranium to Cgnpc By 2020
InterFax, 29 April 2009
"China's oil demand fell by nearly six per cent year-on-year in the first quarter of 2009, Energy Intelligence (EI), the US-based energy advisory firm has said...In a new update, EI said that Chinese net crude imports and domestic production averaged 7.39 million barrels per day. That is 5.6 per cent lower than the corresponding figure in 2009....EI in its report said that the key factor was crude imports, which slid 9 per cent year-on-year to 3.33 million bpd. Domestic output slid 0.6 per cnt to 3.75 million bpd, it added....several other figures are not encouraging. 'China's power output, a key barometer of industrial activity, fell 1.3 per cent year-on-year in March and is likely to drop four per cent this month,' EI said."
China's oil demand fell by nearly 6% in Q1 of 2009
Emirates Business 24/7, 28 April 2009
"Crude oil output growth from deepwater areas may stagnate because current oil prices make it unprofitable to tap new deposits and large discoveries dwindle, a consultant said. 'The pace of growth will slow and then become flat for the next few years,' Michael Rodgers, a partner at PFC Energy, said in an interview at the Offshore Vessels conference in Singapore yesterday. 'There were not a whole lot of large commercial discoveries in the last couple of years.' Production from deepwater blocks grew 67 percent a year between 2005 and 2008 following discoveries off Angola and Nigeria. That beat a growth of 1.3 percent in total crude oil output during the same period. Global deepwater oil production may peak at 7.5 million barrels a day in 2013, Rodgers said....'Falling investment in commercial deepwater development will require fewer deepwater platforms in the next five years compared to the last five years,' Rodgers said. Production of oil from the deep seas accounted for 8 percent of global crude produced last year....Output in deepwater areas, or those at water depths of more than 1,000 feet (305 meters), soared in the past five years as companies discovered large deposits in Angola, Nigeria and the Gulf of Mexico, Rodgers said. The majority of deepwater areas have reached 'maturity' and current projects are facing delays, he said. Oil and gas explorers are postponing or scrapping deepwater projects, potentially reducing crude supplies by as much as 2.4 million barrels a day in 2011, Morgan Stanley said in a report in March. Oil prices in New York have declined more than 66 percent from a record $147.27 a barrel in July last year. Out of a sample of 46 deepwater projects in places including Brazil, Africa, Norway, Asia and the Gulf of Mexico, about 27 may have an internal rate of return of less than 15 percent, the minimum required for international oil companies to invest in deepwater developments, according to Rodgers. Oil must reach $50 a barrel for some developments to achieve more than 15 percent in returns, he said. No new contracts have been awarded since August 2008 when Morgan Stanley estimated that companies needed 139 new production platforms to develop fields in deep seas. Since then, 11 orders have been canceled and 46 delayed by an average 15 months, according to last month’s Morgan Stanley report. Worldwide spending on oil and gas exploration may drop 12 percent in 2009 to $400 billion, according to a report in December by Barclays Capital Research."
Deepwater Oil Production Growth May Stagnate on Low Prices
Bloomberg, 28 April 2009
"On the basis of depletion alone, world oil production will begin to decline around 2010, and coal production around 2025 or 2030. Since coal will peak later, that means that a greater proportion of our energy will be coming from coal than from oil. Therefore emissions may not decline so much or so fast as total energy—unless we implement emissions reduction agreements."
Italian magazine interviews Richard Heinberg
Energy Bulletin, 27 April 2009
"Petroleo Brasileiro SA, Brazil’s state-controlled oil company, may be hurt by a rig shortage as it begins development of the Tupi field, the largest discovery in the Americas since 1976, according to Jefferies & Co. Inc. The company expects to almost double the numbers of rigs operating in deepwater offshore Brazil to 68 by 2012, from 38 today, according to Jefferies analyst Jud Bailey. It’s 'questionable' whether six of these rigs can even be built because the contractors are 'small marginal' players, Bailey said April 24 in an interview from Houston. Others rigs may be delivered as much as a year late, he said. Tupi, which starts pumping oil on May 1, and other Santos Basin fields may contain about 100 billion barrels of oil, according to Marcio Mello, head of Brazil’s petroleum geologists association. That’s enough to supply all needs in the U.S., the world’s largest consumer, for more than 13 years, according to BP Plc. Petrobras is scouring the world in search of billions of dollars to finance the fields’ development. Demand for vessels that can drill in ocean depths up to 10,000 feet is growing faster than the supply of rigs, forcing oil companies to pay escalating rates even after crude lost two-thirds of its value in the past nine months. Producers are betting subsea discoveries will tap pools of crude so large that they will be profitable regardless of oil prices....A drop in oil prices has made it difficult for small rig builders to complete orders as margins narrow, Bailey said. Brazil’s government has also required Petrobras to hire local builders, who are not necessarily capable of building the rigs or don’t have the money to do it, he said. Petrobras would have to step in and 'backstop' some of these companies financially to allow them to produce the equipment in time, he said. 'The down side for Petrobras is that the world capital crunch will make it hard for many companies to finance new ships and drill rigs,' Peter Ping Ho, an oil and gas analyst with Planner Corretora De Valores in Sao Paulo, said April 24. Rio de Janeiro-based Petrobras, whose Tupi field is the largest discovery since Mexico’s Cantarell, is tapping overseas partners to help fund a $174.4 billion five-year investment plan. Chief Financial Officer Almir Barbassa was last week touring Asia to persuade equipment manufacturers and shipbuilders to expand their operations in Brazil....Tupi may hold as many as 8 billion barrels of oil. The field and nearby deposits in Brazil’s so-called pre-salt may almost double Petrobras’s oil reserves, the company said in January. The company is targeting a 53 percent increase in production to 3.66 million barrels a day through 2013. Petrobras will start pumping as much as 30,000 barrels of oil a day to test Tupi. A pilot 100,000 barrel a day project is scheduled for 2010. The oil is 320 kilometers (200 miles) off Brazil’s coast beneath almost 2,000 meters of water and another 5,000 meters of rock and salt."
