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PEAK OIL AND ENERGY CRISIS NEWS ARCHIVES 2010 | ||
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Peak Oil and Energy Crisis News Current Earlier Peak Oil And Energy Crisis News |
Selected News Extracts 2010 "The world's oil reserves have
been exaggerated by up to a third, according to Sir David King, the Government's former
chief scientist, who has warned of shortages and price spikes within years. The scientist
and researchers from Oxford University argue that official figures are inflated because
member countries of the oil cartel, OPEC, over-reported reserves in the 1980s when
competing for global market share. Their new research argues that estimates of
conventional reserves should be downgraded from 1,150bn to 1,350bn barrels to between 850bn and 900bn barrels and claims that
demand may outstrip supply as early as 2014. The researchers claim it is an
open secret that OPEC is likely to have inflated its reserves, but that the International
Energy Agency (IEA), BP, the Energy Information Administration and World Oil do not take
this into account in their statistics. 'It is necessary to investigate ambiguities and
sources of error that are broadly acknowledged but not taken into account in public data
due to political sensitivities,' the researchers said. The paper also raises concerns that
public statistics have started to incorporate non-conventional reserves such as the
Canadian tar sands, where oil and gas are much more difficult to extract and may never
be economically attractive to develop. Sir David said that although the IEA was doing a
good job of warning that more investment in oil and gas exploration is needed, governments
need to pay more attention to independent research. 'The IEA functions through fees that
are paid into it by member companies and has to keep its clients happy,' he said. 'We're
not operating under that basis. This is objective analysis. We're not sitting on any oil
fields. It's critically important that reserves have been overstated, and if you take this
into account, we're talking supply not meeting demand in 2014-2015.' The concept of 'peak
oil' has gained traction in recent years, although energy companies such as BP and Shell
insist that production will be able to keep pace with growing Asian energy needs. Sir David said he was 'very concerned' that Western governments
were not taking the concept of 'peak oil' where demand outstrips production
seriously enough, while China is throwing all its efforts into grabbing as many energy
resources as possible....Dr Oliver Inderwildi, who
co-wrote the paper with Sir David and Nick Owen for Oxford University's Smith School,
believes radical measures such as switching freight transport to airships could become
common in future. 'The belief that alternative fuels such as biofuels could mitigate oil
supply shortages and eventually replace fossil fuels is a pie in the sky. Instead of
relying on those silver bullet solutions, we have to make better use of the remaining
resources by improving efficiency.'" "Bankers
and the financial sector may have displaced energy from the front pages of the newspapers
right now, but Energy Security
remains at the top of the global political and economic
agenda....The need to balance energy security, jobs
and economic development while addressing the problem of climate change all contributed to
the challenge politicians faced in Copenhagen. And
that challenge means that energy security will dominate politics and policy for the next
12 months and considerably beyond.... Reliable and
affordable supplies of hydrocarbon energy were taken for granted through much of the 20th
century and laid the foundation for the worlds extraordinary economic progress. When
concerns arose, it tended to be at times of war or turbulence, notably in the Middle East,
or, closer to home, with industrial action. Whats
different now is that energy security has become a defining issue for the 21st
century, as one element in a complex energy challenge with
strategic, economic and environmental dimensions....
Opening access to a range of potential operators encourages the most efficient solutions,
and often involves partnerships that provide new combinations of skills. Iraq is a very
good example. BP is teaming up there with CNPC of China and Iraqs South Oil Company
to drive a major investment programme that will nearly triple production from the
super-giant Rumaila field. With this and the other agreements concluded with national and
international oil companies in the last six months, Iraq has the potential to contribute 10mmb/d to global supplies in the next
10-15 years. Thats a big piece of the additional
resource we need....The current debate about
Copenhagen and sustainability add new urgency and importance to the broader discussion of energy security. The
challenge of creating a low-carbon economy is far from easy, requiring
the wholesale re-engineering of the global economy over time." "Global
production of crude probably peaked in 2006, and
increasing demand will have to be met from more-difficult-to-extract forms of oil such as
tar sands, International
Energy Agency Chief Economist Fatih Birol said. 'The age of cheap oil is over,' Birol said at a conference in Madrid today.... The depletion of crude reserves
may benefit countries such as Canada and Venezuela, which have tar sands that yield oil. Those resources are more expensive to extract and only become
economical when the price of oil rises." "The IEA, in its 2010 World
Energy Outlook, said crude oil output had already peaked and would flatten out in the next 10 years, boosting reliance on costlier
and more polluting unconventional sources such as oil sands. 'Production in total does not peak before 2035, though it comes close to
doing so,' the IEA said in the executive summary of the report. That projection was
according to the report's central case, the New Policies scenario..... Oil prices would
rise even further if governments did not act to curb consumption, the IEA's chief
economist and lead author of the report, Fatih Birol, told Reuters in an interview. 'The
message is clear, the price will go up, especially if consuming countries do not make
changes in the way they consume oil, especially in the transport sector,' Birol said. Oil
hit $87.63 a barrel on Tuesday, the highest since October 2008, after hovering around
$70-80 most of the year. The world needed higher oil prices to change consuming habits
substantially and spur investment as markets were becoming less sensitive to price
changes, Birol said. 'All the net growth comes from non-OECD countries, almost half from
China alone, mainly driven by rising use of transport fuels,' the IEA said in the report.
While the IEA saw higher prices, it also cut its world oil demand estimate for the next 25
years by 6 million barrels per day (bpd) to 99 million bpd. That remained an increase of
15 million bpd, equal to one and a half times the output of top global producer Russia....
Unconventional oil -- including supplies from oil sands in Canada and Venezuelan heavy
oil, and liquid fuels obtained from natural gas and coal -- is expected to play a bigger
role as growth in crude oil tails off. 'Crude oil
output reaches an undulating plateau of around 68-69 million barrels a day by 2020, but
never regains its all time peak of 70 million barrels per day reached in 2006,' the IEA
said. Last year's edition of the report said global oil production was not forecast to
peak before 2030 and conventional oil production was 'projected to approach a plateau
towards the end of the projection period.'" "Moves made to address carbon emissions are varied,
but many governments seem to be prioritizing low-carbon energy programs as an alternative
to fossil fuels. Fatih Birol [IEA Chief Economist]
recently told the US Council on Foreign Relations of his certainty that developing states
are interested in climate negotiations and in reducing emissions far more
for energy security reasons than
for climate ones. Diplomatically, he did not suggest
that major industrial states might be acting for much the same reasons." |
|
Contact | 'We need a new way of thinking' - Consciousness Based Education |
2010 |
"For the last year, Deutsche Bank's Paul Sankey, one of the best
long-range energy minds on Wall Street, has been distributing a series of provocative,
deeply researched, and forward-looking notes to clients under titles like 'The Peak Oil
Market' and 'The End of the Oil Age.' Last week, Sankey produced a sixth note called '2011
and Beyond -- A Reality Check.' Among the takeaways: As of 2010, the new electric car
age is coming upon us faster than expected -- far beyond this year's conspicuous arrival
of the General Motors Volt and Nissan Leaf, and the race
among the world's industrial nations to dominate this technology. Converging even more
rapidly, says Sankey, are far higher oil and gasoline prices, starting in 2012. Such shifts could have enormous geopolitical ramifications -- as a
consequence, some countries will become poorer, and some richer, with corresponding
impacts on their global influence. Starting with the
second forecast from this 59-page report, 2010 has seen a comparatively gentle respite in
an otherwise unprecedented, decade-long period of turbulence
in oil markets. According to Sankey, this calm is about to break. Sankey's forecast is based on the salient factor of 'spare
capacity.'.... Global spare capacity is actually not 5 million barrels a day, but 4
million barrels a day when one takes into account what countries really produce, versus
what they report. From there, Sankey projects that global demand will rise by 2.5 million
barrels a day next year, and an equal volume in 2012. Looking at the future through this
lens, you can see how we will rapidly work through our spare capacity buffer, and arrive
right back on the knife's edge. Interestingly, however, Sankey sees a ray of light in this
coming crisis. He classifies the consequent years-long oil price spike (peaking at $125 a
barrel in 2015) as the very reason that we are at the end of the oil age. He says that
heavy petroleum consumers will finally absorb the message that they must at last wean
themselves off of oil, and predicts that they will begin dieting -- permanently. Because
of this new consciousness, in Sankey's model global demand will peak at about 96 million
barrels a day in 2020, before commencing a long, slow decline..... In Sankey's view, this demand
destruction will come almost wholly in the United States. The reason is that Chinese
demand is inexorable -- its economy is so hot that Chinese demand can be tempered only so
much -- and Europe is already rationing through the use of high government taxes on
gasoline. That leaves the United States as the sole remaining source of trimmable high
demand. Sankey acknowledges that heavyweight
prognosticators at ExxonMobil and the International Energy Agency differ when it comes to global demand;
both see global demand rising to about 105 or 110 million barrels a day by 2030 (versus
Sankey's projection of around 90 million barrels a day that year). The reason for this
divergence is Sankey's view of the impact of higher prices. He gambles much more heavily
than the others on an American efficiency binge, which includes a sharp turn toward hybrid
and electric cars. When one adds in the coming dramatic
global shift to natural gas, one easily understands Sankey's logic. Which brings us
smoothly to the electric car age. Sankey blends a forecast from Deutsche Bank's automobile
analysts into his note: We are in the midst of a plunge in the price of the most expensive
single component of a hybrid or electric car -- the lithium-ion car battery, Deutsche Bank
says. DB's auto team forecasts that the price of a lithium-ion car battery pack will fall
from the current $16,250 to $11,250 in 2012 -- and $6,250 in 2020. If this trajectory
holds, it means that in a decade, car batteries will reach the magic threshold sought by
all battery-makers: a cost of $250 per kilowatt hour (the 2009 cost was $650 per kilowatt
hour). The reason $250 is the magic threshold is
that, at that cost per kilowatt hour, hybrids and electric cars will more or less stand on
their own without a subsidy; the buyer's payback period, when accounting for fuel savings,
will fall to about three years, the point at which the DB team believes consumers will
start to look at these vehicles on an equivalent basis with gasoline-driven models, and
not as a lifestyle choice. Once that happens, car
sales will spiral upward until, in both China and the United States, some 70 percent of
new car sales will be either hybrid or electric models by 2030, DB forecasts." |
"China is considering new export
quotas on rare earth alloys, a report said Thursday -- a move that would further restrict
shipments of the minerals used in a variety of high-tech industries. The country -- which
has a near-monopoly in the industry -- is also mulling separate export quotas for heavy
and light rare earths, Dow Jones Newswires reported, citing an unnamed official with
knowledge of the plans. The commerce ministry
declined to comment on the report when contacted by AFP. So far, China has issued a single
export quota for rare earths -- 17 elements critical to manufacturing everything from
iPods to low-emission cars, wind turbines and missiles. Beijing has moved to tighten
controls over the minerals by cracking down on heavily polluting producers, cutting quotas
for overseas shipments and hiking export taxes. The commerce ministry on Tuesday announced
a 35 percent cut in rare earth exports for the first half of 2011 compared to a year
earlier, having slashed the quota by 72 percent for the second half of this year. But the
government has so far yet to limit exports of rare earth alloys, which are compounds that
include rare earth elements. Foreign ministry spokeswoman Jiang Yu told reporters on
Thursday that China would continue to supply rare earths to the global market but called
on other countries with reserves to also 'shoulder the responsibility'." China 'mulls export quotas' on rare earth alloys Agence France Presse, 29 December 2010 |
"For five years now Wall Street and its chorus in the financial media
have ignored or denied that global oil production has reached a plateau after 150 years of
steady growth. Those who did admit to a problem were quick to assert that the markets
would find substitutes first in the form of endless quantities of coal waiting to be
exploited and more recently 100 years' worth of shale gas would come seamlessly to the
rescue. The nervousness of course is that once global energy production starts to decline,
capitalism as we have known it for the last few centuries will no longer be the same.....A few weeks ago the most ominous news of year came out of Beijing
when it was announced in muted voice that from here on out China's coal production would
probably not be growing much further. Chinese coal,
of course, is among the miracles of our time. Starting at around 100 million tons per year
when Mao Zedong took over the country, by the turn of the century annual production had
increased to 1 billion tons. Then production really took off with output climbing to circa
3.2 billion tons a decade later. With oil production
faltering and production of much of the world's industrial output shifting to China, it
was this steady increase in coal production that fueled China's and therefore much of the
world's economic growth for the last decade. Now,
with this final surge in the world's production of fossil fuels coming to an end the
outlook for the global economy changes dramatically. Beijing,
which is wedded to achieving an annual GDP growth of 8-10 percent, is already stepping up
its imports of coal and is vigorously pursuing means of locking up as much foreign fossil
fuel resources as the foreigners are willing to sell. If Beijing is unsuccessful in
increasing its coal imports to the extent needed in the next few years, then it is likely
to turn to increasing imports of oil and LNG. The
IEA says that during 2010 global demand for oil grew by 2.5 million barrels a day (b/d)
and reports that during the 3rd quarter the annual rate of demand increased to a 'giddy'
3.3 million b/d. As rates of growth in consumption this fast obviously cannot go on much
longer in the face of very slow to flat increases in production, the IEA is saying that
the increase in demand in 2011 will slow to an average of 1.3 million b/d. Just to support
the 3rd quarters increase in demand, global stockpiles have been dropping by 1.3 million
b/d. Thus far Saudi Arabia, which is the only country claiming substantial surplus
production capacity, has shown little inclination to increase production.... Some are
already saying that the IEA's forecast of a 1.3 million b/d increase for next year is much
too low. The big unknown for the coming years is the
size and availability of OPEC's spare capacity. If much of the 5 or 6 million b/d of
productive capacity that OPEC claims to have in reserve does not really exist or cannot be
opened in a timely manner, then much higher oil
prices seem likely by spring. This, of course, will reduce demand again and we are off on
another cycle of falling demand, more economic damage, and eventually lower prices." The Peak Oil Crisis: 2011 A Pivotal Year? Falls Church News-Press, 29 December 2010 |
"A gas field offshore from
Israel holds an estimated 450 billion cubic metres (16 trillion cubic feet) of natural
gas, positioning the Jewish state as an exporter, Noble Energy said on Wednesday. The new estimates, announced by the US firm which has a major stake in
the field, said the Leviathan gas field dwarfs Israel's next biggest offshore field,
Tamar. 'Leviathan is the latest major discovery for Noble Energy and is easily the largest
exploration discovery in our history,' the firm's chairman Charles Davidson said in a
statement. This discovery has the potential to position Israel as a natural gas exporting
nation,' added company president David Stover. Further tests are required to discover the
final estimated capacity of the Leviathan field, which lies offshore near the northern
Israeli town of Haifa. But the capacity announced on Wednesday is encouraging news for
Israel, which is hoping natural gas reserves offshore could give the Jewish state energy
independence and allow it to export to Europe eventually. The Tamar field, with an
estimated capacity of 178.4 billion cubic metres (6.3 trillion cubic feet), is not yet
operational. It has been dogged by international squabbles between Israel and neighbouring
nations over access, and a domestic brawl over the taxes and royalties the state can levy
on the field. In a statement, the chairman of Israel's Association of Oil and Gas
Exploration Industries hailed the news. 'The results of the Leviathan drill are the
beginning of the transformation of Israel into an energy power and a gas exporter,' he
said." |
"... in 2008, Russia surpassed
Germany as Turkeys largest trading partner, with bilateral trade expected to top $40
billion by the end of 2010. Russia provides Turkey with 68 percent of its natural gas and
20 percent of its imported oil. Thousands of Russian tourists visit Turkey every year and
the two countries recently signed an agreement to waive visa restrictions. Moreover,
Turkey recently removed Russia from the 'Red Book' -- a national security document that
lists Turkeys external security threats. Much of the growth in trade volume is due
to Turkeys growing energy imports from Russia. Turkey finds itself at the center of
the energy-rich Middle East and Eurasia region and has made it a priority to establish
itself as Europes oil and gas hub. Russia, which is keen on controlling natural gas
supply routes to Europe, sees Turkey as a vital strategic choke point and is intent on
making a number of diplomatic inroads to ensure that its energy and economic interests are
protected. These two complementary goals often serve
as the catalyst for other agreements. For example, Russias agreement to build
Turkeys first nuclear power reactor is tied up in both countries desire to
deepen energy cooperation. Atomstroyexport and Inter RAO have agreed to build four
reactors with a total capacity of 4.8 GW for roughly $20 billion. The scale of this deal
is unprecedented, if completed; Turkey will be home to one of the largest reactor
complexes in the world, according to an analysis by STRATFOR. Russia does not even have a
plant this large in its own country, nor has it announced plans to build a reactor complex
on this scale in the near future.... Geopolitically, Turkey and Russia share a number of
overlapping political goals in the countries bordering the Black and Caspian Seas. The
Caucuses have traditionally been an area where Turkey and Russia competed for political
influence. Turkey supported the independence of Azerbaijan, Armenia and Georgia and
extended assistance to the Chechen independence struggle until the Second Chechen War. In
turn, Russia was a strong advocate of Kurdish rights and supported the Kurdistan
Workers Party (PKK). However, after the signing of the Eurasia Cooperation Action
Plan in December 2001, the two countries agreed to cease their support for separatists in
Kurdistan and Chechnya, thus removing a serious source of tension from the relationship.
This coincided with the deterioration of US-Russian relations over Ukraine, Georgia and
the Bush administrations unilateral abrogation of the anti-ballistic missile treaty.
For Turkey, these events coincided with the rapid break down of US-Turkish relations over
the invasion of Iraq.... Turkey believes that any regional security architecture should
include Russia and that 'outside powers' (i.e., the United States) should refrain from
meddling in their immediate sphere of influence. Moreover, Ankara recognizes Russias
role in resolving the regions frozen conflicts, especially between Armenia and
Azerbaijan. In the near to medium term it seems likely that Turkey is intent on pursuing a
balanced foreign policy that maximizes its political self-interest, even in spite of its
traditional Western allies. Moscow is intent on
limiting Western attempts to circumvent Russian oil and gas pipelines, in order to
maintain its geo-political influence in Europe. Conditions
certainly seem ripe for both countries to deepen bilateral ties in the near future. From a
Turkish political standpoint, deepening cooperation with Moscow fits nicely with
Turkeys 'zero problems' foreign policy, while serving a number of Turkeys
immediate foreign policy goals." |
"Oil is back above $90 a barrel. Copper and cotton have hit record
highs. Wheat and corn prices are way up. Over all, world commodity prices have risen by a
quarter in the past six months. So whats the meaning of this surge? Is it
speculation run amok? Is it the result of excessive money creation, a harbinger of runaway
inflation just around the corner? No and no. What the commodity markets are telling us is
that were living in a finite world, in which the rapid growth of emerging economies
is placing pressure on limited supplies of raw materials, pushing up their prices. And
America is, for the most part, just a bystander in this story. Some background: The last time the prices of oil and other commodities were this
high, two and a half years ago, many commentators dismissed the price spike as an
aberration driven by speculators. And they claimed vindication when commodity prices
plunged in the second half of 2008. But that price collapse coincided with a severe global
recession, which led to a sharp fall in demand for raw materials. The big test would come
when the world economy recovered. Would raw materials once again become expensive? Well,
it still feels like a recession in America. But thanks to growth in developing nations,
world industrial production recently passed its previous peak and, sure enough,
commodity prices are surging again. This
doesnt necessarily mean that speculation played no role in 2007-2008. Nor should we
reject the notion that speculation is playing some role in current prices; for example,
who is that mystery investor who has bought up much of the worlds copper supply? But
the fact that world economic recovery has also brought a recovery in commodity prices
strongly suggests that recent price fluctuations mainly reflect fundamental factors.... In particular, today, as in 2007-2008, the primary driving force
behind rising commodity prices isnt demand from the United States. Its demand
from China and other emerging economies. As more and more people in formerly poor nations
are entering the global middle class, theyre beginning to drive cars and eat meat,
placing growing pressure on world oil and food supplies. And those supplies arent
keeping pace. Conventional oil production has been flat for four years; in that sense, at
least, peak oil has arrived. True, alternative sources, like oil from Canadas tar
sands, have continued to grow. But these alternative sources come at relatively high cost,
both monetary and environmental." |
"It's a deep pit in the Mojave
desert. But it could hold the key to America challenging China's technological domination
of the 21st century. At the bottom of the vast site, beneath 6 metres (20ft) of bright
emerald-green water, runs a rich seam of ores that are hardly household names but are
rapidly emerging as the building blocks of the hi-tech future. The mine is the largest
known deposit of rare earth elements outside China.
Eight years ago, it was shut down in a tacit admission that the US was ceding the market
to China. Now, the owners have secured final approval to restart operations, and hope to
begin production soon. 'We will probably never be the largest [mine] in the world again.
It will be hard to overcome China's status in that regard, but we do think we will be a
very significant supplier,' Mark Smith, chief executive of Molycorp Minerals which owns
the mine, told reporters during a tour of the site. So far as the Obama administration is
concerned, the mine can't open soon enough. A US department of energy report warned on 15
December that, in the absence of mines such as this one, America risks losing control over
the production of a host of technologies, from smart phones to smart bombs, electric car
batteries to wind turbines, because of a virtual Chinese monopoly on the rare earth metals
essential to their production. China controls 97% of global rare earth metals production.
Such total domination of a strategic resource became impossible to ignore in October when China
cut exports of rare earth elements by more than 70% over the previous year, disrupting
manufacturing in Japan, Europe and the US. Prices of even the cheapest of the 17 rare
earth elements rose 40%. Now America, like Japan and
Europe, is desperate to find alternatives.... At the
15 December seminar at the Centre for Strategic and International Studies, one PowerPoint
presentation lingered on a slide that showed only the Chinese flag. The room filled with
nervous laughter. By 2015, global demand for rare
earths is expected to reach 205,000 tonnes. 'If we don't get alternative supplies up and
running we are going to have this supply gap that is going to cause a lot of issues,'
Smith said. Those issues forced their way onto the government's agenda this autumn when
China began squeezing raw material exports of rare earth minerals. Some US media reports
have speculated China is trying to use its control over the supply lines for political
leverage. But a number of analysts say China is
trying to get better control over an expensive, dirty and dangerous mining process, and to get more
factories to set up shop inside the country. Rare earths are extracted through opencast
mining and generate radioactive waste. 'I don't believe that China is trying to chop the
west off at the knees but it has a growing internal market that is driving the demand,'
said Gareth Hatch, an analyst at Technology Metal Research. 'That reduces the amount they
are willing to export.' That is where Molycorp the frontrunner for now in a global
race to develop alternative production of rare earth materials hopes to step
in..... By mid-2012, Molycorp aims to produce 20,000
tonnes a year of nine of the 17 rare earths or about 25% of current western imports from
China. Smith suggested the company could possibly ramp up production to 40,000 tonnes
within the next 18 months. He says Molycorp has
exposed just 55 acres of the 2,200 acre site. But
even production on that scale may not be enough to guarantee the supply of metals needed
to move to a clean energy economy: lanthanum for batteries for hybrid cars, neodymium for
the permanent magnets for wind turbines, especially offshore, europium for energy
efficient lighting. 'You would need seven mines the size of Molycorp's just to meet the
demand for wind turbines and that would mean no neodymium for motors or any other
applications,' said Jim Hedrick, who until last year was the rare earth expert at the US
Geological Survey. 'Obviously there is a demand for 10 or 20 mines through the world to
meet all the different demands for these products.' Some companies, such as General
Electric, are already moving to reduce their use of rare earths. 'What we are going to
absolutely have to do is diversify our sources and optimise the use of these materials in
manufacturing,' said Steve Duclos, who heads GE's global research division. In Japan,
meanwhile, Hitachi has started a recycling effort to recover rare earths from hard drives
and other materials..... Aside from raw materials,
it is also unclear whether the US still has the expertise for the complicated process of
turning minerals into usable clean tech components. Such challenges were unthinkable
half-a-century ago when prospectors looking for uranium stumbled instead on a rich deposit
of rare earths about an hour's drive from Las Vegas. By the 1960s, the mine was booming,
largely through sales of europium, used to produce the bright red tones of colour
televisions. But prices fell as China came on the market, with its low production costs. A
pipeline accident in the late 1990s, which leaked radioactive fluid into the desert and a
nearby town, led to an expensive clean-up. The mine closed in 2002. The central pit in the
55-acre site became a pool of bright green water. White bales of minerals some
mined eight years ago were stockpiled until such time as prices would rise.... The company is also confident it can head off competition from a
slew of new mines due to begin coming online from Australia, Wyoming, Quebec and South
Africa. 'The growth in demand for these minerals is just phenomenal,' Smith said. 'A 6%
average growth rate for us would be very, very good but when you start adding things like
hybrid vehicles and wind turbines to the rare earth sectors now you are talking about
double digit growth, and you still don't know where that will end.' At this point, though, Molycorp is not even at the beginning. 'The road to
the green world of the future starts from the black earth. But first you have to get the
materials out of the ground,' said Hatch. 'The whole clean-tech energy industry is hinging
on it.' The 'rare earth elements' are a group of 17
naturally occurring metallic elements used in small amounts in everything from
high-powered magnets to batteries and electronic circuits. The materials (including
scandium, yttrium and a group of elements called the lanthanides) have chemical and
physical properties that make them useful in improving the performance of computer hard
drives and catalytic converters, mobile phones, hi-tech televisions, sunglasses and
lasers. With global demand for hi-tech goods increasing the market for rare earth elements
has doubled in the past decade. Despite their name, rare earth elements are not actually
all that rare, but China has a near-monopoly on mining the elements. In a report on the elements published this year, the British Geological
Survey put their natural abundance on the same level as copper or lead. According to the BGS China has 37% of the world's estimated reserves,
about 36m tonnes, but controls more than 97% of production. The former Soviet bloc has
around 19m tonnes and the US 13m, with other large deposits held by Australia, India,
Brazil and Malaysia. Other sources, untapped as yet, include Greenland. Estimates suggest
the land mass could meet 25% of global demand for REEs. South Africa also has potential
for rich REE deposits, as do Malawi, Madagascar and Kenya." |
"If you look at the world energy outlook from the IEA two things
really stand out. About 80 per cent of the oil they
expect the world to be consuming by 2035 hasnt been found or developed. About 70 per
cent of the oil being produced today will be depleted by then. The second interesting
thing is that for an organization thats always denied the existence of peak oil,
theyve basically acknowledged it by saying that conventional oil production
that is, the type we can afford to burn peaked in 2006." |
"China has refused repeated U.S.
requests to eliminate export restraints on rare earths that have created concern among its
trading partners, the U.S.
Trade Representative's office said on Thursday. 'Going forward, the United States will
continue to pursue vigorous engagement with China on this issue and will not hesitate to
take further action, including WTO dispute settlement, if appropriate,' USTR said in an
annual report on how well China has complied with commitments it made when it joined the
World Trade Organization in 2001.... The warning came one day after USTR said it had begun
a legal challenge at the WTO against certain Chinese subsidies for wind power equipment
manufacturers. U.S. officials said on Wednesday they could file additional cases against
China, and the new report amplifies U.S. concerns over China's export restrictions on rare
earths." |
"The debate [on shale gas] is
about the real cost. If you exclude the natural gas liquids that come with most shale
projects, is the real cost $4 per Mcf (1,000 cubic feet) or is it $8? If the real cost is $8 then a lot of people, like Chesapeake Energy, the
biggest gas producer in the U.S., have a big problem. Is shale gas the sub-prime mortgage
market of the natural gas market? Is this one giant con and investors are being conned
into thinking theres a huge supply of gas at $4 when it really costs $7 or $8 to
bring it to market? In the fullness of time economics will assert itself, just as it did
in the sub-prime mortgage market. But lets, for the sake of argument, say shale gas
is sustainable at $4 and that we dont really care about the ground-water
contamination or weve figured out a way to manage that in some sense, the question
is, what has it done? It certainly hasnt pulled down the price of oil. Boone Pickens
aside, we cant use natural gas to substitute for oil as a transit fuel. So if shale
gas is real at $4 all it means is oil is going to be increasingly used only as a transit
fuel around the world, though gas will be able to substitute for oil entirely as both a
feedstock for petrochemicals, as a home heating fuel, and as a power generation
source." |
"The world's biggest
gas-guzzling nation has limits after all. After seven decades of mostly uninterrupted
growth, U.S. gasoline demand is at the start of a long-term decline. By 2030, Americans
will burn at least 20 percent less gasoline than today, experts say, even as millions of
more cars clog the roads. The country's thirst for gasoline is shrinking as cars and
trucks become more fuel-efficient, the government mandates the use of more ethanol and
people drive less. 'A combination of demographic
change and policy change means the heady days of gasoline growing in the U.S. are over,'
says Daniel Yergin, chairman of IHS Cambridge Energy Research Associates and author of a
Pulitzer Prize-winning history of the oil industry. This isn't the first time in U.S.
history that gasoline demand has fallen, at least temporarily. Drivers typically cut back during recessions, then hit the road
again when the economy picks up. Indeed, the Great Recession was the chief reason demand
fell sharply in 2008. But this time looks different. Government and industry officials
including the CEO of Exxon Mobil say U.S. gasoline demand has peaked for
good. It has declined four years in a row and will not reach the 2006 level again, even
when the economy fully recovers. In fact, the ground
was shifting before the recession. The 2001 terrorist attacks, the war in Iraq, Hurricane
Katrina and pump prices rising to a nationwide average of $3 a gallon for the first time
in a generation reignited public debates about the political and economic effects of oil
imports and climate change. Also, the popularity of SUVs began to wane, and the government started requiring refiners to blend corn-based
ethanol into every gallon of gasoline. Americans are burning an average of 8.2 million
barrels 344 million gallons of gasoline per day in 2010, a figure that
excludes the ethanol blended into gasoline. That's 8 percent less than at the 2006 peak,
according to government data. The decline is
expected to accelerate for several reasons. Starting
with the 2012 model year, cars will have to hit a higher fuel economy target for the first
time since 1990. Each carmaker's fleet must average 30.1 mpg, up from 27.5. By the 2016
model year, that number must rise to 35.5 mpg. And, starting next year, SUVs and minivans,
once classified as trucks, will count toward passenger vehicle targets. The auto industry is introducing cars that run partially or
entirely on electricity, and the federal government is providing billions of dollars in
subsidies to increase production and spur sales. By 2022, the country's fuel mix
must include 36 billion gallons of ethanol and other biofuels, up from 14 billion gallons
in 2011. Put another way, biofuels will account for roughly one of every four gallons sold
at the pump. Gasoline prices are forecast to
stay high as developing economies in Asia and the Middle East use more oil. There are demographic factors at work, too. Baby boomers will drive less
as they age. The surge of women entering the work force and commuting in recent decades
has leveled off. And the era of Americans commuting ever farther distances appears to be
over. One measure of this, vehicle miles traveled per
licensed driver, began to flatten in the middle of the last decade after years of sharp
growth. 'People wildly underestimate the effect that
all this is going to have' on gasoline demand,' says Paul
Sankey, an analyst at Deutsche Bank. Sankey predicts by 2030 America will use just 5.4
million barrels a day, the same as in 1969. Aaron
Brady, an analyst at CERA, predicts a more modest drop, to 6.6 million barrels a day. As a
result, families will spend less on fuel, the country's dependence on foreign oil will
wane and heat-trapping emissions of carbon dioxide will grow more slowly. The shift from
SUVs began in 2004 and has saved Americans $15 billion on gasoline this year, according to
the National Resources Defense Council. By 2020, improved fuel economy is expected to
lower annual carbon dioxide emissions by 400 billion pounds, the equivalent of taking 32
million cars off the road. In reality, there will be 27 million more cars on the road
a total of 254 million a decade from now, according to government
projections.... While America's diminishing demand
will temper global demand, it will be more than offset by rapidly growing demand in China,
India, the Middle East and Africa. As a result, declining U.S. gasoline demand will not
bring lower pump prices. Worldwide oil demand will hit a
record 88.3 million barrels per day next year, according to the consulting firm Wood
Mackenzie. Put simply, 'we're entering a period
where the U.S. motorist is no longer the king of the road,' Yergin says." |
"The weekly US stocks report showed a record drop of nearly 10
million barrels in US crude inventories, although some of this drop may be due to
refineries deliberately delaying imports to avoid local inventory taxes along the Gulf
Coast. The stocks report also showed that refined
products supplied to US consumers climbed in November to 20.2 million b/d, the highest in
nearly two years. The American Petroleum Institute issued a report also saying that US
demand for petroleum products increased significantly to 20 million b/d and that
consumption during the first 11 months of 2010 was up by 2.4 percent to 19.2 million b/d
over last year. The API notes that demand for
distillates was up 14 percent in November to over 4 million b/d and concludes that these
numbers suggest that the US economy is rebounding nicely. As other indicators do not show
the US economy rebounding at anywhere near this rate, it suggests that an increased
portion of US distillate production may be going to exports." Review ASPO, 20 December 2010 |
"Chevron Corp., the second-largest U.S. energy company, said a pilot
project to boost production by injecting steam into an oil field shared between Saudi
Arabia and Kuwait showed 'very promising' results. Chevron
is trying to boost production from the Wafra field in the so-called Neutral Zone shared
between the two countries by as much as 600,000 barrels a day once a new method for
injecting steam is applied on a large scale. 'We
have 16 steam-injection wells in the field and I can tell you that the results that came
out were very promising,' Ganesh Thakur, Chevrons vice president and global adviser
for reservoir management, told an industry conference today in Dharan, Saudi Arabia. The
Wafra field will become the worlds largest project for oil recovery with steam
injection, once the company applies it to the entire field, Thakur said. Chevron began
injecting steam at the site in June 2009 to extract more crude. The San Ramon,
California-based company is still testing the steam-flooding technology on a small part of
the Wafra field. The cost of the pilot project is
$340 million and to apply the technology to the entire field would cost several billion
dollars, Gary Greaser, an assistant to the Chevron president, told Bloomberg on Oct. 19.
The decision to apply the technology to the entire field will be made in 2013, Greaser said." |
"The world's first nuclear fuel
bank of low enriched uranium (LEU) was officially launched in Russia on Friday, which
aspiring nations could use for nuclear reactors instead of making it themselves. 'The LEU Reserve would be made available for back-up supply to any
eligible IAEA member state that might face a non-commercial disruption of supply of LEU to
be used in nuclear fuel for power reactors, thereby facilitating the development of
nuclear energy for peaceful purposes,' Yukiya Amano, director general of the International
Atomic Energy Agency (IAEA), said at the LEU Reserve's inauguration ceremony in the
Siberian city of Angarsk. In March 2010, the IAEA signed an agreement with Russia to
establish the LEU Reserve." |
"Household
electricity bills are set to nearly double over the next 20 years as the Government sets
out plans to artificially raise power prices to subsidise the building of new nuclear
plants and thousands of wind turbines. However, consumer groups said that householders
should not bear the brunt of the rises, and have called on the Government and power
companies to help to shoulder the burden. Manufacturing bosses said that rising energy
prices would make them less internationally competitive. Power companies warned that the new incentives and subsidies
might put off investors. Chris Huhne, the Liberal Democrat Energy and Climate Change
Secretary, announced yesterday what he billed as the biggest shake-up of the electricity
market since the Thatcher years and the privatisation of the industry. 'This will be a
seismic shift,' Mr Huhne told MPs in the House of Commons. 'It is about securing investment in cleaner, greener power and
delivering secure and affordable low-carbon energy for decades to come.' Mr Huhne said that
his aim was to replace the 25 per cent of the nations electricity generating plants
that will shut in the next decade as dirty coal and oil-fired stations and ageing nuclear
plants are retired, with thousands of megawatts of new nuclear and green energy
facilities. Consultation documents sent out yesterday are to be turned into a
White Paper in March, with plans for legislation in 2012. He aims to introduce three new financial levers to attract
investment but which will force up the price
that electricity producers charge consumers.
First will be the introduction of a minimum carbon price at which coal and gas-fired power
stations are effectively forced to pay a pollution tax to the Treasury. The second will be a 'feed-in tariff' using a mechanism
that sets the price of electricity on long-term contracts at a level high enough for green
energy investors to see a return on the tens of billions that need be pumped in. And
third, subsidies are to be paid to the builders of, for instance, new gas power stations,
to ensure a reserve generating capacity when the wind is not blowing and thus not
producing green electricity. The Energy Department says that these measures would mean an
increase, in todays money, of about a third in household bills by 2030. Department
officials, however, concede that their projected forecast on bills is based on a
significantly lower usage of electricity by householders in the years to come. Gas
accounts for about £650 and electricity accounts for about £500 in the average annual
household energy bill. With inflation, the electricity portion is likely to rise to about
£900 by 2030, or more if households do not cut consumption. Consumer Focus, the energy watchdog, said: 'Consumers cant be expected to write a blank cheque to fund
this. A balance must be found on how this is funded between government, energy customers
and the industry.' |
"Chris Huhne, the Energy Secretary, will outline government plans today to
encourage energy companies to develop low-carbon power plants, including nuclear power
stations and wind farms. Energy analysts say the
Coalition's plans will put Britain on course for a 'high cost, low carbon' electricity
market where consumers pay the price for environmentally friendly generating technology.
Energy companies say that the shift will require them to invest more than £200 billion in
new power stations and networks over the next 20 years. According to uSwitch, the price comparison website, funding that
investment will cost households more than £500 a year on top of the current total average
energy bill of £1,157. Mr Huhne's officials dispute that figure and insist that the
direct costs of specific government policies will be much lower. A new consultation will
push energy companies into investing billions of pounds in technology, costs that
companies say will be passed on to consumers.... A new tax could be levied on fossil fuels
such as coal and gas, making them more expensive relative to low-carbon sources of energy
such as nuclear and wind power. Mr Huhne will tell MPs that the reforms will wean Britain
off imported gas, and curb inevitable price rises, meaning household bills will ultimately
be lower than they would have been otherwise. Writing in the Business section of The Daily
Telegraph today, Mr Huhne hails his plans as the most far-reaching reform of the
electricity market since privatisation in the 1980s. 'These reforms can unlock private
investment on an unprecedented scale, and ensure that we undergo the low-carbon
electricity revolution at the lowest possible cost to consumers,' he writes. David Porter,
chief executive of the Association of Electricity Producers, said ministers and companies
needed to be honest and admit that the shift towards low-carbon generation would cost
households more." |
"In May this year the State Oceanic Administration, a body under the
Ministry for Land and Resources, stated close to the end of a 574-page report as if
it were a well-known fact that China had proposed a programme for aircraft carrier
construction last year.... Beijing is anxious not to trigger concern about its rising
military and political prowess while also advancing its declared goal of rising to global
greatness. Aircraft carriers are, according to
military officials, both symbols of such power and necessary for a naval force venturing
ever further beyond regional waters. Admiral Wu Shengli, the PLA Navys commander,
has said the navy is modernising because of Chinas 'expanded national interests'.
These include protecting vital sea lanes through the South China Sea and the Strait of
Malacca all the way to the Middle East, where most of Chinas oil comes from,
according to Chinas defence white paper. The
PLA Navy has shown it is serious by sending anti-piracy forces to the Gulf of Aden since
late 2008." Carriers back Chinas global reach Financial Times, 17 December 2001 |
"The United States risks major
supply disruptions of rare earth metals used in clean energy products unless it
diversifies its sources of the minerals, the Energy Department warns in a report due to be
released later on Wednesday. The United States and
other countries are worried that China, which controls 97 percent of the world trade in
rare earth metals, will use those supplies as a political weapon and cut back their export
when it is in a dispute with another country or to grow China's clean energy technology
sector. 'The availability of a number of these materials is at risk due to their location,
vulnerability to supply disruptions and lack of suitable substitutes,' U.S. Energy
Secretary Steven Chu said in a report, due to be unveiled on Wednesday at a rare earth
metals conference at the Center for Strategic and International Studies. The release of
the report coincides with trade talks in Washington between the United States and China.
U.S. officials are expected to push Chinese officials to loosen export restraints on rare
earth elements. China, which said on Tuesday it planned to raise export taxes on some rare
earth metals beginning next month , holds 37 percent of known rare metal reserves, the
United States has 13 percent and the rest is in other countries.... However, mining rare
earth metals can be very expensive and the lead times for new mining operations are long,
ranging from two to 10 years." US at risk of rare earths supply disruptions Reuters, 15 December 2010 |
"A year-long European Union
investigation into biofuels has concluded that their green credentials might be partly
compromised by indirect side-effects, which should be tackled, EU officials said. The multi-billion-dollar industry fears barriers will be further raised
against unsustainable biofuels from food, but the long-awaited European Commission report,
due next week, will stop short of proposing any new actions. Instead, it will recommend
six months more of studies. The report follows a one-year internal battle among experts
within the Commission, which has thrown into doubt EU plans to create a $17-billion-a-year
market for biofuels from producers such as France, Germany, Brazil, Malaysia and
Indonesia. Investment in European biofuels has slowed to a halt due to doubts over the
sector's green credentials and the challenging investment climate.... Recent uncertainty
over investments has largely been caused by a new concept known as 'indirect land-use
change' (ILUC). In essence, that means that if you take a field of grain and switch the
crop to biofuel, somebody, somewhere, will go hungry unless those missing tonnes of grain
are grown elsewhere. The crops to make up the shortfall could come from anywhere, and
economics often dictate that will be in tropical zones, encouraging farmers to hack out
new land from fertile forests. Burning forests to clear that land can pump vast quantities
of climate-warming emissions into the atmosphere, enough, in theory, to cancel out any of
the climate benefits the biofuels were meant to bring. 'Indirect land use (change) is a
concrete danger,' Oettinger said. 'It's a normal economic process that acres with
agriculture will be used as acres for production of biofuels.' 'There's a danger that
deforestation follows,' he added. 'It's in our interest to have an instrument to avoid
this process.' The Commission has run 15 studies on different biofuel crops, which on
average conclude that over the next decade Europe's biofuels policies might have an
indirect impact equal to 4.5 million hectares of land -- an area the size of Denmark. If
that was gained by clearing wild land, as economics often dictate, it could result in a
one-off release of at least 200 million tonnes of carbon -- about the same as the annual
fossil-fuel emissions of Germany, according to Reuters calculations." |
"While the Paris Basin may hold 100 billion barrels, the amount of
recoverable reserves hasnt been estimated, according to the French Energy Ministry.
Typically between 30 percent and 50 percent of the oil remains in the source rock, of
which 1 percent could be recoverable, according to McKenzie. That
may mean about 300 million barrels of oil are potentially recoverable." Toreador Plans to Drill in Paris Basin for Shale Oil Starting Next Month Bloomberg, 15 December 2010 |
"China and India may increase
imports of coal by 78 percent to 337 million metric tons next year, further driving up
prices from the highest in two years and diverting supplies from Europe to Asia. China may buy 233
million tons more of the fuel than it exports next year, up from net imports of 143
million in 2010, Citigroup Inc. said in a Nov. 29 report. India faces a shortfall of 104
million tons in the 12 months ending March 2012, mjunction Services Ltd., a Kolkata-based
commodity trader, said in a note on Dec. 6, citing Coal Minister Sriprakash
Jaiswal. Asias two fastest-growing major economies are burning
more of the fuel as economic expansion raises demand for electricity. The International
Monetary Fund forecasts that Chinas gross domestic product
will next year expand 9.6 percent and India 8.4 percent. China added about 51 gigawatts of
coal-fired capacity last year, more than half the total capacity of the U.K., according to
data from Daiwa Capital Markets and the U.S. Energy Department..... China will need 2
billion tons of coal over the next 10 years to fuel the countrys industrial
development, the China Securities Journal reported today, citing Dai Yande, deputy head of
Chinas Energy Research Institute. 'The thermal-coal market will remain tight as
strong demand from emerging markets, particularly China and India, drives record levels of
imports,' said Daniel
Brebner and Xiao
Fu, London-based analysts at Deutsche Bank AG. 'Supply is anticipated to be
constrained in key producing regions such as China, Indonesia and Australia.'... Coal use
in Asia climbed 6.4
percent last year, more than a 0.8 percent increase in oil consumption, according to BP
Plc. Prices have also surged because of supply disruptions from heavy rain and flooding at
mines in Indonesia, Colombia and Australia, while South Africas export growth has
been crimped by a lack of rail capacity. Xstrata Plc, the worlds
largest exporter of thermal coal, has declared force majeure on some Australian shipments
on Dec. 7 because of flooding of mines.... Such disruptions have prompted South Africa and
Colombia to divert supplies from traditional markets in Europe to higher- paying Asia.