Brazil’s Tupi Oil Field May Be Hurt by Rig Shortage: Week Ahead
Bloomberg, 27 April 2009
"After several years of speculation, the Alberta government last month released a long-awaited 'expert’s report' on nuclear power and oil sands and has now embarked on a series of province-wide public consultations. The move comes on the heels of a decision last month by Bruce Power, a private company that operates a publicly-owned nuclear station in western Ontario, to seek approval to build a $10 billion nuclear station at a site known as Whitemud, about 310 miles northwest of Edmonton. Bruce Power hopes to begin an environmental assessment next year. Its proposal calls for two to four 1,000-megawatt reactors, with three vendors – Atomic Energy of Canada Ltd., Westinghouse and Areva – competing to supply the equipment. According to the expert panel report, almost 90 percent of Alberta’s electricity comes from coal or natural gas, and demand is projected to jump 74 percent within the next 15 years, largely due to the needs of the oil sands projects — which consumes roughly 1 billion cubic feet of natural gas daily. At the same time, the National Energy Board has projected a drop in long-term natural gas production in Western Canada, and continued consumption by oil-sands production could turn the province into a net importer within the next few decades....But anti-nuclear activists and critics of Alberta’s oil sands industry are questioning the idea of using nuclear energy as an alternative. Andrew Nikiforuk, a Canadian journalist and the author of the 2008 book, 'Tar Sands: Dirty Oil and the Future of a Continent,” said Royal Dutch Shell has been testing a bitumen extraction process in Colorado that relies less on natural gas and instead uses long electrodes that can be driven down into the shale to gradually separate the trapped oil....Beyond the customary objections to nuclear power, Mr. Nikiforuk observes that the project may serve to further impair Canada’s international reputation on energy policy. 'The first country to use nuclear power to produce fossil fuels will not be highly regarded on the planet.'”
Using Nuclear Power to Extract Oil?
New York Times (Blog), 27 April 2009
"Kazakhstan's newest in-situ leach (ISL) uranium mine, Kharasan 1, has been officially opened at a ceremony attended by Kazakh, Japanese and Canadian dignitaries. The 24 April ceremony was led by Kazakh prime minister Karim Massimov and attended by official delegations headed by Japanese and Canadian diplomats, representatives from the companies involved in the Kharasan 1 project, and Kazakh dignitaries. The mine is expected to produce 180 tonnes of uranium in 2009, reaching its full capacity of 3000 tonnes of uranium per year in 2014. It is expected to operate until 2053."
Kazakh uranium mine starts
World Nuclear News, 27 April 2009
"The recovery of Iraq’s oil industry is still a mirage. The government aims to nearly double production – to 4.5m barrels a day – over the next five years. It can’t do that without foreign help. But for the moment, foreigners aren’t especially welcome. True, Royal Dutch Shell has signed a preliminary agreement with the oil ministry to capture flared gas in the Basra region. But the oil and gas committee of the Iraqi parliament says the $4bn deal is invalid. It says parliament, not the ministry, has the final word. Then there’s China’s National Petroleum Company, which has a 20-year service contract to develop the al-Ahdab oilfield. MPs are threatening to revoke that, too. Security is still a concern for oil majors. But the energy companies are hoping the violence will continue to subside. Some 32 of them have thrown their hats into the ring in a tender process to develop more fields. But as the Shell dispute shows, without a solid national hydrocarbon law the politics are risky. Political bickering has kept any law from passing parliament for over two years. The division of spoils, both within Iraq and between Iraq and the foreigners, is hotly contested. The political impasse explains why so few contracts have been tendered."