South Africa accounted for about 30 percent of Indias thermal coal imports this
year, according to ministry data. Shipments in the first nine months of this year
increased 16 percent to 15.2 million tons, while Chinas purchases
surged to 5.1 million tons until October compared with 1.52 million tons it imported for
the entire 2009, according to mjunction Services, which is backed by Tata Steel Ltd. and
Steel Authority of India Ltd., and Chinese customs data. 'Robust Chinese coal demand and
import growth will continue throughout 2011,' Jeffrey
Landsberg, president of New York-based Commodore Research & Consultancy, said Dec.
10 in an e-mailed response to questions. 'China still has many decades left to develop.
Only a fraction of the population, and really just the eastern part of the nation, has
experienced profound growth. The rest of the country needs to develop as well.' |
"The leaders of Afghanistan and
Pakistan were in the capital of gasrich Turkmenistan Saturday to push forward on
ambitions to build a pipeline across their countries. The pipeline, which would terminate
in India, would bring huge amounts of gas to underdeveloped regions and could earn
impoverished Afghanistan hundreds of millions of dollars in transit fees. But it would
cross both Talibanintensive stretches of Afghanistan and parts of Pakistan's unruly
tribal areas. The leaders, along with Turkmenistan's
president and India's oil minister are expected to sign a document expressing support for
the project. The next step would likely be to seek proposals and bids from energy
companies. Efforts to get the pipeline called TAPI after the countries involved
under way have intensified in recent months as Afghanistan seeks ways to
kickstart its economy, while Pakistan and India explore how to slake their energy
thirst. The project has also won vocal support from
the United States, which is strongly opposed to India and Pakistan drawing supplies from
Iran through another proposed gas pipeline.
Turkmenistan, which is believed to hold the world's fourthlargest gas reserves, is
eager to find new markets for its potentially gargantuan energy exports amid flagging
interest from Russia, its traditional client. Plans
to build a pipeline transporting the former Soviet nation's gas to Western Europe to date
remain hazy ambitions.... The TAPI pipeline would
stretch some 1,700 kilometers (1,050 miles) from Turkmenistan's Dovletabad field to the
Indian township of Fazilka, just over the border with Pakistan. Its cost is estimated at
about $8 billion. Sections of the pipeline's intended path across deep Taliban
country in Afghanistan's Kandahar Province and then into Pakistan's restive tribal areas.
That raises concern among experts about its nearterm feasibility. 'The issue is not
only security in the sense that you can't actually guarantee the safety of the pipeline,
but actual construction is going to be difficult as well,' said Maria Kuusisto, an Asia
analyst at Eurasia Group. With the capacity to deliver more than 30 billion cubic meters
of gas annually, TAPI would come as welcome relief for energyparched nations along
the route. According to a preliminary breakdown, India and Pakistan would each stand to
receive around 38 million cubic meters of gas out of the 90 million cubic meters shipped
daily. Afghanistan would get the remainder.... Attempts
to build a pipeline through Afghanistan date back to the mid1990s, when the
U.S.led consortium Unocal was locked in fierce competition with Argentina's Bridas
to win a deal to construct and run the route. But as the Taliban gained control of
Afghanistan, those ambitions were shelved and remained so during the next decade's war." |
"Afghanistan will deploy up to
7,000 troops to secure a major transnational gas pipeline slated to run through some of
the most dangerous parts of the war-torn country, an official said on Sunday. The pledge
comes a day after Turkmenistan signed broad agreements with Afghanistan, India and
Pakistan at a summit in its capital Ashgabat on the ambitious venture. The 1,700-kilometre
(1,050-mile) TAPI pipeline, Ashgabats dream project that first appeared in 1995, has
been on hold for many years due to the Taliban insurgency in Afghanistan. The pipeline
aims to transport over 30 billion cubic metres of gas annually from the Dauletabad gas
fields in southeast Turkmenistan and could turn into a cash cow for Afghanistan in transit
fees. 'This huge project is very important for
Afghanistan,' Wahidullah Shahrani, the minister of mines and industries, told a press
conference in Kabul. 'Five thousand to seven thousand security forces will be deployed to
safeguard the pipeline route.' The proposed Afghan section of the pipeline passes through
southern Taliban heartlands including Helmand and Kandahar, where the central government
has a tenuous grip on the territory.... The pipeline will allow the Afghan government to
earn 'hundreds of millions of dollars each year' from transit fees, he added. Construction
of the pipeline is due to start in 2012 and be completed and operational by the end of
2014, he said. The pipeline is slated to go through the Quetta area in Pakistan and end in
Fazilka, an Indian city near the India-Pakistan border." |
"In this months Oil Market Report, the IEA once again pushes
its estimates for global oil demand higher with the increase for 2010 up by 130,000 b/d
and for 2011 up by 260,000 b/d to an annual average of 88.8 million b/d. While the
increase in demand this year will be 2.5 million b/d, next years increase in demand
is forecast to fall to 1.3 million b/d as consumption in China slackens. The 2.5 million
b/d increase in demand which will occur this year is the largest annual increase in at
least 30 years. The Agency says that November oil production increased by 400,000 b/d,
largely due to increased output from Canada, Kazakhstan and Brazil. The IEA says that OPEC production in November increased by 45,000
b/d, while Platts says that OPEC production fell by 70,000 b/d last month. OPECs
production capacity, however, is due to fall in 2011 due to depletion from existing fields
and then increase between 2012 and 2015 as new projects come online. Much of this
increase, however, is supposed to come from Iraq which is still very much of an open
question. The
IEAs monthly report notes that in retrospect demand for oil in the 3rd quarter was
exceptional. Price increases were due mainly to market fundamentals rather than
speculation. In making forecasts for 2011 and beyond, the Agency is faced with the problem
of feedback from higher prices slowing growth or possibly even driving demand lower as
happened two years ago. Last week OPEC released its monthly forecast for future demand.
The cartel is forecasting that demand will increase by only 1.18 million b/d to an annual
average of 87.1 million b/d next year well below the 88.8 million b/d forecast by
the IEA. While the lower OPEC forecast supports the
cartels decision not to increase production at this time, it is also based on
expectations that the global GDP increase in 2011 will not be as robust as some
suggest." |
"Desire Petroleum, the oil
explorer, said further tests showed it did not make an oil discovery in the Falkland
Islands, days after it said it believed it had found oil. Shares in the Aim-listed oil explorer plunged 50pc after the company said
in a statement on Monday that additional analysis of data from Rachel North well did
not support initial indications of oil being found in significant quantities. Last Thursday,
Desire said: 'Preliminary data collected indicate that this well is an oil discovery.'
Today Stephen Phipps, the chairman, said: 'It is extremely disappointing that the
subsequent wireline logs and fluids sampling have dashed all the earlier promise of this
being Desire's first oil discovery in the North Falkland Basin.'" |
"Switching from coal to gas
power could save European nations 450bn euros ($596bn; £377bn) in the next two decades
and cut carbon dioxide (CO2) emissions, a group of gas firms says. European coal-fired
power stations emit 70% more CO2 than modern gas plants, the European Gas Advocacy Forum
said. Gradually replacing coal power stations with gas could help Europe cut CO2 emissions
by 80% by 2050, it said. But sceptics say renewable energy rather than gas is the way
forward. The European Gas Advocacy Forum, which is made up of eight gas companies -
Centrica, ENI, E.On Ruhrgas, Gazprom Export, GDF Suez, Qatar Petroleum, Royal Dutch Shell
and Statoil - would like to see coal's share of the energy mix fall from 24% currently to
between 4% and 9% by 2030. During this period, power stations using gas, biomass, other
renewable energy sources and nuclear energy would produce more to fill the void, the group
said in a joint position paper presented to the European Commission on Friday. The gas companies insist gas should fill most of the void during the
initial two decades as this would be the quickest and cheapest solution. 'The reason why
it is cheap is that gas power requires lower investments than coal and nuclear power
plants,' the head of Statoil's gas division, Rune Bjornson, told BBC News.... Another
reason why many are sceptical to increasing the use of gas relates to the security of
supply. Such concerns are largely based on a perception that Europe could become dependent
on supplies from Russia's Gazprom in particular, a scenario widely deemed undesirable
following its rows with Ukraine in recent years. Such concerns are overdone, said Mr
Bjornson, insisting that global estimates point to more than 250 years of economically
recoverable natural gas resources at current consumption levels. 'Availability of gas and the number of supply sources have never
been better than they are today,' he said." |
"The
drive by foreign companies to grab a piece of the action in gas-rich Turkmenistan is
reported to be producing some strange bedfellows -- like PetroSaudi, owned by the son of
King Abdallah, and Merhav,
an Israeli conglomerate run by former intelligence officer Yosef Maiman. According to
Intelligence Online, a Paris-based Web site that covers global security issues, the
companies from these longtime Middle Eastern adversaries are negotiating a partnership
'through intermediaries' to explore the Serdar field that straddles the border between
Turkmenistan and oil-rich Azerbaijan. It is reported
to contain the equivalent of at least 1 billion barrels of recoverable oil. Turkmenistan
is the world's 10th-largest gas producer. The United States, Europe, China, Russia and
Iran are all clamoring for access to its vast gas fields. These contain an estimated 20
trillion cubic meters of natural gas -- enough to supply Europe for 66 years. Maiman once
worked for the Mossad, Israel's foreign intelligence service, and is reputedly linked to a
network of companies owned by the agency. He has been moving into Central Asia for some
time, spearheading an Israeli effort to secure influence -- and a significant intelligence
presence -- in the energy-rich Caspian Sea basin, the economic center of the five former
Soviet republics that make up the Muslim region. The Merhav Group has been involved in
Turkmenistan's natural gas industry for years. In 2004 The Jerusalem Post described
Maiman, a familiar figure in the Turkmen capital of Ashgabat, as a 'leading figure' in
Central Asia's gas sector. According to some reports, Maiman was made a citizen of
Turkmenistan by decree of the country's eccentric and authoritarian president, Saparmurad
Niyazov, who died of heart disease Dec. 21, 2006. According to Intelligence Online, Maiman
was behind the appointment of Israel's first ambassador to Turkmenistan, Reuven Dinia, by
Foreign Minister Avigdor Lieberman recently. Dinai is another ex-Mossad officer, who once
ran its Moscow station until he was expelled in 1996. Merhav has reportedly dominated
foreign business in Turkmenistan, including brokering energy projects in the country.
Turkmenistan and Azerbaijan are closely linked to Israeli commercial interests -- not to
mention Israeli intelligence -- and Maiman appears to be well-placed to broker an
agreement between them over the disputed Serdar field, which Ashgabat and Baku both claim,
and secure a contract. The German-born entrepreneur, who became an Israeli citizen in 1971
and founded Merhav five years later, also has longstanding business links with Saudi
Arabia. These connections may well expand as Israel and Saudi Arabia both find themselves
in confrontation with nuclear-wannabe Iran. Maiman has traveled to Riyadh several times in
recent years on his collection of non-Israeli passports. PetroSaudi, headed by Turki bin
Abdullah bin Abdulaziz, one of the sons of the Saudi monarch, thus may be a front-runner
in Turkmenistan if it cements its partnership with Merhav. They face competition from
Total of France, Eni of Italy, Royal Dutch Shell, TNK-BP, Lukoil of Russia and Chevron of
the United States. These companies are being welcomed in Ashgabat because the country was
badly hit in April, when Russia suddenly stopped importing Turkmen natural gas. That
slashed Turkmenistan's exports by 84 percent, because Russia was experiencing a gas glut.
Without Russia as a customer, Turkmenistan is losing an estimated $1 billion a month.
'Right now Turkmenistan is looking for any energy deal it can make with almost any player,
because Russia's sudden halt to natural gas imports has cut off most of Ashgabat's cash
flow,' according to the U.S.-based security consultancy Stratfor. Turkmenistan does not
have a viable alternative export route and, warns Stratfor, 'could go bankrupt if energy
revenues do not start coming in from somewhere.' Moscow, which remains the dominant power
in Central Asia, is unhappy about Turkmenistan's efforts to bring in new energy partners.
China, with its insatiable appetite for energy to fuel its expanding economy, is likely to
take Russia's place. Russia does not want to see any challenge to its influence in Central
Asia. Neighboring Iran is another energy-hungry prospect. 'The geography of Central Asia,
the competition among its five countries for resources and the increasing competition
among outside powers for Central Asian energy seem to indicate that a fight for the
region's energy resources in inevitable,' according to Stratfor." 'Saudi, Israel tie-up' in Turkmenistan United Press Intenational, 10 December 2009 |
"Total SA,
Frances largest crude producer, has yet to find 'doable' oil or natural gas from
shale deposits in Europe, said Chief Executive
Officer Christophe
de Margerie. Europes system of petroleum royalties, in which producers share
revenue with the government, doesnt benefit private landowners, de Margerie said at
an event at the French Consulate in New York today. Landowners have no incentive to permit
drilling, in contrast to the U.S. where they share in royalties, he said. Total entered
the U.S. shale-gas business in January, agreeing to pay $800 million for 25 percent of
Chesapeake Energy Corp.s assets in the Barnett Shale field in Texas. Total committed
to spend another $1.45 billion to cover 60 percent of Chesapeakes share of drilling
costs. The company also has a shale-oil joint venture in the U.S., de Margerie said. Shale
formations consist of dense rock that can be broken apart using water, sand and chemicals
to release
oil or gas. Europe is less accepting of shale
production than the U.S., de Margerie said. Local groups are mounting opposition to
Totals shale-exploration plans in southern France because of potential environmental
damage." |
"Biomass has low energy density relative to fossil fuels, and thus a
conversion facility must have easy logistical access. In most cases, this means that
biomass must be sourced close to the facility. This puts some limits on the size of
biomass facilities, so they suffer from the lack of economies of scale....cellulose
generally makes up less than 50% of the composition of biomass, limiting the biomass
fraction that can be converted into ethanol. The fraction that is converted ends up as a
dilute beer of generally around 4% ethanol and 96% water. This
makes the energy requirements of purifying cellulosic ethanol very high.....In early 2010, 100 years after the first cellulosic ethanol plant was
built in the U.S., the EPA recognized that the cellulosic ethanol mandates could not be
met. They subsequently reduced the 100 million gallon mandate for 2010 to 6.5 million
gallons. (Actual qualifying production of cellulosic ethanol through
October 2010 is zero gallons). The U.S.
DOEs Energy Information Administration has completed its predictions for next
years cellulosic biofuels production and estimates that actual production levels
will be much lower than anticipated. Earlier this year, the U.S. EPA proposed a reduction
in the cellulosic biofuels portion of the 2011 renewable fuel standard (RFS) to between 5
and 17.1 million gallons, down drastically from the 250 million gallons initially called
for in the 2007 RFS. But according to an Oct. 20 letter sent from EIA Administrator
Richard Newell to EPA Administrator Lisa Jackson, the EPAs reduced target is still
too high. The EIA suggests that a more likely 2011 production total for cellulosic
biofuels is approximately 3.94 million gallons. Additionally, the EIA said half of the
facilities on the EPAs list wont produce biofuels next year. So the EIA
projects that 2011 cellulosic ethanol production will be 3.94 million gallons, less than
2% of the originally mandated amount. They suggest
that the EPA, having cut the 2011 estimate from 250 million to the range of 5 to 17.1
million gallons, is still much too optimistic, and that half of the facilities that the
EPA expects to produce cellulosic fuel will not. Following the EIA story, the EPA has come
back and revised their 2011 numbers down to 6.6 million gallons of
cellulosic ethanol." |
"Two related events occurred recently which affect the world of
energy and climate science....The second event was the publication of a comment in the
science journal Nature called The End Of Cheap Coal. The authors Richard
Heinberg and David Fridley give their rationale for sounding a warning 'World energy
policy is gripped by a fallacy the idea that coal is destined to stay cheap for
decades to come. This assumption supports investment in clean-coal technology
and trumps serious efforts to increase energy conservation and develop alternative energy
sources. It is an important enough assumption about our energy future that it demands
closer examination. There are two reasons to believe that coal prices are likely to soar
in the years ahead. First, a spate of recent studies
suggests that available, useful coal may be less abundant than has been assumed
indeed that the peak of world coal production may be only years away. One pessimistic study published in 2010 concluded that global energy
derived from coal could peak as early as 2011. Second,
global demand is growing rapidly, largely driven by China. Demand rose modestly in the 1990s (0.45% per year), but since 2000 it has
been surging at 3.8% per year. China is both the worlds biggest producer of coal
(40% of global production) and its biggest consumer. Its influence on future coal prices
should not be underestimated. Economic shocks from rising coal prices will be felt by
every sector of society. Better data on global coal supplies is long overdue and energy
policies that assume a bottomless coal pit need rethinking urgently.'" |
"Consumers are
facing big increases in their energy bills to pay for a £130 billion plan to create a new
generation of 'green' power stations over the next decade. Ministers will reveal the cost
and shape of Britains energy generation in the next few weeks. It will entail the
construction of new nuclear plants and 'cleaner' gas-fired and coal-fired power stations.
Several billion pounds are also to be spent on building a national grid for carbon dioxide
a network of pipes to collect the waste gas from such power stations and pump it
underground. Charles Hendry, the energy minister, said consumers could expect to pay
significantly more for their power in coming years as the nations ageing coal-fired
and nuclear plants have to be replaced. 'There is
going to be a price to pay for having energy security but there would be an even bigger
price for energy insecurity if we did nothing. There will be a cost to consumers for what
we are planning,' he said.... A big chunk of the
£130 billion cost arises from the governments pledge to cut greenhouse gas
emissions by 80% by 2030. At present, Britain emits the equivalent of about 600m tons of
CO2 a year. In practice, this means slashing the amount of fuel used in motor vehicles
and the gas used in heating homes to almost nothing by 2030. This could only
be achieved by switching to electric vehicles and electric space heating but this would
demand an enormous increase in the nations ability to generate power, from 80
gigawatts (GW) a year now to about 120GW in 2030. Almost all this energy generation would
have to be from low-carbon sources or the switch would be pointless. Hendry said: 'We need
to invest £100 billion in sustainable power generating systems and another £30 billion
in rebuilding power transmission and other systems by 2020.'... All options would mean
householders paying significantly more than the current average annual energy bill of more
than £1,000. Dieter Helm, professor of energy policy at Oxford University, estimates the
increase at up to 40%. For scientists and engineers the real challenge lies in building
low-carbon power stations fast enough to meet demand. The government has already approved
sites for about eight new nuclear plants but, privately, ministers acknowledge that the
nation will need at least double that number by 2030. This, however, will not be enough so
the government also wants a new generation of coal and gas-fired plants equipped with the
kit to capture CO2 and then pump it away for storage. The government has already announced plans to invest up to £4
billion in four industrial-scale trial projects to assess the feasibility of such carbon
capture and storage schemes. If they succeed, the eventual aim would be to install high-
pressure CO2 pipes around areas such as Humberside, Teesside, the Thames estuary and the
Firth of Forth, where there are clusters of power stations. The pipes would collect the
gas and take it out to a rig in the North Sea which would inject it into bedrock more than
2,600ft beneath the seabed. Chris Train, network operations director for National Grid,
said it would be technically quite simple to construct a network of high-pressure
pipelines to carry waste greenhouse gases. 'What this all depends on is simply getting the
economics right,' he said." |
"Iraqs proved oil reserves, at 143 billion barrels,
are exceeded only by Saudi Arabia and Venezuela. However, its troubled history has left
tracts of the country unexplored and some geologists believe that its oil wealth could be
the greatest in the world. For companies such as BP, Shell, ExxonMobil and dozens of
Chinese, Russian, Korean and French groups, the challenges involved are equally daunting.
Iraqs infrastructure remains shattered. BP will not only have to import rigs and
equipment but also build new roads, power stations, pipelines and shipping terminals at a
cost of billions. 'Mission creep' may be a military term but Western oil executives use
the same phrase to describe their fear of being drawn into the sort of nation-building
activities that Donald Rumsfeld fretted about in 2003. One of the biggest problems is an acute lack of water. Many of the big
oilfields awarded to foreign companies by the Iraqi Government were originally discovered
in the 1950s and 1960s. They still contain huge reserves but the crude must now be pumped
out artificially by injecting water into underground rock formations. Exxon, BP, Shell and
others are pressing ahead with a $10 billion (£6.4 billion) scheme to pipe seawater from
the Persian Gulf into the deserts of southern Iraq. The International Energy Agency
estimates that more than $160 billion of investment will need to be poured into
Iraqs oil industry by 2017." |
"Oil headed for its biggest weekly gain in a month on
speculation that U.S. fuel demand will increase as the economic recovery gathers pace in
the world’s biggest oil consumer.... The January contract was at $87.94 a
barrel, down 6 cents, or 0.1 percent, in electronic trading on the New York Mercantile
Exchange at 3:22 p.m. Singapore time. It closed yesterday at $88 a barrel, the highest
since October 2008. U.S. employers added 150,000 workers last month, a Bloomberg survey
showed before the Labor Department report today. Data yesterday showed pending sales of
U.S. existing houses unexpectedly jumped by a record 10 percent in October, while claims
for jobless benefits over the past month on average dropped to a two-year low. Brent crude
for January settlement was at $90.81 a barrel, up 11 cents, on the London-based ICE
Futures Europe exchange. The contract increased
$1.82, or 2 percent, to end the session yesterday at $90.69, the highest close since Oct.
1, 2008." |
"The US shale gas boom has the hallmarks of a
technology bubble: firms need continual re-capitalization but their gas output is not
demonstrably profitable. Value is instead based on reserves and technology. The switch from gas to oil suggests shale gas can survive only through
cross-subsidization not on its own merit. Perpetual expansion cannot forever disguise a serious problem with the
bottom line. Shale gas has been an extraordinary
success in the United States, changing the country's gas balance from one of growing
importer to potential exporter. It has reversed the decline in US proved natural gas
reserves and boosted production to such an extent that storage is close to capacity and
prices have dropped significantly. The claims made by the shale gas industry are that they
have discovered sufficient gas reserves to supply the US with cheap natural gas for the
next 100 years. Not only that, but they have now claimed that they can produce shale gas
at prices below $1/MMBtu. The US success story has not gone unnoticed around the world and
major integrated oil and gas companies have spent billions buying into US shale reserves
and accessing the relevant drilling technology.... In Europe, shale gas has met its
skeptics. They argue that Europe's shale resources are unproven, that harsher
environmental regulation, less amenable subsurface rights and more densely populated
regions will all retard the industry's development. Significantly, the barriers to shale
gas development in Europe are all regionally specific. They take for granted that the fundamental economic case for shale gas
production is sound. Unfortunately, there are some good reasons to think otherwise. ..... Chesapeake Energy is probably the most well-known shale gas company
in the US, and, as such, the entire world. It has expanded aggressively and holds large
positions in the major US shale plays. It can boast exceptional share price growth since
its beginnings in 1992, backed by increasing production and an expanding resource base.
The company is emblematic of the shale gas revolution...... despite the impressive expansion, growing production, the huge reserves,
and the equally huge expenditures, Chesapeake does not appear to have created a base from
which it can derive a steady and sustainable profit.
Chief executive officer Aubrey McClendon described 2009 as 'a very successful year for
Chesapeake,' but the company saw a net income loss of $5.83 billion, which effectively
wiped out all the net income reported by the company since its foundation. Since 1992, the
company has reported a cumulative net income of minus $368 million. And this is before the
precipitous fall in US natural gas prices in 2010. Chesapeake's operating costs have been
growing faster than production since 1999, while the sales price of the gas produced has
been falling since 2006. 1999 appeared to be a breakthrough year. Excluding oil, in 1998,
Chesapeake had spent $1.234 billion in operating costs to produce 94 Bcf of natural gas.
In 1999, it spent just $247 million to produce 109 Bcf of gas, the equivalent of $2.266
million per Bcf of gas produced. However, this figure has risen steadily since, hitting
$7.86 million per Bcf of gas produced in 2007, $13.13 million in 2008 and $19.94 million
in 2009." |
"Expectations of
demand from Chinese nuclear reactors has pushed uranium spot prices to recent highs and
threatens to cause a supply deficit. China's need
for nuclear fuel to serve its growing energy requirements had heightened the potential for
supply problems in the uranium industry, Laramide Resources and Australia's Encounter
Resources said on the sidelines of the Mines and Money Conference in London....Encounter's
exploration director, Peter Bewick, said: "We have seen the spot price go up to above
$US60 a pound, which is certainly at least a 50 per cent rise in the last four months. 'When the weapons processing program finishes in 2013 there is
just generally a shortage of uranium going forward -- so it is a supply-demand issue.' In
the post-Cold War era, secondary sources of the metal, such as from decommissioning
Russian nuclear weapons, became a significant supply for the energy industry. Steve Kidd,
director of strategy and research at the World Nuclear Association, told the conference
that 'primary supply does need to increase sharply' due to increased demand, especially
from China. He said in order to achieve this,
development companies 'need to talk to the Chinese about off-take agreements and equity
investments, but they will (eventually) come running when they need more supply in
2020'." |
"The Obama administration
is considering forcing energy companies to reveal more details about the chemicals they
use to help extract natural gas
from public lands, Interior Secretary Ken Salazar said Tuesday. The federal government is
weighing the new disclosure requirements for natural gas wells on public lands that are
stimulated using a technique called hydraulic fracturing, amid
mounting fears that the practice can contaminate nearby drinking water supplies. 'There is a bright future with respect to natural gas in the United States of America,' Salazar
said at an Interior Department forum. But, he added, the nation must 'move forward in a
way that can reassure the American public that what we are doing is in fact safe and is
protective of the environment.' Energy companies use hydraulic fracturing techniques -
high-pressure injections of water, sand and chemical mixtures deep underground - to
release natural gas locked in shale rock formations. Combined with horizontal drilling,
hydraulic fracturing, called 'fracking' in oil field parlance, is allowing companies to
produce gas from rock that is barely permeable, unlocking what industry analysts generally
describe as a 100-year supply of natural gas. But environmentalists worry that chemicals
used in fracking or natural gas escaping from poorly designed wells could taint water
sources. On Monday, those fears prompted the New York State Assembly
to pass legislation that would bar approvals of new hydraulically fractured wells in the
state until May. The state Senate passed the measure earlier this year, and New York Gov.
David Paterson is expected to sign the moratorium into law." |
"BP has risked further anger from environmental groups
by committing to the development of its Canadian oil sands project, calling it 'a
significant milestone' for the company. BP, which owns 50pc of the Sunrise oil sands
project in northern Alberta but will spend the first $2.5bn on the scheme, said it was 'a
significant milestone' for the company. It added that the development represented a
'40-year secure and stable source of production for North America'. The Canadian
investment is the oil major's first large commitment since the Gulf of Mexico oil spill on
April 20 and reflects the company’s plan to seek growth by making large
investments in a few selected areas. BP's partner in
the project, Husky Energy, predicts that Sunrise will produce 60,000 barrels of oil per
day from 2014. BP believes the site has reserves in excess of 3bn barrels, with the
potential to produce more than 200,000 barrels a day." |
"Two past episodes offer important lessons: the Great
Depression of the 1930s and the 'lost decade' associated with the debt crisis of the
1980s. In the 1980s many countries were hit
by adverse world market conditions in the aftermath of the second oil shock the fall in production and rise in prices prompted by the
Iranian revolution and the Iran-Iraq war which made servicing their debts
difficult. After Mexicos inability to meet its obligations in 1982, other
governments unilaterally rescheduled their debts to postpone repayment." |
"Two past episodes offer important lessons: the Great Depression of the
1930s and the 'lost decade' associated with the debt crisis of the 1980s. In the 1980s many countries were hit by adverse world
market conditions in the aftermath of the second oil shock the fall in production and rise in prices prompted by the
Iranian revolution and the Iran-Iraq war which made servicing their debts
difficult. After Mexicos inability to meet its obligations in 1982, other
governments unilaterally rescheduled their debts to postpone repayment." When defaulting was all the rage Sunday Times, 28 November 2010 |
"Cameco has agreed to supply 29
million pounds of uranium concentrate to state-owned China Guangdong Nuclear Power Holding
Co. (CGNPC) under a long-term agreement through 2025. China's largest clean-energy
enterprise operates three nuclear power stations and is building another 14 nuclear power
plants, the most currently under construction worldwide. Earlier this month, CGNPC signed
a 10-year supply deal with Kazakhstan's Kazatomprom for approximately 5.3 million pounds
per year, as well as a US$3.5-billion, 5.6 million pounds per year agreement with Areva. The current rally in uranium stocks was sparked by Cameco's deal in June
to supply China National Nuclear Corp. with 23 million pounds of uranium concentrate
through 2020. " |
"Toshiba Corp. has signed a
memorandum of understanding with Mongolia's MNFCC LLC agreeing to discussions on
cooperation in the development of Mongolia's mineral resources, including uranium, rare
earth and rare metals products. Many of the obscure
minerals, metals and their oxides are used in electronics manufacture and have been rising
in price in recent years as China has developed a monopoly position in their supply. In
July China reduced rare earth export quotas for the rest of the year by 72 percent,
inflating prices more than six-fold for some rare earth materials vital to the energy,
military, electronics and manufacturing sectors. China just has begun exporting rare
earths to Japan after a two-month suspension due to a territorial row." |
"Cameco has agreed to supply 29
million pounds of uranium concentrate to state-owned China Guangdong Nuclear Power Holding
Co. (CGNPC) under a long-term agreement through 2025. China's largest clean-energy
enterprise operates three nuclear power stations and is building another 14 nuclear power
plants, the most currently under construction worldwide. Earlier this month, CGNPC signed
a 10-year supply deal with Kazakhstan's Kazatomprom for approximately 5.3 million pounds
per year, as well as a US$3.5-billion, 5.6 million pounds per year agreement with Areva. The current rally in uranium stocks was sparked by Cameco's deal in June
to supply China National Nuclear Corp. with 23 million pounds of uranium concentrate
through 2020. " |
"Toshiba Corp. has signed a memorandum of understanding with
Mongolia's MNFCC LLC agreeing to discussions on cooperation in the development of
Mongolia's mineral resources, including uranium, rare earth and rare metals products. Many
of the obscure minerals, metals and their oxides are used in electronics manufacture and
have been rising in price in recent years as China
has developed a monopoly position in their supply. In July China reduced rare earth export
quotas for the rest of the year by 72 percent, inflating prices more than six-fold for
some rare earth materials vital to the energy, military, electronics and manufacturing
sectors. China just has begun exporting rare earths
to Japan after a two-month suspension due to a territorial row." |
"For a glimpse
of a truly scary future dependent on volatile suppliers look no farther than Mr
Huhnes favoured approach, the dash for wind. Every wind turbine has a magnet made of
a metal called neodymium. There are 2.5 tonnes of it in each of the behemoths that have just gone
up to spoil my view in Northumberland. The
mining and refining of neodymium is so dirty (involving repeated boiling in acid, with
radioactive thorium as a waste product), that only one country does it: China. This year
it flexed its trade muscles and briefly stopped exporting neodymium from its inner
Mongolian mines. Hows that for dangerous reliance on a volatile foreign supply?....
The chief reason that living standards shot up in the Industrial Revolution was cheap
energy. Coal had a peculiar property that marked it out from wood, wind and water: it
became less costly the more of it you dug up. The drop in the price of energy compared
with labour spurred the replacement of toil with automation, thus collapsing the price of
fulfilling human needs and desires." |
"Many countries have started to promote the use of biofuels as part
of their commitment to reducing greenhouses gas (GHG) emissions and combating climate
change. Member states of the EU, for instance, are legally required to derive 10% of their
transport fuels from renewable sources that cut GHG emissions compared to fossil fuels by
2020. South Africas draft biofuel strategy calls for a mandatory 4.5% biofuel
component in road transport fuel by 2013.... Studies have shown that there simply
isnt enough arable land to quench our fuel-thirst on biofuels. If current US and EU
biofuel targets were to be met domestically, almost all of the soy and maize grown in
North America would have to be used and Europe would be left with only about a third of
its farmland to grow food on.... Earlier this month,
a study commissioned by the Institute for European Environmental Policy estimated that in
order to meet the EUs 2020 biofuel targets, an additional 4.1 to 6.9 million
hectares of land will have to be cultivated much of it in developing countries
resulting in 80 to 167% more GHG emissions than if the demand was met through
fossil fuels. The verdict? Biofuels are a dead end.
While they can provide a limited amount of truly green and sustainable transport fuel,
biofuels will never be able to satisfy our current fossil fuel addiction. Electric
vehicles powered by renewable solar and wind energy, once they are widely available, are a
much better bet." |
"China's crude oil imports from Saudi Arabia will likely rise 11
percent next year to hit one million barrels per day, a pace slightly faster than 2010 but
off the heady increases in previous years, industry officials told Reuters. China's
refining expansion is expected to moderate next year and rising competition of mostly
Russian oil via a Siberian pipeline means import growth for the high-sulphur Saudi oil
would be limited, they said. At one million bpd,
China stands a touch behind the United States as the Kingdom's second-largest crude buyer.
US Energy Information Administration data showed
Riyadh supplied 1.07 million bpd in the first eight months of 2010 to the U.S., largely
flat from a year earlier." |
"Economic global coal reserves
will run out faster than expected because of overly optimistic estimates and accelerating
demand, leading to a surge in prices, Nature
magazine reported in its Nov. 18 issue. 'The inevitable result of soaring demand and
dwindling supply will be rising coal prices globally, even in nations that are currently
self-sufficient in the resources,' Richard Heinberg
and David Fridley, fellows at the Post-Carbon Institute in Santa Rosa,
California wrote in an article in the magazine. 'Energy policies relying on cheap coal
have no future.' China last year
imported a record amount of coking coal, used for steelmaking, while India almost doubled
purchases of energy coal for its power stations, pushing takeover activity in the sector.
China, the worlds biggest producer and consumer of coal, has coal resources of 187
billion metric tons, second to the U.S., according to data
collected in the 2000-10 national resource survey by Chinas Ministry of Land and
Resources, or about 62 years worth of coal, according to Heinberg and Findley. 'But
the overwhelming global trend, as revealed by national coal surveys over the past few
decades, is for the size of countries estimated reserves to shrink as geologists
uncover restrictions,' Heinberg and Fridley said. 'Coal
consumption is accelerating fast. This renders meaningless reserves-lifetime figures
calculated on the basis of flat demand.' The peak of world coal supply 'may be only years'
away as the worlds highest quality and most accessible coal reserves are depleted in
light of growing demand, Heinberg and Fridley said, citing scientific studies." |
"The Copenhagen accord, a non-binding document which was the best
that could be salvaged from the summit, talks of trying to keep the world less than 2°C
warmer than in pre-industrial timesa level that is rather arbitrarily seen as the
threshold for danger. Many countries have, in signing the accord, promised actions that
will or should reduce carbon emissions. In the World
Energy Outlook, recently published by the International Energy Agency, an assessment of
these promises forms the basis of a 'new policies scenario' for the next 25 years (see
chart 1). According to the IEA, the scenario puts the world on course to warm by 3.5°C by
2100. For comparison, the difference in global mean temperature between the pre-industrial
age and the ice ages was about 6°C. The IEA also looked at what it might take to hit a
two-degree target; the answer, says the agencys chief economist, Fatih Birol, is 'too good to be believed'. Every
signatory of the Copenhagen accord would have to hit the top of its range of commitments.
That would provide a worldwide rate of decarbonisation (reduction in carbon emitted per
unit of GDP) twice as large in the decade to come as in the one just past: 2.8% a year,
not 1.4%. Mr Birol notes that
the highest annual rate on record is 2.5%, in the wake of the first oil shock. But for the
two-degree scenario 2.8% is just the beginning; from 2020 to 2035 the rate of
decarbonisation needs to double again, to 5.5%. Though they are unwilling to say it in
public, the sheer improbability of such success has led many climate scientists,
campaigners and policymakers to conclude that, in the words of Bob Watson, once the head
of the IPCC and now the chief scientist at Britains Department for Environment, Food
and Rural Affairs, 'Two degrees is a wishful dream.' The fight to limit global warming to
easily tolerated levels is thus over. Analysts who
have long worked on adaptation to climate changefinding ways to live with scarcer
water, higher peak temperatures, higher sea levels and weather patterns at odds with those
under which todays settled patterns of farming developedare starting to see
their day in the uncomfortably hot sun. That such measures cannot protect everyone from
all harm that climate change may bring does not mean that they should be ignored. On the
contrary, they are sorely needed. Many of these adaptations are the sorts of
thingmoving house, improving water supply, sowing different seedsthat people
will do for themselves, given a chance. This is one reason why adaptation has not been the
subject of public debate in the same way as reductions in greenhouse-gas emissions from
industry and deforestation have. But even if a lot of adaptation will end up being done
privately, it is also a suitable issue for public policy. For a start, some forms of
adaptationflood barriers, for instanceare clearly public goods, best supplied
through collective action. Adaptation will require redistribution, too. Some people and
communities are too poor to adapt on their own; and if emissions caused by the consumption
of the rich imposes adaptation costs on the poor, justice demands recompense. Furthermore,
policymakers neat division of the topic of climate change into mitigation, impact
and adaptation is too simplistic. Some means of adaptation can also act as mitigation; a
farming technique which helps soil store moisture better may well help it store carbon
too. Some forms of adaptation will be hard to distinguish from the sort of impact you
would rather avoid. Mass migration is a good way of adapting if the alternative is sitting
still and starving; to people who live where the migrants turn up it may look awfully like
an unwelcome impact....Even if the world contrives to keep feeding itself without too much
ecosystem damage, many of those dependent on agriculture or in poverty could still suffer
a great deal. Regional droughts could wreak havoc, with bad ones causing global surges in
food prices." Facing the consequences Economist, 25 November 2010 |
"New European Union proposals for a tough cut in carbon dioxide emissions would have only a limited impact on the global warming process, International Energy Agency chief economist told Reuters on Monday. The EU has agreed a goal to cut greenhouse gas emissions by at least 20 percent by 2020 compared with 1990 levels, but proposals have surfaced that the cut should reach 30 percent. Fatih Birol, of the IEA, said the gains from the tougher EU reduction target would roughly equal only two weeks of China's emissions. 'The United States and China are essential for combating climate change globally. We estimate extending Europe's plan to cut emissions from 20 to 30 percent would roughly equal China's two-week gas output,' Birol said in an interview. Birol was skeptical about the chance of a breakthrough in the forthcoming United Nations climate summit in Mexico. 'The wind is not blowing in the right direction for fighting global warming. Frankly, there are virtually no chances for the Cancun summit to end in legally binding agreement,' Birol said, adding, 'I would be very happy to be proven wrong on this.'"Global impact of EU 30 pct carbon cut small:IEA Reuters, 22 November 2010 |
"Cameco Corp (CCO.TO) signed a
long-term agreement to supply 29 million pounds of uranium concentrate to China's
state-owned nuclear power company, at a time when
the Asian superpower steps up its ambitious nuclear power programme. China Guangdong
Nuclear Power Holding Co Ltd (CGNPC), the country's largest clean-energy enterprise,
operates three nuclear power stations and is constructing 14 nuclear power plants. Cameco
has agreed to supply uranium concentrate through 2025, it said in a statement late on
Tuesday. CGNPC has about 17,000 megawatts (MW) of
nuclear capacity under construction and expects over 50,000 MW by 2020. 'This long-term supply agreement with China Guangdong Nuclear Power is a
significant step for our company in the world's fastest growing uranium market,' Cameco
Chief Executive Jerry Grandey said. By 2010, China
aims to produce 80-112 gigawatts (GW) of electricity from nuclear power, up from the
current capacity of 11 GW. It will need an additional 82 million pounds of uranium to
start and fuel those new reactors. Camceo, the largest uranium producer in Canada, said
its expectation to double production by 2018 aligns well with China's nuclear reactor
construction program. Global uranium demand is expected to grow 32 percent by 2015,
according to RBC Capital Markets, a forecast that
already has uranium producers' share prices climbing." |
"Uranium Energy Corp. (UEC) Chief Executive Amir Adnani expects
prices for the radioactive metal to continue rising on tighter supplies over the next few
years amid growing demand from the nuclear-power sector. 'Mine
production for uranium is basically only enough to meet two-thirds of current demand,' or about 15 million pounds a year, Chief Executive Amir Adnani said. 'Over the next two to three years, you are going to have a very
tight uranium market on the supply side,'..." |
"Lord Jacob Rothschild and
Rupert Murdoch have invested in an Israeli venture to produce oil from bituminous-bearing
rock (shale) in the Elah Valley in the Judean foothills. Last week, they acquired 11% in equal shares of Genie Energy Corporation
unit Genie Oil and Gas Inc. for a total of $11 million. Genie Energy, a subsidiary of IDT
Corporation (NYSE: IDT), is the parent company (89%) of Israel Energy Initiatives Ltd.
(IEI), which holds an exclusive shale oil exploration and production license covering 238
square miles in the Adulam district, which is between Beit Shemesh and Beit Guvrin. The
company believes that its shale oil cracking technology can free the world from dependence
on Arab oil and turn Israel into an energy powerhouse able to produce 300 billion barrels
of non-conventional oil at a cost of up to $40 per barrel....Negotiations with Lord Jacob
Rothschild and Murdoch began six months ago, and Lord Rothschild visited Israel during
that time. Genie is involved in similar projects in Colorado and Mongolia. IEI president
Effie Eitam, who served as minister of national infrastructures in the Sharon government,
told 'Globes' that IEI hopes to obtain a permit from the regional planning and building
commission within days to carry out a pilot shale oil project on a six-dunam (1.5-acre)
site in the Elah Valley. Local residents strongly oppose IEI's venture. They fear possible
environmental damage from the drilling. Residents claim that the drilling will harm the
Adulam District's vistas and nature, as well as its vineyards, which have been called the
Israeli Provence.....In July 2008, IEI obtained its shale oil and exploration license from
the Ministry of National Infrastructures. Under the license terms, the company has to
launch a pilot project to produce 500 barrel of oil in the Elah Valley by mid-2011. The project will heat shale strata at a depth of 300 meters to a
temperature of 300 degree Celsius for two years." |
"The UK must speed up the switch
to alternative energy sources to protect the country from the impacts of rising oil
prices, business leaders have urged. The group of companies warned that in the wake of the
Gulf of Mexico oil spill, tightened regulation of deep water drilling could see oil prices
rise, threatening the UK economy within the next five years. Sir Richard Branson, founder
of Virgin Group, one of the businesses in the UK industry taskforce on peak oil and energy
security, said the disaster in the Gulf of Mexico had increased the chances of an 'oil
crunch' in the coming decade. He said: 'This will
lead to much higher sustained prices which will in many ways rival the impact of the
credit crunch of 2007 on UK growth, jobs and stability. 'The time to take out our
insurance policies against such an outcome is now. We must do this to avoid the horrible
shocks to the UK economy which will be mirrored in many other parts of the world.' The
taskforce, which includes companies such as Arup, Solarcentury, Stagecoach group, Scottish
and Southern Energy and Virgin, said deep water drilling would become increasingly
important as it was likely to provide 29% of new capacity by 2015, compared to 5%
today." 'Oil crunch' prompts energy warning Press Association, 18 November 2010 |
"Oilpatch capital costs are
slowly rising back to precession levels, according to a report by a prominent U.S. energy
think-tank. According to IHS CERA's downstream capital cost index -- the group's version
of a consumer price index -- the costs of building a large processing facilities such as
refineries jumped three per cent from the start of the year and are just four per cent
below the 2008 peak. According to IHS, a combination
of factors including higher oil prices and a weaker U.S. dollar contributed to the rise,
along with a stronger global economy.... In a news release, IHS CERA said the current
index rose from 175 to 180 in six months. The values are indexed to the year 2000, meaning
that a project that cost $100 in 2000 would cost $180 today." IHS CERA study says oilpatch costs rising Ottowa Citizen, 18 November 2010 |
"New forecasts suggest that coal
reserves will run out faster than many believe.
Energy policies relying on cheap coal have no future, say Richard Heinberg and David
Fridley. World energy policy is gripped by a fallacy the idea that coal is destined
to stay cheap for decades to come. This assumption supports investment in 'clean-coal'
technology and trumps serious efforts to increase energy conservation and develop
alternative energy sources." |
"It took just 32 seconds to extinguish faith in the airship and the
hydrogen that once buoyed the Hindenburg, which erupted in a fatal inferno 73 years ago. Now hydrogen is being dropped again by the aviation industry. But
this time the promised 'green' fuel for powering flights of the future has been quietly
shelved in favour of biofuels and more fossil fuel-sipping aviation. And while hydrogen as a potential 'greener' fuel for foreseeable flights
gets dumped worldwide, airlines and aircraft manufacturers are also jettisoning their once
radical ideas for such hydrogen-burning, sci-fi-like, cryoplanes....Three times more
efficient than oil but four times bulkier - even in its liquid state - hydrogen already
powers several prototype cryoplanes around the world. But despite the millions poured into
research, the promised commercialisation of such aircraft has to come to nothing as
hydrogen failed to prove itself any greener then other energy sources. 'The energy costs
of making hydrogen are enormous,' Professor Ian Poll, head of technology for the UK
government-funded sustainable aviation Omega organisation tells the BBC. 'Currently it has
to be created with an awful lot of energy. We need a source of electricity to make
hydrogen that does not emit CO2, and there are not many of those around.'.... just 12
years ago, experts and much of the aircraft industry seemed bullish about hydrogen's
chances as the new super fuel. Generated from hydropower, liquid hydrogen they thought
would be the ultimate non-polluting fuel source that, with some modification, be readily
used by today's aircraft. Radical redesign of the world's airline fleet was planned to
carry the bulky liquified gas. The result would have been new-look cryo-jets reminiscent
of Thunderbird 2, with short wings and a bulging fuselage containing the liquified
gas..... Researchers found that aircraft would require fuel tanks four times larger than
today's. Models showed that the larger exterior surface areas would increase energy
consumption by well over a tenth, and overall operating costs by around 5%. Despite the
drawbacks, reactions from the air industry were positive, with Airbus and its partners
Daimler-Benz Aerospace avowing a goal of replacing kerosene with hydrogen to run their
engines by 2020. But for the aerospace giants, hydrogen's appeal is now much diminished,
and the emphasis seems to be on making fossil fuels go further. 'Kerosene is a very good
fuel and very difficult to compete with,' explains Rainer von Wrede who works in Airbus's
research and technology department. 'In principle it is possible to fly with hydrogen and
we have a proof of concept but for the moment we can not produce enough hydrogen in an
environmentally friendly manner for aviation.' Where Airbus, and the aviation industry as
a whole, is devoting its research is into reducing consumption further and committing to
developing what it calls greener synthetic kerosene and leaner planes and engines.
Hydrogen, nuclear-powered planes, solar and electric powered commercial aircraft have all
been shelved for the short- to mid-term." |
"The implications of the
International Energy Agency's (IEA) new report, World Energy Outlook 2010, are stark. Its
25-year 'New Policies Scenario' projects it is most probable that conventional crude oil
production 'never regains its all-time peak of 70 million barrels per day reached in
2006.' In this scenario, crude oil production is
most likely to stay on a plateau of around 68 million to 69 million barrels per day. There
you have it. We are now, in all likelihood, living in a 'post-peak' world.... Is this the
end of industrial civilization as we know it? The IEA insists: not yet. Despite the peak
of conventional oil production, the IEA concludes that total growth in liquid fuels from
other unconventional sources - like tar sands, oil shale and natural gas liquids - will
not only make up for the shortfall in crude but actually rise as high as around 99 million
barrels per day until around 2035. Despite this apparent optimism - under this scenario,
there are no imminent fuel shortages - we have passed a historic tipping point. In the words of IEA Chief Economist Fatih Birol, 'The age of cheap oil is over.' The problem is that unconventional
sources of oil and gas are far more expensive to get out of the ground and process into
usable petroleum and are environmentally problematic. This means that over the next
decade, oil prices are likely to significantly increase. Driven largely by industrial growth in places like China and India,
demand is projected to grow 36 percent up to 2035; at which point, the price of oil will
rise beyond $200 a barrel. On the way, by around 2015, we could see price hikes above $100
a barrel. Unfortunately, a large body of independent
scientific literature suggests the IEA's favored scenario is far too optimistic on a whole
range of issues. The agency forecasts, for instance, that Iraq will be able to triple its
production by 2035 and that Saudi Arabia's production will double. Yet this looks rather
unlikely. IHS Cambridge Energy Research Associates, a leading energy consultancy firm
vehemently opposed to the idea of peak oil, nevertheless projects the most we can hope is
for Iraq to increase its output to 6.5 million barrels per day by 2020 - half of Iraq's
actual target.... The IEA's hopes that
unconventional oil and gas could rise rapidly to meet expected demand may also be
misplaced. 'If conventional oil production is at peak production, then projected
unconventional oil production cannot mitigate peaking of conventional oil alone,'
concluded a study by University of Newcastle chemical engineer Steve Mohr, published in
Energy Policy. A Boston University study concurred,
finding that the Energy Return on Investment (EROI) - the energy you get out compared to
what you put in - is simply infinitesimal, at around 1:1 or 2:1, compared with
conventional oil's EROI at the well head of 20:1....
If the IEA is right about everything, we are in for a
rough ride. But if, as the above suggests, the IEA is right about us passing the peak of
conventional oil in 2006 but almost fanatical in its faith in the prospects for expanded
production from unconventional sources, then we are in for an even rougher ride. The 'post-peak' world clearly does not imply the end of the world. But it
does imply an extremely volatile one whose dynamics will be difficult to predict. It is a
world not of easy abundance, but of declining - and increasingly expensive - carbon-based
resources. If we are to develop sufficient resilience to the various price shocks and
converging crises of the 'post-peak' world, we will need to recognize they are symptomatic
of an inevitable civilizational transition toward an emerging post-carbon age. There is no
time for denial. Governments and communities need to start adapting now." |
"What about
unconventional gas? Although EROI is quite high at inception, the EROI of all gas
production rapidly declines as energy costs of compression and distribution to consumers
is factored in. An extensive analysis by former Amoco
petroleum geologist and World Oil columnist Arthur Berman, who has consulted for
ExxonMobil and Total, fundamentally undermines industry forecasts for natural gas
production based on shale gas inputs. He argues that actual shale gas production rates are
less than half of official industry projections - this is because production decline rates
at shale wells are far higher than assumed. 'Many
believe that the high initial rates and cumulative production of shale plays prove their
success,' Berman says. 'What they miss is that production decline rates are so high that,
without continuous drilling, overall production would plummet. There is no doubt that the
shale gas resource is very large. The concern is that much of it is noncommercial even at
price levels that are considerably higher than they are today." |
"The idea of peak oilthe
point at which global production reaches its maximumhas fixated the energy industry
for years. Now, China is grappling with a new worry: peak coal. State-run media reported
that Beijing is considering capping domestic coal output in the 2011-2015 period, partly
because officials worry miners are running down reserves too quickly to meet the needs of
a rapidly expanding economy. 'China accounts for around 14% of global coal reserves but
its share of global coal consumption is already over triple that at 47%, which is
unsustainable,' Hong Kong-based brokerage CLSA Asia-Pacific Markets said in a report last
month. Imposing a cap would be significant as
China's mining sector is already finding it hard to keep up with domestic coal demand, which has grown around 10% annually over the
past decade. Its net coal imports exceeded 106 million metric tons in the first nine
months of the yearhigher than the level for 2009 as a wholeand state companies
have been aggressively acquiring overseas coal assets to secure long-term supply. In the three years to September 2010, Chinese companies spent $20.96
billion on overseas coal-sector acquisitions, according to Dealogic. An output ceiling
would also underpin regional coal prices, which are near six-month highs on expectations
that China will import record volumes of coal this month and in December. While China
hasn't declared publicly it will impose a coal production cap, the idea is gathering
momentum.... Policy makers are mulling an annual cap of between 3.6 billion tons and 3.8
billion tons in the next five-year plan, running from 2011 to 2015, the state-run Xinhua
news agency reported earlier.... Even if no official limits are introduced, China can't
keep growing coal output much beyond another decade, analysts say. The mining sector is
constrained by chronic infrastructure bottlenecks, especially road and rail, and those
coal deposits that are easiest to mine have already been tapped. Experts are starting to
predict when China's coal reserves will run outa nightmare scenario in a country
where 70% of its energy is derived from coal. According to BP PLC,
China can only continue at current rates of production for 38 years before its coal
reserves are exhausted. That compares with 245 years in the U.S., and 105 years in India.
BP estimates that China had 114.5 billion tons of proven coal reserves at the end of 2009,
ranking it third behind the U.S. and Russia. The International Energy Agency says China
could have as much as 189 billion tons of coal that it hasn't tapped yet.... not all coal
has the same energy content. That's significant as many new discoveries in Inner Mongolia
are of poorer quality than the coal reserves being depleted in Shanxi. But the strength of
China's coal demand, and moves by miners to raise output in step, is worrying the market
as well as Beijing. Even if China's annual coal demand growth halved to 5% then the
country would run out of coal in 21 years unless it finds material new deposits, CLSA
says, using 114.5 billion tons of reserves as a benchmark." |
"Paladin Energy Ltd., the
Australian mining company producing uranium in Africa, expects prices to keep rising as China drives demand for nuclear fuel. China has 'piled up' contracts to import uranium, Paladin Chief
Executive Officer John
Borshoff told analysts on a call today. 'Although they have sucked a chunk out of new
production, they are nowhere near their target of acquiring in the vicinity of 45 to 50
million pounds per annum by 2020.' |
"Global production of crude
probably peaked in 2006, and increasing demand will
have to be met from more-difficult-to-extract forms of oil such as tar sands, International
Energy Agency Chief Economist Fatih Birol said. 'The age of cheap oil is over,' Birol said at a conference in Madrid today.... The depletion of crude reserves
may benefit countries such as Canada and Venezuela, which have tar sands that yield oil. Those resources are more expensive to extract and only become
economical when the price of oil rises." |
"Norway, the worlds
second-biggest natural-gas exporter, expects increased demand
will reduce a glut of the fuel more quickly than forecast by the International Energy
Agency, according to its Oil Minister. An excess of supply capacity will peak at more than
200 billion cubic meters next year, from 130 billion in 2009, before starting 'a hesitant
decline' to at least 150 billion in 2020, the IEA said in a report this month. The Paris-based agency defines the glut as the capacity of inter-regional
pipelines and LNG export plants minus the volume of gas actually traded. 'Im a little bit surprised to hear that the IEA is
projecting a glut of natural gas for the next ten years, this is contrary to the message I
get from the industry and other market advisers who say that much of the gas surplus has
already disappeared,' Terje
Riis-Johansen said today in an Oslo interview. 'We see an imbalance in the market now,
but we believe this will stabilize itself relatively soon.'.... 'The size of the gas glut will go down, but it may be with us for
some time to come,' Fatih
Birol,
chief economist at the agency, said today at a conference in Oslo.... Producers and buyers have diverging forecasts for how long the
glut will last. E.ON Ruhrgas AGs chief executive officer said last week he expected
the glut to peak in two or three years and last a decade. Total SA said the oversupply will be absorbed by surging demand for the
fuel in China and India. 'We see a market that is in the process of normalizing itself,'
Riis-Johansen said. 'The role of gas will be significant going forward and well see
a switch from coal to gas, which will ensure a stable delivery of Norwegian gas.' The
countrys gas production doubled
in the past decade and is forecast to stabilize at 105 billion to 112 billion cubic meters
a year until 2014 because of a lack of any large discoveries. The country, the
worlds seventh-biggest oil exporter, plans to boost gas output as oil production
from its North Sea fields is forecast to decline for a 10th consecutive year, according to
the Norwegian Petroleum Directorate." Norway Says Natural-Gas Glut Will Shrink, Markets Stabilize Soon Bloomberg, 15 November 2010 |
"High oil prices are hindering economic recovery and it would not be
in the interest of the oil-producing OPEC states to see oil above $90 per barrel, the
chief economist of the International Energy Agency (IEA) said. Asked if the current price
of oil was starting to damage the economy, IEA chief economist Fatih Birol told Reuters on
Monday: 'At these high level of prices, it would
definitely be a problem for economic recovery. This may well strangle the economic
recovery of many... countries.' Oil prices were
above $85 a barrel on Monday. Asked if he though OPEC would change supply if oil prices
topped $90, Birol said: 'I think if it goes above $90 it is not a good thing for OPEC
countries as well'." INTERVIEW - IEA says oil prices strangling recovery Reuters, 15 November 2010 |
"Uranium buyers in the US 'have
been a bit slow in realizing a major supply crunch is coming,' Uranium One CEO Jean
Nortier said Monday during the company's
third-quarter results conference call with analysts. Nortier said US utility buyers are
'more willing to buy at market prices, but we're not seeing a desperate scramble for
supply', Nortier said, in contrast to the behavior on the part of Asian buyers who are
locking in long-term supplies. The spot uranium price has risen by almost $17/lb U3O8
since June and ended last week at nearly $59/lb... Nortier
said China is the 'locomotive' driving the future supply crunch and rising prices in the
longer term. 'Nobody knows how much China will need to buy' to fuel its massive nuclear
power construction program, he said. 'Our view is they will buy every single pound they
can,' Nortier said." |
"Chinas natural gas supply
may not meet demand next year, Caijing magazine reported on its website today, citing Yang Jianhong, a deputy director at PetroChina Co.s planning
and engineering institute. The countrys natural gas supply may reach 130 billion
cubic meters, while demand may be as much as 140 billion square meters, the report said,
citing Yang." |
"Peak oil is not just here
its behind us already. Thats the conclusion of the International Energy
Agency [World Energy Outlook, 2010], the Paris-based organization that provides energy
analysis to 28 industrialized nations. According to
a projection in the agencys latest annual
report, released last week, production of
conventional crude oil the black liquid stuff
that rigs pump out of the ground probably topped out for good in 2006, at about 70 million
barrels a day. Production from currently producing oil fields will drop sharply in coming
decades, the report suggests.... The I.E.A.s stance that 2006 will be the year global
supplies of conventional oil reached their ultimate peak is a more pessimistic take than
its previous assessments. In 2008, the organization projected that conventional oil
production would continue to slowly climb for several more decades. Its current estimate
that enough new oil will be found to keep the oil supply roughly steady for the next 25
years is hardly ironclad, however, a point the report acknowledges in the executive
summary. 'Will peak oil be a guest or the spectre at the feast?' its authors ask. 'The
size of ultimately recoverable resources of both conventional and unconventional oil is a
major source of uncertainty for the long-term outlook for world oil production,' it
concludes." |
"The European Union's energy
commissioner has unveiled the main outlines of a proposed joint EU energy strategy for the
next 10 years. Presenting his 'Energy 2020' strategy paper in Brussels today, Guenther
Oettinger called for investment of up to a trillion euros ($1.4 trillion) to strengthen
infrastructure across the bloc. He also pleaded for
a common external energy policy, saying member states pursuing their own interests weaken
the EU's collective negotiating position. Reforming the energy sector is one of the
crucial challenges facing the EU as it attempts to modernize its economy and consolidate
its foreign policy stance. Oettinger said the bloc needs to start factoring the impact of
growing energy prices into its economic plans. 'We have rising energy prices, which are an
increasing problem both for the competitiveness of the industry as well as the social
well-being of EU citizens,' he said. To bring down costs, Oettinger said, the EU must
decrease its dependence on expensive fossil fuels, such as oil, gas, and coal, and invest
in renewable energy sources. Such a move would also help the bloc to counteract climate
change....Oettinger said ensuring the further diversification of the EU's energy supplies
is an important part of the 2020 energy strategy. However, he appeared to distance the
European Commission from calls to cut Russia's share in EU energy provisions and transit,
bracketing together the Nabucco and South Stream pipelines. 'We have a European interest
in the southern corridor. We believe that we need a long-term strategy for Europe and our
gas markets for the direct importation from [the Caspian region] of not only, but gas as
well,' he said. 'Nabucco is a possibility. There are [also] other pipelines, like South
Stream. It is decisive that we build direct
connections to the sources in the Caspian basin over the next decade.' Oettinger highlighted the expected contribution of the North Stream
pipeline between Russia and Germany currently under construction, which could amount to
more than 50 billion cubic meters (bcm) a year. Nabucco, on the other hand, is expected to
deliver a little more than 30 bcm annually in full flow." |
"The Kazakh National company Kazatomprom
and China Guangdong Nuclear Power Company (CGNPC) have today
signed in Astana a long-term contract on the purchase and sale of concentrates of natural
uranium. The document was signed following the talks of Kazakh Prime Minister Karim
Masimov and Chairman of the National Committee of the People's Political Consultative
Conference of China Jia Qinglin, ITAR-TASS reported. In April last year, Kazatomprom and
CGNPC signed a memorandum of understanding establishing a joint venture to build nuclear
power plants in China. The parties agreed that
Kazatomprom will supply to China 24,200 tons of uranium until 2020. During President Hu Jintao's visit to Kazakhstan in June, the sides
signed an intergovernmental agreement on cooperation in peaceful uses of atomic energy.
The contract on the purchase and sale of concentrates of natural uranium was signed
between Kazatomprom and CGNPC. Today, China is the
largest buyer of Kazakh uranium." |
"It was a looming doomsday scenario: 'Peak oil' would someday hit,
potentially sending food prices soaring, stock markets reeling, and countries to war to
seize and protect remaining oil reserves. Instead, the
International Energy Agency said Tuesday, peak crude oil already came and went unnoticed in 2006.
'The age of cheap oil is over,' Dr. Birol said in a telephone interview from Brussels. 'Governments and consumers should be prepared to pay higher oil prices.'
According to the IEA's World Energy Outlook, released Nov. 9, oil demand will increase to
99 million barrels per day (mbd) by 2035, up from 84 mbd in 2009. This will drive oil
prices over $200 a barrel by 2035, which is equivalent to $113 in 2009 real dollars. That
scenario assumes governments will implement broad policy commitments and plans that they
have already announced to reduce carbon emissions. But if governments continue at their
current pace of oil use, then by 2035 the price of crude oil will near $240 per barrel
($135 in real dollars) as demand rises to 107 mbd, according to the report. The IEA said
less developed nations will account for 93 percent of the projected increase in world
energy demand. China, in particular, is projected to account for 39 percent of rising
energy demand and 57 percent of rising global oil demand. Global crude oil production,
though, has already peaked, according to the IEA. The
difference between supply and demand will be made up from rising production of natural gas
liquids and unconventional oil, notably Canadian oil sands. Crude oil output will plateau
at about 69 mbd by 2015, according to the IEA, marginally below the all-time peak of 70
mbd reached in 2006. Total oil production, which
includes the oil sands and liquid gas, will not peak before 2035." |
"A glut in
global supplies of natural gas over the next decade threatens to blunt investment in
alternative sources of energy including wind, nuclear and solar power, the International Energy Agency said yesterday. Speaking at the
launch of the IEAs annual World Energy Outlook report, Fatih Birol, its chief
economist, said that the world was entering a 'golden age of gas' because of surging
production of shale gas using new technology developed in the United States. He said that
the IEA, the Paris-based agency that advises the Organisation for Economic Co-operation
and Development on oil and energy issues, was now predicting a global surplus of the fuel
of about 150 billion cubic metres annually in the years ahead. That is equivalent to
nearly double Britains annual gas consumption of 86 billion cubic metres, or 5 per
cent of world demand of 2,940 billion cubic metres. However, Dr Birol warned that
depressed prices for the fuel were boosting investment in gas-fired power stations and
having a knock-on impact on rival technologies considered critical for meeting
international carbon-reduction targets, which are now less competitive. 'Modest gas prices
will in turn have a negative impact on many alternative fuels, including renewables and
nuclear energy,' he said. 'We can already see the first evidence of this in the United
States.' He pointed out that several wind energy projects had been cancelled or postponed
in the US in recent months. 'Nuclear is the same. The advantage of gas is that you have a
very low capital cost compared with nuclear.'" |
"A glut in global supplies of natural gas over the next
decade threatens to blunt investment in alternative sources of energy including wind,
nuclear and solar power, the International Energy Agency said yesterday....In contrast, Dr Birol [IEA Chief Economist] said that the worlds production of
conventional crude oil may have already peaked as long ago as 2006. He said that oil
production from the worlds existing fields had hit a high of 70 million barrels per
day in 2006 but now stood at about 69 million barrels. He said that it was set for a
steady decline to 16 million bpd in 2035. This shortage of conventional supplies will help
to drive oil prices above $200 a barrel by 2035." |
"The availability of oil worldwide has already peaked, the European
Union's energy chief Guenther Oettinger said on Wednesday. 'My fear is that the global consumption of oil is going to increase, but
European oil consumption has already reached its peak. The
amount of oil available globally, I think, has already peaked,' Oettinger told a news briefing in Brussels. He was presenting a new EU
energy strategy for investing 1 trillion euros over the next decade in a common EU energy
network, to curb the bloc's dependence on fossil fuel imports." Global oil availability has peaked -EU energy chief Reuters, 10 November 2010 |
"Heres a finding that will
have any red-blooded American spluttering into his cornflakes. According to the Conference
Board, a highly respected economic research association, China will overtake the US as the
worlds biggest economy by 2012, or within two years. OK, so in dollar terms, thats obviously not going to be the case. It
will be a lot longer than two years before China overtakes the US on that measure. But in
terms of purchasing power parity, according to the
Conference Boards latest world economic outlook, China is already nearly there,
and by 2020 will have reached a size of output which is nearly half as big again as the
US.
Heres the Wkipedia link explaining what PPP is, but broadly speaking the idea is
to measure output according to the volume, not the price of goods and services produced.
The assumption made is that identical goods will have the same price in different markets.
In practice, this is obviously not the case. A taxi ride in Beijing, for instance, will
cost you approximately a tenth of what it costs in London. But it is essentially the same
service.....We all knew that the weight of economic growth had skewed dramatically since
the crisis from advanced to emerging market economies, but many in the West dont yet
seem fully to appreciate the speed with which economic and geo-political power is
shifting. This is a truly seismic change. How these once irrelevant economies choose to
use their new found power is the overarching question of our times." |
"Oil prices will rise beyond $200 a barrel as global supplies,
strained by rising demand from China, India and other emerging economies, near their peak
in 2035, the International Energy Agency (IEA) predicted yesterday.....The IEA expects
natural gas and unconventional sources of oil such as the Canadian tar sands to play a
bigger role as crude oil output eases, 'reaching an undulating plateau of around 68-69
million barrels a day by 2020'. The peak was in 2006,
when output touched 70 million barrels a day. The
outlook varies across regions, though all of the increase in the world oil demand between
2009 and 2035 comes from non-OECD countries. China is seen as the source of the biggest
increase in demand in absolute terms. Under the 'New Policies' scenario, Chinese demand is
projected to rise from just over 8 million barrels a day last year to more than 15 million
by 2035. 'China accounts for 57 per cent of the global increase in demand,' the IEA
said." |
"Canadian uranium producer
Cameco Corp is ramping up spending on exploration for the nuclear fuel, especially at
earlier stage prospects, in preparation for increased demand in the future, CEO Jerry
Grandey said on Monday.... Grandey said that Chinese buyers remain active in the market,
looking to build inventory, while some North American and European utilities are also
seeking uranium for delivery around 2012 and 2013. Overall though, utilities are generally
well covered for the next two or three years, he commented. 'But beyond that, into 2014
and 2015, there remains a lot of uncovered need,' Grandey said. 'We are now seeing utilities move back into the term market.' Uranium
being mined actually already falls short of global demand, but the balance is made up by
supply from inventories held by governments, mainly the US and Russia. However, these
supplies are expected to decline over the next ten years, as Russia reaches the end of its
programme to recycle highly-enriched uranium from nuclear warheads into
low-enriched-uranium fuel for sale to US nuclear power plants. Grandey said that he is increasingly inclined to believe Russian
statements that the so-called 'Megatons to Megawatts' programme will not be renewed when
it ends in late 2013. Some industry players had
speculated that the agreement could be extended at smaller volumes.... Cameco has said
that it will grow production to at least 40-million pounds a year of uranium by 2018,
including expected output from its delayed Cigar Lake project, in Canada's Saskatchewan
province. Output this year is now forecast at 22-million pounds, the company indicated on
Monday. The firm had said earlier this year it would produce 21,5-million pounds of
uranium in 2010." |
"The year 2006 may be remembered
for civil strife in Iraq, the nuclear weapon testing threat by North Korea, and the
genocide in Darfur, but now it appears that another world event was occurring at the same
timewithout headlines, but with far-reaching consequence for all nations.
Thats the year that the worlds conventional oil production likely reached its
peak, the International Energy Agency (IEA) in Vienna,
Austria, said Tuesday. According to the 25-year
forecast in the IEA's latest annual World Energy Outlook, the most likely scenario is for
crude oil production to stay on a plateau at about 68 to 69 million barrels per day. In this scenario, crude oil production 'never regains its all-time
peak of 70 million barrels per day reached in 2006,' said IEAs World Energy Outlook 2010. In
previous years, the IEA had predicted that crude oil production would continue to rise for
at least another couple of decades.... IEA actually
projects that the total production of what it calls 'petroleum fuels' is most likely to
continue steadily rising, reaching about 99 million barrels per day by 2035. This growth
in liquid fuels would come entirely from unconventional sources, including 'natural gas
liquids,' which are created as a by-product of tapping natural gas reservoirs. The consequences for the worlds energy consumers of this increased
reliance on natural gas liquids and other unconventional fuels are stark. 'The age of
cheap oil is over,' said Fatih Birol, IEA chief economist. 'If the consuming nations do not make major efforts
to slow down the oil demand growth, we will see higher oil prices,' Birol said, 'which we think is not good news for the economies of the consuming
nations....The closely watched most-likely scenario, which the IEA calls the 'New Policies
Scenario,' assumes that countries stick to the commitments they have made in the past
couple of years to cut greenhouse gas emissions....But even under IEAs so-called
'business-as-usual' scenario, without the projected efforts to cut fossil fuel pollution,
oil production would be significantly lower in 20 years' time than the IEA had forecast
even just a few years ago. Oil production might rise marginally under the
'business-as-usual' scenario, the report said, but supplies would be short enough to send
oil prices soaring to double todays level.... A
major reason for the rising prices and flatlining production is that for 'the currently
producing fields of crude oil, the production will decline,' Birol said. Today's active oil fields produce about 70 million barrels per day,
but by 2035, he said, 'they will produce less than 20 million barrels per day of oil.'
Just to keep crude oil production flat would require much more production from new oil
fieldsincluding those discovered but not yet developed, and others still to be
discovered. The IEA forecasts that Saudi
Arabiathe largest producerwould boost its production by 50 percent, and that
Iraq would nearly triple its production. Maintaining this plateau would require massive
investment in the oil industry, the report estimated, about $8 trillion over the next 25
years. Also, in the IEA's main scenario, production from 'tar sands,' also known as 'oil
sands,' found mainly in Canada and Venezuela, would triple in the next 25 years. However,
these unconventional sources are generally more expensive and harder on the environment,
the IEA said. Tar sands 'mining operations have a large impact on the landscape,' the
report said, requiring forests to be cleared, and large 'tailing ponds' to collect the
toxic runoff from tar sands processing. Tar sands have a bigger climate footprint than
conventional oil, with larger greenhouse gas emissions for the whole life cycle, from
'well-to-wheels,' the new report said. Barrel for barrel, the IEA said, oil from tar sands
would create 5 to 15 percent more emissions of carbon dioxide (CO2), the principal
greenhouse gas causing global warming. Looking at the reasons for the plateau in crude oil
production, 'its clear that its a mixture of above-ground and below-ground
factors,' said Guy Caruso, former head of the U.S.
Energy Information Agency, and now at the Center for
Strategic and International Studies, a think tank in Washington, D.C. 'Its
partly geological resource limitations,' Caruso said. 'Theres decline that
were fighting in the older fields,' in which production has fallen faster than had
been expected. But there are also 'areas like Venezuela, Iraq, Kazakhstan, and Nigeria,
where we know the oil is there,' but political turmoil and other issues have kept
production far below the potential, he said. When all the factors are taken into account,
the trend is toward rising oil prices, Caruso said." |
"Global oil supplies will come close to a peak by 2035 when oil
prices will exceed $200 a barrel, the International Energy Agency said on Tuesday, as
China and other emerging economies drive demand higher. The
IEA, in its 2010 World Energy Outlook, said crude oil output had already peaked and would
flatten out in the next 10 years, boosting reliance on costlier and more polluting
unconventional sources such as oil sands.
'Production in total does not peak before 2035, though it comes close to doing so,' the
IEA said in the executive summary of the report. That projection was according to the
report's central case, the New Policies scenario..... Oil prices would rise even further
if governments did not act to curb consumption, the IEA's chief economist and lead author
of the report, Fatih Birol, told Reuters in an interview. 'The message is clear, the price will go
up, especially if consuming countries do not make changes in the way they consume oil,
especially in the transport sector,' Birol said. Oil hit $87.63 a barrel on Tuesday, the highest since October 2008,
after hovering around $70-80 most of the year. The world needed higher oil prices to
change consuming habits substantially and spur investment as markets were becoming less
sensitive to price changes, Birol said. 'All the net growth comes from non-OECD countries, almost half from
China alone, mainly driven by rising use of transport fuels,' the IEA said in the report.
While the IEA saw higher prices, it also cut its world oil demand estimate for the next 25
years by 6 million barrels per day (bpd) to 99 million bpd. That remained an increase of
15 million bpd, equal to one and a half times the output of top global producer Russia....
Unconventional oil -- including supplies from oil sands in Canada and Venezuelan heavy
oil, and liquid fuels obtained from natural gas and coal -- is expected to play a bigger
role as growth in crude oil tails off. 'Crude oil
output reaches an undulating plateau of around 68-69 million barrels a day by 2020, but
never regains its all time peak of 70 million barrels per day reached in 2006,' the IEA
said. Last year's edition of the report said global oil production was not forecast to
peak before 2030 and conventional oil production was 'projected to approach a plateau
towards the end of the projection period.'" |
"Some 20,000 tonnes
of uranium will be supplied to China Guangdong Nuclear Power Corp (CGNPC) over a ten
year period, while another deal promotes fuel manufacturing with China National Nuclear
Corporation (CNNC). The uranium deal was
finalised during the visit of Chinese President Hu Jintao to France, in which various
contracts were announced. According to China Daily, France and China have agreed to double
the current level of bilateral trade by 2015." |
"From 2020, South African coal
production will come off a peak, creating a potential power supply problem for the
country, which generates the bulk of its electricity from coal-fired plants, according to
a report in the South African Journal of Science. Dr
Chris Hartnady , research and technical director at earth sciences consultancy Umvoto
Africa, said in the report that coal reserves in southern Africa were closer to 15-
billion tons than the 50-billion the government had estimated. Using an analytical
methodology of M King Hubbert , a US geologist, Dr Hartnady said SA would reach peak coal
production of 284-million tons in 2020, at which stage approximately half of the total
23-billion tons of economically recoverable resource would be exhausted. Production would
then taper off to present-day levels of 250-million tons a year by 2037 and then halve to
125-million tons by 2063, at which stage the reserves would be 90% depleted, he said.
'Given SA s heavy dependence on coal for power generation and electricity supply,
the economic situation appears to be heading rapidly towards a state of severe permanent
crisis, which will be exacerbated by the anticipated low level of coal production at peak
in 2020,' he said. A reassessment of the regions reserves, using a complete
statistical history of southern African coal production, showed them to be much
lower than previously thought, he said. The South African government had already begun
scaling back reserve estimates from the early 2000s, and, using South African Mineral
Resource Committee (Samrec) definitions, lowered the figure to 28-billion tons from about
50-billion tons earlier this decade. 'The current analysis suggests that a further
reduction to a value of less than 15-billion tons may be anticipated in a reassessment
based on strict Samrec definitions.'" |
"Saudi Arabia's shift to a higher oil price comfort range reflects a
desire to make up for a weaker dollar rather than strain on the kingdom's budget and
government spending is seen staying strong in the coming year. The world's top crude exporter moved its preferred price up a
notch this week, saying $70-$90 a barrel was an acceptable range for consumers, driving
oil prices higher. Andrew Gilmour, senior economist
at Samba Financial Group in London said: 'I do not think it has a budget connection. The
dollar's weakness is the most significant factor.' Until this week, Saudi Oil Minister Ali
al Naimi had said the ideal range for producers and consumers was $70-$80 a barrel, the
line held for the past two years." |
"The global energy watchdog will next week throw its weight behind
calls for governments to implement pledges to fight climate change and cut fossil fuel
subsidies, warning that a failure to do so would
significantly inflate oil prices.
The International Energy Agency
forecasts that implementation of new environmental policies would see demand for oil
almost 10 per cent lower by 2035 than under current policy commitments. That would result
in prices roughly $20 a barrel lower." |
"Iraq will miss its target of
producing 12m barrels of oil a day by 2017 and could take another 20 years to achieve even
half that level of output, says the International
Energy Agency. In a draft of its annual World Energy Outlook report, the IEA gives a
downbeat assessment of Iraqs ambitions. However, it predicts its crude oil
production will overtake that of neighbouring Iran 'by soon after 2015'." |
"A new report from the Energy
Biosciences Institute (EBI) in Berkeley projects that development of cost-competitive
algae biofuel production will require much more long-term research, development and
demonstration....Their conclusions stem from a
detailed techno-economic analysis of algal biofuels production. The project is one of the
over 70 studies on bioenergy now being pursued by the EBI and its scientists at the
University of California at Berkeley, the University of Illinois in Urbana-Champaign, and
Berkeley Lab. The algae biofuels industry is still in its early gestation stage, the new
report notes. Although well over 100 companies in the U.S. and abroad are now working to
produce algal biomass and oil for transportation fuels, most are small and none has yet
operated a pilot plant with multiple acres of algae production systems....The report's
analysis includes five conceptual facilities for algae pond biofuel production, four of
them 250 acres in size and one of 1,000 acres. All used municipal wastewater as the source
of both water and nutrients, with some emphasising production of oil, while others have
wastewater treatment as their main priorities....The
EBI scientists conclude that 'algal oil production will be neither quick nor plentiful -
10 years is a reasonable projection for the R, D and D (research, development and
demonstration) to allow a conclusion about the ability to achieve, at least for specific
locations, relatively low-cost algal biomass and oil production.'" |
"Brazilian state oil company
Petrobras (PBR.N: Quote) on
Wednesday questioned British gas producer BG Group's (BG.L: Quote) move to boost its oil
reserve estimates for discoveries in Brazil, saying the company should await the
completion of wells being drilled there. BG on
Tuesday lifted estimates for total recoverable resources from the Tupi, Iracema and Guara
areas in Brazil by 34 percent, raising BG's net resources from those areas to 2.8 billion
barrels of oil equivalent (boe). 'Petrobras believes it is important to wait for the
conclusion of the drilling in the Tupi (area) to provide additional information on
recoverable volumes,' the company said in a statement. It added that BG's announcement
"does not represent a statement by the consortium responsible for the operation of
the blocks. The Brazilian firm is the operator of the BM-S-11 and BM-S-9 blocks, which are
located in deep waters off Brazil's coast and include the areas in question. It reiterated
its estimates of 5 billion to 8 billion barrels for Tupi and Iracema in BM-S-11 and 1.1
billion to 2 billion barrels in Guara in BM-S-9. Petrobras has a 65 percent stake in
BS-M-11 with BG holding 25 percent and Portugal's GALP (GALP.LS: Quote) holding 10
percent." |
"BG
Group will spend $15bn (£9.3bn) on the world's first project to liquify and ship gas
produced from coal deposits, the natural gas
company's biggest ever investment, it was announced today. The 20-year Queensland Curtis
scheme is the first of a clutch of 'coal seam methane' projects in eastern Australia to get the go-ahead, and
will underline Australia's growing importance as a supplier of natural resources to South
East Asia. It will involve building a 540km
underground pipeline in Queensland which will link the gas producing coal deposits to a
new terminal near Gladstone, on the east coast, which will liquify the gas for export by
tanker.... The BG project is scheduled to begin
operation in 2014, producing 8.5m tonnes of liquified natural gas (LNG) each year
initially, equivalent to one 10th of the gas consumed in the UK. State-owned China National Offshore Oil Corporation (CNOOC) has signed
the biggest supply contract with BG, and will buy 3.6m tonnes of LNG each year for 20
years. CNOOC will also take a 10% stake in the first phase of the project and invest with
BG to build two new LNG cargo ships in China to be used in the project." |
"A newly-tapped oil field off the coast of Brazil could contain up to
15 billion barrels of oil, officials say. Brazil's national petroleum agency said the
Libra field most probably held around 8 billion barrels. That matches the size of the
giant Tupi oil field, whose discovery in 2007 drew attention to Brazil's potential as a
major oil producer. If the 15 billion barrel figure were confirmed it would double
Brazil's known oil reserves. It would also be the biggest oil field discovered in the
Americas since 1976, when Mexico found the giant Cantarell field in the Gulf of Mexico.
The Libra exploratory well is located 183km (114 miles) offshore from Rio de Janeiro. 'The volume of recoverable oil belonging to the nation could vary
from 3.7 billion to 15 billion barrels, with the most likely estimate being 7.9 billion
barrels,' the national petroleum agency (ANP) said
in a statement." |
"Keeping up Russias oil
output will cost 9 trillion roubles ($292 billion), according to Vladimir Putin. The prime
minister called for that level of investment over the next decade to maintain crude oil
production levels at 500 million tons a year. And he admitted that tax regimes needed to
be reformed before new reserves can be exploited fully in the vital resource sector....An
agreement on developing Russias oil sector was reached in Samara on Thursday and
anticipates a small increase of 2.2 per cent in oil
production until 2020, Vedomosti reported. The new figure of 505 million tons a year will largely be met by existing
production regions, according to energy minister Sergei Shmatko. But come 2020 further growth will only be possible through new
deposits and technologies, Putin warned, raising the spectre of peak oil production in the
mid-term future. However, the investment necessary
is the industry is to keep up with the current production levels is more than 8.6 trillion
roubles, Putin said, admitting that the tax regime had to be changed. The target of 505
million tons based on current oil price predictions and a proposed drop in taxes from 73
per cent to 65, Shmatko said." |
"It's a secret just how much oil
the US military uses, but estimates range from around 400,000 barrels a day in peacetime
almost as much as Greece to 800,000 barrels a day at the height of the Iraq
war.This puts a single nation's armed forces near Australia as an oil consumer and among the
top 25 countries in the world today. Either way it is by far the world's largest
single buyer of oil and the last thing any admiral, general or under secretary of
defence has had to be been concerned about is whether there's gas in the tanks or that the
navy's carbon emissions are a bit extravagant. But there are signs of change. Every $10
rise in the price of oil costs the gas-guzzling US air force around an extra $600m each
year. Just keeping one US soldier in Afghanistan with the world price of oil at $80 a
barrel now costs hundreds of dollars a day in fuel alone. And because the US as a country
imports more than $300bn worth of oil a year, fiscal reality is dawning. The US military
spent around $8bn in 2004 on fuel, and probably twice that last year. Surging world fuel prices are likely to put the brakes on the US
oil war machine as much as political opposition. The military knows this. Earlier this
year a Joint
Operating Environment report from the US joint forces command predicted that global
surplus oil production capacity could disappear within two years and there could be a
shortfall of nearly 10m barrels a day by 2015. 'Peak oil', said the generals,
would impact massively on the US and other economies, and the US military would be
compromised. Meanwhile Wesley Clark, former supreme allied commander in Europe, has argued strongly
that America's addiction to foreign oil is unsustainable and, by extension, the
military's $20bn a year spend on oil and other energy must be reconsidered." |
"The term refers to 17 elements, most of which are fairly abundant in
nature. Some are as common as copper or zinc, while even the rarest occur in greater
quantities than gold or platinum. Mining and processing them, however, is a difficult and
costly process, which requires large amounts of energy and produces a range of toxic
emissions and residues, some of them radioactive. During the 1990s and for much of the
past decade, China was able to produce rare earths more cheaply than other countries,
leading to the closure of mines elsewhere, notably in Australia and the US. However, the
Chinese government is now promoting the development of high-tech industries, which has
pushed up domestic demand for rare earths. At the same time it is under pressure to rein
in the environmental impact of rampant economic growth. 'They want to restrict the amount
of environmental damage they do,' says John Meyer, head of resources at Fairfax investment
bank. 'They want to restrict the amount of energy they put into the production of rare
earths and they're saying 'we don't really want to export these things any more; we'll do
it for ourselves but other countries need to take care of their own rare earth supply.'...
In the US, moves are under way to reopen mines which were mothballed when Chinese
production was at its height. They include the giant Mountain Pass mine in California,
which was once the world's biggest source of rare earth elements. It was the cause of
numerous leaks of hazardous waste, before it effectively shut down in 2002, amid mounting
environmental concerns and increasing competition. Now, the mine's owner, Molycorp
Minerals, is planning to resume full production at the site, allowing it to produce 20,000
tonnes of rare earth products by 2012. The company is keen to emphasise its social
responsibility, pointing out that rare earths are widely used in the production of green
technologies, as well as in other vital areas such as communications and healthcare.... But reopening mines, or establishing new ones, is a costly
process. The modernisation of Mountain Pass, for example, is expected to cost more than
half a billion dollars. It can also be time consuming, particularly in developed
countries, because of the need to obtain environmental permits. So there is a real risk
that if China does clamp down on exports, mines elsewhere may not be ready to meet demand.
'There are very real risks of a shortage,' says John Meyer. 'It's going to be very
important and perhaps critical for governments to step in and help companies to push
through the environmental processes, in order to get these mines up and running in time.'