Iraqi oil recovery still a mirage
Business Standard, 27 April 2009
"'All targets and no trousers' seemed to be the gist of the reaction from environmentalists to last week's Budget. Greens welcomed the introduction of new, legally binding, carbon-reduction goals but attacked the lack of a clear road map showing how they could be achieved. Some applauded policies such as the extra subsidy for offshore wind and investment in building efficiency, but attacked overall funding of £1.4bn as miserly in comparison to the enormity of the climate crisis and recent financial bailouts. But for those who are more worried about oil depletion, the Budget was utterly hollow. The car scrappage scheme came without efficiency conditions attached, the return to inflation-plus fuel duty increases was welcome but timid compared to the escalator that was killed off by the petrol protests of 2000, and tax breaks for North Sea operators will do little to stem the decline in output. Production has halved since its peak in 1999, and is now dropping at 7 per cent a year, dragging Britain ever deeper into import dependency. Still less will the Budget improve the global oil outlook. The International Energy Agency forecasts a 'supply crunch' early in the next decade, Shell predicts a production plateau from 2015, and the head of the Libyan National Oil Company sees peak oil looming. In contrast, the big energy announcement of the week looked far bolder. The Energy Secretary, Ed Miliband, said new coal-fired power stations would only be approved if they included a demonstration plant for carbon capture and storage (CCS) from day one, and a commitment by the energy company to retrofit the entire power station once the Environment Agency judged CCS to be technically and commercially proven. This came beside plans to fund four of the new pilot plants through a 2 per cent levy on customers' bills. The move was welcomed by environmental groups and is an advance on the Government's previous dither in this area. But it is also a spectacular gamble and has three obvious risks. One, pilot plants will capture only a quarter of new power station emissions. Two, the technology may not be viable, at least not in time, posing a dilemma in the mid-2020s: whether to close the power stations or sacrifice the climate. Three, coal may be less abundant than the Government assumes. In 2000, the global coal supply was expected to last 277 years, but by 2006 that had plunged to 140 years as consumption rose and estimates of reserves were revised downwards. One forecasting group predicts peak coal as early as 2025, Mr Miliband's deadline for retrofitting CCS. The Government seems too timid to confront peak oil publicly, but reckless enough to gamble on potentially unabated coal emissions and the coal supply. Why not bet on true sustainability: get serious about energy efficiency, renewables, electrification of transport and a European supergrid, and commit the sort of money they have recently been throwing at the banking industry? The stakes are even higher."
A Government still addicted to petrol
Independent, 26 April 2009
"Oil could approach the record prices of last July as the global recession halts investment in exploration and energy projects, the Organization of Petroleum Exporting Countries (Opec) warned last night. At a meeting in Toyko, OPEC, the cartel of oil-producing countries, and 13 Asian finance ministers, called for greater monitoring of global oil prices, claiming volatility is not in the interest of either producers or consumers. The leaders expressed concerns in a joint statement that the world is heading for an oil price spike when it recovers from the economic crisis. ‘Price extremes have been unjustifiable and unsustainable,’ said the Saudi Arabian oil minister, Ali al-Naimi. ‘I have often cautioned that if prices remain too low for too long, they can carry the seeds of future spikes and volatility.’ …’The drying up of liquidity to fund projects underpinning economic growth in emerging and developing economies has been a significant consequence of the recession,’ said Mr al-Naimi.”
Oil will hit peak after recession, says OPEC
Telegraph, 26 April 2009
"Mexico's state-run oil giant Petroleos Mexicanos (Pemex) on Tuesday reported that its first quarter oil output was averaged at 2.667 million barrels per day (bpd), down 7.8 percent from the same period of 2008. Cantarell, Mexico's largest oil producing field for decades, produced 787,000 bpd of oil, down more than 34 percent year-on-year. The deposit has averaged between 40 percent and 60 percent of the nation's total oil output at least over the past 20 years. The oil output at Ku-Maloob-Zaap, now the nation's biggest oil producing field, averaged 797,000 bpd, up nearly 20 percent from a year earlier. The two fields, which are offshore in the Gulf of Mexico and are close to the southeastern Mexico state Campeche, accounted for around 60 percent of the nation's production during the first quarter of 2009. The firm had initially estimated that its output would be 2.8 million bpd this year. But last week a senior Pemex official told the press that it may be as low as 2.6 million bpd.... Mexico is the third-largest oil supplier to the United States. Oil is Mexico's top foreign currency earner, financing about 40 percent of its annual budget."