So rare earths may not be rare, but they could soon be in very short supply. If that
happens, prices are certain to rise, manufactured goods are likely to become more
expensive and consumers could be in for a big shock." |
"China has said it will not use exports
of so-called rare earth minerals as a diplomatic bargaining tool. The country produces
more than 90% of these valuable commodities, which are used to produce electronic items
such as mobile phones. A row has blown up surrounding their availability, with relations
between China and Japan at its centre....The US and the EU asked Beijing to clarify its
policy on mineral exports after China stopped shipping to Japan. The stoppage followed a
spat between China and Japan last month over islands whose ownership is disputed. A
spokesman for China's Ministry of Industry and Information Technology, Zhu Hongren, said:
'China will not use rare earths as a bargaining tool. We will have cooperation with other
countries in the use of rare earths, because it is a non-renewable energy resource.' But
Mr Zhu did not answer a reporter's question about when normal exports of rare earth
minerals would resume. China has about 30% of rare
earth mineral deposits, but accounts for about 97% of production. Meanwhile, US Secretary of State Hillary Clinton has called on China to
clarify its policy on rare earth resources. She said recent Chinese restrictions served as
a 'wake-up call' for the industrialised world which should drive it to look for other
suppliers." |
"China is driving up world coal
prices as clogged roads and railways from Beijing to Tibet restrict deliveries in the
worlds fastest-growing major economy while the country tries to build stockpiles
ahead of winter. A jam held up traffic for as many as 10 days along the countrys
main east-west highway in August, underscoring a crisis that may buoy prices for the next
two years, according to Daniel
Brebner, an analyst at Deutsche Bank AG in London. The China Coal Transport and
Distribution Association says it may take up to four years to ease the gridlock.
Government incentives and lower wages away from coastal regions are boosting Chinese
inland development, creating transport disruption that is hampering access to domestic
supplies and prompting coal consumers to turn to foreign imports. Power-station coal at
the Australian port of Newcastle and South
Africas Richards Bay climbed to
four-month highs last week, according to data compiled by IHS McCloskey, a Petersfield,
U.K.-based researcher." |
"The U.S. Geological Survey says
a revised estimate for the amount of conventional, undiscovered oil in the National
Petroleum Reserve in Alaska is a fraction of a previous estimate. The group estimates
about 896 million barrels of such oil are in the reserve, about 90 percent less than a
2002 estimate of 10.6 billion barrels. The new
estimate is mainly due to the incorporation of new data from recent exploration drilling
revealing gas occurrence rather than oil in much of the area, the geological survey said.
'These new findings underscore the challenge of predicting whether oil or gas will be
found in frontier areas,' USGS Director Dr. Marcia McNutt said in a statement. 'It is
important to re-evaluate the petroleum potential of an area as new data becomes
available.' The organization also estimates 8
trillion cubic feet less gas than a 2002 estimate of 61 trillion cubic feet of
undiscovered, conventional, non-associated gas --
meaning gas found in discrete accumulations with little to no crude oil in the
reservoir." |
"Prices have moved to up from their traditional $10-20 a barrel range
to roughly four times higher. Looking behind this number, it does not take long to learn
that world oil production has been static for the last five years and that demand for oil
in China, India, the oil-exporters, and a few other developing countries is moving up
rapidly. Indeed, a few knowledgeable observers are
beginning to say that it was the rapid increase in oil prices and the concomitant
inflation and higher interest rates between 2002 and 2006 that started the ball rolling
towards our current global recession. The great oil
price spike to $147 a barrel in the summer of 2008 was the icing on the cake. The great
financial/credit bubble that had been growing in the U.S. and Europe for several decades
began to deflate. If one cares to look still further into the situation one would learn
that a consensus of knowledgeable observers is saying that total world oil production will
likely start to decline within the next three or four years causing another great oil
price spike and incalculable damage to the world's economy in its present configuration.
Within the next ten years, the American (and in most other countries) way of life as it
developed in the last century of abundant and cheap energy will become unsustainable and
far reaching changes will have to take place....When the Obama administration came into
office nearly two years ago, they decided that in contrast to the Republican policies of
tax cuts, a large dose of Keynesian deficit financing was all they could really do to help
the economy recover. In reality, the massive dose of government spending seems to have
only slowed the decline and did little to halt or reverse the steady rise in true
unemployment that some unbiased observers now put in the vicinity of 22 percent. The unwillingness of both parties to deal with the real issue --
that the fossil fuel age is coming to an end and that we must rapidly restructure our
economy and lifestyles -- means that sensible, proposals are completely absent from the
political dialogue. Instead, the campaign of 2008
has degenerated into one of demonizing opponents and/or calling for a return to the values
of the 18th century. No matter which party gains control of Congress next week, the
inevitable outcome is still more gridlock, more economic decline, and rising
unemployment." |
"World uranium supply deficit, currently running at about 12 500 to
15 000 tons (2010 mine and supply forecasts relative to demand forecasts), or about 20
percent, is covered from sources especially including stocks held by mining companies,
power plant operators and builders. This massive deficit is also partly covered, perhaps
by 4 000 tons of uranium equivalent per year, with recycled and diluted highly radioactive
wastes including plutonium that are converted to so-called MOX fuel (Mixed OXide), almost
exclusively in France and the UK. There is one other 'supply side solution', which is
given periodic headline treatment, and that is the US-Russian 'Megatons to Megawatts'
programme, turning Russian arms, and an undisclosed number of US warheads into
ploughshares by dismantling surplus atom bombs and recycling their atomic materials as
reactor fuel. This programme was first mooted from just before the collapse of the USSR,
in 1990-1991. The first physical operations, concerning 500 tons of Highly Enriched
Uranium (HEU) from Russian bomb warheads started in July1993, but the first arrivals in
the USA of 24 tons of Low Enriched Uranium (LEU) reactor grade fuel produced from 0.786
tons of Russian HEU only started in January 1995.... Megatons to Megawatts is basically a
'diluting' operation, stepping weapons-grade HEU down to the LEU fuels needed for most
conventional civil power reactors. Plutonium is also separated, and can be 'cut' into
utilisable fuel using the MOX route although the amounts treated this way are not
published and may be very low. The amount of fresh mined uranium the programme displaces'
, almost exclusively in the USA and not elsewhere, is however controversial. It is claimed by some sources like the WNA (World Nuclear
Association) and the OECD's NEA (Nuclear Energy Agency) to have 'displaced' about 13
percent of world reactor fuel requirements, around 8 000 tons of uranium in 2009, covering
about 45 percent of the USA's total reactor fuel that year....When we look at the actual declared amounts that are traded, by
commercial private companies, we find quite large 'missing amounts' of finished fuel (or
upstream scrapped weapons), suggesting that uranium stocks and reactor (but not bomb
warhead) materials are increasingly entering the programme. The
major authorized private company operating this market, the world's largest uranium mining
and fuel supply company Cameco, is estimated by industry observers as buying and reselling
around 7 million pounds (3182 tonnes) of Russian ex-military source uranium fuel each
year, in the past 2 to 3 years. Other suppliers
handle much less than this, and Cameco's agreement with the sole Russian supplier, the
state firm Techsnabexport (Tenex) will terminate in 2013 unless president Obama and the
Medvedev-Putin duo make a decision to continue scrapping warheads. For the select group of North American re-seller companies
including Cameco, for which this supply represents about one-quarter of its total sales of
uranium, termination will represent a major challenge. For the USA's 100-plus civil
reactors in current operation, a claimed 45 percent or more of their present annual fuel
generates a need for at least 8000 tons a year, perhaps more, to satisfy the 45 percent
claim. The most important point is that any start of phasing down in operations of the
Megatons to Megawatts programme from the most recent rate (since 2006) of an average 1200
warheads scrapped each year, which was already lower than the rate in the preceding 3
years 2002-2005), will automatically increase the quantities of 'fresh mined' uranium
needed by US reactor operators. This will quickly add another twist to a world
supply/demand context already heavily in deficit....
As already mentioned we have a basic and massive
undersupply of world uranium fuel supply, but also have some 56 new reactors under
construction and 439 in operation, with perhaps as many as 200 more reactors planned or
proposed for the next 9 years (2011-2020). Results of this 'outright and announced crisis'
will certainly include a radical increase of uranium prices, triggering more mine
investment and development, and possibly a Russian decision to cash in on the coming
uranium price boom through staying their decision to stop scrapping bomb warheads in 2013.
To be sure, fuel costs for nuclear reactors
are a small slice of total costs, but over and above about a uranium price of US $ 80 to
100 per pound, fuel costs start to become very significant for power plant operators and
builders, because of stockpiling needs and their costs, with first loading requirements of
a typical industry standard 900 MW reactor being about 250 - 350 tons. Probably much more important for the industry, any long-term
structural-type fuel shortage will cast a long and deep shadow on the highly mediatized
'Nuclear Renaissance'." |
"The Queen, one of the worlds longest-serving
monarchs, and the Emir of Qatar, one of the worlds richest, are old friends. But
when, amid lashing rain, the Emir and his glamorous wife were welcomed yesterday at the
start of a three-day state visit, it was about more than just the renewal of old
acquaintance it was about money.... the Qataris have plenty of money and the
Government, which decides state visits, rather than Buckingham Palace, would like British
businesses to reap some of the benefit.... The invitation to 58-year-old Sheikh Hamad bin
Khalifa al Thani a powerful figure in the Gulf, and one of the regions more
progressive figures to stay as the Queens guest at Windsor Castle is part of
the Governments strategy to 're-energise' Britains standing with the Gulf
states. The Government hopes the visit will
bring more of the huge oil and gas wealth of Qatar to British firms, and secure vital
energy supplies." |
"Shares in Cairn Energy fell by more than
7% after the oil and gas group said that its
controversial drilling programme off the coast of Greenland had come to an end without
making a commercial discovery. It said it had
managed to complete only two out of four planned wells by the 30 September, the end of the
drilling season in Greenland. The company did not have time to finish drilling a third
well where it
announced last month oil had been 'observed intermittently'. The company said it would
study data taken from the suspended well before deciding whether to resume drilling after
the season begins again next June. Cairn confirmed that the two completed wells, which
found traces of hydrocarbons, did not result in commercial discoveries. It said it would
write off the $185m (£117m) spent on the drilling programme." |
"Chinese demand could push crude
to $100 a barrel soon, according to JP Morgan, with the weaker dollar
and restocking of French oil inventories once strikes end also
helping to drive up oil prices. China's economy was
quick to recover from the global downturn and has been growing at
a spectactular pace, resulting in rampant demand for oil. Growth has slowed slightly
to an annual rate of 9.6% in the third quarter from 10.3% in the second. JP Morgan raised
its forecast for US crude futures to an average of $81 a barrel in the fourth quarter,
from $75 a barrel." |
"Supplies of
North Sea gas are set to tumble a further 9 per cent this winter, forcing Britain to
import more of the fuel from overseas than ever before, National Grid said yesterday. In
its annual winter outlook report on the state of Britains energy supplies, National
Grid said that 55 per cent of the gas used to heat homes and factories this winter would
need to be imported from countries such as Norway, Qatar, Trinidad, Algeria and the
Netherlands. That is the highest level on record and double the 27 per cent level of
imports recorded in 2007. A spokesman for
National Grid, which operates Britains wholesale gas supply network, said: 'As
ageing North Sea fields continue to deplete, we are getting less and less of our gas from
them every year.' The projected 9 per cent decline in UK gas production this winter marks
a sharp acceleration of the trend. Production last year was down by only 6 per cent
compared with 2008-09. It also marks a quick reversal for Britain, which was still a net
exporter of gas in 2003. It was forced to import about 5 per cent of supplies in 2004 for
the first time. If these trends continue, Britain will be forced to import three quarters
of its gas supplies by 2015. National Grid said that the fall in production would force
the UK to import far more by ship as liquefied natural gas (LNG) this winter than ever
before. With wholesale prices relatively low because of a surplus of US shale gas
production, Britain is expected to import more than 100 million cubic meters of LNG a day
in the coming months or more than one quarter of the countrys total average
daily winter gas supply of 367 million cubic metres. Most of the LNG gas that has
been superchilled and shrunk to one 600th of its normal size will arrive at two new
terminals at Milford Haven in South Wales and another on the Isle of Grain in Kent.
Further gas will be piped to the UK from Norway via the Langeled pipeline to Easington and
another to St Fergus in Scotland. Britains growing dependency on imports comes as
the nation is becoming increasingly reliant on gas-fired electricity generation. 'There
are several new gas plants firing up,' said Nick Campbell, energy trader at Inenco, citing
new plants at Staythorpe and West Burton in Nottinghamshire, Severn Power in Wales and
Grain in Kent.Figures from the Department for Energy and Climate Change this month showed
that the UK generated 41 terrawatt-hours, or 52 per cent of its electricity, from gas
power stations in the three months to June 30 up from an average of 30 per cent in
2006." |
"The world faces decades of
economic turmoil and a vicious cycle of recessions as oil supplies run low and prices
spike, according to a Parliamentary research paper [in
New Zealand]. The paper, The Next Oil Shock, says that known oil reserves would last for
another 25 to 32 years, but an oil 'supply crunch'
could occur in 2012 or shortly afterwards as demand rises and supplies fail to keep pace. It was likely to be followed by a pattern of supply and demand crises.
''While the world will not run out of oil reserves for decades to come, it cannot
indefinitely continue to produce oil at an increasing rate from the remaining reserves.
Forecasts indicate that world oil production capacity will not grow or fall in the next
five years while demand will continue to rise. ''There is a risk that the world economy
may be at the start of a cycle of supply crunches leading to price spikes and recessions,
followed by recoveries leading to supply crunches.' The paper, by Parliamentary Library
economics and industry research analyst Clint Smith, is based on international research,
reports and data. It says the present world demand for oil of 86 million barrels a day was
predicted to rise to more than 87 million barrels per day next year and continue to
increase." |
"The chief executive of one of
the largest oil
and natural gas
services companies in the world has said that shale gas could be much harder to recover in
Europe than in the United States, because of concerns about environmental damage and other
issues. 'We should not underestimate the challenge,'
Andrew F. Gould, the chief executive of the company, Schlumberger,
said Wednesday. 'The drilling and producing of shale gas wells in Central Europe will be
very different from doing so in the southern United States for financial and logistical,
social and regulatory reasons,' Mr. Gould said during Oil & Money, a conference
convened by the International Herald Tribune.... So far, the growth of shale gas
production has been most significant in the United States. According to the U.S.
Energy Information Administration, U.S. shale gas production increased eightfold over
the past decade. It now accounts for 10 percent of U.S. natural gas production and 20
percent of total remaining recoverable gas resources in the United States. The U.S. Energy Information Administration projects that shale gas
will represent 7 percent of global natural gas supplies by 2030.... But the picture of total reserves of shale gas in Europe and the
potential for extraction remain unclear. 'So far, to be frank, you cant really get
too excited yet about Europe,' said Walter van de Vijver, the chief executive of the
exploration and production arm of Reliance Industries of India. For one thing, there is a
strong possibility that parts of Europe might have the 'wrong rocks,' when compared with
the United States, according to Paul Stevens, a senior research fellow at Chatham House, a
research institute in London. Replicating the success of shale gas in the United States is
likely to be difficult as 'the shale plays tend to be smaller, deeper, and less material'
in Western Europe and 'tend to have a fairly high clay content, which is not necessarily
good news for hydraulic fracturing,' Mr. Stevens said. The comparatively dense population
density of Europe means that shale production could run into local opposition because of
the way drilling could disrupt communities, and the way that pollution associated with
drilling might face prohibitions, Mr. Stevens added." |
"An energy watchdog
lifted its forecast for world oil consumption today but played down fears that prices will
top 100 US dollars a barrel. Global demand is
expected to reach 86.9 million barrels a day this year and 88.2 million barrels a day next
year, the International Energy Agency (IEA) said, revising up its previous forecast by
300,000 barrels for each year. Oil prices broke through the 80 US dollars a barrel mark
earlier this month, and higher demand could prompt a further increase, which in turn could
be passed on to the petrol pump or see business costs climb. David Fyfe, editor of the IEA oil market report, tried to calm concerns
and said there would be 'comfortable levels of supply'. He said: 'Prices in early October
broke through the psychological 80 US dollars a barrel barrier, with many foreseeing more
strength to come. Choruses of '100 dollars a barrel by next year' are being heard once
more. Our own view, however, is that markets could
remain comfortably supplied until well into 2011.'...
The agency said stronger-than-expected economic growth in developing countries, outside
the OECD, and increased demand for crude oil in the third quarter of the year in countries
within the OECD, led to the upward revision. The IEA
expects oil demand to rise by 2.1 million barrels a day year-on-year in 2010, and the
growth to slip back 1.2 million barrels a day in 2011." |
"The US military's heavy dependence on fossil fuels is a dangerous
vulnerability, officials said Wednesday as they made a fresh push to develop renewable
energy solutions for the battlefield. In the wake of
a spate of deadly attacks on tankers carrying fuel to foreign troops in Afghanistan,
Admiral Mike Mullen, the chairman of the Joint Chiefs of Staff, spoke of a 'strategic
imperative' for the US military to become more efficient and find new sources of energy.
The Department of Defense is burning through 300,000 barrels of oil a day, using more
energy per soldier every year and its top import to Afghanistan is fossil fuels, the
highest ranking US military officer said as he kicked off a Pentagon discussion on energy
security. Navy Secretary Ray Mabus, a former ambassador to Saudi Arabia, has set a goal of
having renewable energy account for 50 percent of power for the Navy and Marines by 2020.
'We're not going green just for green's sake. Energy reform and the new energy future
aren't about politics or slogans,' he said. 'It's about protecting the lives of our
troops. It's about making our military better and more capable fighters. It's about making
our country more secure and more independent. That's why we are doing this, that's why we
have to change." |
"Iraq and Afghanistan were wars of choice, not necessity,
and will be judged by history to have been strategic aberrations..... The strategic axis
of the world has moved from the Atlantic to the Indian Ocean and the Pacific, thanks in
part to the growth of China and India. The importance of the sea to our security and
economic vitality is likely to increase sharply in the coming years. Our calculations of
risks, interests and opportunities will all be fundamentally affected by climate change, the scramble for resources, territorial disputes and the exploitation of the polar regions
and deep oceans.... History tells us repeatedly that maritime nations that turn their
backs on the sea shrink in status and suffer economic decline." |
"Kyrgyzstan came close to disintegrating in the summer after
ethnic violence in the south between Kyrgyz and minority Uzbek communities. Fearful that
further unrest could destabilise all of Central Asia, Russias Federal Security
Service is deploying border guards in southern Kyrgyzstan for the first time since the
Soviet collapse. The US base at Manas,
critical for supplying Nato operations in Afghanistan, continues to irritate the Kremlin. It was furious when Mr
Bakiyev reneged on a pledge to close the base after securing a $2 billion Russian loan and
is determined to press the new Kyrgyz government to serve notice on the Americans in
return for future aid. Russia has been turning the economic screw elsewhere in Central
Asia to maintain its dominance in a new 'Great Game' against the West and resource-hungry China over the regions energy
reserves. Gazprom now monopolises
Uzbekistans huge gas exports after a deal with President Karimov, its long-serving
Soviet-era dictator. However, neighbouring Turkmenistan, which has the worlds fifth
largest gas reserves, has opened a supply pipeline to China, the first in Central Asia to
bypass Russia. The EU is also courting Turkmenistan to supply the proposed Nabucco
pipeline that will skirt Russia, to reduce Europes energy dependence on Moscow....
Neighbouring Armenia confirmed itself as Moscows garrison in the Caucasus in August
by signing a 24-year lease extension on a military base until 2044. Azerbaijan has grown
rich from Caspian Sea oil pumped west along the Baku-Ceyhan pipeline through Georgia and
Turkey, aided by US backing for investment by energy companies. This has allowed Baku
greater independence from Russia but an unresolved conflict with Armenia over the
territory of Nagorno-Karabakh means that it cannot stray too far from its former Soviet
master. Russia has the power to tip the military balance against Azerbaijan if fighting
resumes, making the pipeline vulnerable. Russian jets tried unsuccessfully to bomb the
Georgian section during the 2008 war." |
"The Middle
East is poised for a dramatic surge in nuclear power development over the next two
decades. An investigation by The Times has revealed that by 2025, at least 15 new reactors
will be built across the region, from Egypt and Turkey to the United Arab Emirates. With
Irans centrifuges at Natanz still spinning uranium in defiance of international
conventions, fears will mount that the plans now being announced by Middle East
governments mark the first steps in a nuclear arms race across this volatile region. The
UAE has begun preparing ground at its preferred site on the Gulf coast, with the first of
four South Korean-built reactors scheduled to come online in 2017. Kuwait is expected
formally to announce plans to build four reactors later this year, while Saudi Arabia,
whose previous interest in nuclear power has been lukewarm at best, is now expected to
follow suit.... If Irans nuclear
programme goes unchecked there are genuine concerns of a surge in proliferation among its
neighbours. 'There is the feeling that getting started on the nuclear ladder is prudent,
given Irans assumed ambitions,' said Mark Fitzpatrick, senior fellow for
non-proliferation at the International Institute for Strategic Studies in London. The UAE
has ruled out the uranium enrichment or reprocessing required to develop weapons-grade
material but other states might not be so scrupulous if their security and regional status
are threatened. For Saudi Arabia in particular, a nuclear-armed Iran would present a clear
threat. 'Saudi Arabia has made no bones about the fact that if Iran gets nuclear weapons
they will want to as well. King Abdullah has said as much,' Mr Fitzpatrick said.
Riyadhs determination to match Tehran explains in part why the $60 billion defence
deal the kingdom agreed with Washington in September caused so little stir in the United
States or Israel. Besides sending a clear message to Iran, as well as benefiting business
in the US, the deal is also an effort to reassure the kingdom that it can defend itself by
conventional means. Similar agreements are in place across the region, with the east coast
of the Arabian Peninsula now bristling with Patriot missiles. Washington hopes to bolster
the regions defences and rein in the urge to acquire more destructive weapons in the
future. Despite the concerns, these developments are part of a new global surge in atomic
energy development. Rising oil prices and concerns about the environmental impact of
fossil fuels have made nuclear power politically and economically viable again. Some 60
reactors are under construction worldwide, more than a third of them in China. Even in the
oil-rich nations of the Gulf, young, rapidly growing populations and a burgeoning middle
class are putting increasing demands on energy resources. With oil and gas prices soaring
over recent years, burning fossil fuels for energy is no longer viable." |
"Britain is expected to import
more liquefied natural gas (LNG) by ship to meet winter demand set to rise 3.8pc this
year, according to National Grid. The power networks
operator calmed fears that there would be a repeat of last year, when it was forced to
issue a series of alerts forcing industrial customers to cut back their gas usage. Britain
also came dangerously close to running low on gas the previous year, during a dispute
between Ukraine and Russia that threatened European pipeline supplies. National Grid's
annual winter outlook said that even in the event of a harsh winter there would be more
than enough capacity, partly due to the LNG imports and also because of increase
generating capacity. 'Gas and electricity demand is manageable and should be met even in a
very cold winter,' it said yesterday. The network operator's forecast said power stations
are likely to increase their gas generation, as more capacity comes on stream. It
predicted that utilities will favour gas-fired plants for generation in October and
November, but coal plants from December to March.... The
regulator predicted more LNG will be imported from the US, where gas prices are cheaper
than in Europe. This will be made possible by increased capacity at Britain's Isle of
Grain LNG terminal and the British-Dutch BBL gas pipeline." |
"The United States and Israel
are watching with concern the growing military cooperation among Turkey, China and Iran,
especially following a joint Turkish-Chinese air-force exercise last week. Until two years ago Israel was Turkey's main partner for air combat
training. In 2001 the Turkish air force inaugurated a tactical air warfare center in Konya
with Israel and the United States. Until 2008 the Israel Air Force was a frequent guest in
Turkey's sky and a regular participant in the country's big annual exercise, Anatolian
Eagle. In the wake of Operation Cast Lead and the subsequent deterioration of bilateral
relations Turkey last year revoked Israel's participation in the maneuvers. The United
States decided not to take part in the exercise this year because of that decision. A
number of other NATO members followed suit. Turkey replaced the Israel Air Force with its
Chinese counterpart. China sent Sukhoi SU-27 fighter aircraft and pilots to train with
Turkey's F-16 fighters. In the past these exercises were held in relatively openness, but
last week they were held covertly, with only a brief report appearing in the Turkish media
after the exercise. The West has been watching the changes in the Chinese army's
structure, and especially the long-range naval and aerial exercises that indicate
Beijing's intention to acquire the ability to conduct warfare far from China's borders....
China has also developed a surface-to-surface rocket-launching system together with
Turkey. China's Prime Minister Wen Jiabao is due to visit Ankara this month and to sign
several bilateral cooperation agreements. Turkey and
China are also involved in projects to build oil pipelines from Iran." |
"Iraq has sharply increased its estimate of the country's proven oil reserves by 25%,
making it the second only to Saudi Arabia in terms of conventional crude oil. Iraq's oil
minister, Hussain al-Shahristani, puts the reserves at 143.1 billion barrels. He says the figures, revised for the first time since 2001, refer to
reserves that can be extracted by available techniques in the country. He adds that there
areas still to be explored could boost that figure even more. The new estimate moves Iraq
into second place behind Saudi Arabia, and ahead of Iran. Canada and Venezuela both have
far greater reserves than Iran and Iraq, the Associated Press notes, but says these
include oil shale and the tar-like bitumen that are far harder to extract." |
"China is pouring another $7bn
(£4.4bn) into Brazil's oil industry, reigniting fears of a global 'land grab' of natural
resources. State-owned Sinopec clinched the deal with Spain's Repsol yesterday to buy 40
per cent of its Brazilian business, giving China's largest oil company access to Repsol
Brasil's estimated reserves of 1.2 billion barrels of oil and gas. The whopping price tag for Repsol Brasil which values the company
at nearly twice previous estimates is a sign of China's willingness to pay whatever
it takes to lock in its future energy supplies and avoid social unrest. It will give the
company enough cash to develop all its current oil projects, including two fields in the
Santos Basin. The Repsol deal is not China's first in Brazil. In February last year,
Sinopec stumped up a $10bn loan to Petrobras, the state-owned oil company, in return for
guaranteed supplies of 10,000 barrels of oil every day for the next 10 years. It also
follows a slew of similar deals across the world. While much of the developed world is
baulking at its debts in the aftermath of the financial crisis, China has continued a global spending spree of unprecedented
proportions, snapping up everything from oil and gas reserves to mining concessions to
agricultural land, with vast reserves of US dollars.
This year alone, Chinese companies have laid out billions of dollars buying up stakes in
Canada's oil sands, a Guinean iron ore mine, oil fields in Angola and Uganda, an
Argentinian oil company and a major Australian coal-bed methane gas company. 'China is
rich in people but short of resources, and it wants to have stable supplies of its own
rather than having to buy on the open market,' Jonathan Fenby, China expert and director
of research group Trusted Resources, said. But it is a strategy causing anxiety elsewhere
in the world. Rumours in recent weeks that China's Sinochem may make a bid for Canada's
Potash Corporation raised fears that the Middle Kingdom would corner the global market for
fertiliser. Similarly, when BP's share price plummeted after Barack Obama's criticisms in
the wake of the Gulf of Mexico oil spill, there was concern that the company would be
driven into the hands of the Chinese. More explicitly still, when the aluminium giant
Chinalco was trying to buy Anglo-Australian Rio Tinto last year, television ads protesting
against the scheme from no less than the Senate opposition leader bellowed 'Keep Australia
Australian'. 'Chinese acquisitions are increasingly on the political radar,' said Robin
Geffen, the chief executive of Neptune Investment Management, which runs a leading China
investment fund. 'The pinch points come when people feel that supplies affecting national
security could be threatened by China buying them all up.' Contrary to the conspiracy
theories, China is not looking for world domination. It
has seen economic growth averaging a massive 10 per cent for the best part of three
decades, and although it is expected to drop into the high single-digits in the coming
years in response to a dip in export demand the natural resources required
to support even slightly moderated growth are an overwhelming priority. China is already
the second-largest oil consumer in the world and far outstrips its domestic supplies.
Neptune estimates that it will need to buy two companies the size of BP each year for the
next 12 years to meet its growing domestic energy demand. Demand for electricity alone is
growing each year equivalent to Britain's entire output. 'These are massive, massive
numbers,' Mr Geffen said. 'The deal with Repsol today, and all the others we have seen in
recent years, are wholly strategic, to nail down what they estimate future demand will
be.'" |
"Japan may budget measures to secure supplies of rare earths after
China curtailed exports of the minerals, said Japans Trade Minister Akihiro Ohata.
The Ministry of Economy, Trade and Industry 'hopes' to ask for a supplementary budget to
secure stable rare earth supplies, Ohata told Jiji Press today. The comments were
confirmed by a ministry spokesman, who didnt want to be identified....Japans trade ministry is investigating Chinas
effective ban on rare earths. The government will
check with about 30 companies including users and trading houses to confirm whether China
has banned the shipments, Tsutomu Murasaki, director of the non-ferrous metals division,
said Sept. 28. The ministry plans to release the results of its investigation next week,
the spokesman said." |
"Is the world about to begin running out of coal? Two researchers say
so. In a peer-reviewed article published in the journal Energy, they write that the world
will hit 'peak coal' production next year or shortly thereafter, and then mining would
begin a long, steep decline. Bottom line, say the paper's co-authors, Tadeusz Patzek, a
University of Texas engineering professor, and Greg Croft, a St. Mary's College of
California earth science professor, is that the 7 billion tons of coal the world is now
mining and burning each year is about the best it can do. 'Our ability to produce this
resource at 8 billion tons per year, in my mind, is a dream,' Patzek said. The pair's
prediction is based on the 'Hubbert Cycle,' the resource-depletion theory that American
geophysicist M. King Hubbert used in the 1950s to correctly forecast that U.S. oil
production would peak two decades later. Patzek
predicts coal will peak not because supplies are running out but because the remaining
deposits are increasingly difficult to mine. Alaska's North Slope, for example, has coal
reserves that rival those of the continental United States, but turning that coal into
energy would be practically impossible, Patzek argues. 'It would take 10 or 11 of the largest coal terminals on the Earth
operating 24-7, 365 to load ships above the Arctic Circle during the polar night,' he
said. Russia, China and other energy consumers face similar logistical difficulties with
coal, Patzek said. And while global supplies are set to trail off, the stage is set for
demand to spike, Patzek said. U.S. consumers use slightly less than 1 billion tons of coal
annually, the Chinese use an estimated 3.5 billion tons, and emerging energy giants like
India and Indonesia are hungry for more. 'In the past, any time we demanded something, we
got it. Well, this time around, it may be different,' Patzek said. 'The message of this
paper is that we really have to be a little bit smarter and less energy-intensive.'" |
"The UN's environment chief on
Wednesday called for a global drive to recycle rare metals that have hit the headlines in
a spat between Japan and China, warning that they are crucial for green technologies.
Achim Steiner, executive director of the UN Environment Programme, said that demand for
'rare earth metals' such as lithium and neodymium -- used in batteries for hybrid cars or
components in wind and solar power -- was accelerating fast. Rare earths are available in
only small quantities and mined in a few locations, raising fears that global supply for a
clean, high-tech economy could be exhausted swiftly as well as hampered by geopolitical
disputes. ... A UNEP-hosted panel of experts
highlighted the concerns about rare earth or speciality metals in May, estimating that
only one percent was recycled at the end of a product's life while the rest was discarded.
By comparison, the International Panel for Sustainable Resource Management estimated that
common metals such as steel, aluminium, copper and tin have 25 to 75 percent recycling
rates, in some instances exceeding fresh raw material supplies from mining. Steiner said that, based on current knowledge, some rare earths
'may be exhausted, as with peak oil, on a time horizon of 30 to 40 years.'" |
"There are enough known uranium resources in the world that the
supply of the metal will not be a constraint to the continued growth of the nuclear energy
industry, Cameco Corporation CEO Jerry Grandey said in Toronto on Tuesday..... There are
438 plants operating today, consuming about 180-million pounds of uranium a year. Not all
of this comes from new mine production, as a portion of the world's uranium is supplied
from uranium inventories, which are being steadily depleted. The
uranium mining industry is producing about 140-million pounds a year at the moment. Based
on current projections, consumption could increase to around 250-million to 300-million
pounds a year, Grandey said. 'So the industry itself, in response to uranium price
signals, has got to work quite hard to ensure that we meet the demand of the 180-million
pounds a year, and growth year-on-year going forward.' However, while some critics point to the production shortfall and say that
the nuclear industry is just not sustainable, 'the reality is that uranium is quite an
abundant element', he added. Exploration ground to a halt because of oversupply left over
from the sixties and seventies, which means that no-one has been looking seriously for
uranium until about five years ago. However, since exploration started up again, a number
of additional deposits have been discovered, and studies show the world has at least 160
years' worth of uranium supply, Grandey said. 'In my view, uranium is not going to be a
constraint, it's just a question of getting deposits that have been identified through the
pipeline of permitting and licensing.' Cameco, which
expects to produce 21,5-million pounds of uranium this year has plans to double the output
from its existing operations to 40-million pounds a year by 2018, in anticipation of
rising demand for the nuclear fuel." |
"The German government has
signalled its ambition to wean one of the worlds largest economies off fossil fuels
by pledging to generate enough renewable energy to meet 60 per cent of the countrys
energy needs by 2050. Norbert Röttgen, environment
minister, said it was 'the most ambitious energy programme ever seen, not only in
Germany'." |
"Climate change can be
solved in a snap by making oil, gas and coal companies take responsibility for burying all
the carbon dioxide emitted by the fossil fuel products they sell, one of Britain's leading
young climate scientists said yesterday. Government attempts to try to get millions of
people to change their behaviour through taxes and incentives were doomed to fail, said Dr
Myles Allen, head of the Climate Dynamics Group at the University Oxford, and an
increasingly influential voice in the climate debate.... Disposing of CO2 by burying it in
the ground, known as carbon capture and storage (CCS), is now regarded as essential for
tackling climate change, yet the technology is in its infancy. Britain is one of the
countries leading its development, with four experimental CCS-fitted coal-fired power
stations now being planned by the Government, but it may be a decade before it is
implemented and two of those trials could be the victim of cuts. Dr Allen's
contention is that if the big oil companies and other fossil fuel producers were forced
themselves to implement CCS or go out of business its adaptation would be
much quicker and much more widespread, and far more efficient than the current government
policy of trying to deal with emissions from millions of consumers. He told the
conference: 'Carbon comes into Europe through a couple of dozen pipes, ports and holes in
the ground. It goes out through hundreds of millions of flues and exhaust pipes. Yet
European climate policy is all about controlling the flow at the point of emission. It's
like blowing air into a sponge and trying to slow it down by blocking up the holes.' World temperatures have already risen to nearly one degree above the
pre-industrial, and this rise has been produced, Dr Allen says, by all the fossil fuels
which have been burned since then, which has been estimeated at about 500 billion tonnes.
Therefore, he says, we can afford to burn another half-trillion tonnes of carbon before
the extra degree of warming is reached we need to stop using fossil fuels
completely by the time we reach the trillionth tonne. As
long as all CO2 is being 'sequestered' (buried or otherwise diposed of) by then, the
climate problem will be controllable and this is the time frame the fossil fuel
industry has to take care of emissions. The key point is not to start using any of the
remaining four trillion tones of fossil fuels which thought to constitute the world's
reserves." |
"Scientists have estimated that South Africa is soon to reach its
peak coal production. Jeremy Wakeford, the chairman of the association for the Study of
Peak Oil (Aspo) said : 'It is commonly believed that South Africa has abundant coal
reserves which will last 200 years or more. But recent research [from] three scientific
journals suggests that usable reserves are much smaller than previously thought, and that
annual production could reach a peak and begin to decline within a decade -- or might even
have peaked already'. A study by geologist
Chris Hartnady soon to be published in the SA Journal of Science, estimates that South
Africa will reach peak coal production in 2020 when around 285 million tonnes will be
produced. Last year 242 million tonnes were produced
with over half being used by Eskom and the export market and Sasol sharing the rest. Eskom
has already started complaining of the poor grade of coal it is receiving this year. It is
in the middle of arbitration with a supplier over plans to cancel the contract to quality
issues. The utility has warned that having to pay higher prices for better quality coal
will lead to higher power costs for consumers." |
"The US is trying to resume production of raw materials vital for
defence equipment and green technology in response to rising fears about Chinese dominance
of the sector. The push follows moves by Beijing,
which controls more than 90 per cent of production, to restrict exports of 'rare earths'
which have a range of sophisticated uses from precision-guided weapons, night
vision and radar systems to green technologies such as hybrid cars and wind turbines." |
"The Scottish government has
raised its target for sourcing electricity from renewable energy by 30 percentage points.
Three years ago, it set out to achieve 50% from green power within 10 years. But new
industry research suggested that the country's renewable energy potential was bigger than
thought. First Minister Alex Salmond has now announced that the government is setting a
new target of 80% of electricity from renewables by 2020. He said: 'We are already on the path to a low carbon economy - Scotland
gets nearly a quarter of its electricity from green sources. 'Scotland is ideally placed
to help lead the renewables revolution and taking account of the levels of planned
investment over the next decade. 'I believe it is now time to aim higher and to go
further.' An independent analysis was commissioned by Scottish Renewables into the
country's renewable energy potential, which includes power drawn from wind, tidal, wave
and hydro turbines, and energy from waste and biomass. It
said the 2007 target of sourcing 50% of power needs from green sources within 10 years
could easily be reached. It said it should reach 31% by next year, and there are several large projects which have already won approval and
will come on stream after that." |
"Moscow and Beijing have agreed on key supply terms for future
Russian gas deliveries to China, which is seeking to secure energy resources to fuel its
growing economy, Gazprom said on Wednesday. Russian gas giant Gazprom, keen to diversify
its energy clients, has been in talks with China National Petroleum Corporation (CNPC) to
start sending gas to China but the two countries have yet to agree on pricing. Gazprom,
the world's largest gas producer, said in a statement on Wednesday that Russian and Chinese officials in Beijing had agreed on 'key
targets and parameters of the future supplies of Russian natural gas,' adding that
supplies were scheduled to start in 2015. The
statement did not provide further details." |
"Meeting the growing demand for energy in the U.S., even through
sustainable means, could entail greater threats to the environment, new research shows.
The study was carried out by Circle of Blue, a network of journalists and scientists
dedicated to water sustainability, and could have implications not just for the relationship between energy demand and water scarcity in the U.S. but elsewhere in the world, as well. 'It is not just that energy production could not occur without
using vast amounts of water. It's also that it's occurring in the era of climate change,
population growth and steadily increasing demand for energy,' explained Circle of Blue's
Keith Schneider, who presented the findings in Washington Wednesday. 'The result is that
the competition for water at every stage of the mining, processing, production, shipping
and use of energy is growing more fierce, more complex and much more difficult to
resolve,' he said. About half the 410 billion gallons of water the U.S. withdraws daily
goes to cooling thermoelectric power plants, and most of that to cooling coal-burning
plants, according to the U.S. Geological Survey.
Meanwhile, climate change is leading to decreased snowmelt, rains and freshwater supplies,
says Circle of Blue. One of the things missing from the discussion, then, is the
recognition that saving energy also saves water, the group contends.... 'We are about to
see water wars in the future,' said U.S. General Anthony Zinni. 'We have seen fuel wars;
we're about to see water wars.'" |
"The BP oil spill in the Gulf of Mexico will have little or no effect
on the medium-term outlook for offshore drilling and supplies, the International Energy
Agency told Reuters on Tuesday. Fatih Birol, the chief economist of the group that advises 28 industrialized
economies, said while some projects may be delayed in
the short-term, the need to increase future oil
supplies meant governments will not impose draconian regulations in the wake of the BP (BP.L) spill that
caused the United States' worst ever oil spill. 'From what I'm hearing from most OECD
governments is that they are considering increasing regulation and those that are put in
place will be monitored more closely than they perhaps were in the past,' Birol told Reuters in a
telephone interview. 'But they are sensitive to the fact these regulations should not be
designed to slow the growth of offshore drilling or making these upstream investments
unprofitable. There may be some delays to some project, but I do not think the BP oil
spill will represent the end of offshore drilling'." |
"There is nothing intrinsically wrong with President Obamas
earmarking $50-billion (U.S.) for new
transport infrastructure, or extending the Bush tax
cuts to low- and middle-income American householdsprovided the country can
afford them. But already burdened with a record budget
deficit of over $1-trillion, most Americans probably think Washingtons already
done far too much for the economy as it is.... implicit in this strategy is the belief
that todays economy can be force-fed more government spending and tax cuts to
achieve yesterdays rate of growth. Whats
being overlooked is that last cycles rate of growth was fueled for the most part
with cheap oiloil was below $30 a barrel for the first half of the period. Even
todays oil prices
werent encountered until the last year of growth. Thats not incidental to the
performance of the U.S. economy, which relies on imports for over half of its
19-million-barrel-a-day requirement. Feed the U.S. economy cheap oil, and youll see
robust growth rates and a drop in the jobless rate to four-decade lowsno matter
whos in the White House. But throw in $147-per-barrel oil, and the U.S. economy
stops dead in its tracks. Unfortunately, President Obama cant bring back the cheap
oil prices that fueled most of last cycles growth. The age of cheap oil is over, and
that means recalibrating the speed limit for the worlds largest oil-consuming
economy. In a world of $75per-barrel to triple-digit oil prices, the U.S. economy is
not likely to grow more than by 1 to 2 per cent per year until it can curb its oil
appetite significantly. Trying to substitute fiscal stimulus for cheap oil wont make
the American economy grow any faster. It will just make an already record-sized deficit
that much bigger." |
"Reuters reported that remedial
work to restore Cameco Corporation's flooded Cigar Lake uranium mine is on track for
completion next month with first production expected in mid 2013. As per report, Canada's unfinished Cigar Lake mine which is expected to
produce 18 million pounds of uranium a year or about 15% of global mined supply was
flooded in 2006 and again while repairs were still ongoing in 2008." |
"Energy secretary Chris Huhne
has ordered his officials to look at the impact of a 1970s-style oil price spike on the
British economy. Mr Huhne said the UK was having to prepare itself for 'lots of shocks',
forcing the price of a barrel of oil to double, mirroring the volatility last seen in the
1970s. Mr Huhne said he was concerned about the future fluctuations in the price of a
barrel of oil, which would send the price of petrol soaring. A 1970s-style doubling in the
price of oil would drain £45billion from the UK economy in two years, hitting investment
and jobs. He told a meeting on the fringe of the
partys conference in Liverpool: 'We will have a world where there may be lots of
shocks, we may well have oil price rises which are similar to the ones that we had in the
1970s, a doubling. I have asked for some work to be done in the department about what the
impact of that might be in terms of British business, businesses that have nothing to do
with energy, with green growth, entirely outside. The corner shop is affected if we have
an oil price shock because the economy is hit very seriously.' In his keynote speech to
delegates in the main conference hall he said his fears about the price of oil offered
further justification for the Governments push towards creating a greener economy.
He added: 'So the low-carbon economy is also a
premium which we pay to ensure ourselves against those sorts of oil price, fossil fuel
price, shocks.' |
"Emissions from Canada's oil
sands, from crude production to end use, are 6 percent higher than from other oil imported
into the United States, a study said on Tuesday.
While that is well below the levels cited by some environmental groups, meeting new rules
on carbon emissions would still mean an unlikely halving of greenhouse gases from oil
sands crude over the next 10 years, according to the study by energy think tank IHS CERA.
Those hefty emission cuts, borne by oil sands producers as more North American governments
adopt tougher environmental standards, would be impractical without other carbon offsets,
the study said. California and other jurisdictions have set fuel policies calling for a 10
percent drop in life-cycle greenhouse gas emissions within a decade. Canada's oil industry
is concerned about the impact on costs and access to markets as more governments follow
suit with low-carbon standards. 'It will be difficult to meet those,' said IHS CERA
director Jackie Forrest, an author of the report, called 'Oil Sands, Greenhouse Gases, and
U.S. Oil Supply: Getting the Numbers Right.' IHS CERA
got its life-cycle average from the results of 13 government, academic and industry
studies that put oil sands emissions at 5 percent to 15 percent above other crudes." |
"It is a question that could provoke a new Cold War as global warming opens
up the possibility of exploiting vast new energy reserves: Who owns the Arctic? Vladimir
Putin opens an international conference on the future of the region on Wednesday, the
latest sign of the Kremlins determination to establish itself as the dominant
northern power. The two-day meeting in Moscow is the first big international project of
the Russian Geographical Society (RGS) since Mr Putin, the Prime Minister, installed
himself as head of the organisations board of trustees last year. His close ally,
Sergei Shoigu, the Emergency Situations Minister, became president of the RGS at the same
time. The conference, entitled The Arctic: Territory of Dialogue, will gather members of
the intergovernmental Arctic Council comprising Russia, the United States, Canada,
Norway, Denmark, Finland, Iceland and Sweden as well as scores of scientists and
international polar experts to discuss the regions future....What is at stake? American geologists estimate that the Arctic may contain
at least 90 billion barrels of oil and as much as 1.55 quadrillion cubic metres of gas, or
a third of global reserves. Untapped
deposits of nickel, gold, coal, diamonds, platinum, titanium and other vital raw materials
are also predicted to lie beneath the rapidly receding ice caps....Russias latest national security strategy, approved
last year by President Medvedev, makes clear that the Kremlin already regards the Arctic
as an arena of potential military confrontation. It stated: '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.' Sergei Lavrov, the Russian Foreign Minister, has warned Nato against boosting its
presence in the region. Nikolai Patrushev, secretary of Russias Security Council,
once flew to the North Pole to plant a Russian flag on the ice. Mr Putin has previously
accused the West of coveting Russias energy reserves, warning that 'many conflicts,
foreign policy actions and diplomatic moves smell of oil and gas'." Who owns the Arctic? Putin to open talks and stake Russias claim London Times, 20 September 2010 |
"Toro Energy managing director, Greg Hall, addressed the World
Nuclear Association in London last week, discussing Australias uranium mining
potential. He was cautiously optimistic that Australia can help meet a predicted global
shortfall over the next 10 years. Mr Hall said that
around US$3 billion had been spent globally on uranium exploration since late in 2003.
While this had resulted in substantial increases in uranium through existing known
resource expansions, it had not yet generated a wealth of new discoveries. 'There have
been some new, globally significant discoveries and there will be a few more,' said Mr
Hall. Indeed, he predicted five globally significant uranium discoveries in the period
between 2003 and 2020. The catch is that it will be on average between eight and 15 years
before any opportunities move to stable production. The
last such major discoveries were Four Mile in South Australia in 2004-2005 and the HUSAB
project in Namibia. The problem seems to be that a market already constrained by time
needs to satisfy long-term contract demand by energy utilities, new power stations and a
rush by Asian utilities to lock in future uranium production sources. According to Toro, some of these projects will need to commence
production shortly to support adequate global supply. However, as not all these projects
will be economical the supply risk is not being addressed as the time and cost associated
with historically defined deposits continues to be underestimated....At the high price end, Australia could produce 7000t of additional
uranium oxide by 2015, rising to 14,000t by 2022. A median price range would see this
output ease back to between 3000 additional tonnes in 2015 and just under 12,000
additional tonnes in 2022. A low price environment going forward would see only a low
increase in Australian uranium oxide output to barely above 2,000 additional tonnes in
2015 and up to 4,000 additional tonnes between 2018 and 2022." |
"The exploitation of shale gas in emerging countries will help offset
energy poverty by offering an affordable energy source, the chairman of the Quebec Oil and
Gas Association told the World Energy Congress Thursday morning. Shale formations that
contain the trapped fuel can be found worldwide and there are now technologies that make
the fuel recovery economic, Andre Caillé, chairman of the Quebec Oil and Gas Association,
said. 'Access to these technologies is essential to break the vicious circle' of energy
poverty, which has negative impacts on education and health levels, he told a session on
energy for a sustainable future. Breakthrough shale drilling technologies are changing the
energy landscape in North America and they could spread rapidly to rest of the world if,
as the Obama administration promises, those technologies are transferred to the developing
world. And those technologies can be applied to shale oil, which would put downward
pressure on oil prices, according to Caillé, former head of Hydro-Québec and former
chairman of the World Energy Council, Canada. Although shale gas exploitation is running
into stiff opposition in Quebec, where it is still in the exploration stage, and in the
U.S., where more than 20,000 wells have been drilled, Caillé described shale gas in
positive terms. Asked about widespread concerns about
the industry's effect on water supplies, Caillé noted that risks are associated with any
energy source." |
"Plenty of uranium exists for nuclear power plants for decades, but
more research is needed to develop a better way to dispose of the spent fuel, says a
report today by the Massachusetts Institute of Technology. 'At any reasonable expected
growth of nuclear power over this century, the availability of uranium will not be a
constraint,' says study co-chair Mujid Kazimi, an MIT professor of nuclear engineering. The researchers say the idea of a limited uranium supply has long prompted
efforts to develop reactors that breed plutonium, which they argue are not economically viable. The report supports President Obama's loan guarantees, controversial among environmental
groups, to help build the first new nuclear power plants in three decades. It suggests
nuclear power has significant potential to reduce greenhouse-gas emissions, arguing
current U.S. nuclear plants generate 70% of all zero-carbon electricity.... Some of the report's funding came from the nuclear power industry." |
"Speaking at the World Energy
Congress in Montreal on Sept. 13, Shell CEO Peter Voser spoke positively about the impact
of natural gas and oil shale plays in North America and South Africa. However, he was less
optimistic about the development of European shale assets. While acknowledging that the 'shale revolution' has the potential to
change the energy landscape, Voser said that the public and even energy experts
havent fully grasped the extent of coming production from shale resource plays. He
noted that shale players must 'confront the risks' in developing shale assets, which he
did not elaborate upon. In a media briefing following his speech, the Shell CEO mentioned
that his company is exploiting shale gas plays in South Africa, which he described as an
area where the environment for the heavy land-use demand is acceptable to the public. In
contrast, he said that Europeans would not agree to
the type of land use prevalent in North America and South Africa because of the population
density and cultural differences." |
"China will need to source over
8 500 t/y of uranium from other countries by 2020, and is looking to buy shares in uranium
producers, China National Nuclear Corp vice-president Lu Huaxiang said on Tuesday. China's
current uranium demand was 1 700 t/y, and this would increase tenfold over the next decade, he told Mining Weekly Online through an
interpreter. 'There is 9 GW of installed nuclear
generating capacity. That will grow to 70 GW in the next ten years, so there will be a ten
times increase in uranium to about 17 000 t/y in China,' Huaxiang said. The country was
able to meet the uranium requirements of its current nuclear fleet from domestic supplies,
but would need to look abroad to meet future demand. 'If you look to the future, we will
surely need to purchase uranium from sources outside China. We
will likely source over 50% of our requirements from outside China,' Huaxiang said on the sidelines of the World Energy Congress being held in Montreal.
China had increased the number of reactors it would build over the next ten years,
Huaxiang said earlier in a speech. Previous estimates had pegged nuclear generation at 60
000 GW by 2020. The country was cooperating with a number of exploration companies, as
well as producers, and was eyeing the acquisition of stakes in such firms. 'We are
considering acquiring shares of companies outside China. It is an option we are looking
at,' noted Huaxiang. Asked where China was most likely to pursue uranium acquisitions, he
said: 'The number-one choice is countries that have large uranium resources, such as
Kazakhstan, Australia, Canada and African countries such as Niger. 'We have some very good
relationships with companies in those countries.' China had already acquired stakes in
Australian uranium companies, as well as those operating in Kazakhstan." |
"Having built up a spare crude production capacity of over 4 million
b/d, Saudi Aramco's priorities will now be gas developmentwhere an increasing focus
on unconventional gas is neededto meet spiralling domestic demand, while its oil
position will be sustained through, over the long term, raising recovery levels to 70% at
its main onshore oilfields. Saudi Aramco expects to continue growing its oil reserves
mainly through improvements to its recovery levels, hoping to raise those to 70% and add
40% to crude reserves 'over time', while its domestic gas shortage is to be met over the
long term by the company moving into the exploitation of unconventional gas reserves in
the kingdom. Saudi Aramco is also hoping to escape its gas shortage dilemma by targeting
unconventional gas reserves, which it believes could more than double its current gas
reserves of 'about 280 tcf'. Moving the company into an unconventional-focused gas
exploration and production sphere will, however, require not only large investments, but
also the attainment of a new technological skillset, a huge undertaking in a completely
nationalised sector. While the strategic direction
laid out by Saudi Aramco is bold and well funded, it also confirms what the industry has
known for some time: that the era of new conventional oil and gas discoveries in the
kingdom is more or less over and that future production capacity will come at a very
different production cost for Saudi Arabia than has hitherto been the case.... Having invested heavily over the past decade, first to catch up with
runaway global demand (after a long period of low crude prices and, consequentially,
investment) and then to rebuild its spare crude production capacity cushion, the kingdom's
national energy champion is now in a comfortable position to meet resurgent economical and
crude demand growth across the globe. Domestically,
however, its gas position has become anything but comfortable, with failure to discover
new gas reserves or bring them onstream sufficiently swiftly leading to repeated power
shortages during peak electricity demand seasons during much of the past decade. To
alleviate the gas shortages, increasing volumes of crude and refined products have had to
be burned in power plants throughout the kingdom, at lower efficiency rates than if gas
had been used and to a considerable future revenue loss in the shape of those crude and
product volumes lost for export.... This year Saudi
Arabia is burning almost 880,000 b/d of crude and crude derivatives for power generation,
while growing oilfield maturity over the long term is also raising the kingdom's need for
either increased gas or water injectionsthe latter demanding large-scale
power-consuming water desalination operations.... Saudi
Aramco's strategic focus on technology to raise recoverability is of course nothing new.
Its efforts to explore and develop unconventional gasperhaps mainly shale
gasare the real new item of interest, although both together point to Saudi Aramco
adjusting toand confirminga new era for Saudi Arabia's hydrocarbon industry.
Future capacity will not come from additional discoveries of conventional oil or gas
reserves, but from reserves being added through technical improvements by the company. On
the oil side this has been a notion in the industry for some time, with few new oilfields
having been identified over the past two decades while recoverability rates have
increased, making it possible for the kingdom to not only replace production, but even
grow its reserve figures. Nevertheless, the situation has a few heavy long-term
implications, as the higher recovery numbersshould they come anywhere close to such
a huge uplift as 40% growth in reservesare likely to require costly investments in enhanced oil recovery ( EOR) at its major oilfields, which has the potential to
dramatically change the Saudi bottom-line production cost per barrel. The kingdom is, like
most of its Gulf neighbours still, producing from low-cost oilfields, giving it very
healthy per-barrel margins. With massive future investments in costly advanced technology
and EOR solutions the basic calculations might change significantly, bringing Saudi Arabia
closer to other mature producers over time with regard to production costs, in itself
significantly limiting its opportunities and economic freedom of manoeuvre. A similar
issue applies to future unconventional gas developments, which will come at a production
cost radically different from what the kingdom and its population has been accustomed to,
and in the long term this inevitably has to result in reforms of already costly energy
subsidy regimes." |
"Last week, USEC Inc.
(NYSE: USU)
announced that a government and industry partnership to downblend Russian weapons-grade
uranium to low enriched uranium for supply to USEC`s customers as commercial reactor fuel
has presently eliminated the equivalent of 16,000 nuclear warheads by recycling 400 tonnes
of uranium. The Megatons to Megawatts program has been in operation since 1995 and
is on track to complete the downblending of the equivalent of 20,000 nuclear warheads into
commercial nuclear fuel by the end of 2013. The U.S. Department of Energys National Nuclear Security Administration
(NNSA) is the U.S. lead agency on the program and is working to reduce nuclear risks by
monitoring the conversion of Russian highly enriched uranium at several sites in Russia. The fuel generated to date could produce enough electricity to
meet the demand for a city the size of Boston or Seattle for approximately 610 years and
is the energy equivalent of more than 9.8 billion barrels of oil or nearly three years of
U.S. crude oil imports." |
"Biofuels made from plant waste
and municipal trash rather than food crops could replace more than half of gasoline used
in the European Union by 2020, industry analyst Bloomberg New Energy Finance said today. The 27-nation bloc could make 90 billion liters (24 billion gallons) of
so-called next-generation ethanol in 2020, about 65 percent of predicted fossil gasoline
use, the London-based group said in a study. At least 100 refineries a year could be built
in the bloc from 2013, it said. The EU currently has no commercial factories that refine
biofuels from plant waste. European agriculture 'can benefit from a new bioenergy industry
as farmers will have an extra revenue source, increasing the euros-per-hectare ratio for
every piece of land,' said Roberto
Rodriguez Labastida, a co-author of the study....Todays report was commissioned
by Novozymes A/S and Royal DSM
NV, both of which produce enzymes used to catalyze reactions during the production of
second-generation biofuels. Novozymes Chief Executive Officer Steen
Riisgaard said in a July interview that Europe is lagging behind the U.S., China and
Brazil in developing fuels from plant matter.... Under the business-as-usual scenario,
there will be 15 refineries making biofuels from plant waste by 2020, compared with 946 in
a 'bullish' case, according to the study. Rodriguez
said the more optimistic scenario could be achieved by using municipal waste and just 25
percent of crop and forestry waste, allowing the rest to stay in the soil, providing
nutrients. The push for the fuels is clouded by a
debate over whether it unfairly competes with farmland used for food production. Nestle
SA, the worlds largest food company, is opposed to using food crops for
biofuels." |
"Charles Maxwell is senior
energy analyst at Weeden & Co. Maxwell discusses where oil's production peak is and
how that affects investments. 'The use of petroleum
in the world is now up to about 30 billion barrels per year. The rate at which we have
found new supplies of petroleum over the last 10 years has fallen to an average, of only
about 10 billion barrels per year..... The peak of production usually comes sometime
between 30 and 50 years after the peak of finding oil. 'The peak of discovery,' as they
call it. For instance, in the North Sea,
the peak of discovery was in the late 1960s, and the peak of production was in the late
1990s. So it was around 30 years between the peak of finding oil and the peak production
of that oil.... In the United States, the actual peak of discovery was 1931, quite a bit
earlier. We were the first country to actually peak in the world of oil production. Our
peak of production came in late in 1970. So that was a 39-year transition from the peak of
finding the oil to the peak of producing it.... Now
the question remains in front of us, has the world peaked in its level of discovery and if
so, how long will it take the world, if it has peaked, to reach the peak of oil output? I
believe that the peak of discovery fell in the five-year interval between 1965 and 1970.
So if you took it at, say, 1968, and then you added 50 years, you would get to 2018....Technology is trying to give us the ability to produce more out of a
giant field. In the early days we only produced about 25%. Today we're producing about 40%
of the oil in place when a field is found. These numbers are gaining rather slowly now.
What's happening is that the increase in the world's population and greater use of oil in
transportation, particularly in the emerging countries, is working to lift oil demand, and
that spurs us to drain a field more quickly, but not necessarily to get a higher
proportion of oil out of it. So we have technology improving production capability, but
actually taking the oil out faster rather than getting much more out.... We think that the peak in production will actually occur in the
period 2015 to 2020. And if I had to pick a particular year, I might use 2017 or 2018.
That would suggest that around 2015, we will hit a near-plateau of production around the
world, and we will hold it for maybe four or five years. On the other side of that plateau, production will begin slowly moving
down. By 2020, we should be headed in a downward direction for oil output in the world
each year instead of an upward direction, as we are today..... at around 2015, we will be unable to produce the incremental
barrel in the global system. So a tightness of supply will begin to be felt. Let's say in
2013, we may produce 1% more oil than we did the year before and then if we have a demand
growth of 1¼% in 2013, we'll be very slightly tightening the system. The difference
between supply and demand is not going to be very much at first. It would not normally
cause a big rise in price. On the other hand, in 2014, that tightness begins to grow and
it is now a trend. By 2015 perhaps we're only able to produce 0.50% more with about 1.25%
higher demand, so that we're 0.75% short. And now we have to raise prices enough to stop
some people from using that oil because it is actually not available. We call that 'the
destruction of oil demand.' It is important because it forces the price of oil up on an
accelerated basis.... Supply
and demand are now in rough equilibrium and that means that prices are in a range between
about $69 on the bottom and about $86 on the top. And that $16, $17, $18 range seems like
it will be with us through 2010 and probably most of 2011. We'll be living in a dream
world. Things in the oil world are going to be just fine for the immediate future. We can
buy gasoline at $3.00 per gallon or perhaps $2.75. That is fine for now. The problems come
around 2013 or 2014, when we begin to find that this higher growth that you spoke about is
nowhere matched by higher production of petroleum products and, obviously, we begin to run
tight.....That
begins to scare people, since they can look ahead and see that the issue is not going to
be resolved quickly, since you have to find the oil many years in advance of being able to
produce it. We just haven't found enough oil for a number of years, so this problem is now
beyond the reach of some big, major discovery that suddenly would provide us with a
sufficiency. And so far, we have no technological breakthrough to assist us. So we're going to have to make a switch from using oil to using more coal
or more natural gas or more nuclear or other alternatives. But most alternative supplies
(such as hydropower) can't be expanded quickly. Solar power is too small to be meaningful.
Wind power, again, is too small, and most of the good places for wind have already been
taken. So it looks like alternative energies will plug only a very small part of the hole.
And we'll have to rely more on coal. But we can't rely on coal because the emissions
people will not allow us to burn coal and the various government agencies are not allowing
the establishment of coal-burning plants.... In the same way, the American public has not
yet really given the go-ahead for the nuclear power developments of the future. So, it
doesn't look like nuclear can get revved up in the time frame of the next 10 years. Even
if we decide to seize the nuclear alternative, it's still a decade before we can get the
plants built and operating..... The average oil company, producing conventional oil in the
way that we normally do, by drilling and pumping it out, will peak around the mid-to-late
teens, along with the rest of the world, But the oil sands companies average about 2035 to
2045 for their ability to continue producing incremental barrels. So, they keep going for
many, many years after the peak has been reached here in the teens by all the other
conventional producing companies.'" |
"There will be a need for liquid fuels, especially in transport, for
many decades, and in a world of finite oil reserves and pressure to curb carbon dioxide
emissions, a growing proportion of those are likely to be biofuels. To play a central role
in the energy system of the future, however, biofuels will need to be different from the
varieties that are generally available today. First generation biofuels, such as ethanol
from corn and sugar, and biodiesel from vegetable oils, are now well established in many
developed countries, often encouraged by generous subsidies and supportive regulations,
but their drawbacks have become increasingly evident. In spite of a recent study published
by the World Bank that suggested that biofuels played only a small part in the surge in
food prices of 2006-08, there have been persistent concerns about diverting agricultural
resources towards fuel production. As a result, there has been an increasingly intensive
search for new feedstocks and processes, and in the past couple of years large
international oil groups including ExxonMobil,
Royal
Dutch Shell and BP have stepped up their commitment to research and development of
advanced biofuels. Several of the companies
developing second-generation biofuels, those not produced from food crops, claim to be
close to commercial deployment, yet delivery of large volumes of their products is still
many years away. Confident-sounding predictions of commercial production have frequently
turned out to be over-optimistic, and in a sign of how realism has set in, the US
government has cut sharply its targets for the use of advanced biofuels. Legislation in
2007 set a goal for consumption of cellulosic ethanol, made from plants such as
switchgrass, straw or wood chips, of 100m gallons for 2010, and 250m gallons for 2011.
This year those goals have been scaled back to just 6.5m gallons for 2010, and up to 17.1m
gallons for 2011. If reached, next years upper limit would still represent only
about 0.1 per cent of total US biofuel consumption, which is expected to be just under 8
per cent of total transport fuel usage. Only a
handful of companies are expected to be delivering cellulosic ethanol in the US next year,
of which the largest is set to be Maryland-based Fiberight, which started production in
May at its Blairstown, Iowa, plant, initially using pulp wastes from a local paper
factory. The second-largest could be Indiana-based Agresti Biofuels, again producing
ethanol from waste, and the next could be California-based AE Biofuels, which has a plant
producing conventional corn ethanol, butt plans to use it to create a rising proportion of
cellulosic ethanol from straw. The preliminary and tentative nature of even these plans
the tattered remnants of the high hopes of three years ago are a warning of
how difficult the large-scale production of advanced biofuels is likely to be." |
"The
UKs gas storage capacity is set to rise by 15% after the government today gave the
go ahead to WINGAS Storage to convert its Saltfleetby onshore gas field into an
underground gas storage facility. Saltfleetby in
Lincolnshire is the UKs largest onshore gas field and will provide between 700
million to 800 million cubic metres of new gas storage capacity. 'This new project will
provide the UK with new and much-needed as storage, said Energy Minister Charles Hendry.
'As the UK becomes increasingly dependent on imported gas, this government has made it a
priority to ensure secure gas supplies,' he added in a statement released today." |
"Government plans to
subsidise green heating are challenged today by the largest ever field study of 'heat pump' devices in
the UK, which reveals 80% perform so badly they would not qualify as renewable energy under proposed European
standards. The report, from the Energy Saving Trust, reveals the
prevalence of badly installed heat pumps that are consequently under-performing. The
controversial report could affect the government's plans to launch its Renewable
Heat Incentive (RHI) next April to pay householders for generating heat from such
'green' ground and air source heat pumps. There are already
fears the RHI could be a victim of spending cuts announced next month.... the Trust's
peer-reviewed study, the largest of its kind in the UK, found the 83 devices it monitored
for a year were underperforming. About 87% didn't
achieve a system efficiency of 3 which the Trust considers the level of a
'well-performing' system (higher is better). And 80% failed to meet 2.6, the level being
considered under the EU Renewable
Energy Directive for classification as a renewable source of energy." |
"Smart meters to boost energy efficiency in homes do not
automatically achieve a significant reduction in energy demand, research showed on
Wednesday. Smart meters record energy or water consumption and send the readings back to
the utility for monitoring and billing. It is hoped that consumers will save energy
through increased awareness of how much they use and that estimated bills will be
eliminated. Previous studies have shown that smart meters encourage homeowners to cut
their energy use by 3 to 15 percent, but researchers said consumers also need educating
about energy use....At the end of the trial,
participants were given the option to keep the meter and were surveyed again 11 months
later. The academics found that initial savings in electricity consumption of 7.8 percent
after four months could not be sustained in the medium to long term. 'Participants who
kept the monitor (...) did not manage to sustain their electricity savings any better than
those without a monitor,' they said." |
"Unsurprisingly, he is appalled by the idea. Russia has been planning
floating reactors for quite some time, but reached a recent milestone when the hull of the
Akademik Lomonosov was launched into the Baltic Sea. The reactor is not complete, but the
barge that will house the plant was launched on June 30 at the Baltyskiy shipyard in St
Petersburg and China has been watching developments very closely indeed. Sergei
Kiriyenko, head of Russia's nuclear agency Rosatom said the plant would be 'absolutely
safe' and predicted 'big interest from foreign customers especially in developing
nations'. Floating reactors can be used in
inaccessible places where there is no electricity grid including exploring for oil
in the Arctic or Antarctic." |
"When the United States went to war in Iraq, the price of oil was
less than $25 a barrel, and futures markets expected it to remain around that level. With
the war, prices started to soar, reaching $140 a barrel by 2008. We believe that the war
and its impact on the Middle East, the largest supplier of oil in the world, were major
factors. Not only was Iraqi production interrupted, but the instability the war brought to
the Middle East dampened investment in the region. In calculating our $3 trillion estimate
[of the cost of the war] two years ago, we blamed the war for a $5-per-barrel oil price
increase. We now believe that a more realistic (if still conservative) estimate of the
war's impact on prices works out to at least $10 per barrel. That would add at least $250
billion in direct costs to our original assessment of the war's price tag. But the cost of
this increase doesn't stop there: Higher oil prices
had a devastating effect on the economy. There is no
question that the Iraq war added substantially to the federal debt. This was the first
time in American history that the government cut taxes as it went to war. The result: a
war completely funded by borrowing. U.S. debt soared from $6.4 trillion in March 2003 to
$10 trillion in 2008 (before the financial crisis); at least a quarter of that increase is
directly attributable to the war. And that doesn't include future health care and
disability payments for veterans, which will add another half-trillion dollars to the
debt. The global financial crisis was due, at least
in part, to the war. Higher oil prices meant that money spent buying oil abroad was money
not being spent at home." |
"Energy experts warn that an
acute shortage of uranium is going to hit the nuclear energy industry. Dr Yogi Goswami,
co-director of the Clean Energy Research Centre at the University of Florida warns that
'the proven reserves of uranium will last less than 30 years.' Current nuclear plants consume around 67,000 tonnes of high-grade uranium
per year. With present uranium deposits in the planet having been estimated at 4-5 million
tones, this means the present resources would last 42 years. But if there is going to be a
stepping up of nuclear energy plants, as seems to be the case, then the likelihood is that
that the time span is going to be considerably reduced. Dr Goswami who is the inventor of
the a new thermodynamic cycle for solar thermal power now called the Goswami Thermodynamic
cycle, says, 'by 2050, all proven and undiscovered reserves of uranium will be over.'
'Other options for producing uranium will be available. For example, three parts per
billion of sea water is uranium but the costs of recovering this uranium are so high that
it is unlikely to prove an unviable option,' he said. Dr
Goswami agreed that atomic fuel was limitless if a government went in for breeder
reactors. But from the 400 nuclear reactors being used in the world, 'I do not know of a
single government using them at present.' Dr Goswami
also expressed his scepticism at the thermal breeder reactor technology based on thorium.
At present, India is the only country currently pursuing this because of its substantial
thorium reserves. His views were seconded by Dr Lee Stefankos, a professor of electrical
engineering and director of the Clean Energy Research Centre at the University of South
Florida. Dr Stefanakos, who has been carrying out research in the areas of solar thermal
energy conversion, photovoltaic systems and hydrogen. Dr Stefankos also feels that nuclear
energy is not one of the major producers of energy. With the shrinking uranium reserves,
Dr Stefankos believes solar energy provides a safer and in the long run, a much cheaper
alternative." |
"Sinochem could struggle
to make a move on Potash Corp of Saskatchewan. Intervening in the battle for control of
the Canadian fertiliser group would fit with the state-owned firm's aim to be a mainstay
for China's agricultural safety. But Sinochem, which has reportedly hired advisers to
consider its options, will face other hurdles if it wants to block BHP Billiton's $39
billion hostile bid. China has strategic reasons to
covet Potash Corp. The Middle Kingdom is already the world's second-largest potash
importer. BHP's plan to run Potash Corp's operations at full capacity would squeeze out
marginal producers, driving up long-term prices." |
"Based on economic and policy considerations that appear to be
unconstrained by geophysics, the Intergovernmental Panel on Climate Change (IPCC)
generated forty carbon production and emissions scenarios. In this paper, we develop a
base-case scenario for global coal production based on the physical multi-cycle Hubbert
analysis of historical production data. Areas with large resources but little production
history, such as Alaska and the Russian Far East, are treated as sensitivities on top of
this base-case, producing an additional 125 Gt of coal. The value of this approach is
that it provides a reality check on the magnitude of carbon emissions in a
business-as-usual (BAU) scenario. The resulting
base-case is significantly below 36 of the 40 carbon emission scenarios from the IPCC. The
global peak of coal production from existing coalfields is predicted to occur close to the
year 2011. The peak coal production rate is 160 EJ/y, and the peak carbon emissions
from coal burning are 4.0 Gt C (15 Gt CO2) per year. After 2011, the
production rates of coal and CO2 decline, reaching 1990 levels by the year 2037, and
reaching 50% of the peak value in the year 2047. It
is unlikely that future mines will reverse the trend predicted in this BAU scenario." |
"Vladimir Putin, the Russian
prime minister, on Sunday opened a new pipeline to export east Siberian oil to China that
will help Russia reorientate its oil trade towards the east. The pipeline, running 67km
from Skovorodino
in east Siberia to Chinas north-eastern frontier, is an offshoot of a new oil
export route Russia is building to the Pacific Ocean, providing a strategic window on the
fast-growing energy markets of Asia. 'This is a
vital project for us as we begin to diversify our sales of strategic raw materials,' Mr
Putin said. 'So far we have delivered most oil to Europe ... The Asia-Pacific region has
received insubstantial volumes.' Russia began exporting oil this year from a new export
terminal on the Pacific Ocean built to serve fields in east Siberia, one of the
worlds last untapped oil provinces. Some Kremlin-friendly oil companies have been
granted tax breaks to speed development of east Siberian reserves and offset a decline in
production in other regions. Transneft,
the Russian oil pipeline monopoly, completed the construction of a pipeline from Taishet
in the Irkutsk region to Skovorodino last year, the first stretch of a planned 2,757km
pipeline to the Pacific. On completion in 2012, the pipeline will be capable of carrying
up to 1.6m barrels of oil a day, about one-third of Russias current exports. Julia
Nanay, senior director at PFC Energy, the Washington-based oil consultancy, said the
pipeline would give Russia flexibility to focus oil trade on premium markets. 'There is
more money to be made by exporting to Asia than to Europe. By building the spur to China,
Russia is acknowledging commercial realities,' she said..... Transneft said last year that Russia would boost its daily oil production
by 1m barrels to 11m b/d after 2012, providing enough oil for exports both ways. But analysts have warned that Russian oil production, after rising to an
all-time record of 10.2m b/d this month, will begin to fall next year as a decline
accelerates at mature fields." |
"Chinas ambitious targets
for the commercial production of coal-bed methane need 'a reality check', according to a
consultants report into the countrys efforts to extract the high-energy gas
trapped in coal deposits. This autumn marks the fifth anniversary of Chinas first
commercial CBM production. Beijing announced an aggressive
target of 5bn cubic metres a year by 2010. However, production of the gas is currently
just a quarter of that. China will soon announce
ambitious targets of 10bn cubic metres a year by 2015, and double that for 2020, according
to a report from Wood Mackenzie. 'A reality check is needed,' the report warns. 'CBM is
still far from providing another major source of gas supply.' China has massive reserves
of unconventional gas forms of natural gas such as shale gas and coal bed methane
which could supply as much as 12bn cubic
feet per day by 2030, playing a crucial role in meeting Chinas huge gas needs.
Coal bed methane alone could account for 14 per cent of domestic gas supply by 2030,
according to the consultancy. But key questions remain over how the unconventionals sector
will develop, and whether government policies will move fast enough to open up the sector.
Chinas total gas demand last year was about 9bn cubic feet per day. By 2015, gas demand is expected to reach 20bn cubic feet per day
and import dependency will increase to about 30 per cent, according to Wood Mackenzie." |
"China's draconian export curbs
on rare earth minerals needed by the rest of the world for frontier technologies is
escalating into a serious diplomatic and trade clash with the United States and other
leading powers. Japan's foreign minister Katsuya
Okada issued what amounted to a formal protest at top-level meeting with Chinese officials
in Beijing over the weekend, saying the sudden cut-off was 'affecting the global
production chain'. It is the latest sign of rising pressure after angry complaints by
companies outside China that rely on this family of 17 metals for hybrid cars, mobile
phones, superconductors, navigation, and a host of high-tech industries." |
"China will build a
multi-million-dollar research base on its east coast as it steps up its efforts to search
for energy sources and rare earths on the ocean floor,
state media said Friday. Engineers have started to design the base, which will cost an
estimated 495 million yuan (72.8 million dollars) for the initial construction, the Xinhua
news agency reported. The base in the coastal city of Qingdao in Shandong province will
cover 26 hectares (64.2 acres) and serve as a support station for the deep-diving manned
submersible vessel 'Jiaolong', the report said. China's ambitious ocean exploration
programme began in 2002 as the country's appetite for energy resources expanded rapidly
with its fast economic growth." |
"In the last decade America has rapidly
developed a new source of gas found naturally in rocks. It now provides a fifth of
national needs. Such gas is present in Europe too, and whether or not it is practical to
extract it, it is already having an effect on future supplies.... there is great hype in
western Europe, where unconventional gas exploration is just beginning, notably in Poland.
If a shale revolution did happen, it would be a serious game changer.Western Europe, which
is two-thirds dependent on gas imports - a figure expected to rise - could become
self-sufficient. Russia's gas exports would face serious competition, undermining efforts
to use energy to promote state power. Global gas prices, already falling following the
shale revolution in the US, could drop even further. This might encourage the major gas
exporters to create an Organization of Gas Exporting Countries (OGEC) to defend their
revenues. All these possible consequences are conditional on whether the US shale
experience can be replicated. A number of favourable circumstances exist in America but
are not present in Europe. There was a huge amount of geological data from old cores kept
from previous drilling. Shale plays - shale reserves are called plays rather than fields
reflecting the large geographic areas involved - overlay conventional oil and gas fields
which had been extensively explored. Onshore oil and gas operations in Europe have been
limited. US shale plays are large and relatively
shallow, whereas in Europe they are small and deep, with high clay content. Clay is not
conducive to hydraulic fracturing, a key technological ingredient to release the gas....In 1980, the US Crude Oil Windfall Profit Tax Act introduced a
nonconventional fuel production tax credit of $3 per oil barrel equivalent. Before 2000,
this accounted for around a quarter of domestic gas prices and was a significant
incentive. No such tax breaks exist in Europe, except in Hungary. Indeed, European
petroleum legislation completely ignores unconventional gas and would therefore require
significant redrafting. In the US very large areas were licensed for shale exploration, in
Europe, traditionally oil and gas operations are only allowed in small areas.... Because of much faster field depletion, shale needs far more wells
than conventional fields and is therefore much more disruptive locally. The US has a low population density - 27 people per square kilometre
compared to England with 383 - which is used to oil and gas operations in the
neighbourhood; not so in Europe. In the US landowners directly benefit from oil and gas
produced from their land. Again, not so in Europe, where the state owns sub-soil
hydrocarbons. Thus there is likely to be considerable local opposition in Europe to the
very intrusive operations required. There is also concern over local environmental issues,
given the potential damage to ground water from the hydraulic fracturing chemicals. Until
recently, ground water damage was not an issue in the US, although it is becoming so. In
Europe the story is likely to be more serious and local opposition to such methods could
be strong. A crucial part of the US story, also missing in Europe, was the existence of a
vibrant service sector, given unconventional gas depends heavily on new technology such as
horizontal drilling and hydraulic fracturing....Overall, the prospects for a shale
revolution in Europe look thin. However, the hype has created huge investor uncertainty in
gas. Already US investors in liquefied natural gas regasification plants have been badly
hurt as the demand failed to materialise. Faced with such uncertainty, it is likely that
current potential investors in gas transport options - pipelines and liquefied natural gas
- will wait to see what may or may not emerge on unconventional gas. If the shale revolution happens, then Europe can happily float on
a cloud of cheap gas for a long time to come. But if Europe fails to replicate the US
experience, there will be serious problems as future gas supplies suffer from insufficient
investment today resulting from the uncertainty created by a possible shale gas
revolution." |
"I feel the peak/plateau period is much delayed because of the
recession. Currently I am looking at around 2020 - perhaps as late as 2025. But of course
it is dependent on what happens to the global economy (and the environment) between now
and then. When I first started forecasting in the
late 1990s, I had a production plateau beginning around 2016. Over time, supplies got
tighter and tighter and oil prices started to rise, and the plateau moved nearer to around
2012. Now it has moved out to 2020, showing how uncertain this modeling can be because so
many technological, financial, political and social variables are at work. The fluctuation
points to volatility of course which is a signal of tight energy supply. If there is a new
surge in economic growth and China and India continue to grow and mop up oil supplies,
then it will move back to 2016 very quickly. In the
old days, people who used to argue against the reality of peak oil pointed out that the
so-called peak is always shifting into the future. And they were right as the subject was
not fully understood, especially the impact of political and economic circumstances.
That's generally not the case now, with the peak moving both forwards and backwards. The
world has hit a volatile period in history where new energy supplies are all difficult to
find and expensive to produce. The hope is for a magical new energy source to replace
hydrocarbon liquid fuels.... [Peak oil]has become mainstream, supported by empirical
observations, greater understanding of both above- and below-ground factors and more
detailed modeling. Defining a date of peak is not regarded as so valuable. However the
deniers are becoming more vocal just as they are in the environmental movement. The original people who denied peak oil were focused on supply but
the angle today is demand. We won't reach a supply peak but a demand peak. Of course
supply and demand are really the same thing with demand, through pricing mechanisms,
controlled by supply....When I ran Energyfiles,
which was a commercial concern, I was concerned about being linked too closely with the
peak oil movement. For years it was not mainstream and, although developed by excellent
scientists and promoted by good organizations such as ASPO and the Oil Drum, it had many
weird hangers-on, just like in the environmentalist movement. It was not treated seriously
by most of my potential clients. Conversely now it is generally accepted - albeit with new
names such as 'peak demand' and 'bumpy plateau' - it has become less of an issue because
of the recession. However in just a few years I suspect we will go through the argument
all over again." |
"At the centre
of the New Great Game for control of industrial mineral supply is China. While the world
dozed under the illusion that everything could be bought for a price China has fought to
give itself virtual monopolies over materials that its competitors now realise to be
indispensable.The rare earth metals are the clearest example but Chinas control over
world supplies of antimony, fluorspar, gallium, germanium and magnesia is unsettling. The
restrictions on exports of vital materials are part of a strategic shift: Beijing wants to
use the minerals under its soil to fuel its growth. 'Outside China, the rules are that everything is available for a price. China is
a black hole there is a master plan, but it is hard to see,' said Simon Moores, an
analyst at the research company Industrial Minerals. Some analysts view the panic by the
governments of consumer nations as healthy. They are having to seek alternative sources
and break years of complacency. Nicholas Curtis, executive chairman of one of the few
viable non-Chinese rare earth mining companies, Lynas, falls, unsurprisingly,into that
camp. 'For a long time rare earths users were unconcerned about supply issues, believing
China had an endless supply of rare earths. They benefited from the low prices China was
offering. As a consequence, for ten years there was no new exploration in rare earths.
This is why you are now seeing supply shortages creating price rises and the structural
shortage creating a much greater global strategic concern,' he told The Times. Some choose
to be coy about the role of the Middle Kingdom, deliberately veiling its identity as they
describe ever-more distorted global supply-demand balances. In its report on Europes
vulnerability to mineral supply risks, the EU noted that 'geological scarcity' was not the
issue. 'Of greater relevance are changes in geopolitical framework...many emerging
economies are pursuing industrial development strategies ... aimed at reserving their
resource base for their exclusive use,' concluded the report. Others have little choice
but to be blunt. A US report noted that the M1A2 Abrams battle tank and the Aegis Spy-1
radar worked only because of minerals over which China has a 95 per cent market share. Jack Lifton, a rare earth specialist, said: 'Everyone is
going to have to get used to the idea that, unlike other markets, it doesnt matter
how much money they offer, China isnt going to sell.' |
"For 45 years, South Korea has ignored dirt-poor Bolivia,
and certainly not entertained its leader at lavish expense. Mr Moraless nation,
however, has lots of lithium and Seoul wants Samsung, Hyundai, LG and its other
industrial giants to remain in business. Not an ounce of the stuff has yet left
Bolivias Salar de Uyuni, but the great salt lake holds enough lithium, according to
some projections, to give whoever gains access to it future dominion over batteries for
electric cars, laptops and mobile phones. Mr
Morales has also spotted sooner than most that the world has fundamentally changed:
resource geopolitics has lurched far beyond oil. The impending clashes will concern
almost-unknown minerals and the worlds consumer nations are realising this with some
alarm... The South Korean Government
declared last week that it would draw cash from the national pension and sovereign funds
to secure rare metals. It was coupled with a proposal that future aid should be focused on
countries with rare metals. The courting of Mr Morales is not an isolated incident: China,
Japan, Russia and France have all tried similar ruses to win his heart. This is, however,
just the start. Other land grabs in the 'New
Great Game', warned a recent EU report, could erupt over the molybdenum used for
cardiograms, cobalt for mobile phones, palladium for desalination plants, fluorspar, which
is essential to chemical production, or the magnesium oxide vital to every oil refinery,
cement factory and steel mill on Earth. The
EU lists 14 raw materials as 'critical'. The US Department of Defence will next month
publish a report on how much its military relies on materials that, currently, can only be
obtained from China. In May, Britains
Department for Transport and Department for Business received a report on rare earth
resources which said it was likely that China would, by 2015, ban all exports of the
metals substances that underpin the digital revolution and without which most
'green' technology cannot function. Gal Luft, a director of the Washington-based Institute
for the Analysis of Global Security, pointed to Chinas 95 per cent control of global
production of rare earth metals, predicting that foreign policies around the world would
be shaped by the need for dysprosium, cobalt and platinum in the same way that oil defined geopolitics in the 20th century. Chinas ever-tightening restrictions on rare earth exports
quotas will be slashed by 72 per cent by the end of this year reflect a
pattern that may soon be seen in other commodities. 'When it comes to resources, there is no free market,' he said. 'The lesson for
governments that want to stay in business is that you cant source things you want
from one place.' Jaakko Kooroshy, a policy analyst at The Hague Centre for Strategic
Studies, told The Times that the situation had exposed spectacular complacency
among Western governments. 'The West has woken up late to the idea that these metals have
a strategic importance. In the supposed boom of the 1990s ... mining was a non-issue and
everyone wanted to diversify away from something seen as dirty and old. Suddenly it
matters again.' The mineral issues do not end with technology, with attention focused also
on fundamental minerals. Control of world potash supply for crop fertiliser may become
increasingly tormented by trade restrictions and politicised resource control. Academics in the US and Australia have warned that
phosphorus, the other mineral behind the 1960s 'green revolution' in food, may be
approaching physical limits, ushering in 'the gravest natural resource shortage
youve never heard of.' Just as this
resource vulnerability has not been lost on President Lee of South Korea, Japans
leadership is at least unified on the need for panic. Supplies of lithium, tantalum,
germanium, indium and the 17 rare earth metals are fundamental to things that Japan does
best consumer electronics, hybrid vehicles and precision technology. The dominance
of China in the supply of many of these has become a source of concern. Katsuya Okada, the
Japanese Foreign Minister, has spent this year in a typhoon of trips. London, Paris,
Berlin and even Beijing have not featured instead it is South Africa, Vietnam,
Tanzania, Mongolia, Kazakhstan and Australia that have featured. The country is urgently
talking to mineral-producing heads of state before China and South Korea get their
feet in the door." |
"Our modern lives are made possible by metals and minerals
that most people have never heard of. Coltan is used to make capacitors in mobile phones
and DVD players; cassiterite is found in electronic devices like laptops; wolframite is
used to make tungsten, the filament in lightbulbs, and so the list goes on. Most of these
rare natural resources come from only a handful of sources on Earth, which was not much of
a problem when demand was limited to the West. However, the growing affluence and demand from developing countries such as China,
in combination with limited supply, has resulted in a dramatic spike in prices for nearly
all metals and minerals during the past decade. An added complication is that the
industrial countries most in need of access to these minerals have limited or non-existent
supplies of their own. Geopolitics is, therefore,
increasingly driven by consumer countries trying to guarantee supplies of limited
resources. This struggle for raw materials may manifest itself as economic warfare in the
future as countries vie to protect domestic industries. It is unlikely to spill over into
physical conflict because most metals and minerals are quite common and, as the price
increases, more areas become commercially viable to mine. Deposits that were regarded as
marginal suddenly become attractive and, if the price becomes too crazy, companies can try
to find an alternative. Where full-scale conflict over resources is more likely is in the
case of those commodities that are either consumed in bulk or have no substitute. Billions
of tonnes of iron ore, copper, corn and wheat are needed every year and shortages of any
of these would have an immediate impact. A doubling in the price of corn, for example,
would lead to a dramatic rise in the price of nearly every product in our supermarkets and
cause starvation and food riots in many parts of the world. Agricultural land, water and oil have no realistic substitutes and
control of them will be increasingly important as the population grows. Access to these
may determine the wars that we fight in the 21st century." |
"The Nabucco pipeline project
has taken another step forward by ordering engineering work for two feeder lines from
Turkey to Iraq and Georgia. However, a third planned
feeder line from Turkey to Iran has been put on the back-burner due to political
considerations, the consortium announced. At a recent Steering Committee meeting in
Ankara, Nabucco shareholders agreed to modify the feeder line concept, a press release
says. Due to the current political situation, they decided to put on hold the third
feeder line to the Turkish-Iran border. There will be feeder lines to the Turkish-Georgian
and Turkish-Iraqi borders. The planned
route offers a wide range of supply sources for the Nabucco gas pipeline, which will
receive gas from Azerbaijan, Turkmenistan and Iraq, the Nabucco consortium
announced." |
"An American-backed plan to extract oil shale from rocks
beneath the Holy Land has triggered fierce opposition in Israel. The Union for
Environmental Defence is seeking an injunction from the countrys Supreme Court to
block the project, which intends to produce a type of crude from a vast deposit in the
Adullam valley, west of Jerusalem..... The country, which imports all its oil, is thought
to have 15 billion tonnes of the material a type of rock rich in hydrocarbons
enough to supply Israel with fuel for about 50 years. But extracting oil shale and
processing it into a useable fuel is an energy-intensive and environmentally fraught
process. It has aroused vigorous opposition for its potential impact on the water table,
local environment and high greenhouse gas emissions associated with production....Israels rich oil shale deposits are being targeted
as oil companies focus increasingly on 'unconventional' sources of oil as traditional
fields are depleted in the face of robust global demand....Israels conventional oil supplies are negligible.