Mexico Oil Output Down 7.8% in First Quarter
Xinhua News Agency, 22 April 2009
"Japan opened a major uranium mine in Kazakhstan on Friday, gaining access to alternative energy supplies from resource-rich Central Asia. Khorasan-1, tucked away in the arid steppes of southern Kazakhstan, is being developed by a group of Japanese firms including Toshiba Corp (6502.T), as well as Kazakh state uranium company Kazatomprom and a unit of Canada's Uranium One (UUU.TO).On Friday, a delegation of Japanese executives, the head of Kazatomprom and other officials flew to the remote location for an official ceremony which marks Kazakhstan's growing resolve to become the world's top uranium exporter as soon as this year. Kazakh Prime Minister Karim Masimov pressed a symbolic button at the site, officially launching production....Kazakhstan produced 8,521 tonnes of uranium last year, up from 6,637 in 2007. Analysts say Kazatomprom is now on track to edge out Canada's Cameco this year as the world's No.1 producer....Dzhakishev said he saw 2009 production at 12,200-12,300 tonnes, significantly higher than last year's but below Kazakhstan's projected full capacity output of 20,000 tonnes. 'We will have to hold back production a bit because we will produce only as much as the market wants,' he said."
Japan opens major uranium deposit in Central Asia
Reuters, 24 April 2009
"A new generation of coal-fired power stations is to be built to plug Britain's energy gap, but ministers have insisted that they must be capable of stripping out and burying all carbon emissions by 2025. The move aims to place Britain at the forefront of an international drive to master carbon capture and storage (CCS), an unproven technology that advocates say is critical to global efforts to tackle climate change. But sceptics warned that Britain was taking a huge and potentially costly gamble with an immature technology that could force tens of thousands of British families into fuel poverty by driving up their bills. The technology is expected to add at least £700 million to the cost of building each new coal power station. The costs will be borne by consumers through a levy on energy bills of 2 per cent by 2020, an average of almost £30 per household per year.... The new stations would also bolster the security of Britain's future energy supplies and could reinvigorate the North Sea as a hub for stored carbon emitted from plants across Britain and Europe, he said. CCS, in which the carbon emitted from burning fossil fuels is stripped out using chemical scrubbers and piped for storage in old gasfields beneath the seabed, remains an untested technology on a commercial scale. The largest pilot project in the world is attached to a 30MW power plant but under the terms of the scheme announced yesterday, companies will be granted permission to build new coal plants if they apply CCS to 400MW of power generation, or a quarter to half of a typical plant. In a reversal of policy, Mr Miliband said that power companies must be able to capture and bury all the CO2 emissions from the new coal plants by 2025 at the latest, if the Environment Agency rules that CCS works. Last night there were still a range of unanswered questions about how the scheme would work. A Department for Energy and Climate Change spokesman said that it was unclear whether power companies would be allowed to generate electricity from the untreated section of a new coal-fired power plant before its CCS demonstration project is shown to work."
New life for old king coal, but this time without CO2
London Times, 24 April 2009
"Alistair Darling committed the UK to cutting greenhouse gases by 34 per cent by 2020 in the first legally binding 'carbon budget' in the world. The ambitious target will transform the way the UK generates and uses energy and the Chancellor announced £1.4 billion of new funding to aid the transition. This will include £525 million to increase the number of homes powered by offshore wind farms by 2.8 million and £375 million to improve energy efficiency in businesses and homes through insulation and more efficient heating systems. He also found £45 for small scale renewables like wind turbines on houses and £25 million for community heating schemes - where villages or small residential communities share energy generated from waste or wood. Some £405 million will go towards encouraging so-called 'green collar' jobs in the environment industry through boosting manufacturing in low carbon goods like solar panels. More controversially, he announced £90 million for research into carbon capture and storage (CCS) on fossil fuel power plants, such as coal, oil or gas. The money will go towards up to four plants demonstrating the new technology that captures carbon dioxide from coal-fired power stations and stores it underground. However experts said the spending would not be enough to meet the ambitious emissions targets and criticised the Chancellor for failing to introduce more green measures to stimulate the wider economy. Environmental groups had high hopes for this year's budget following President Barack Obama's 'new green deal' in America and the Government's earlier commitment to cut greenhouse gases by 80 per cent by 2050. Lord Stern, the former World Bank economist who first advised the UK on the dangers of climate change, said the UK will have to up the target to 42 per cent following any international agreement to on climate change in Copenhagen at the end of this year. He also said the UK will have to increase funding for renewables if the targets are to be met in the long term. 'The transition to a low-carbon economy cannot be achieved overnight and it is important to acknowledge that it will continue to make demands on the public finances over the next 10 years, and that there will be areas in which consumers must pay more, for instance through an increase in fuel duty,' he said. Mr Darling said the 34 per cent target will be met by cutting emissions in the UK rather than buying offsets from abroad but he failed to commit to the 42 per cent target at Copenhagen. Andy Atkins, Executive Director of Friends of the Earth, said it was a 'massive missed opportunity'."
Greenhouse gas emissions will be cut by a third in world's first carbon Budget
Daily Telegraph, 23 April 2009