Overall, about 410 oil wells have been drilled in the country with little success. Three
quarters of Israels oil comes from Russia and elsewhere in the former Soviet Union,
the remainder being imported from West Africa, Egypt and Mexico." |
"European energy companies have
shelved a plan to source gas from Iran to Europe via the European Union-backed Nabucco gas
pipeline given Iran's political situation, the
Nabucco consortium said Monday. In line with previous statements on Iran, the
consortium said it has decided to go ahead with the construction of two smaller supply
pipes from Georgia and Iraq to the Turkish Nabucco pipeline starting point, but that the
plan for a third from Iran has been cancelled for the time being." |
"Speculation that government ministers are far more concerned about a
future supply crunch than they have admitted has been fuelled by the revelation that they
are canvassing views from industry and the scientific community about 'peak oil'.The Department of Energy and Climate Change (DECC)
is also refusing to hand over policy documents about 'peak
oil' the point at which oil production
reaches its maximum and then declines under the Freedom of Information (FoI) Act,
despite releasing others in which it admits 'secrecy
around the topic is probably not good'.... But documents obtained under the FoI Act seen by the Observer show
that a 'peak oil workshop' brought together staff from the DECC, the Bank of England and
Ministry of Defence among others to discuss the issue. A ministry note of that summit warned that '[Government] public lines on
peak oil are 'not quite right'. They need to take account of climate change and put more
emphasis on reducing demand and also the fact that peak oil may increase volatility in the market....
a letter in response to the FoI request written by DECC officials and dated 31 July 2010
says it can only release some information on what is currently under policy discussion
because they are 'ongoing' and 'high profile' in nature. The letter adds: 'We recognise the public interest arguments
in favour of disclosing this information. In particular we recognise that greater
transparency makes government more open and accountable and could help provide an insight
into peak oil. However any public interest in the disclosure of such information
must be balanced with the need to ensure that ministers and advisers can discuss policy in
a manner which allows for frank exchanges of views and opinions about important and
sensitive issues.'" Peak oil alarm revealed by secret official talks Observer, 22 August 2010 |
"One of
Britains biggest oil companies is ready to pull out of Libya, as new tensions
emerged with the North African country over the release one year ago today of Abdel Baset
Ali al-Megrahi. BG Group, Britains third largest oil company after BP and Royal
Dutch Shell, told The Times that it was seeking to leave Libya after a botched five-year
drilling campaign failed to discover a single barrel of oil. BG, which is thought to have spent well over $100 million (£64
million) on the project, said: 'We have drilled three wells there and the results have
been disappointing. They have all been plugged and abandoned.' BGs announcement will
serve to undermine hopes that al-Megrahis release would provide an economic boost by
smoothing the way for British companies to develop lucrative oil concessions in Libya.....As well as BG, Anglo-Dutch group Royal Dutch Shell has
also had a disappointing run, spending at least $187 million on an as-yet unsuccessful
project to find gas in extremely deep rock formations in the countrys north. BP remains committed to a $900 million exploration programme in
the Sirte basin and the onshore Ghadames basin, but has not yet found any oil either. It
plans to drill its first well this year. It is not just oil companies that have struggled
in Libya since Tony Blairs 'Big Tent' diplomatic mission there in 2004. Figures from
UK Trade & Investment reveal that the value of exported goods to Libya in 2004 was
£216 million and decreased in the two years after the landmark meeting between Mr Blair
and Colonel Gaddafi." |
"Rising demand for meat in emerging markets has prompted BHP
Billiton to bid $39 billion for the worlds largest fertiliser producer. The Potash
Corporation of Saskatchewan rejected the $130-a-share offer, but BHP is expected to
return. PotashCorps shares rose by 24 per cent to $144.67 in New York in
anticipation of a higher offer, valuing the company at $42.9 billion. BHP has more than $9
billion in cash and City financiers said that it would have little difficulty raising the
debt required to finance what would be the biggest deal in the world this year. The
overture signals a shift in direction for BHP. It is already a leader in coal, copper,
iron ore and petroleum, but it announced plans this year to develop a $12 billion potash
mine in Canada. Its interest stems from the
belief that increased affluence and population growth will lead to greater demand for
food, particularly meat. People in Asia eat only 27.8kg of meat per head each year,
compared with 123.2kg in North America and 74.3kg in Europe. As Asians become richer,
their consumption of meat is expected to rise, and so more wheat and grain will be needed
to raise cattle. It has been estimated that it takes 7kg of grain to produce every 1kg of
beef. The population of the world is also
expected to increase by half to more than nine billion by 2050, putting further pressure
on food production. Fruit and vegetable consumption is forecast to rise by a quarter to
two billion tonnes a year in the next decade, while demand for grains and oilseed is
expected to rise by a fifth. With the supply of agricultural land declining in some areas
as a result of rapid urbanisation, existing land will have to become more productive.
Countries such as India and China are therefore expected to use much more fertiliser,
increasing demand for potash, nitrogen and phosphates." |
"British oil explorer Rockhopper
has confirmed that the latest well to be drilled in the Falkland Islands under a
controversial exploration programme is a dry hole.
The drilling of Rockhopper's Ernest prospect had been widely anticipated since the
company's Sea Lion well - drilled in the same basin in May - made a significant oil
discovery, sending Rockhopper's shares soaring by over 500pc. The company will now carry
out further tests on the Sea Lion discovery to help it plan a potential appraisal
campaign, Sam Moody, Rockhopper's managing director, said." |
"The US commodities regulator has imposed a $12m (£7.7m) fine on oil
traders responsible for speculatively pushing the price of oil above the $100-a-barrel
mark for the first time in January 2008. The Commodities and Futures Trading Commission
(CFTC) fined a former division of ConAgra Foods for its involvement in the so-called
'vanity trade' which was responsible for purposefully pushing up the price on the New York
Mercantile Exchange (NYMEX). The levy is intended to send a clear message that the
regulator is intent on finding and fining those individuals and companies which were
responsible for pushing oil to $147-a-barrel by July 2008. The surge in oil prices was
blamed on speculators by regulators on both sides of the Atlantic, and has led to
increased scrutiny in the crude oil market. The increase in fuel prices hurt road and air
travel, and exacerbated the onset of the global recession on large parts of the economy. The 'vanity trade' occurred on January 2, 2008, when a oil trader
bought 1,000 barrels for $100 each when the prevailing price was 40 cents lower." |
"A sharp slowdown in the pace of
Japan's economic recovery has enabled China to overtake it as the world's second-largest
economy, leaving only the United States in front of
it. Data released yesterday revealed that the Japanese economy grew at an annualised rate
of 0.4 per cent over the three months to the end of June, a substantial reverse following
the 4.4 per cent growth seen in the first quarter. The slowdown meant that China
officially overhauled Japan as the second biggest economy in the world this spring, at
least in terms of total output. Its gross domestic product for the second quarter was
$1.335 trillion, compared to Japan's $1.286 trillion, though the country's huge population
means that China remains well down the global league in terms of GDP per capita." |
"Roughly 16% of total energy needs (up to 25% in the
highly industrialised countries) are now met by electric energy. Nuclear fission's
contribution to total electric energy has decreased from about 18% more than 10 years ago
to about 14% in 2008. On a worldwide scale, nuclear energy is thus only a small component
of the global energy mix, and its share, contrary to widespread belief, is not on the
rise. During 2009, for example, nuclear power plants provided 2,560 terawatt hours
(TWh) equivalent to 2,560bn kilowatt hours of electric energy, about 1.6% lower than
during 2008 and almost 4% lower than during the record year of 2006. Early results for the
first four months of 2010 for the OECD countries indicate that so far the 2010 results are
as low or lower than last year. During the next five
years, on average, roughly 10 new nuclear reactors are expected to become operational
every year. But this assumes that all are constructed according to schedule, and the
nuclear industry has rarely met its promised construction deadlines. According to the
World Nuclear Association (WNA), 17 new reactors should have become operational between
2007 and 2009. But only five came onstream during this period three in 2007 and two
in 2009. Moreover, four reactors were de-commissioned during 2009, and a larger number of
reactors in Japan and Germany are not in use, owing to various technical stoppages. At
least 100 older and smaller reactors will most likely be closed over the next 10-15 years.
Furthermore, during the past 10 years, only about two-thirds of worldwide demand for
nuclear fuel was met from resources obtained from mining. The remaining 20,000 tonnes came
from so-called secondary uranium sources mainly inventories held by utilities and
governments, reprocessed nuclear fuel, and stockpiles of depleted uranium. The supply from
these sources will drop by roughly 10,000 tonnes at the end of 2013, when the Megatons to
Megawatt programme between Russia and the United States which recycles highly
enriched uranium from Russian nuclear warheads into low-enriched uranium for nuclear power
plants comes to an end. Current projections indicate that uranium shortages in the
coming years can be avoided only if existing and new uranium mines operate according to
plan. Indeed, extrapolations of global supply that foresee an increase in uranium mining
are based on claims about the ability to expand output in Kazakhstan. So far, uranium
mining in Kazakhstan has increased roughly as expected, from 4,357 tonnes in 2005 to
14,000 tonnes in 2009. But it remains to be seen if the uranium mining in this country can
indeed increase further. According to the WNA's latest estimates, from July 2010, the
expected uranium extraction figure for 2010 has actually been decreased to 15,000 tonnes. The view that the amount of energy derived from nuclear power worldwide
will continue its slow decrease during the coming years is further supported by the 2008
annual report of the Euratom Supply Agency, which coordinates the long-term uranium needs
of nuclear power plants within the European Union. According to the agency's forecast,
uranium demand in Europe will fall from 21,747 tonnes in 2010 to roughly 16,000 tonnes by
2024. These numbers indicate that the EU, currently producing about one-third of the
world's nuclear electric energy, is heading for a reduction in nuclear-energy production
of up to 20% over the coming 10 years. One can also expect that the current worldwide
economic crisis will not help to accelerate the construction of nuclear power plants and
new uranium mines. In summary, the hard facts about nuclear energy are inconsistent with
the possibility of a worldwide renaissance of nuclear energy. Indeed, they point toward a
continuing slow phase-out of nuclear energy in most of the large OECD countries. It seems
unavoidable that energy consumers, especially in many rich countries, will have to learn
to exchange their current worries about the distant future consequences of global warming
for the reality of energy shortages during periods of peak demand." The reality of nuclear energy is inconsistent with dreams of a renaissance Guardian, 16 August 2010 |
"Roughly 16% of total energy needs (up to 25% in the
highly industrialised countries) are now met by electric energy. Nuclear fission's
contribution to total electric energy has decreased from about 18% more than 10 years ago
to about 14% in 2008. On a worldwide scale, nuclear energy is thus only a small component
of the global energy mix, and its share, contrary to widespread belief, is not on the
rise. During 2009, for example, nuclear power plants provided 2,560 terawatt hours
(TWh) equivalent to 2,560bn kilowatt hours of electric energy, about 1.6% lower than
during 2008 and almost 4% lower than during the record year of 2006. Early results for the
first four months of 2010 for the OECD countries indicate that so far the 2010 results are
as low or lower than last year. During the next five
years, on average, roughly 10 new nuclear reactors are expected to become operational
every year. But this assumes that all are constructed according to schedule, and the
nuclear industry has rarely met its promised construction deadlines. According to the
World Nuclear Association (WNA), 17 new reactors should have become operational between
2007 and 2009. But only five came onstream during this period three in 2007 and two
in 2009. Moreover, four reactors were de-commissioned during 2009, and a larger number of
reactors in Japan and Germany are not in use, owing to various technical stoppages. At
least 100 older and smaller reactors will most likely be closed over the next 10-15 years.
Furthermore, during the past 10 years, only about two-thirds of worldwide demand for
nuclear fuel was met from resources obtained from mining. The remaining 20,000 tonnes came
from so-called secondary uranium sources mainly inventories held by utilities and
governments, reprocessed nuclear fuel, and stockpiles of depleted uranium. The supply from
these sources will drop by roughly 10,000 tonnes at the end of 2013, when the Megatons to
Megawatt programme between Russia and the United States which recycles highly
enriched uranium from Russian nuclear warheads into low-enriched uranium for nuclear power
plants comes to an end. Current projections indicate that uranium shortages in the
coming years can be avoided only if existing and new uranium mines operate according to
plan. Indeed, extrapolations of global supply that foresee an increase in uranium mining
are based on claims about the ability to expand output in Kazakhstan. So far, uranium
mining in Kazakhstan has increased roughly as expected, from 4,357 tonnes in 2005 to
14,000 tonnes in 2009. But it remains to be seen if the uranium mining in this country can
indeed increase further. According to the WNA's latest estimates, from July 2010, the
expected uranium extraction figure for 2010 has actually been decreased to 15,000 tonnes. The view that the amount of energy derived from nuclear power worldwide
will continue its slow decrease during the coming years is further supported by the 2008
annual report of the Euratom Supply Agency, which coordinates the long-term uranium needs
of nuclear power plants within the European Union. According to the agency's forecast,
uranium demand in Europe will fall from 21,747 tonnes in 2010 to roughly 16,000 tonnes by
2024. These numbers indicate that the EU, currently producing about one-third of the
world's nuclear electric energy, is heading for a reduction in nuclear-energy production
of up to 20% over the coming 10 years. One can also expect that the current worldwide
economic crisis will not help to accelerate the construction of nuclear power plants and
new uranium mines. In summary, the hard facts about nuclear energy are inconsistent with
the possibility of a worldwide renaissance of nuclear energy. Indeed, they point toward a
continuing slow phase-out of nuclear energy in most of the large OECD countries. It seems
unavoidable that energy consumers, especially in many rich countries, will have to learn
to exchange their current worries about the distant future consequences of global warming
for the reality of energy shortages during periods of peak demand." |
"The share of global uranium demand that will be met by currently
operating mines over the next 10 years has risen as new production centers have opened,
Canadian uranium miner Cameco said Friday. The company said it expects fully 75% of
uranium demand over the next 10 years will be met by currently operating mines, up from
the 67% it estimated at the end of 2009, according to a management discussion and analysis
released as part of the company's second quarter financial results. George Assie, Cameco
senior vice president for marketing and business development, said all but one of the new
production centers -- Paladin Energy's Kayelekera mine in Malawi -- are in Kazakhstan. The same analysis foresees the proportion of global uranium demand
being met by secondary supplies, such as surplus military supplies, as falling to 20% from
21% in the end-2009 estimate. About 5% is now expected to come from new sources of primary
production, compared to the previous estimate of 12%, Cameco said." |
"France has traditionally dominated expertise in atomic power with
state-sponsored giants Areva and EDF Energy. However, China is fast catching up. The
superpower wants to build 153 new plants using existing technology and believes it can cut
the costs of French and Japanese-based reactor designs by one third by rolling out the
parts in bulk.... Among the countries thinking of building their first plants are Vietnam,
Bangladesh, Indonesia, Saudi Arabia, UAE, Egypt, Jordan, Algeria, Nigeria, Ghana,
Kazakhstan and the Philippines. However, China's priority is likely to be its own
energy-hungry domestic market, where it aims to build enough nuclear power to provide 8pc
of its population's electricity. The energy planners are also moving to ensure it has
enough fuel stockpiled for its burgeoning programme. In
June, China agreed to buy more than 10,000 tons of uranium concentrate, known as
yellowcake, over the next decade from Cameco, guarding against the possibility of a
nuclear fuel squeeze as the technology's popularity spreads." |
"About 40km south of Beijing, some of the world's most exciting
science is splitting atoms in pursuit of the nuclear physicist's Holy Grail the
tiny, cheap reactor. China started generating
electricity from the first fourth generation nuclear station without fanfare last month,
using largely home-grown technology that reduces waste, increases efficiency and vastly
brings down costs compared with existing plants. It's only a trial project, with the first
commercial-scale model planned for 2020, but nevertheless is a step towards
production-line nuclear plants that it aims to produce for the world. If it can bring down costs, China is likely to have customers galore
rushing to reduce their carbon emissions by providing the equivalent of Ikea flat-pack
parts for countries from Belarus to Ghana. But as China throws money at pioneering
technology and plans to build 153 stations using basic versions of existing designs,
Western nations are struggling to make the old economics of nuclear power add up. Delays
and cost over-runs are already plaguing the construction of new nuclear plants in France
and Finland. But Chris Huhne, the Lib Dem energy secretary, last week pledged that
the UK's £50bn programme is on track. This is despite an incomplete planning system,
industry concerns about funding and no firm plans for disposing of radioactive
waste." |
"The Organization of Petroleum Exporting Countries
boosted its global oil demand forecast for this year and next as emerging economies in
Asia, the Middle East and Latin America push consumption higher. OPEC bolstered its
outlook for 2010 and 2011 by 140,000 barrels a day each in its monthly report today. Worldwide crude oil use will increase by 1.05 million barrels a
day, or 1.2 percent, next year to average 86.56 million a day, the organizations
Vienna-based secretariat said....OPEC expects that
next years additional demand will increase the worlds need for its crude. The
amount of OPEC oil needed to balance global supply and demand, known as the call- on-OPEC,
will be about 28.9 million barrels a day in 2011. Thats about 200,000 barrels a day,
or 0.7 percent, higher than this years requirement, and 93,000 a day more than the
forecast made in last months report.... OPECs estimate for oil consumption for
next year is about 1 million barrels a day lower than that of the International Energy Agency, which released
its monthly report on Aug. 11. The IEA, the
Paris-based adviser to oil-consuming nations, forecasts global demand of 87.9 million barrels a day. OPEC raised its estimate for supplies from outside the organization by
60,000 barrels a day each for this year and next. Non-OPEC producers will
bolster output by 790,000 barrels a day this year to average 51.92 million a day, and next
year by 350,000 barrels a day to 52.27 million a day,
according to the report. Non-OPEC supply growth in 2011 will be driven by projects in
Brazil, Canada, Azerbaijan, Colombia and Kazakhstan, according to the report. OPECs
implementation of record supply cuts announced in late 2008 has dropped as rebounding oil
prices encourage members to exceed their production limits. The 11 OPEC
nations bound by quotas raised production by 120,000 barrels a day last month compared
with June, according to the report. Those members, which exclude Iraq, pumped 26.86
million barrels a day in July. That puts compliance with agreed output cuts at 52 percent,
down from a revised 55 percent in June." |
"Global demand for oil will exceed the International Energy Agencys
earlier estimates, even as the adviser predicts the economic recovery will slow next year.
Crude demand worldwide will average 87.9 million barrels a day in 2011, the IEA
said today in its monthly oil market report. While
that is 50,000 barrels a day more than the Paris- based adviser forecast last month, it
lags behind the upward revision of 80,000 barrels for this years estimate. There are
'significant downside risks' that demand will slow on an uncertain global economic
outlook, the IEA said. 'Global economic activity is seen expanding by 4.5 percent
this year but remains capped at 4.3 percent next year,' according to the report. 'Concerns
that the global economic recovery may falter from the second half of 2010 pose a
significant downward risk to the forecast.'.The IEA is projecting that China and other
developing nations will offset shrinking demand for oil next year in richer countries such
as the U.S., where the Federal Reserve said yesterday it wont unwind stimulus
measures because the economy is weaker than previously anticipated. Even China is showing
signs of slowing growth, with industrial output increasing the least in 11 months,
according to a report today....World demand will
climb 1.3 million barrels a day, or 1.5 percent in 2011, down from this years growth
of 1.8 million barrels a day, or 2.2 percent, the IEA said. Last month, it forecast 2010 growth of 2.1 percent and 1.6 percent in
2011. Rising consumption will be more than offset by greater production from countries
outside the Organization of Petroleum Exporting Countries, reducing the worlds need
for OPEC oil, according to the IEA estimates. Non-OPEC supply will average 52.9 million
barrels a day in 2011, 100,000 barrels a day more than the IEA estimated last month. The
revision was driven by higher U.S. production figures and greater-than-expected Chinese
oil supply in the second half of this year, according to the agency. It also raised its
supply forecast for 2010 by 200,000 barrels a day to 52.6 million barrels a day." |
"Extract Resources Ltd., the
uranium explorer partly owned by Rio Tinto Group, said an increase in resources at its
Rossing South project in Namibia makes the deposit the sixth biggest in the world. Extract upgraded the size of the resource to 257 million pounds, a
tenfold increase from July 2009, it said in a statement today to the Australian stock
exchange. The deposit was previously rated the worlds eighth largest, Chief
Executive Officer Jonathan
Leslie said in a webcast. 'We fully expect to continue to move up the ranking' as
Extract has a large area yet to explore at Rossing South, Leslie said. 'We think
theres significant scope to expand the resource beyond what weve announced
today.' |
"Matt Simmons, a prominent oil investor who argued the world was
rapidly approaching peak oil production capacity, died suddenly on Sunday of an apparent
heart attack at his home in North Haven, Maine. Simmons, 67 years old, founded Simmons
& Co. International, an investment bank that caters to energy companies, in 1974. More
recently, Simmons had retired to devote his time to the Ocean Energy Institute, a group he
founded to research and develop energy from wind and tidal sources. In his 2005 book 'Twilight in the Desert: The Coming Saudi Oil
Shock and the World Economy,' Simmons drew attention to the unreliability of Middle East
oil reserves, arguing that the nation's oil reserves were nearing their highest levels of
production. Simmons' views on 'peak oil' have long be considered controversial as
have his recent statements regarding the oil spill in the Gulf of Mexico. Simmons, who served as an energy advisor to President George W. Bush,
asserted earlier this summer, that he expected BP would need to file for bankruptcy
protection in the wake of the Deepwater Horizon accident. He also claimed there were two
leaks in the Gulf of Mexico, not just the one on which BP had fixed its underwater
cameras." |
"Based on economic and policy considerations that appear to be
unconstrained by geophysics, the Intergovernmental Panel on Climate Change (IPCC)
generated forty carbon production and emissions scenarios. In this paper, we develop a
base-case scenario for global coal production based on the physical multi-cycle Hubbert
analysis of historical production data. Areas with large resources but little production
history, such as Alaska and the Russian Far East, are treated as sensitivities on top of
this base-case, producing an additional 125 Gt of coal. The value of this approach is
that it provides a reality check on the magnitude of carbon emissions in a
business-as-usual (BAU) scenario. The resulting base-case is significantly below 36 of the
40 carbon emission scenarios from the IPCC. The
global peak of coal production from existing coalfields is predicted to occur close to the
year 2011. The peak coal production rate is
160 EJ/y, and the peak carbon emissions from coal burning are 4.0 Gt C
(15 Gt CO2) per year. After 2011, the production rates of coal and CO2 decline,
reaching 1990 levels by the year 2037, and reaching 50% of the peak value in the year
2047. It is unlikely that future mines will reverse the trend predicted in this BAU
scenario." |
"Shortly after the Marines rolled into Baghdad and tore down a statue
of Saddam Hussein, I visited the Ministry of Oil. American troops surrounded the
sand-colored building, protecting it like a strategic jewel. But not far away, looters
were relieving the National Museum of its actual jewels. Baghdad had become a carnival of
looting. A few dozen Iraqis who worked at the Oil Ministry were gathered outside the
American cordon, and one of them, noting the protection afforded his workplace and the
lack of protection everywhere else, remarked to me, 'It is all about oil.'...Donald
Rumsfeld, the former defense secretary, insisted the invasion of Iraq had 'nothing
to do with oil.' But even Alan Greenspan, the former Federal Reserve chairman,
rejected that line. 'It is politically inconvenient to acknowledge what everyone knows,'
Greenspan wrote in his memoir. 'The Iraq war is largely about oil.' If it is even partly true
that we invade for oil and maintain a navy and army for oil, how much is that costing? This is one of the tricky things about oil, the hidden costs, and
one of the reasons we are addicted to the substance -- we don't acknowledge its full
price. If we wish to know, we can. An innovative approach comes from Roger Stern, an
economic geographer at Princeton University who in April published a peer-reviewed study on the cost of keeping aircraft carriers in the
Persian Gulf from 1976 to 2007. Because carriers patrol the gulf for the explicit mission
of securing oil shipments, Stern was on solid ground in attributing that cost to oil. He
had found an excellent metric. He combed through the Defense Department's data -- which is
not easy to do because the Pentagon does not disaggregate its expenditures by region or
mission -- and came up with a total, over three decades, of $7.3 trillion. Yes, trillion." |
"The U.K., known for rain and gray skies, enjoyed record
installations of solar panels in July after the government guaranteed prices for
electricity from renewable energy up to 10 times market rates. Photovoltaic panels with the capacity to generate 4.6 megawatts
were fitted last month, energy regulator Ofgem said on its website. Thats more than
in the whole of 2009, according to Bloomberg New Energy Finance, which forecasts the
nations solar market will increase 12-fold this year. The government on April 1 introduced feed-in tariffs that fix above-normal
prices for electricity from small installations of wind, solar and hydro power. Companies
from the German utility E.ON AG to Tesco Plc, the biggest U.K.
supermarket, have entered the market. Sharp Corp. is doubling
production at its solar cell factory in Wales, which is the biggest in Britain. 'The solar revolution is coming,' said Serge Younes of the industry consultant WSP Environment &
Energy. 'There are a lot of roofs in the south of the U.K. and a lot of land.' According
to Ofgem, 11.3 megawatts of PV were fitted in the first four months of the tariffs
existence, enough to supply 26,000 homes. That tops the 4 megawatts installed in 2009 and
4.4 megawatts in 2008. It isnt just homeowners who are taking advantage of the
incentives. As well as selling panels, J Sainsbury Plc, another
supermarket chain, may fit panels to its stores. Farmers including Glastonbury music
festival founder Michael
Eavis are seeking income from placing solar power in fields and on barns.... Farmers
see solar power as a new source of revenue. Worthy Farm, which hosts the Glastonbury
Festival, plans to mount 1,200 panels on barns, according to its website. The National
Farmers Union has had a significant number of inquiries from financiers and
its members about using farmland and barn roofs to host panels, said Jonathan Scurlock,
the unions chief renewable adviser. Farmers are being offered rent of 1,000 pounds
to 2,000 pounds per hectare for their fields, more than they can make from livestock or
crops, he said. 'We dont want a food-versus-fuel backlash,' Scurlock said.
'Were looking at things like solar panels mounted to a 2-meter (6-feet) height with
free range poultry running around underneath.' |
"The European Union is seeking
an agreement on a natural-gas pipeline between Turkmenistan and Azerbaijan as the
27-nation bloc aims to import Caspian fuel and reduce its dependence on Russia. The EU regulators energy unit drafted a document that the parties
could use as the basis for a deal on building at least one pipeline across the Caspian
Sea, according to a copy of the non-binding paper obtained by Bloomberg. The EU, seeking
less reliance on Russia, wants Turkmen gas for the proposed Nabucco pipeline. Turkmenistan, where foreign investment was held back until the
2006 death of isolationist President-for-Life Saparmurat
Niyazov, ships gas to Russia and Iran, and opened a pipeline to China last year. Plans
to build a link across the Caspian Sea have been frustrated by unresolved marine borders
and opposition from Russia and Iran. 'Without Turkmen gas, Nabucco wouldnt make
sense,' said Alexander
Rahr, a Russia and Eurasia expert at the German Council on Foreign Relations in
Berlin. 'The EU is trying to get this pipeline through, but theyre running out of
time as the Turkmen are sending more gas to China.' ....
After Niyazovs death, governments from the EU to Asia jostled for access to
Turkmenistans gas reserves, estimated at 8.1 trillion cubic meters by BP Plc.
Thats enough to meet current German demand for more
than a century. Russia wants Turkmenistan and
Kazakhstan to build a new gas pipeline along the Caspian coast to keep control over the
former Soviet republics energy exports. Iran has presented an alternative plan
envisioning a network of shipping routes and pipelines that would turn the country into a
regional hub for Caspian energy exports....Turkmenistan
is building a $2 billion East-West pipeline that will carry about 30 billion cubic meters
of gas from the countrys biggest fields toward the Caspian coast when opened in June
2015 as it seeks to increase fuel exports. Nabucco is planned to stretch more than
3,300 kilometers (2,050 miles) from Turkey to Austria to send gas to Europe and reduce the
regions dependence on Russia. Nabucco is also
seeking to source gas from Azerbaijan and Iraq. The
Nabucco partners, which also include Essen, Germany- based RWE AG,
Budapest-based Mol Nyrt., Bulgargaz EAD, Romanias Transgaz SA and Ankara-based
Botas, have said theyll decide on the investment by the end of this year. Construction is set to begin in 2011 and shipments may start at
the end of 2014, according to the ventures website.
While Nabucco welcomes increased support from the EU for a southern gas corridor, the
venture doesnt have any formal knowledge of efforts to push for an Azeri-Turkmen
deal on a pipe between the countries, spokeswoman Gabriele Egartner said in an e-mailed
response to questions." |
"Despite repeated pledges to
phase out fossil fuel subsidies and criticism from some quarters that government support
for renewable energy technologies is too
generous, global subsidies provided to renewable energy and
biofuels are dwarfed by those enjoyed by the fossil fuel industry. That is the conclusion of a major report released late last week by
analyst Bloomberg New Energy Finance, which analyses subsidies and incentive schemes
offered globally to developers of renewable energy and biofuel technologies and projects.
The report concludes that in 2009 governments provided subsidies worth between $43bn
(£27bn) and $46bn to renewable energy and biofuel industries, including support provided
through feed-in tariffs, renewable energy credits, tax credits, cash grants and other
direct subsidies. In contrast, estimates from the International Energy Agency (IEA) released
in June showed that $557bn was spent by governments during 2008 to subsidise the
fossil fuel industry. Michael Liebreich, chief executive of Bloomberg New Energy
Finance, said the study revealed that investors reluctant to finance renewable energy
industries because they believe them to be heavily subsidised were operating under a
misapprehension. 'One of the reasons the clean energy sector is starved of funding is
because mainstream investors worry that renewable energy only works with direct government
support,' he said. 'Setting aside the fact that in many cases clean energy competes on its
own merits for instance in the case of well-situated wind farms and Brazilian
sugarcane ethanol this analysis shows that the global direct subsidy for fossil fuels is around 10
times the subsidy for renewables.' However, the report predicted that the gap between
fossil fuel and renewable energy subsidies should 'narrow considerably' this year as
support for renewable and biofuels increases as a result of green government stimulus
packages worth an estimated $188bn, and fossil fuel subsidies operated by countries such
as China are cut in line with falling oil prices." |
"Energy Resources of Australia Ltd., the
uranium producer controlled by Rio Tinto Group, declined the most in almost three months
after reporting a 37 percent drop in first-half sales of the fuel for nuclear power
stations....Uranium supply may outpace demand during the next 18 months to two years due
to increased production, especially in Kazakhstan, and more of the material being released
by the U.S. Department of Energy, Chief Executive Officer Rob Atkinson said in telephone
interview today from Darwin. 'I think the uranium
market is fairly well-serviced' over that period, Atkinson said. After that, 'there is
going to be a realization that Kazakhstan is supplying an enormous proportion of the world
market, and I dont think countries or buyers are going to be comfortable having as
many eggs in one basket.'" |
"Energy Secretary Chris Huhne
today outlined a series of measures to improve energy efficiency, boost renewables and
allow new nuclear projects to go ahead as he laid out the Government's energy policy. In the first annual energy statement to the Commons, Mr Huhne set out
plans to secure the UK energy supplies and cut carbon emissions while 'keeping the lights
on'. The Department of Energy and Climate Change also published a series of 'pathways' for
how the energy system might look in 2050, outlining the scale of the challenge of meeting
the legally-binding target to cut emissions by 80% by mid century... The 32 measures
outlined today include efforts to speed up the roll-out of smart meters, provide
incentives for heat produced from renewable sources, and bring in emissions performance
standards for power plants to make them cut their greenhouse gases. Other steps aim to
speed up connection of offshore wind farms to the grid, remove obstacles to private
investment in new nuclear power and prop up the carbon price polluters have to pay for
their emissions to encourage the development of low-carbon alternatives..... Laying out a
series of policies which had already been pledged in the coalition agreement, Mr Huhne
said the 'Green Deal' to install insulation and other green measures in homes would
transform finance for improving energy efficiency in buildings. And in an effort to
provide transparency to people on the costs of taking action on climate change, he said
the Government would be publishing analysis of the impact of energy and climate change
policies on household and business bills up to 2020. According to the analysis
published today, the extra cost of energy and climate change policies is set to add just
£13 to the average household energy bill by 2020. While efforts to cut carbon could
lead to an 18% increase in gas prices and a 33% jump in electricity prices by the end of
the decade, efforts to increase small-scale renewables on people's homes and make them
more energy-efficient will lead to an overall 1% increase in bills. Mr Huhne said the
cheapest way to close the gap between energy supply and demand was to cut energy use,
pointing to the green deal and to the publication of plans to roll out smart meters, which
will provide consumers with information to help them save power. The Government energy
strategy also includes changes to the law to allow local councils to sell green energy to
boost community-scale renewable schemes, putting forward proposals to create a green
investment bank and carrying out a comprehensive review of the electricity market,
including the role of regulator Ofgem, he said." |
"The price boom in the early 2000s resulted in a significant amount
of new exploration and mine development. In 2000, uranium prices were below $10 a pound as
nuclear power had become very unfashionable, but within seven years prices had hit $136.
Uranium became a profitable business once again. This has lead to a number of new mines
coming on stream and supply increasing. One of the world's largest mines BHP
Billiton's Olympic Dam in Australia has just been brought back to full capacity
after months of repairs. Cameco's massive Cigar Lake mine in Canada will be back on stream
in about 18 months after a flood three years ago. All of this means that uranium supplies
are likely to exceed demand over the next few years, according to mining consultants CRU.
It predicts that demand will increase by 46pc over the next decade, but there will not be
a lack of supply for many years to come. By 2030,
however, CRU expects the supply from mines may lag behind demand by as much as 30,000
tonnes." |
"The world's largest cargo ships
are travelling at lower speeds today than sailing clippers such as the Cutty Sark did more
than 130 years ago. A combination of the recession and growing awareness in the shipping
industry about climate change emissions encouraged many ship owners to adopt 'slow
steaming' to save fuel two years ago. This lowered
speeds from the standard 25 knots to 20 knots, but many major companies have now taken
this a stage further by adopting 'super-slow steaming' at speeds of 12 knots (about
14mph). Travel times between the US and China, or between Australia and Europe, are now
comparable to those of the great age of sail in the 19th century. American clippers
reached 14 to 17 knots in the 1850s, with the fastest recording speeds of 22 knots or
more. Maersk, the world's largest shipping line, with more than 600 ships, has adapted its
giant marine diesel engines to travel at super-slow speeds without suffering damage. This
reduces fuel consumption and greenhouse gas emissions by 30%. It is believed that the
company has saved more than £65m on fuel since it began its go-slow." |
"Since the turn of the century,
Chinas energy consumption has doubled. The country has scrambled across the globe in
search of oil to supply its needs, and in 2009 became the biggest coal importer....Renewable energy sources have their limitations, which means nuclear
will provide a large portion of Chinas new power generation capacity. Already, over
half of the new nuclear plants under construction around the world are in China or India.
This means Chinas going to be needing a lot of uranium to feed these plants, and the
country doesnt have all that much of the nuclear fuel within its borders. If the
uranium market tightens up over the next decade, as analysts predict, the country is going
to need to make its got enough uranium to keep the power flowing. Last month, China agreed
to buy more than 10 000 kg of uranium through the current decade from Canadas
Cameco. But diversity of supply is always an imperative when it comes to sourcing
uranium." |
"Economic growth here [in
Ireland] could fall by as much as 7.5pc if there is a sudden rise in oil and gas prices,
according to a report published yesterday. Ireland -- which imports more fossil fuels than
almost anywhere else in Europe and which generates less energy from renewable sources --
would suffer more than neighbouring countries if energy prices were to spike, according to
the report by the environmental consultants AP EnvEcon. It was commissioned by engineering giant Siemens. Oil prices are
likely to rise as supplies dwindle and emerging economies consume more, while prices could
spike suddenly following natural disasters, political tension or wars, the report
notes." |
"Reports that France will see a
power shortfall by as soon as 2013 will put greater pressure on the UKs dwindling
supply and force up prices thats according to the UKs largest energy
consultancy, M&C Energy Group. France is facing a growing dependency on electricity
imports as demand outpaces supply, particularly at peak times. David Hunter, Energy Analyst from M&C Energy Group, believes that
energy will become a scarce commodity resulting in increased prices and real risks of
blackouts." |
"Earlier this week, the
International Energy Agency announced that China was now the world's largest consumer of
energy (oil, coal, natural gas, nuclear power and renewables), surpassing the U.S. for the
first time. With 1.3 billion people, China is
unlikely to reach current U.S. energy consumption per capita for some time, if ever, but
to double energy consumption in the last ten years is still an impressive achievement. But
keep in mind that the average American is still consuming five times as much energy each
year as the average Chinese. China had not been
expected to overtake the US for another five years, but the global recession reduced U.S.
consumption and China's strong economic rebound in the last sent Beijing's consumption
soaring." |
"China overtook the U.S. as the
worlds biggest energy user last year, emphasizing that developing nations are
driving global growth, according to the International Energy Agency. China consumed 2,252 million metric tons of oil equivalent in 2009 in the
form of crude, coal, natural gas, nuclear power and renewable sources, IEA Chief Economist
Fatih
Birol said
yesterday. That exceeded the 2,170 million tons used by the U.S. 'Its one of those major turning points,' Tilak
Doshi, the chief economist at the Energy Studies Institute at the National University
of Singapore, said in a phone interview. 'China is growing by leaps and bounds.
Youve got OECD countries where youre talking about oil demand peaking,
meanwhile the emerging countries like China and India will keep growing their energy
demand.' Chinas gross domestic product expanded 10.3 percent in the second quarter
even as the government took measures to cool growth. China, with Hong Kong included, was
the biggest energy user in 2009, consuming 2.2 billion tons of oil equivalent, BP Plc said in its annual
Statistical Review of World Energy in June. The U.S. was second and Russia ranked third,
BP said. |
"An energy demand surge in the
Gulf will be largely met by oil fired generation, removing an estimated 1.5 million
barrels of oil equivalent per day (boepd) otherwise available for export, Wood Mackenzie
said in a report. Energy demand in the Arabian
Peninsula has more than doubled in the past 10 years and is forecast to increase by 85
percent by 2030, compared with 2008 levels, Wood Mackenzie's Energy Markets Service
Insight division said in a report released to the press on Monday. Demand for oil will
increase by about 114 percent during that time, largely because of the commissioning of 39
GW of new oil fired generation in the region. By around 2030, however, fuel
diversification though nuclear energy and coal could help to free up 1.5 mmboepd of oil
for world markets. In the shorter term, oil producing
Gulf nations are being forced to burn oil for power because they do not have enough gas to
cope with rising regional demand. The report said:
'Sustained rapid energy demand growth could mean that oil exports will become a casualty
of the Arabian gas supply crunch.' Ironically, the huge increase in consumption stems from
plans by the countries of the Arabian Peninsula - Saudi Arabia, Kuwait, the UAE, Qatar and
Oman - to curb their over dependence on oil revenues by investing in refining,
petrochemicals and aluminium mining and smelting. The report said: 'The downside of this
diversification is that these new industries are energy intensive.' Qatar holds the
world's third largest gas reserves behind Russia and Iran, but its production is
constrained by the moratorium on new gas developments in the giant North Field until 2014.
The amount of gas available for the Gulf is also limited by the region's gas export
commitments to Asia and Europe. Overall gas production growth in Qatar is expected to
average 15 percent a year to 2014, before slowing to 1 percent per year to 2030, assuming
the moratorium is lifted after 2014, the report said. The development of shale gas in the
US will release liquefied natural gas (LNG) previously destined for other markets, with
the Arabian Peninsula a prime candidate for that gas, the report said." |
"In the 1970s the UK invested
about 0.15% of GDP each year in research and development (R&D) into providing cheaper
and cleaner energy. Britain was putting more
public money into nuclear power and other new sources of electricity than almost any other
economy. From the mid-1980s the amount invested each year has fallen almost continuously.
The figure today is about 0.01%, one 15th of what it was a generation ago. We now sit at the bottom of the international league. The US, for example,
spends three times as much as a percentage of its GDP, Japan nine times as much. The UK
government announced last week that it was cutting yet more money from of the energy
R&D budget. Some £34m
is to be axed, affecting low-carbon technology programmes including offshore wind,
wood fuels, building insulation and geothermal energy. This represents a reduction of just
under 20% of total public expenditure on low-carbon technologies. This figure is on top of
the cancellation
of the £80m loan to Sheffield Forgemasters that would have paid for much of the
installation of a new press to make the huge parts necessary for new nuclear power
stations. As the Department of Energy and Climate Change (DECC)
swung its axe, the government's own Committee on Climate Change was busy today stressing
the need for continued public support for nascent energy technologies." |
"Britain's new generation of
nuclear power stations will not be built if the Government refuses them any more support,
a KPMG report will say this week. The study, commissioned by RWE npower, says it is still
uneconomic for utility companies to invest billions of pounds in nuclear power. The Government has offered to impose a minimum price on carbon permits
which would raise the cost of fossil fuel generation and make low-carbon nuclear
more attractive. It has made a promise not to offer any direct subsidies. KPMG's report
will say a carbon 'floor price' is not enough for the big utilities to commit large
capital investments to the nuclear sector. It will suggest that the Government ought to
introduce a variable premium tariff for all low-carbon technologies from nuclear to
renewables to make sure enough new power generation is built before Britain starts
to run short on capacity in the second half of this decade." |
"While, the U.S. and OECD economies may not be doing so well, the
global demand for oil has recovered nicely. After
taking a two-year 3 percent dip in obeisance to the economic downturn, global oil
consumption is now reported to be back in the vicinity of its 2008 high of 86.6 million
barrels a day (b/d) for 2010. While U.S. demand is down a million barrels a day or so,
demand from China and India are up more than enough to offset what is called 'weak' US and
European consumption. The International Energy Agency (IEA) tells
us that it currently expects world demand to increase by 1.3 million b/d next year to
a new annual high of 87.8 million b/d. As nobody who carefully watches global oil
production expects it to increase in coming years, we are left with 'total productive
capacity' which is currently estimated by the IEA to be 89.7 million b/d. This is about 3
million b/d above what we are currently using - maybe. Most of this spare capacity is supposed to be in Saudi Arabia; a land of
eternal optimism where oil reserves never go down no matter how much is pumped up and
sold. Many are skeptical that all of this 'spare capacity' is really ready-to-go,
reasonable quality, sustainable, production capacity. If not we are in worse shape than we
believe. It does not take much arithmetic ability to figure out that if we are currently
using some 86 million b/d, and that we can go to 89 million at best, and that we are
supposed to be increasing demand at around 1.5 million b/d each year, then something has
got to give in the next 24 months. That something is called price - of barrels of oil or
gallons of gasoline if that is what is the most meaningful to you." |
"Global oil demand growth will slow next year, leaving the market
with comfortable supplies until at least the middle
of next year, the International Energy Agency said
in its monthly Oil Market Report on Tuesday. Global
oil demand will grow by 1.35 million barrels per day (bpd) next year to 87.84 million bpd, the IEA said in its first 2011 demand projection in a monthly
report." |
"Revisions to a U.S. ban on
deep- water drilling will do little to restart Gulf of Mexico operations brought to a
standstill by the worst oil spill in the countrys history, industry groups and
analysts said. The policy announced yesterday may
let some deep-water work resume earlier than the six-month pause ordered by the Obama
administration May 27, according to the Interior Department. A federal judge rejected the
initial moratorium, imposed in response to the BP Plc oil spill in April. Regulations and
congressional opposition after the accident will prevent most new drilling, said Kevin
Book, a managing director at ClearView Energy Partners LLC, a Washington-based policy
analysis firm. Companies have canceled drilling contracts and shut down rigs since the
original ban took effect. 'The de-facto moratorium is the part that the administration is
very clear about,' Book said in an interview. 'Even if there were no moratorium, there
would still be regulations, there would still be Congress. Practically speaking, we expect
nothing to change.' President Barack Obama had halted drilling in waters deeper than 500
feet (152.4 meters) to give a presidential commission time to study improvements in the
safety of offshore operations." |
"The UK is in the 'last chance
saloon' to secure investment in its creaking energy infrastructure, ministers are being
warned by a leading business group. The EEF
manufacturers federation is urging the new government to 'show leadership' by
setting out a timetable for action, or risk undermining energy security within five years.
There is only a limited window of opportunity to implement new policies and market reforms
to generate the estimated £200bn of investment the
UK needs in the next decade, the EEF argues in a
report published on Monday. It says the energy industry must make far-reaching investment
decisions as early as 2012 to secure finance and mobilise supply chains." |
"French energy company Total is looking to expand its holdings in oil
sands through a $1 billion deal to tap into Alberta, Canada, recent transactions show.
Total is expanding its portfolio in Alberta's tar sands through a $1 billion bid for UTS
Energy of Calgary, the Financial Times reports. Alberta assets held by UTS Energy are
estimated at more than 3 billion barrels of oil, the report adds. The French energy company has invested in oil sands projects and
plans to expand its work in unconventional resources as conventional reserves run dry. The report said the planned bid for UTS Energy is a sign international
energy companies are interested in oil sand projects despite pressure from lawmakers in
the region. Commercial deliveries of crude oil to the U.S. Midwest from the Keystone
pipeline from Canadian tar sands started during the last week of June. U.S. Rep. Henry
Waxman, D-Calif., the chairman of the House Energy and Commerce Committee, in a letter to
U.S. Secretary of State Hillary Clinton said that while tar sand pipelines could increase
oil deliveries to U.S. markets substantially, the risk was too great. Waxman complains
that extraction methods from tar sands requires more energy and releases more harmful
emissions than conventional deposits." |
"The pebble bed modular reactor (PBMR) technology is unlikely to
solve SAs energy shortage in a cost- effective way, according to an Institute of
Security Studies paper on the project. The paper pours cold water on the benefits of the
PBMR technology at a time when the future of the PBMR company lies in tatters, following
the governments decision to drastically cut its funding. Trade unions last month
said the majority of the companys employees had opted to take voluntary retrenchment
packages. In a paper for the Institute of Security
Studies, environmental policy researcher David Fig said the PBMR technology would provide
'a small amount of expensive' electricity. The
commercial reactors were designed to produce 165MW each. Since the establishment of the
PBMR company in 1999, the government has spent more than R8,5bn on the project. 'Given the
immense cost, the minimal power dividend and the opportunity cost of foregoing smart
development of clean energy resources, why did SA continue to sink huge resources into the
PBMR project until recently?' said Mr Fig. He said nuclear was an expensive source of
electricity which 'crowds public investment out of less environmentally harmful options.
'It is overly costly in terms of harnessing the energies of human and other
resources.' |
"America must be prepared to re-equip its warships to
venture into the Arctic Ocean as climate change gradually makes the entire region ice-free
for a few weeks a year, the US Navys Oceanographer has told The Times. The effect of
retreating ice in the Arctic is going to be so significant, according to Rear-Admiral
David Titley, that the Pentagon will have to make a decision within the next two or three
years on whether to invest billions of dollars to 'ice-harden' ships and submarines to
cope with the changing conditions. Those changes will mean vital new shipping routes
opening up, such as the Northwest Passage and the Bering Strait, which have serious
defence and commercial implications. Admiral Titley said: 'The Bering Strait right now is a strategic backwater. But if what we
have been talking about comes true, with significant trade in the Arctic region in 30 to
40 years, and if the world is still one in which hydrocarbons play a significant role for
power, heating and lighting, energy extraction may be coming southbound through the Bering
Strait.'" |
"The British Government is drawing up contingency plans for
a possible collapse of BP amid mounting fears that the oil giant could be broken up or
taken over in the wake of the Gulf of Mexico oil disaster, The Times has learnt.... BP controls vital strategic assets overseas, including the
Baku-Tbilisi-Ceyhan pipeline that bypasses Russia
and Iran to connect Europe with the rich oil and gas
resources of Azerbaijan and the Caspian region." |
"Norway's oil production is
expected to decline 'rapidly' over the next 10 to 20 years, so the country needs to save its revenue through some form of wealth
fund, the country's central bank governor said today. Norges Bank Governor Svein Gjedrem
gave no details of the expected production decline in comments during a talk in Singapore,
which he is visiting to open an office of the central bank unit that manages Norway's
$425-billion government pension fund." |
"Britain will need up to £1
trillion of investment to replace and decarbonise infrastructure over the next 20 years, according to a report by the Green Investment Bank (GIB) Commission on
behalf of the Government. The report, commissioned by Labour in 2009, sets out how a GIB
might be set up to tackle the low carbon investment needs of Britain. With an estimated
£50bn of investment required every year, the commission, chaired by Yell Group chairman
Bob Wigley, said the work needed was 'on a scale not seen since reconstruction after the
Second World War.'" |
"A recently released BP document shows that before the Deepwater
Horizon explosion, the company was basing its whole future on production from deepwater
wells. There is little doubt that there is a whole
lot of oil deep below the Gulf of Mexico, off the coast of Brazil and the east coast of
Africa. The industry hype says there is at least 100 billion barrels or even more. Keep in
mind that this is only three years of global oil consumption and even in the best of
circumstances; it would take decades to extract. Right
now there are two issues regarding deepwater oil. First is how much can be extracted. If
it turns out that 10 or 20 percent of initial estimates is all that can really be
recovered, then the cost of this oil will be prohibitive. Deepwater wells were running
$100 to in some cases $200 million per well drilled. Platforms that drill and support
multiple wells can easily get into the billions of dollars before they are producing. If
these wells unlimitedly yield only a fraction of what their planners were hoping for,
there are going to be some very broke oil companies, or some very expensive gasoline in
our future. The next question is what the fallout from the Deepwater Horizon disaster will
be for deepwater oil. The U.S. has already imposed a moratorium on further drilling until
the causes of the blowout are fully understood. This moratorium alone is almost certain to
add substantially to the costs of drilling in deepwater. Add to this the new and most
likely tougher drilling regulations and the development and deployment of a new generation
of blowout preventers that work reliably and we are going to see some very high cost oil
coming from offshore wells. All this says that we may not be getting half of our oil from
deepwater wells 10 or 15 years from now. Unless there are some major advances in vehicle
mileage, the oil that we get from offshore just may be too expensive to put in our gas
tanks." |
"A North Sea
oil find believed to be as big as the largest discoveries of the seventies has sent shares
in the projects stakeholders soaring. Two wells off the east coast of Scotland are
thought to have struck a single reservoir that could hold up to 300 million barrels of
oil. The discovery in an area of seabed
known as Catcher is likely to boost interest in North Sea exploration at a time when oil
operators are turning their attention to high-impact wells in areas such as West Africa,
Brazil and Australia. The discovery is in almost 300 feet of water, far shallower than the
dangerous deep-water drilling that many oil explorers have been undertaking. EnCore Oil,
the operator of the project, which owns a 15 per cent stake, said that further
investigations could add 'very significantly' to the 300 million barrels estimate...The
find may encourage renewed investment in the North Sea, which has been regarded as
depleted after large fields began to run dry in the 1990s." |
"The first of two relief wells is close to puncturing
BPs ruptured Macondo well, raising hopes that the oil giant is on the way to ending
the Deepwater Horizon crisis in the Gulf of Mexico. Steven Chu, the US Energy Secretary,
is expected to fly to Houston today to help to oversee the final stages of the operation, The
Times has learnt....Mr Chu yesterday emphasised the critical importance of deepwater
drilling in the Gulf of Mexico to future US energy supplies and warned that prices would
inevitably rise higher. He told The Times/Smith School World Forum on Enterprise
and the Environment in Oxford that of the 50.4 billion barrels of oil available for
development off the US coast, 34.4 billion were in the waters more than 200 metres deep in
the Gulf of Mexico. As demand for oil increases we are being driven into more and
more unconventional sources, he said, citing the critical role of oil sands,
deepwater and ultra-deepwater drilling. The three-day forum was founded by Sir David King,
former chief scientific adviser to Tony Blair and the founding director of the Smith
School of Enterprise and the Environment. Mikhail Gorbachev, who also spoke at the event,
said that the Deepwater Horizon oil disaster was a tragedy on a global scale that bore
parallels to the Chernobyl accident in 1986, when a nuclear reactor exploded in Ukraine
scattering a cloud of radioactive debris across Northern Europe. Mr Gorbachev, now
president of the Green Cross International environmental group, said the accident would
act as a wake-up call for policymakers and the oil industry in the same way that Chernobyl
was a watershed for the nuclear industry. 'The consequences have to be studied very
carefully,' he said. 'It underlines the need to learn lessons at the earliest stages of
construction and paying particular attention to the issue of security.' Mr Gorbachev also
criticised the rich subsidies enjoyed by the worlds oil industry, which he claimed
stood at $300 billion a year. The communiqué issued after the G20 summit in Toronto was
expected to call for government subsidies for 'inefficient' fossil fuels such as oil to be
phased out. His remarks came as Fatih Birol, chief economist of the International Energy Agency, said that
tighter regulations and higher costs for deepwater drilling were likely to raise the
Wests dependency on Opec. 'Over three
quarters of non-Opec oil supplies are expected to come from offshore drilling, so if there
are increased costs and delays this will accelerate the dominance [of Opec],' he said. Mr Birol added that 900,000 barrels of new daily oil production could be
deferred if deepwater drilling becomes more costly." |
"BP
staked its future on expanding offshore drilling a month before the catastrophic explosion
on the Deepwater Horizon triggered the United States' worst environmental
disaster, according to company documents revealed yesterday. The investigative web site ProPublica published
a March 2010 strategy document in which BP named 'expanding deepwater' as its number
one area for long-term growth. But even as the document was drawn up, engineers were
struggling to control the Macondo well in the Gulf of Mexico, which had already gained a
reputation as a risky operation, according to industry sources. The strategy paper claimed
BP now held a global lead over its competitors in deepwater production even though
its costs were considerably lower. Earlier this month the executives of BP's rivals,
including Exxon and Chevron, told a congressional hearing they would have taken more
safeguards on the doomed Deepwater Horizon rig. The battle over the future of offshore
drilling continued yesterday as the country's biggest business lobby said it would step up
its campaign to force the Obama administration to lift its six-month ban on drilling new
wells in the Gulf of Mexico." |
"I argued in the book that what
really sparked the financial crisis was the fact that the Federal Reserve had to move the
Fed funds rate from 1 to 5.5 percent following in a similar rise in US inflation that came
from the energy component. Were already beyond
the minus signs in inflation, were in the two percent inflation range. If were
going to see triple-digit oil prices by 2011, then were probably going to see
inflation close to double where it is today. While people are worried about deflation,
history has shown that these huge massive deficits that have arisen have as their dancing
partner inflation and not deflation. The US government has always monetized those
deficits, meaning that theyve always printed money to pay for them in the past and I
see no reason why they wont do that in the future, particularly when so much of the
debt is owned abroad." |
"Global oil output could slide
by up to 900,000 barrels a day from projected levels for 2015 if oil producing countries
follow the US lead and impose moratoriums on development of new offshore oil reserves,
International Energy Agency executive director Nobuo Tanaka said Friday. The Paris-based organisation is conducting research on the possible
impact of the US moratorium and its implications worldwide, Tanaka said, Dow Jones
Newswires reported. 'If other countries like Angola, Brazil and the North Sea (countries)
put on hold new offshore development and there is also one or two years of delay, the
impact on global oil output might be 800,000 barrels a day to 900,000 barrels a day by
2015,' Tanaka told Dow Jones.... Although the decline would represent about one percent of
global oil output, 'given that spare oil production capacity is about six million barrels
a day, (a drop of) roughly one million barrels a day can't be ignored,' he said. Oil and
gas companies began shutting down 33 deepwater exploration rigs last month after US
President Barack Obama imposed a six-month moratorium on developing new deepwater wells in
the Gulf of Mexico. 'There is little near-term impact. But for the medium term, if new
offshore oil development in the US is delayed by one or two years, the impact (on
production) would be 100,000 barrels a day to 300,000 barrels a day by 2015,' Tanaka said.
'The ultimate impact is unclear. But it would take time to investigate the causes of the
spill and develop appropriate safety requirements and procedures,' he said." |
"Dimock [Pennsylvania] is now known as the place where, over the past
two years, peoples water started turning brown and making them sick, one
womans water well spontaneously combusted, and horses and pets mysteriously began to
lose their hair. Craig and Julie Sautner moved to Dimock from a nearby town in March
2008..... By October 2009, the D.E.P. had taken all the water wells in the Sautners
neighborhood offline. It acknowledged that a major contamination of the aquifer had
occurred. In addition to methane, dangerously high levels of iron and aluminum were found
in the Sautners water. The Sautners now rely on water delivered to them every week
by Cabot. The value of their land has been decimated. Their children no longer take
showers at home. They desperately want to move but cannot afford to buy a new house on top
of their current mortgage. 'Our land is worthless,' says Craig. 'Who is going to buy this
house?'. As drillers seek to commence fracking
operations in the Delaware River basin watershed and in other key watersheds in New York
Stateall of which sit atop large repositories of natural gas trapped in shale rock
deep undergroundconcerned residents, activists, and government officials are
pointing to Dimock as an example of what can go wrong when this form of drilling is
allowed to take place without proper regulation.
Some are pointing to a wave of groundwater-contamination incidents and mysterious health
problems out West, in Colorado, New Mexico, and Wyoming, where hydraulic fracturing has
been going on for years as part of a massive oil-and-gas boom, and saying that fracking
should not be allowed at all in delicate ecosystems like the Delaware River basin.
Damascus and Dimock are both located above a vast rock formation rich in natural gas known
as the Marcellus Shale, which stretches along the Appalachians from West Virginia up to
the western half of the state of New York. The gas in
the Marcellus Shale has been known about for more than 100 years, but it has become
accessible and attractive as a resource only in the past two decades, thanks to
technological innovation, the depletion of easier-to-reach, 'conventional' gas deposits,
and increases in the price of natural gas. Shale-gas deposits are dispersed throughout a
thin horizontal layer of loose rock (the shale), generally more than a mile below ground.
Conventional vertical drilling cannot retrieve shale gas in an economical way, but when
combined with hydraulic fracturing, horizontal drillingwhereby a deeply drilled well
is bent at an angle to run parallel to the surface of the Earthchanges the equation.... Fracking is an energy- and resource-intensive process. Every
shale-gas well that is fracked requires between three and eight million gallons of water.
Fleets of trucks have to make hundreds of trips to carry the fracking fluid to and from
each well site. Due in part to spotty state laws and an absence of federal regulation, the
safety record that hydraulic fracturing has amassed to date is deeply disturbing. As use
of the technique has spread, it has been followed by incidents of water contamination and
environmental degradation, and even devastating health problems. Thousands of complaints
have been lodged with state and federal agencies by people all over the country whose
lives and communities have been transformed by fracking operations..... Shale gas has become a significant part of our energy mix over the
past decade. From 1996 to 2006, shale-gas production went from less than 2 percent to 6
percent of all domestic natural-gas production. Some industry analysts predict shale gas
will represent a full half of total domestic gas production within 10 years.... Although fracking was never regulated by the federal government when
it was a less prevalently used technique, it was granted explicit exemptionsdespite
dissent within the E.P.A.from the Safe Drinking Water Act, the Clean Air Act, and
the Clean Water Act by the Energy Policy Act of 2005, the wide-ranging energy bill crafted
by Dick Cheney in closed-door meetings with oil-and-gas executives. While the average
citizen can receive harsh punishment under federal law for dumping a car battery into a
pond, gas companies, thanks to what has become known as the Halliburton Loophole, are
allowed to pump millions of gallons of fluid containing toxic chemicals into the ground,
right next to our aquifers, without even having to identify them. Claiming that the
information is proprietary, drilling companies have still not come out and fully disclosed
what fracking fluid is made of.... According to Theo Colborn, a noted expert on water
issues and endocrine disruptors, at least half of the chemicals known to be present in
fracking fluid are toxic; many of them are carcinogens, neurotoxins, endocrine disruptors,
and mutagens. But Colborn estimates that a third of the chemicals in fracking fluid remain
unknown to the public. ... Yet the shale-gas
boom, driven by fracking, continues on a global scale. Shale land is already being leased
in Western and Central Europe while foreign companies buy up land in the Marcellus Shale.
A May 25 memorandum of economic and strategic dialogue between the U.S. and China
prominently lists an initiative to help China assess and extract its own shale gas as an
item of agreement. In Australia, where fracking has been sweeping the Queensland
countryside and where landowners have little or no control over their mineral rights, a
furor has been growing over the water contamination happening around drilling locations." |
"Members of Congress yesterday
implored the State Department to scrutinize the 'significant' environmental impacts of a
proposed massive pipeline that would carry Canadian tar sands oil
2,000 miles from northern Alberta, across U.S. states to refineries in Texas and
tankers off the Gulf coast. In a letter
to Secretary of State Hillary Clinton, nearly 50 members of the House of Representatives
said the agency 'must determine whether the project is in the national interest' in terms
of 'clean energy and climate change priorities' before rubberstamping it." |
"Chris Huhne, the energy and climate change
secretary, warned last night that the threat to gas supplies from the political row
between Russia and Belarus highlighted once again the desperate need for Britain to build
up a low-carbon energy policy and domestic energy security through new wind farms
and possibly nuclear reactors. Huhne said it was also vital that Britain was better
protected from any 'big shocks' arising from huge increases in the price of oil, as
companies such as BP were forced into increasingly environmentally sensitive areas. The European gas market has been repeatedly disrupted by rows between
Moscow and its former Soviet neighbours, which have led to cuts in Siberian supplies
reaching the continent, triggering a sudden cut in imports to Britain. Yesterday the
latest dispute escalated after Moscow cut more supplies and Belarus threatened to siphon
off Russian gas supplies crossing its territory. Huhne said these stand-offs underlined
the importance of Britain having its own sources of power as UK North Sea gas runs down.
'Energy has always had big geopolitical issues around it and that is why, both in terms of
physical assurance of supply and in terms of guarantees against price volatility, we have
a really strong incentive to develop our renewable sector,' he said." |
"The BP oil
spill in the Gulf of Mexico has been an important political event as well as an economic
and environmental disaster. It has almost
certainly brought to an end Tony Haywards career as chief executive officer of BP.
That is no great public issue in itself. However, it has also provided a check to
President Obamas drive for re-election in 2012.... The President needs to have the
oil if he is to win re-election. He is like the driver of some large limousine. He can set
off down the road, waving cheerfully to the crowds, but, if he has no petrol in the tank,
he will not get far. Since the first oil shock in 1973, I have been writing about the
economic consequences of the depletion of oil resources, the concept that is now called
'Peak Oil'. In June 1990 I wrote that 'by the end of the century the gradual depletion of
the worlds oil resources will again have raised the real price of oil'. It did. The
oil price has previously risen to well above $100 (£67) a barrel, and is now apparently
stable at about $80 a barrel. Low-cost oil has been depleted and high-cost oil has had to
be found to replace it. High-cost oil is risky and environmentally damaging. The Gulf
spill may prove to have been the result of some specific act of negligence by BP. Looked
at another way, this spillage was a natural consequence of US policy, which in turn was
dictated by consumer demand. The President can, if he likes, blame BP, but he should also
blame himself. In any case, he will share the blame as well as the responsibility.The
policy of the US Administration as well as that of the oil companies has been to search
for the last barrel of oil, wherever it may be, whatever it does to the environment and
whatever it costs. The BP blowout is a natural consequence of this 'last barrel' policy. It is also an indicator that the peak of oil has probably
been reached." |
"Afghanistan
is Hell on Earth, a place of ragged rocks
and parched hills in which warlords and drug dealers duck and dive from helicopter
gunships. Nothing good there, you might think, but according to the US government, Afghanistan
is not a wasteland but a treasure trove. A king's ransom of valuable minerals lies beneath
the rubble of war, say people in Washington, copper and iron ore worth hundreds of
billions of dollars, gold, silver and exotic materials: cobalt used as a catalyst in
refineries, niobium and molybdenum used to strengthen steel. Even as President Barack
Obama rages against the US's dependence on crude oil, strategists in Washington are
fashioning geopolitical models of a precarious new world of dependency on strange metals. Afghanistan is now part of
a global jigsaw puzzle of critical resources. A study by the Pentagon and the US Geological Survey reveals the scale of Afghanistan's
mineral wealth, a resource far greater than believed. There are big reserves of lithium, a
metal used in rechargeable batteries. So large are the deposits that a Pentagon
memo concludes that Afghanistan could become 'the Saudi Arabia of lithium'. Out goes oil, in
comes lithium. It could be the critical mineral in an electric world. But not just yet.
Whatever Obama says or the green lobby believes, the US will be sucking at the teat of
OPEC for the next half century, and probably much longer.....The Pentagon papers
suggest that Afghanistan is a trillion-dollar mineral play, a bet on the resources that
will power the new economy, right in the middle of a war zone. A Chinese consortium has already secured a contract to mine copper south
of Kabul, and the Afghan Ministry of Mines is holding an investor roadshow next week in
London, touting its wares to mining prospectors.....Unfortunately, this is not
really about markets; it's about carving up the world into client states and securing
supply routes, with gunboats if necessary.
Oil has always been like this. It is no accident that Shell was originally a shipping
company. Ever since the Rothschild and Nobel families began to buy lamp oil in Baku on
the Caspian Sea, oil has been less about marketplaces than about the control of supply
routes. The battle for access to oil has afflicted so many nations with conflict and
corruption that we pray for oil's demise. We need to wake up, get down and dirty and feel
the grimy ore under our fingernails. These
are the minerals of mass destruction: coal, oil, uranium that stokes nuclear power
stations, lithium for batteries and countless minerals that make the guts of
communications technology." |
"Overwhelmingly, Americans think
the nation needs a fundamental overhaul of its energy policies, and most expect
alternative forms to replace oil
as a major source within 25 years. Yet a majority are unwilling to pay higher gasoline
prices to help develop new fuel sources. Those are
among the findings of the latest nationwide New York Times/CBS News poll. The poll, which
examines the publics reaction to the oil leak in the Gulf of Mexico, highlights some
of the complex political challenges the Obama administration faces. For instance, despite
intense news coverage and widespread public concern about the economic and ecological
damage from the gulf disaster, most Americans remain far more concerned about jobs and the
nations overall economy." |
"The oil that's flooded into the Gulf of Mexico has created big
concerns about the environmental and economic damage. Another
serious outcome has gotten far less attention: peak oil. By prompting President Obama to
suspend deep-water drilling in US offshore waters, the Gulf oil spill is pushing up the
date at which the world's conventional oil production peaks. By itself, the United States suspension would bring forward that date
only a little. But if other nations with offshore oil output or potential also stop risky
offshore exploration and drilling, it could speed the arrival of peak oil at a more
alarming rate. Without alternative supplies of energy to offset it, a decline in oil
production would send shock waves through the world, rattling economies and politics
alike. Competition for resources could be fierce. In a geological sense, the world is
still awash in oil. The US Geological Survey estimates 3,000 billion barrels of
conventional crude are buried in the world, about a 46-year supply if no more oil is
found, according to the National Center for Policy Analysis, a public-policy research firm
in Dallas. The problem is getting oil out of the ground. Much oil is inaccessible
or so expensive to drill that it's not feasible even if oil prices surged. Sometimes the
environmental risks (think BP's Deepwater Horizon fiasco) may be too high....Typically,
production losses are offset by new finds. The International Energy Agency has calculated
that it would take the discovery of six new fields the size of those in Saudi Arabia to
maintain current world oil output through 2030..." |
"The US special envoy to
Pakistan said Sunday he had warned Islamabad against signing a deal with Iran on a gas
pipeline, saying the US was preparing laws that could affect the project. 'We cautioned the Pakistanis not to over-commit themselves until we know
the legislation,' Richard Holbrooke, US President Barack Obama's special envoy to
Afghanistan as well as Pakistan, told reporters. 'Pakistan has an obvious major energy
problem. We are very sympathetic to it. In regard to the specific project, legislation is
now being prepared which may apply to this project,' said Holbrooke. He declined to give
details, saying he was not involved in drawing up the legislation, but cautioned that it
could be 'comprehensive.' 'This can range from legislation which could be so comprehensive
that something like this could create a major problem for any company or country,'
Holbrooke said. Iran and Pakistan last week formally signed an export deal which commits
Iran to selling natural gas to its eastern neighbour from 2014. Iran has already
constructed 907 kilometres (564 miles) of the pipeline between Asalooyeh, in southern
Iran, and Iranshahr, which will carry natural gas from Iran's giant South Pars field. The
pipeline was originally planned to connect Iran, Pakistan and India, but the latter pulled
out of the project last year. Pakistan plans to use the gas purchased from Iran for its
power sector. The Obama administration on Wednesday added Iranian individuals and firms to
a blacklist as part of US and European efforts to tighten the screws on Iran a week after
UN approved sanctions against its nuclear programme. The new US sanctions target insurance
companies, oil firms and shipping lines linked to Iran's nuclear or missile programmes as
well as the Islamic Revolutionary Guards Corps (IRGC) and Iran's defence minister Ahmad
Vahidi. Pakistani Foreign Minister Shah Mehmood Qureshi told journalists in his hometown
Multan that he hoped the pipeline project would not come under sanctions, the Associated
Press of Pakistan reported." |
"Serious scientific opinion
argues it could stop the Gulf of Mexico oil spill. But the public wouldnt stand for
it. It is, literally, the nuclear option. As tens of thousands of barrels of oil continue to spill into
the Gulf of Mexico, as Barack Obama plays the hard man and BPs Tony Hayward plays
the contrite villain, as the greatest environmental disaster the US has ever known
worsens, there is one solution buzzing round the American scientific community. Nuke the
well.... President Obama has never been shy of comparisons with John F. Kennedy. The oil
spill is not far from the stage of his predecessors greatest triumph, the Cuban
missile crisis of 1962. It was here that Soviet ships met the US naval blockade of Cuba
and the world teetered on the edge of nuclear annihilation. For the heir of Kennedy to
expose the gulf to even the tiniest doses of radiation is unthinkable...Added to the ghost
of Kennedy is the very real issue of Mr Obamas own anti-nuclear rhetoric. Detonating
a device in the gulf would run contrary to the terms of the Nuclear Non-Proliferation
Treaty, and be treacherous ground for a President who has been vocal about
disarmament." |
"With up to 60,000 barrels of oil a day gushing out of
BPs ruptured well in the Gulf of Mexico, it looks as though the company is finished
in its current form. And so should it be. BP has started every day of this crisis hoping
for the best. Its claim that it was losing 5,000 barrels of oil a day has turned out to be
a woeful underestimate. Its statement that this was not the worlds worst oil spill
was foolhardy. The internal e-mails between BP executives, released by Congress, imply a
possible complacency about safety that is a chilling echo of some BP management attitudes
in the run-up to the 2005 Texas City refinery tragedy.But this disaster has revealed
something even more serious than BPs ineptitude. It has shown the world just how
risky it is to drill under the sea to depths that no human being can withstand. Whatever
the failures by the regulator in this case and the US Minerals Management Service
was clearly at fault the realisation that Big Oil has been operating at the very
edge of mankinds technological capability will lower the value of oil drilling
companies as insurance costs boom, at least in developed countries. The success of Big Oil
in the past half century has been based on a simple bargain: delivering exorbitant profits
to shareholders by drilling holes in the ground. In the next half century the economics
may look very different. Even before this disaster the industry was having to look
in ever more expensive places to find oil. The Gulf spill should serve as a wake-up call
to investors that the bargain is changing. The financial and environmental risks
associated with oil are becoming harder to ignore. BPs failure to manage the risks
of oil drilling raises profound questions about its ability to handle other risks. Under the leadership of John Browne, BP tried to move
'Beyond Petroleum' towards cleaner, more secure energy supplies. Under Tony Hayward, BP
returned to hydrocarbons, divesting many of its small investments in solar energy, and
tramping on to tar sands. Sadly, the current management is not capable of resurrecting BP
as an energy company of the future.... Desperation to appear in control of a leak that is
out of control has wrong-footed everyone. In declaring war on BP and encouraging the
states to demand that the company create a compensation fund of $20 billion, more than
three times its cash reserves, Barack Obama risks rendering the company unable to afford
to pay all the damages." |
"....despite
all the fuss about global warming, the US Government... halved its energy research
spending in the past decade to just $5 billion a year one fourteenth of military
research and one sixth of government
spending on medical R&D. The private sectors research efforts were even more
pathetic and still are. The entire
global research effort on all forms of non-carbon energy, including nuclear power, in the
past decade was only about double Microsofts spending on repeatedly upgrading
Windows and Office. By contrast to the $10 billion spent globally on alternative energy
and nuclear research, $250 billion was spent annually, according to the Stern report, on
subsidising the extraction and burning of fossil fuels. BPs much -touted $45 million investment in Solarex, the worlds
biggest solar-energy company, was minuscule compared with the $70 billion the company paid
at around the same time to buy the US oil giants Amoco and Arco, making BP the biggest US
oil producer.....It is impossible to say whether President Obama will prove right in the
prediction he made last night that the global energy outlook will be changed for ever by
the Deepwater Horizon oil spill. What he can definitely do is see to it that no oil
company will ever again claim that prospecting for oil is a less financially risky
proposition than installing wind turbines or investing in nuclear power. The Obama
Administrations strategic objective, beyond sealing the gusher and cleaning up the
mess, should be ensure that drilling for oil becomes prohibitively expensive. The oilmen
and investors must be forced to recognise that the true costs and risks to society of oil
exploration are far greater than the costs and risks of investing in alternative energy or
nuclear power. Whether or not BP is found by the courts to have been negligently culpable,
the company now faces catastrophic financial losses. If these losses threaten BPs
survival as an independent company, then oil drilling in technically challenging or
environmentally sensitive locations may be recognised as too expensive by oil company
managements..... A panic among shareholders after the Gulf of Mexico blowout could put an
end to the worlds dependence on fossil fuels much faster than any amount of
regulation or protest, just as the Three Mile Island and Chernobyl accidents almost
immediately halted worldwide activity in nuclear power." |
"Over the past three years, geology has become a hot topic of
conversation in Brazilian homes. Most people have learnt, through the news, that buried
deep under the sea bed, hundreds of kilometres off the Brazilian coast, is a thick layer
of salt. And beneath the salt - in an area that has become known as the 'pre-salt'- lies a
gigantic oil reservoir that President Luiz Inacio Lula da Silva has referred to as 'a gift
of God' and 'the second independence of Brazil'. The actual wealth remains 7km (4.3
miles) beneath the ocean and a long way off from being exploited, but the federal
government has already made grandiose plans for Brazilian education based on these
resources. And local governments are involved in bitter disputes over the sharing of the
expected profits and royalties. There is no shortage of pride and enthusiasm in Brazil
over the potential of the pre-salt reservoir, and apparently no intention of slowing down
deepwater exploration - as other countries like the United States and Norway have done -
because of the oil spill in the Gulf of Mexico. 'With the development of the pre-salt
reservoir, we believe Brazil will gain its place among the top 10 oil producers in the
world. We have already even been formally invited to join Opec [Organization of
Petroleum-Exporting Countries],' says the director general of the federal National Oil
Agency (ANP in Portuguese), Haroldo Lima..... if
Brazil wants to produce more oil, its only option is to go deeper and deeper. More than
90% of the country's reservoirs are located in deep (over 400m; 1,300ft) or ultradeep
(over 1,000m; 3,300ft) waters, and about 80% of the oil currently produced in Brazil
already comes from these types of fields. Petrobras is the largest producer of oil in
deepwater provinces in the world and is highly respected in the industry. But drilling in
the pre-salt fields will pose challenges greater than Petrobras - or indeed any other oil
company - has ever faced before. 'We are talking about a complex and aggressive
environment: there's salt, there's corrosion, extreme pressures, weather can change, waves
of 10m (33ft) can appear from nowhere... There's no engineering solution that could be
100% safe,' says Claudio Sampaio, architect for the
naval engineering department at the University of Sao Paulo." |
"For decades, we have known the
days of cheap and easily accessible oil were numbered. For decades, we have talked
and talked about the need to end Americas century-long addiction to fossil fuels.
And for decades, we have failed to act with the sense of urgency that this challenge
requires. Time and again, the path forward has been blocked not only by oil
industry lobbyists, but also by a lack of political courage and candor. The consequences
of our inaction are now in plain sight.
Countries like China are investing in clean energy jobs and industries that should be here
in America. Each day, we send nearly $1 billion of our wealth to foreign countries
for their oil. And today, as we look to the Gulf, we see an entire way of life being
threatened by a menacing cloud of black crude. We cannot consign our children to this
future. The tragedy unfolding on our coast is the most painful and powerful reminder
yet that the time to embrace a clean energy future is now. Now is the moment for
this generation to embark on a national mission to unleash American innovation and seize
control of our own destiny. This is not some distant vision for America. The
transition away from fossil fuels will take some time, but over the last year and a half,
we have already taken unprecedented action to jumpstart the clean energy industry. As
we speak, old factories are reopening to produce wind turbines, people are going back to
work installing energy-efficient windows, and small businesses are making solar
panels. Consumers are buying more efficient cars and trucks, and families are making
their homes more energy-efficient. Scientists and researchers are discovering clean
energy technologies that will someday lead to entire new industries. ... Now, there are
costs associated with this transition. And some believe we cant afford those
costs right now. I say we cant afford not to change how we produce and use
energy because the long-term costs to our economy, our national security, and our
environment are far greater..... The one answer I will not settle for is the idea that
this challenge is too big and too difficult to meet. You see, the same thing was
said about our ability to produce enough planes and tanks in World War II. The same
thing was said about our ability to harness the science and technology to land a man
safely on the surface of the moon. And yet, time and again, we have refused to settle
for the paltry limits of conventional wisdom. " |
"President Obama likened the impact of the oil spill
disaster on the nations psyche to the September 11 terrorist attacks as he made his
first multi-state tour yesterday of the Gulf of Mexico. Facing questions about his
leadership amid rising public anger 56 days after the Deepwater Horizon drilling rig
exploded, he sought to reassert his authority by visiting Mississippi, Alabama and
Florida, the states left out of three previous trips to the region....'One of the biggest
leadership challenges for me going forward is going to be to make sure that we draw the
right lessons from this disaster,' Mr Obama said in an interview with The Politico news
website before he set off. Vowing to move forward 'in a bold way' with a clean energy
policy that would help America to reduce its oil dependency, he added: 'In the same way that our view of our vulnerabilities and
our foreign policy was shaped profoundly by 9/11, I think this disaster is going to shape
how we think about the environment and energy for many years to come.' Mr Obama will address the nation from the Oval Office tonight,
when he will announce new measures to help to restore the Gulfs ecosystem. Tomorrow
he meets BP executives for what the White House was keen to portray as showdown
talks." |
"When I interviewed Mr Hayward two weeks into the crisis he
said that the Macondo well, a mile below the surface, was not pushing any envelopes in
engineering terms. He has since admitted BP
lacks the tools to cope with this 40,000 barrel-a-day spill, let alone the 250,000
barrel-a-day spill that it promised it could handle as a condition of its permit. The
engineering envelope is shot. The industry is in over its head. This weeks spectacle in Washington is BP paying for
it." |
"Plans are under way to extend the
life of the UK's oldest nuclear reactors, which would ease the government's need to
find an extra £4bn for clean-up funding, the Guardian has learned. The Wylfa reactor on Anglesey, due to close at the end of the
year, would remain open until at least 2012 if safety regulators agree. The extra electricity generated by the reactor, which began operations in
1971, would earn its parent, the Nuclear Decommissioning Authority (NDA), up to an extra
£500m in revenue. EnergySolutions, the US company which operates the old Magnox reactor
sites for the NDA, is also looking for a further life extension of the Oldbury reactor. It
is the UK's oldest
operating nuclear plant, opened in 1968, and recently regulators gave it approval to
remain open until mid 2011. EnergySolutions is preparing to begin work on another
extension soon." |
"The disaster caused by the Gulf of Mexico oil spill has cast doubts over the future of deep water exploration
and is likely to have the long-term effect of raising oil prices, analysts say. British
oil giant BP has struggled to stem the crude gushing from a ruptured underwater pipe after
the Deepwater Horizon rig it leased exploded before sinking
into the sea on April 22, causing a major environmental disaster. 'The benefits of being
able to drill and produce in deep and ultra-deep waters are brought into question now it
has become clear that basic remediation of problems is extremely difficult in deep water,'
said analysts at Barclays Capital. BP chief executive Tony Hayward
concurred, saying: 'What is taking place is an issue
which will impact the global oil and gas industry and will necessarily have a very broad
impact not only in the United States but around the world.' The first direct consequence for the industry was the US administration's
declaration of a six-month moratorium on new deep-water drilling and delays on planned
exploration off the Alaska coast. According to a study by Wood Mackenzie energy consultants, these restrictions would cut
global production by 80,000 barrels a day in 2011 -- just under one percent of the total.
The moratorium also raises questions about equipment already in the Gulf of Mexico. 'If
rigs leave the region, restoration in drilling activity will take time as equipment needs
to be brought back in,' Barclays Capital said. The oil spill fall-out could also have the
more far-reaching effect of deterring oil companies from going
ahead with similar deep water projects. 'There is now
considerable uncertainty over the future of deep water exploration, both in the US and
elsewhere,' said Helen Henton, an analyst at
Standard Chartered Bank. In the United States, this could have a serious impact. The Gulf
of Mexico represents 19 percent of US oil reserves, of which 80
percent are found in deep water, and 29 percent of national production, she said. Washington believes the region is crucial to future global energy
supplies -- between 2008 and 2014, production is expected to increase by half a million
barrels a day compared to current levels. The crisis could also deter those firms hoping
to take advantage of Brazil's vast offshore reserves -- as many as 50 billion barrels of crude are thought to lie under a vast salt layer deep in
the ocean. And in the North Sea, where the big oil fields are exhausted, the future of
exploration also lies deep under the sea, east of Britain's Shetland Islands. Despite the risks, oil firms have little choice.
Locked out of the 'easy' oil fields in the Middle East -- with the exception of Iraq --
they are forced to turn to increasingly difficult areas. 'In
the future, it is inevitable that technology and risk will increase, not diminish, as
'easy' sources of oil are depleted and as the exploration effort moves into new and ever
more challenging frontiers,' said Tim Morgan, global
head of research at Tullett Prebon. Delayed projects, tighter legislation and more and
more expensive technology all point towards the same conclusion -- the price of oil will go up. 'We
think the long end of the market will gradually price in more of the oil spill effect,'
said Torbjorn Kjus, oil market analyst at DNB Nor." |
"Oil futures for delivery in 2018 at less than $100 are 'undervalued'
as BP Plcs spill in the Gulf of Mexico will raise the costs of exploration and lead
to drilling restrictions, Barclays Capital said. 'Oil
will be slower onstream, more expensive to produce, it will be more politicized and there
will be less of it,' Barclays analysts including
Paul Horsnell said in a report today. 'All of those are factors that make us look at the
current back of the oil curve and see it as undervalued at current levels of a shade below
$100.'.... President Barack Obama has extended a ban on new deepwater permits and
exploration in the Alaskan Arctic for six months following the accident. Stricter
regulation may add $5 a barrel to long-term oil contracts, according to Deutsche Bank AG,
while a one-year worldwide delay in deepwater drilling may cut as much as 500,000 barrels
a day from 2013 supply, according to Sanford C. Bernstein analysts. The number of rigs
drilling in the Gulf of Mexico plunged 50 percent last week to the lowest level in 16
years, Baker Hughes Inc. reported June 4. U.S. output may be cut by 150,000 to 200,000
barrels a day next year because of new limits, Deutsche Bank said. 'We see the
consequences as being more severe than the postponement of Gulf Coast volumes,' Barclays
said in the report today. 'It looks likely to become an iconic event, a touchstone and
rallying flag for opposition to the oil industry across a wide series of fronts and issues
for years to come.'" |
"GLOBAL oil demand will peak
within six years, says an influential energy analyst.
Forecasts of relentless consumption growth in China are wrong, claims Peter Tertzakian,
head of Arc Financial, an energy-focused private-equity firm and an
authority on global energy markets. And oil's dominance of the transportation market will
be eroded by the growth of alternative energy sources. It is a combination that should
shock companies and countries that assume GDP growth will always equate to rising oil
demand. As oil consumption has tapered off in the rich West, producers have increasingly
focused on the expanding economies of Asia and the Middle East, where consumption
continues to surge. But even Chinese demand will reach a plateau within three to five
years, Tertzakian says." |
"BP has revealed that more new
oil was produced in the Gulf of Mexico last year than any other region in the world, as the company seeks to persuade the US government that its giant spill
should not halt deepwater drilling. At its annual economic review, the energy major made
the case for pushing ahead with exploration of 'difficult' harder to extract
oil, saying global demand will now rise after last year's sharp reduction in consumption.
Oil fields in the Gulf of Mexico, where BP is currently fighting to plug a leaking well,
are some of the most productive and profitable in the world..... Oil consumption in
developed countries has fallen back to 1995 levels, as heavy industry suffered during the
downturn and governments turn away from fossil fuels blamed for causing climate change. The report found that world demand dropped by 1.2m barrels per day, causing Opec to rein back production to sustain prices. However, demand
for oil rose in China, India and Saudi Arabia, where usage even outstripped the growth of
their economies. Dr Ruhl believes consumption will rise again this year on demand from
developing economies, which will push companies towards increasingly difficult oil
exploration, such as deepwater drilling. 'Global oil demand is no longer declining and
appears to be on the rising path in 2010,' he added." |
"World oil
consumption fell by 1.2m barrels per day (bpd) in 2009, the second consecutive annual
decline and the largest volume since 1982, BP said
in its annual Statistical Review of World Energy today. The world's oil production dropped
by 2m bpd, or 2.6%, which was also the largest decline since 1982, the review said. It
said global oil refining capacity additions totalled 2m bpd, with the Asia-Pacific region
accounting for 80% of the increase. The world's proven oil reserves stood at 1.33 trillion
barrels last year, an increase of 700,000m barrels from 2008. The world's gas reserves
grew by 2.21tn cubic metres last year, while production fell by 2.1%, marking the first
decline on record, BP said." |
"In Pipelineistan, Russia and Turkey are now brothers in arms. Russia will build a crucial Samsun-Ceyhan pipeline to bring
Russian oil from the Black Sea to the Mediterranean.
Moreover, Turkey is about to join the Russian South Stream gas pipeline - and that means a
direct blow to the troubled US/EU-supported Nabucco." |
"Britain's former chief
scientist has attacked politicians and industry experts who have their 'heads in the sand'
over dwindling oil supplies. Sir David King said governments, including the UK's, were too eager to
believe the optimistic predictions of economists who tell them that 'oil will be squeezed
out of the ground pretty much forever'. King, the government's chief scientific adviser
from 2000 to 2007, is now director of the Smith
School of Enterprise and the Environment in Oxford. He said: 'That's what governments
want to hear and that's what they do hear, and I think the British government as much as
many others.' He added that those with a 'vested interest' repeatedly overstated
how much accessible oil remains in the ground. Conventional
oil reserves are about 30% lower than widely reported, he said. Established oil sources were becoming harder to exploit, he said, leading
to wider use of unconventional sources such as deepwater drilling, with environmental
impacts including those seen with the
Deepwater Horizon spill in the Gulf of Mexico. He
said oil demand would overtake production capacity as soon as 2015, which would drive up the price further." |
"Azerbaijan and Turkey yesterday
(7 June) signed a deal to ship 11 billion cubic metres of Azeri gas per year to Turkey.
Shipments would start in 2017 and some of the gas may be pumped into the EU's planned
Nabucco pipeline. Meanwhile, Northern Iraq declared
in Turkey that it stands ready to provide gas supplies 'to make Nabucco work'. The
agreement was signed in Istanbul by Azerbaijan's minister of industry and energy, Natig
Aliyev, and Turkey's minister of energy and natural resources, Taner Yildiz, EurActiv
Turkey reported. The ceremony took place in the framework of a visit to Turkey by Azeri
President Ilham Aliyev. The agreement covers gas supplies from Azerbaijan's Shah Deniz 1
and Shah Deniz 2 developments in the south-west Caspian Sea. Turkey currently buys about
6.6 billion cubic metres of Azeri gas per year but does not always use it in full. Aliyev
said in mid-May that if it were to receive attractive offers, Azerbaijan might join new
gas projects, including Nabucco, according to news channel CNN Turk....Meanwhile, Russia signed a deal in Athens on 7 June to found a
joint company for building a section of Gazprom's planned South Stream gas pipeline on
Greek territory. South Stream is the
Gazprom-favoured rival of Nabucco. The new company, called South Stream Greece S.A., will
be headquartered in Athens, with each side holding an equal 50% stake in the joint
venture. Russia had already secured intergovernmental agreements to build South Stream
with Hungary, Austria, Bulgaria, Greece and Croatia." |
"Shale gas cannot be seen yet as
a game changer in Europe as it is in the United States, where roughly 50% of the country's
needs are met by developing unconventional gas. The conclusion was reached by
international experts at a public event held in Brussels yesterday (7 June). To illustrate the possible impact of developing shale gas in Europe, Don
Gauthier of the US Geological Survey said that in an area the size of the Benelux
countries, there would have to be up to 6,000 wells, an impact that would probably attract
environmental opposition. Speaking at a conference organised by IFRI, the French Institute
for Foreign Relations, Gauthier explained that the reason for such concentration was that
unlike natural gas, unconventional gas needs a high
density of wells, including horizontal wells. Conventional gas costs less, as it is
extracted at much higher volumes from only a few vertical wells. Citing the US experience, Gauthier further explained that operators need
to reach agreements with land owners. This, he said, was an easy task in Texas, but much
more difficult in the New York area, where in his words 'a lot of debate' on water issues
had been taking place.... The development of shale gas, which sees chemicals added to the
water to facilitate the underground fracturing process that releases natural gas, is a
concern to environmentalists. Fracturing fluids,
designed to free gas trapped between layers of shale, are developed by companies to suit
the geologic characteristics of each individual site. The wide variety of rock types,
experts explained, means that a chemical developed for a site in the US would have little
if any application elsewhere. They were answering a
question from EurActiv. The countries where shale gas is presumed to exist in the EU are
Germany, Poland, Sweden, France, Austria, Hungary and the UK.... According to estimates,
Poland's shale gas reserves stand at 1.4 to three trillion cubic metres, enough to satisfy
the country's needs for the next 100-200 years, Zalevska said. However, she was quick to
add that there was not yet enough evidence to prove this. Indeed, no shale gas fields have
been documented in Poland yet, she revealed. The first estimation, she said, was due in
4-5 years and the first potential production in 10-15 years. Hans
Van Der Loo of Royal Dutch Schell concurred that unconventional gas reserves in Europe had
yet to be proven and warned that it was not certain to prove commercially successful. Some
firms might end up losing money, he cautioned." |
"Estonias greenhouse gas emissions have been halved since 1990,
which surpasses by many times the goals set in the international Convention on Climate
Change. But this is not enough. Estonias period
of transition agreed with the European Union with regard to the Narva power plants comes
to an end in 2016. By then the production units dating back to the Soviet era
will have been partly modernised and partly replaced with new equipment. The Narva power
plants utilise oil shale, which is a fossil fuel, to produce electricity for the use of
Estonia, the Baltic States, and the Nordic Countries.
'This EUR 100 million investment is one of the largest in recent years. It enables the
significant reduction of the environmental impact of the old units while the present
electricity production capacity is ensured in the future as well', says Tõnu Aas, CEO of the Narva Power
Plants." |
"Gains in oil sands production
is expected to outstrip increases in Alberta's processing capacity over the next decade as
oil companies go slow on building new facilities to protect profit margins and guard
against the return of surging construction costs. The
province's energy regulator said on Monday that this trend will prevail despite government
efforts to foster construction of upgrading plants to bolster economic activity and job
creation from the vast oil sands resources of northern Alberta, the largest crude source
outside the Middle East. In its annual report, the
Energy Resources Conservation Board (ERCB) predicted production of raw bitumen from the
oil sands would more than double to 3.2 million barrels a day by 2019 from 1.49 million in
2009. The figure for last year was up 14 percent from 2008. Output of upgraded synthetic
oil, meanwhile, is expected to hit 1.3 million barrels a day, a 77 percent increase in 10
years, the ERCB said." |
"We have recently been discovering some of the limits of Man's power
over Nature, first in terms of volcanic ash, and now oil. The
Gulf of Mexico spillage reflects the risk of pushing oil exploration to the limit of
technology 5,000ft below the sea's surface....Nobody would be looking for oil at 5,000ft
if there were new supplies in shallower waters. The
oil market registers the scarcity of oil. Last week oil was $74 a barrel for Brent Crude.
The progressive rise in the price over the past 30 years has been a measure of the growth
in demand and the failure of supply to meet that demand. If the oil companies are to
satisfy their markets, they have no choice but to develop high-cost sources which in
earlier decades would have been regarded as hopelessly uneconomic. Indeed, President
Barack Obama's administration started with a pledge to make the United States nearer
self-sufficient in oil by encouraging development projects offshore. The BP spillage in
the Gulf of Mexico has done considerable damage to that policy. There are three facts which have to be recognised. The first - and
most important - is that the age of readily available petroleum is over. For some time
there has been a theory that the world had already reached 'peak oil': the point at which
the growth of demand for oil exceeds the growth in supply. The BP disaster goes beyond the
doctrine of peak oil. We are now at the point of 'peak technology', where the risks of
drilling technology have become greater than society is willing to support. In the United
States, the oil risk has become a political risk....After
the setbacks for President Obama and America's energy policy, the greatest damage, of
course, has been done to the environment of the Gulf and to BP itself. It is the largest
British company, and the most important in terms of British pension funds and their
investments. Britain has therefore suffered-hard financial damage as well as damage to its
reputation in the United States. Not surprisingly, there is a widespread American anger
against BP." |
"Canada's Cameco Corp. (CCJ) and Kazakhstan's Kazatomprom aim to
launch a uranium-conversion plant in the Central Asian state in 2016-2017, Cameco's Chief
Operating Officer Bob Steane said Friday. 'We absolutely believe...there will be a
need for new conversion in 2016-2017,' Steane told Dow Jones Newswires on the sidelines of
an international investment conference in Almaty. 'We are targeting to be in a position to
capture that demand when it is coming in." Cameco and Kazatomprom plan to have a
feasibility study done for the facility 'in the next couple of years,' Steane said, adding
'conversion only makes sense when you get 12,000 or more [metric] tons capacity,'
referring to the size of the proposed plant. He also said there was an oversupply of
uranium currently in the market but he didn't think 'oversupply is going to stay for a
long time.' Part of the oversupply is 'because people
allowed their inventories to go down. 'In terms of oversupply at the reactors, pretty
quickly they are going to have to start buying and restoring their inventories and that
supply will disappear,' Steane said." |
"The oil spill in the Gulf of Mexico has already been described as
the biggest environmental crisis in US history. The efforts to stop the leak, repair the
damage to the ecosystem and compensate those whose livelihoods depend on clean waters will
come at a tremendous cost to BP. We still dont know what the final bill will be
or how BP and its reputation will manage. Tough
questions are rightly being asked of the oil industry, but the disaster raises wider
issues than the culpability of a few companies. It poses a fundamental question about
whether our dependency on oil and other fossil fuels is sustainable. Oil, coal, gas and
uranium make up 90 per cent of the worlds traded energy. As these supplies deplete
and demand increases, energy companies are taking greater risks to find new reserves. I fear, as we are pushed into more difficult terrain, that this means
more danger and risk. We have already encountered kidnap attempts on gas workers in
Africa, piracy attacks on oil tankers, coalmines collapsing at extreme depths and now we
have an oil spill 5,000ft under the sea. And energy companies are considering exploring
the even riskier and remote territory of the Arctic. Insurance companies, such as
Lloyds, have the dual role of paying claims when these risks become real and
advising business on how to manage those risks so that their enterprises dont become
uninsurable. For example, in the 1870s it was an insurance company that promoted the
development of fire sprinklers in factories. Energy risks now account for just over 6 per
cent of Lloyds business at £1.4 billion. We have already paid out on claims for the
loss of the Deepwater Horizon rig and our total claims from this tragic incident could
amount to $600 million. We need to ask: what can be done to reduce the chances of this
happening again? And are the environmental and economic costs of continuing our quest to
meet the demand for finite and hard-to-reach fossil fuels proving too much? If the slick in the Gulf is the first indicator of the potential
economic chaos we face as demand pushes us into ever riskier places, then securing our
energy supply means investing in clean and renewable energy technology.... Just as the Gulf of Mexico disaster hit thousands of businesses, these
energy shocks could reverberate across company balance sheets everywhere in the coming
years. But there is a worrying lack of awareness
among all businesses of how inextricably linked their futures are to stable access to
energy. A transition to a more resilient energy
system could transform the economy, just as coal did two centuries ago. We have already
taken the first steps: renewable energy made up two-thirds of new energy installations in
Europe last year and China became the worlds largest manufacturer of wind-power
generators and the second largest installer. And several insurers, including Lloyds
syndicates, now have units dedicated to insuring the renewable energy market. Nations are recognising that green energy is no longer just a
friendly optional extra; its an increasingly essential aspect of protecting energy
security and an economic opportunity. The Obama
Administrations response to the oil leak leaves little doubt that environmental
regulations will be strengthened. This regulation by political force, sweeping across
several industries, will only add to the pressures that the energy sector faces." |
"A year ago, the Kremlin issued
a stark warning: that growing competition for control of global energy resources could
spark wars on Russia's borders, including those in Central Asia. 'Problems that involve the use of military force cannot be excluded, that
would destroy the balance of forces close to the borders of the Russian Federation and her
allies,' said a key Kremlin strategy document assessing the main security threats of the
coming decade. Just 20 years ago, Russia and the
energy-rich countries of Central Asia, such as Kazakhstan and Turkmenistan,
and Azerbaijan in the South
Caucasus, were all united, as parts of the Soviet Union. Moscow would have had unfettered
access to their oil and gas reserves. But the Central Asian states realise one of their
greatest strategic strengths as independent countries is playing off the big global powers
now scrambling to buy their precious energy supplies. So, Moscow now finds itself in
fierce competition with the big players: China, the US and
Europe. 'Russia's
overall position in Central Asia is shrinking,' says Mikhail Kroutikhin, editor-in-chief
of the Russian Energy Weekly. 'Russia is in retreat and the Chinese are jumping on the big opportunities.' Rivalry in the region is often
compared with the 19th Century British-Russian imperial rivalry nicknamed the 'Great
Game'. The past year has seen some key moments in the
new energy 'Great Game' in Central Asia, with the first pipelines being commissioned that
take oil and gas east to China, instead of north and west. From Kazakhstan, 200,000
barrels of oil are now being pumped every day across the border into the western Chinese
province of Xinjiang, and there are plans to double this pipeline's capacity. From
Turkmenistan, a pipeline carrying gas to China via Uzbekistan and Kazakhstan was opened
last December by the Chinese President Hu Jintao. It
could satisfy around half of China's current demand by the time it reaches full capacity
in 2013. Turkmenistan's President Kurbanguly Berdymukhamedov called the deal 'political'
as well as commercial and heaped praise on China's 'wise policy', saying it had become
'one of the key guarantors of global security'. With this agreement, Russia's stranglehold
on supplies from Turkmenistan, which has the fourth-largest reserves of gas in the world,
was broken. And while China and its new Central Asian energy partners were locking
themselves in an ever-warmer embrace, Moscow found itself at loggerheads with its
erstwhile client state. Having agreed two years ago to pay a much higher price for Turkmen
gas, to ensure it remained a loyal supplier, the Russians suddenly shut the taps 12 months
ago, causing the pipeline to explode. Analysts believe Moscow had decided it did not need
the gas because of the downturn in global demand and prices during the economic crisis.
Even now it is only taking a third of what it was expected to buy, angering the Turkmen
government and pushing it further into the arms of the Chinese. 'As regards Russia's role
in the region, it has taken a step back in energy,' says Chris Weafer, chief strategist at
Uralsib Bank in Moscow. He believes it was not just
the global economic crisis that prompted this. It was also, he says, because Europeans searching for gas supplies for their planned Nabucco pipeline
were offering much higher prices for Central Asian gas. 'The
game changed because of Nabucco. Up to 2006, Russia could buy cheap gas from Turkmenistan,
Uzbekistan and Kazakhstan - $50 for 1,000 cubic metres and then sell it to Europe for
$250. 'But from the start of 2008, Russia had to agree to pay European prices - $300 per
1,000 cubic metres.' 'Gazprom was not making any money out of it. So the political will to
be involved has abated. Russia has let the Chinese into Central Asia.' And that is something Moscow may ultimately come to regret, because it
also wants to be a major supplier of oil and gas to China. With China already heavily
investing in the two most important Central Asian energy suppliers, Turkmenistan and
Kazakhstan, Russia may struggle to compete. Moscow has had agreements with Beijing to
build a gas pipeline into China since 2002, but the two sides have been haggling ever
since over the price of the gas supplies. Analysts say a deal may finally have been done -
on the condition that the gas comes from a field and pipeline that are exclusively for
Chinese use. Officials also hope the first oil pipeline between the two countries will be
completed by the end of this year. But some analysts
question whether Russia will have sufficient reserves to supply the gas pipeline, given
the expected decline in its production over the next 20 years and the lack of investment
in new fields since the collapse of the Soviet Union in 1991. 'It [the pipeline to China]
will have to tap reserves already going to Europe,' says Mikhail Kroutikhin. 'It is
not economic, but Prime Minister Putin wants it to be built.' Another project which Mr
Putin is determined should go ahead is Russia's South Stream gas pipeline, across the
Black Sea and into the heart of the European Union. The
rivalry between this and Europe's alternative plan - the Nabucco pipeline - is one of the
most intense in the Caspian Sea region. The Europeans, who want to break free from their growing dependence on Russian energy
supplies, desperately need supplies from the region to make the Nabucco pipeline viable.
And the Russians are trying to thwart this. One key battleground is Azerbaijan, which has yet to declare whether
it will feed Nabucco with its gas. Its decision is critical." |
"The financial crisis and the global recession had limited effect on
efforts to lower production costs for Canadian oil sands, companies including Statoil
ASA and Canadian Oil Sands Trust said. 'Both
operating expenditures and maintenance capital have been on a rising trend and when oil
prices accelerate, that trend accelerates along with it and we got a very good taste of
that in the last five years,' Marcel
Coutu, chief executive officer of Canadian
Oil Sands said today at an Oslo conference. 'When oil prices crash, those operating
costs unfortunately lag and it takes some time for them to come down.' Labor costs have
led an across-the-board increase, Coutu said in an interview. Weekly earnings in
Albertas oil and gas industry have climbed 50 percent from 2002 to about C$1,800
($1,700), according to the Canadian Association of Petroleum Products. For new projects,
the capital costs per daily barrel of oil have climbed to $35,000 from $12,000 to $15,000
at the start of the decade, Robert Skinner, senior vice president at Statoil said in an
interview. The Norwegian company estimates break-even
prices for projects using steam assisted gravity drainage technology at $65 to $75 a
barrel, Skinner said. Cost for new supply is at $60 to $80 a barrel, depending on whether
its from drilling or mining, Greg
Stringham, vice president for oil sands at the petroleum association, said at the
conference." |
"Controversial plans for the first coal-fired power station to be
built since the 1970s have been formally lodged. The
plant, at Hunterston in Ayrshire, would use experimental carbon capture storage (CCS)
technology, which removes carbon dioxide emissions
and stores them underground. The £3 billion proposal is the first of its kind in the UK
but faces strong opposition from local people and environmental groups, who argue that it
will damage local wildlife." |
"Inch by inch, Iraq is crawling out from beneath the rubble of a
warzone and building an energy colossus. Increasingly, too, there is help at hand to turn
its oil and gas resources into gold. A clutch of big oil multinationals has entered into
service contracts with the country to develop several huge oilfields, including Rumaila, a
monster that already delivers 1.1 million barrels per day, almost half of Iraqs
current output. BP is charged with raising the bar at Rumaila and by 2016 it expects
output to reach a plateau of 2.8 million bpd, a level greater than the present output of
every Opec state except Iran and Saudi Arabia. Others have joined the drilling frenzy.
Shell, ExxonMobil, Italys Eni and Statoil of Norway are working alongside
Russias Lukoil and Petronas, the Malaysian company, and this month CNOOC, the
Chinese state oil company, put its shoulders behind Iraqs oil reconstruction. The total potential is about 12
million bpd by 2016, equal to existing estimates of Saudi Arabia at maximum throttle. But Iraq is a huge headache for Opec, the oil cartel of which it is a
passive member. Iraq has not had an oil output quota since 1998 because of the sanctions
against Saddam Husseins regime. Its quota was almost equal to Iran, at 3.9 million
bpd, reflecting the rivalry of the two countries, but war and neglect took their toll on
Iraqs oil industry and output is now 2.4 million bpd. The question is how Opec will
bring Iraq back into the fold. Unless global demand for crude soars over the next five
years, big cuts in the output of Saudi Arabia and the other Gulf states will be needed to
accommodate it." |
"Britain is facing a £4bn black
hole in unavoidable nuclear decommissioning and waste costs, Chris Huhne, the energy and climate change
secretary disclosed tonight. The decommissioning costs over the next four years revealed
by officials to Huhne are so serious that he has already flagged the crisis up to the
cabinet.' The revelation places an unexpected burden
on his department's £3bn annual budget ahead of difficult spending negotiations this
summer. 'As you can imagine, this is a fairly existential problem. The costs are such that
my department is not so much the department of energy and climate change, as the
department of nuclear legacy and bits of other things,' Huhne told the Guardian. The
additional costs derive from slowly rising expenditure on nuclear decommissioning, and
falling income due to the closure of ageing power plants, Huhne said. Huhne disclosed that
in current financial year the Nuclear Decommissioning Authority's budget is expected to be
in balance.From 2011-12, the deficit suddenly rises to £850m, in 2012-13 the gap
increases further to £950m and then to £1.1bn in the two subsequent years. The black
hole is equivalent to wiping out one-sixth of the overall cuts in public spending
identified by the Treasury with such fanfare last week. But Huhne insisted: 'I do not
think it is possible for anyone responsibly to stand aside and say we are not going to
deal with it. We just have to, but what we are effectively paying for here is decades of
cheap nuclear electricity for which we have suddenly got a massive postdated bill.' The
revelation will also hand further ammunition to those who say a new generation of nuclear power stations in
Britain will end up being more expensive than the industry claims." |
"Some of the worlds biggest energy companies are stockpiling
the nuclear fuel used to power reactors as they try to capitalise on rock-bottom uranium
prices. An oversupply of nuclear fuel on international commodity markets has followed five
successive years of rapid growth in uranium ore production in Kazakhstan, which has nearly
quadrupled its output since 2004. Raw uranium prices have tumbled to around $40 per pound
almost one quarter of the levels of $140 in 2007. Ed Sterck, uranium analyst at
Bank of Montreal, said that the low price was encouraging nuclear power station operators
such as Exelon, of the United States, Germanys E.ON and EDF, of France, to boost
their stocks of nuclear fuel.... Nik Stanojevic, mining analyst at Brewin Dolphin, said
that prices had fallen sharply after output from
Kazakhstan increased. It has risen to 13,665 tonnes in 2009, up from 3,719 tonnes in 2004,
and the country now supplies about 27 per cent of the worlds total mined uranium
production 50,338 tonnes in 2009. About one third of the worlds total supply
of nuclear fuel comes from Russian nuclear weapons that have been decommissioned as part
of a disarmament agreement struck with the United States at the end of the Cold War. These
supplies are being gradually depleted and are expected to fall away steadily in the next
few years." |
"The fact that BP was drilling
for Macondo a tiny field under a mile of water containing less than 12 hours'
global consumption tells us all we need to know about the state of oil depletion. Deepwater production anything under more than 500 metres of sea
water, far too deep for divers to work should anything go wrong has quadrupled from
less than 2 million barrels per day (mb/d) in 2000 to 8 mb/d today, precisely because
onshore and shallow offshore supplies are running down. The
industry only drills at such extreme depths because there are very few alternatives
the Canadian tar sands and Iraq are equally unpalatable and it is a clear sign of
impending peak oil. Ironically one impact of the BP
spill, the US moratorium on deepwater drilling, is likely to hasten and worsen the effects
of the global production peak. One analyst forecasts the ban could deprive the world of an
additional one million barrels per day from 2016." |
"Ministers have ordered a review
of looming global shortages of resources, from fish and timber to water and precious metals, amid
mounting concern that the problem could hit every sector of the economy. The study has been commissioned following sharp rises in many commodity
prices on the world markets and recent riots in some countries over food
shortages. There is also evidence that some nations are stockpiling important materials,
buying up key producers and land and restricting exports in an attempt to protect their
own businesses from increasingly fierce global competition. Several research projects have
also warned of a pending crisis in natural resources, such as water and wildlife, which
have suffered dramatic losses due to over-use, pollution, habitat loss, and,
increasingly, changes caused by global warming. Professor Bob Watson, the chief scientist
for the Department for Food, Environment and Rural Affairs, the leading department in the
initiative, said every sector of the British economy was directly or indirectly vulnerable
to future shortages. These could be caused either by resources running out or becoming
harder to access because of geopolitical factors from war to tighter environmental
regulation on resources such as timber and palm oil the latter being found in an
estimated one in 10 products, from chocolate to cosmetics, sold in Britain." |
"Turkmenistan has launched work
on a new gas pipeline that will connect the hydrocarbon-rich Central Asian country with
western markets and decrease its reliance on Russia's delivery network.The pipeline --
dubbed East-West -- will stretch 620 miles (1,000 kilometers) from the Southern
Yolotan-Osman field near Afghanistan and carry up to 30 billion cubic meters of natural gas annually to the
Caspian Sea. President Gurbanguli Berdymukhamedov
said Monday that the $2 billion pipeline will give both economic and political clout to
the country and help secure global energy security after its scheduled completion in 2015.
The new Turkmen pipeline could become a crucial move
in Europe's drive to reduce its dependence on Russian gas." |
"... according to Nigerian academics, writers and environment groups,
oil companies have acted with such impunity and recklessness that much of the region has
been devastated by leaks. In fact, more oil is
spilled from the delta's network of terminals, pipes, pumping stations and oil platforms
every year than has been lost in the Gulf of Mexico, the site of a major ecological
catastrophe caused by oil that has poured from a leak triggered by the explosion that
wrecked BP's Deepwater Horizon rig last month. That disaster, which claimed the lives of 11 rig workers, has made
headlines round the world. By contrast, little information has emerged about the damage
inflicted on the Niger delta. Yet the destruction there provides us with a far more
accurate picture of the price we have to pay for drilling oil today." |
"A major oil pipeline between Canada and the U.S. seemed like a
pretty good idea five years ago. Crude oil prices were rising as global demand increased
dramatically. The entire oil market was stretched to near capacity. A proposal by
Calgary-based TransCanada to build a pipeline linking Canada's vast oil fields to the
Midwest seemed like the right play. Then Hurricane Katrina hit the Gulf Coast, crippling
more than 25 percent of America's crude oil production and roughly 15 percent of its
refining capacity. Suddenly, that pipeline idea skyrocketed to celebrity status among oil
producers. Within months of Katrina's wrath, TransCanada had locked up contracts for 83
percent of the pipeline's capacity for an average of 18 years. Today, the Keystone pipeline stretches 2,151 miles at a cost of
$5.2 billion, proving to be one of the longest and most expensive pipelines ever built in
North America. It starts at Alberta's Athabasca tar sands and passes through the St. Louis
area at the ConocoPhillips' Wood River refinery in Roxana. And the oil is expected to
begin flowing next month moving about a half-million barrels a day, enough to
supply about 2 percent of the country's daily demand.
'We're trying to link the free world's largest source of crude oil with the largest
refining market in the world and that's the U.S. market,' said TransCanada Vice
President Robert Jones, who heads the Keystone project. 'It's just a natural marriage.'
Just not exactly the best timing. Much has changed since the project broke ground and oil
approached $150 a barrel. The global economic slump slashed demand, and oil prices
plummeted. Energy firms focused more on renewable energy. And, most recently, the BP spill
has raised serious concerns over U.S. oil dependency and the environmental risks involved
in extracting and delivering it. 'The tar sands and the gulf spill are symptoms of the
same thing: We're running out of easy oil, and the oil industry is forced to go to extreme
measures to meet the need,' said Simon Dyer, oil sands program director with the Pembina
Institute, a Calgary-based sustainable energy think tank. 'There's a lot of recognition
that we need to move to a clean energy future. The oil sands is leading us in the opposite
direction. There's a real disconnect there.'" |
"Royal Dutch Shell, the energy
major, has almost doubled its reserves of shale gas with the $4.7bn (£3.2bn) acquisition
of East Resources. Shell is now the owner of three of the most attractive shale
gas prospects in North America in Texas, Canada and now the Marcellus shales in the
northeast US. US gas reserves have increased 10-fold since the discovery of shale gas over
the last few years. Now oil majors are rushing to buy shale fields, where gas can be
extracted from rock by fracturing the ground." |
"The amount of oil consumed in the world is unbelievable85
million barrels a day. And we are not making more of it. People throw around the term
'peak oil,' but that doesn't mean the system will run out of oil. It means the amount of
oil you're gaining by finding new oil fieldsand bringing them onstreamis equal
to the losses you're taking as other fields run down. The U.S. was the first country to
peak in 1970, but that was a seamless transition since the oil companies just brought in
more oil on tankers. Now the U.S. is importing about
67 percent of its oil. The business of peaking is now usual: There are 30 non-OPEC
countries with significant production. Thirteen of these have peaked or are about to peak,
and they contribute some 52 percent of the oil volume outside OPEC. World oil production
will peak sometime between 2015 and 2020. The plateau should last for three to five years.
The price will go up, since the supply isn't rising
and demand will be strong. That will scare people. Wall Street hasn't accepted yet that
the oil reserves are so limited." |
"Thanks to a drilling boom in
new fields extending from Texas to New York, natural gas has become as an environmentally
friendly competitor to wind. Big new discoveries in shale deposits have brought down the
price of natural gas by 60 percent from two years ago. Michael O'Sullivan of NextEra
Energy, Iowa's second-largest producer of wind power, told the American Wind Energy
Association meeting in Dallas this week: 'Our product is too expensive relative to other
options. Our competitive advantage has largely evaporated.' The sudden rise of natural gas is credited with throwing wind energy into
another of its periodic slowdowns. Iowa, with 3,670 megawatts of wind electricity
generation, trails only Texas among the 50 states in wind capacity. Iowa is seeing the
herky-jerky path of wind. The state has gained about 2,300 jobs making towers, turbines,
blades and gearboxes at plants in Cedar Rapids, Fort Madison, Newton and West
Branch." Natural gas takes breeze from wind energy's sails Des Moines Register, 27 May 2010 |
"The planned ITER fusion reactor
in France is supposed to replicate conditions inside the Sun to produce limitless clean
energy. But skyrocketing costs are putting the international project at risk. Now Germany's research minister has said Berlin will not write a blank
check for the technology.....Originally, the futuristic reactor was supposed to cost
around 5 billion ($6.15 billion). That was the figure given in 2006 when the
participating partners -- the European Union member states, China, India, Japan, Russia,
South Korea and the United States -- agreed to fund the project. The Europeans were
supposed to shoulder 40 percent of the costs, with the remaining partners taking on 9
percent each. But a recent estimate by the European Commission has revealed that the total
costs have already tripled to 15 billion, as a result of higher raw material prices
and new safety requirements, among other expenses." |
"The rising
costs of extracting oil are propping up New York futures for the years ahead, even as
prices sink for crude that will be delivered over the rest of this year. The futures contract closest to delivery on the New York
Mercantile Exchange tumbled 13 percent in the past three months to below $70 a barrel as
investors fled riskier assets and the December 2015 contract lost 5 percent. At the same
time December 2018 futures remain above $90 a barrel,
suggesting analysts are less pessimistic about the long term. The U.S. Labor
Departments index for oil- and gas-field machinery costs rose in April for the first
time in six months. 'The price is holding at decent levels' for delivery in later years,
said Paul
Tossetti, an analyst in Dallas with consultants PFC Energy. 'You need a certain level for all these high-priced resources that
are coming on-stream, deepwater Gulf of Mexico, deepwater Brazil and the Canadian oil
sands. Thats the dynamic part of the non-OPEC oil supply.' |
"Europes sovereign debt crisis is likely to translate into a
slowdown in global demand for oil this year and lower prices, says Francisco
Blanch, head of commodities research at Bank of America-Merrill Lynch." |
"The Royal Academy of
Engineering said that to convert the countries fleet of 30 million vehicles would increase
current demand by 16 per cent or an extra 10 gigawatts of power. With the 70 GW grid currently running at near full capacity that would
mean building the equivalent of six large nuclear power stations or 2,000 wind turbines to
meet demand. It would also mean that it will have to be controlled by a 'smart grid' of
millions of charging points in order to deal with increase and wild fluctuations in
demand. The findings came from the academy's latest report titled Electric Vehicles:
charged with potential which outlines what needs to be done if our cars are to go green.
The organisation said that in order to reduce our carbon footprint then the sources for
the National Grid will have to change to sustainable supplies. Professor Phil Blythe,
professor of intelligent transport systems at Newcastle University, said: 'It is do-able
but if we want to have electric transport you have to ensure that you have the overall
supply strategy in place.' Professor Roger Kemp of Lancaster University, chair of the
Electric Vehicles working group, said that unless we moved away from coal and gas fired
power stations then there would be no point. 'Swapping gas guzzlers for electric vehicles
will not solve our carbon emissions problem on its own,' said the professor of engineering
at Lancaster University. 'When most electricity in Britain is still generated by
burning gas and coal, the difference between an electric car and a small low emission
petrol or diesel car is negligible.' However the
report concluded that by converting to low emission power generation such as nuclear, wind
and water then it could be a great contributor to targets of reducing the country's carbon
footprint by 80 per cent by 2050. The report
believes that conversion to green cars will be gradual with many people preferring hybrid
cars at first until the electric infrastructure is in place." |
"Uranium supply will supposedly
grow by an average of 5% annually until 2015, but dropping thereafter as reserves are
exhausted. Uranium demand is projected to be growing
by an average of 4.4% per year during the next 20 years. The increase in demand is caused
mostly by China over the next two decades it will be the world leader in new
reactors building." |
"Cameco Corporation, the world's
largest producer of uranium, plans to double its production from the current 20 million
pounds to 40 million pounds by 2018. In addition to a plan to start operation of the Cigar
Lake uranium mine in Saskatchewan, Canada in mid-2013, the company aims to expand the
production capacity of mines in the United States and Kazakhstan in which it owns
interests. Cameco will also consider purchasing
interests in other new mines. Tim Gitzel, who took office as the new president of Cameco
on May 13, explained, 'Nuclear energy will generate a great demand for uranium in the
future. We will prepare ourselves to ensure a sufficient supply to meet the demand.' He
described the Cigar Lake mine development project, in which the company holds a 50% stake,
as 'the most important project in our production expansion plans.' Spelling out the
company's prospects for the Millennium uranium deposit situated also in the province of
Saskatchewan, Gitzel said, 'We will complete the feasibility study by the end of next
year, and the result is expected to be positive. We are hopeful of being able to start the
first production between 2017 and 2018.' Cameco is also planning to increase output from
existing mines it owns in the U.S. and Kazakhstan, and is considering acquiring interests
in other new mines, he said." |
"UK offshore wind, wave and
tidal power could generate an amount of electricity equivalent to a billion barrels of oil
per year, according to the first comprehensive valuation of the country's offshore energy
resource, published today. The Offshore
Valuation' report by the Offshore Valuation Group, an informal collaboration of government
and industry organisations, found that in order for the UK to become a net exporter of
offshore renewable electricity it would need to exploit just under a third of its total
offshore wind, wave and tidal resource by 2050. In doing so it would create 145,000 new
jobs, provide the Treasury with £28 billion in tax receipts and reduce carbon emissions
relative to 1990 levels by 30%, according to the group, which includes the UK, Scottish
and Welsh Governments, The Crown Estate and eight companies across the energy sector. The
net value of Scotland's seas alone, calculated as reaching 68GW by 2050, is estimated at
£14 billion in terms of electricity sales. The group, which also received funding from
the Committee on Climate Change, said that if offshore resources were developed still
further to tap their full practical potential, offshore renewables would allow the UK to
power itself six times over at current levels of demand....Tim Helweg-Larsen, director of
researchers Public Interest Research Centre (PIRC), a member of the group, said: 'To
discover that we own a resource with the potential to return the UK to being a net power
exporter, and on a sustainable basis, is genuinely exciting, and a wake-up call to those
in a position to foster the further development of this industry.'" |
"China has extended an $8
billion lunge into to Canada's oilsands - the rich, hugely controversial tar deposits that
are second only to Saudi Arabia in proven oil reserves and lie at the centre of a bitter
legal dispute over 1,600 dead ducks. The rights acquisition deal, led by China's sovereign
wealth fund, comes as rising resource prices, BP's catastrophic oil spill in the Gulf of
Mexico and a new Beijing-led era of 'great game' oil diplomacy has brought Canada's
bitumen deposits into global focus. Analysts believe
that BP's accident may be actively pushing up the notional value of the oilsands. The
resource once universally known as 'bad oil', analysts say, suddenly seems less
threatening than offshore drilling. But as the world follows China's lead and turns its
attention to the oilsands of Alberta, it will find the industry battling an old demon. The
extraction process is dirty and the big players involved stand accused of environmental
high-handedness. Syncrude, the world's largest producer of fuel from oilsands, is
defending itself against accusations that toxic waste from its plants killed a large
number of ducks that alighted on a tailings pond. The company's lawyers -
melodramatically, say environmentalists - have said that they face the choice of 'breaking
the law every hour of every day' or shutting down....Market interest in exploiting
oilsands - massive bitumen deposits from which oil products may be extracted - blows hot
and cold. Extracting fuels from the tar produces huge quantities of greenhouse gasses and
the process is viable only when the prevailing price of crude oil climbs above a
relatively high value. At present, post-crisis prices
of about $75 per barrel, some projects only barely make financial sense. BP, which is struggling to limit the environmental and reputational damage
of its vast spill in the Gulf of Mexico, is among a number of oil majors that have begun
to re-assess oil sands projects as crude prices have risen. It is in talks to secure the
product of a $2.5 billion oilsand project in Alberta and has opened talks on two other
deals this year. The Chinese sovereign wealth fund is also understood to be planning a
pipeline that would carry refined oilsand petroleum product to Canada's west coast, from
where it could easily be shipped to China. Environmental groups, which have long been
opposed to the exploitation of Canadian oilsands, have redoubled their protests since
recent BP's rig accident." |
"Massachusettsbased Cambridge
Energy Research Associates finds 2010 will mark the first time oilsands production will
account for the lion's share of U.S. imports of petroleum and refined products....Canada has long been a top oil supplier to its southern neighbour, but
2010 will mark the first time oilsands production will account for the lion's share of
U.S. imports of petroleum and refined products, according to the report prepared by
Massachusettsbased Cambridge Energy Research Associates. Oilsands could eventually account
for 20 to 36 per cent of U.S. supply by 2030, the report notes....Oil demand in the U.S.
peaked in 2005, but it will remain the world's largest consumer over the next two decades,
the report notes. That in turn will allow oilsands to assume a larger portion of the
country's energy mix. The oilsands would offset reduced supplies from traditional
suppliers like Venezuela, Mexico and Saudi Arabia....The
CERA report suggested the total 'wells-to-wheels' emissions from oilsands-derived crude
are about five to 15 per cent higher than the average of oils produced in the U.S., but said comparisons can be misleading. In addition to greenhouse
emissions, the report noted concerns with land reclamation and water use as potential
stumbling blocks to further development." |
"It has been nearly a month since the tragic events aboard BP's
drilling rig, Deepwater Horizon, which suffered a blowout, caught fire, and sank in the
Gulf of Mexico releasing prodigious amounts of oil into the sea. So far there has been
little damage to the coastline; however, this could change quickly as oil is still pouring
from the damaged well pipe and it could be months before the blowout is brought under
control. The possible damage to the environment ranges anywhere from minor, which is
doubtful, to wiping out the seafood and tourist industries along the Gulf coast for many
years....Yet another serious problem for the
prospects of future oil production is starting to emerge. The deepwater wells, on which we
are basing much of our energy future, may not be as productive as previously thought.
Until recently the poster child for deepwater oil production was BP's Thunderhorse
platform that, after years of delay, started producing in 2008 and was supposed to produce
a billion barrels of oil at the rate of 250,000 barrels a day (b/d). At first all
seemingly went well with production reaching 172,000 b/d in January of 2009, but then
production started falling rapidly to a low of 61,000 b/d last December. BP refuses to comment publicly on what is happening at Thunderhorse, but
outside observers are growing increasingly skeptical that the platform will ever produce
the planned billion barrels. At least 25 other deepwater projects are said to be facing
problems of falling production, raising the question of just how much oil these very
expensive deepwater projects will ever produce. Pressure for regulatory reforms is likely
to be based on just how much environmental and economic damage the Deepwater Horizon
blowout ultimately causes." |
The Barnett remains important as the only shale play that has been
developed to maturity. We believe that the Barnett largely dispels the belief that modern
shale production is a 'manufacturing process,' or that shales constitute 'gas factories.'
That belief is premised on the idea that shales have large cores that are uniform, that
each well is similar, and that over time wells get better. Our
data from the Barnett shows that all three of these premises are wrong. The core areas are
small, wells vary considerably even in close proximity, and over times wells have gotten
worse, not better. |
"...there is a much more
imminent and worrying tide affecting the oil price: the overwhelming ocean of public debt
becoming evident in Europes over-leveraged economies. According to the International
Energy Agency 'downside risks remain a clear and present danger' for the oil price,
despite a raft of analyst forecasts that it will hit $100 per barrel this year. Warning of
a growing supply amid the threat of European economic troubles, the Paris-based body cut
its projections for this year. Worldwide oil demand
is projected at 86.4m barrels a day this year, up 2pc from last year, but this is still
220,000 barrels a day below the previous IEA estimate. Over the past two weeks, oil prices
have been dropping on general worries about the global economy, tracking the depression in
the equity markets..... It seems that the tumbling
oil price is another sign that investors believe it is possible that a contagious debt
crisis is enveloping European nations in a spreading slick. Any return to lower oil prices
will signal even worse news from the energy industry, compounding political pressure
following the Gulf of Mexico spill. Even if the oil price slumps, the US administration is
likely to remain nervous about cosying up to the agents of an environmental disaster. But
the IEA warned world leaders this week not to over-react to the BP crisis by restricting
drilling at a time when prices are dropping. 'A knee-jerk reaction by regulators, banning
new offshore licensing altogether, as some are proposing, risks pushing companies to
ever-more precarious locations in search of hydrocarbons,' it said. 'The law of unintended
consequences may apply.' In other words, this could create the very same conditions of
asset neglect, under- investment in exploration and depressed production that leads to oil
price spikes and further volatility." |
"Price pressures in Britain are
intensifying with annual inflation expected to rise further above the 2pc target when the
latest figures are published on Tuesday. Economists predict that higher petrol prices
helped to drive the consumer prices index (CPI)
the official measure of inflation up to 3.5pc in April, from 3.4pc in March.
The Office for National Statistics data would prompt the first letter of explanation from
Mervyn King, Bank of England governor, to George Osborne, the new Chancellor, outlining
why CPI was more than one percentage point above target. The retail prices index, which
includes housing costs, is expected to have risen even more sharply to 4.9pc from 4.4pc.
Consumer price inflation was above 3pc throughout the first quarter, and the Bank was
forced to concede last week that it had underestimated the short-term threat of inflation
in previous forecasts. It has updated its forecasts to reflect above-target inflation
throughout 2010." |
"The oil leak in the Gulf of Mexico and resulting uncertainty about
future offshore supply won't likely send oil prices soaring anytime soon, finds a new
report from CIBC World Markets Inc. CIBC's latest Global Positioning Strategy report also
notes that even a successful containment of Europe's debt crisis is unlikely to lift oil
prices much higher. Instead, several countering forces are 'at play' in the oil market
that should see prices stay below triple-digit territory over the next 18 months,
averaging US$80 a barrel this year and US$85 in 2011. The forecast [is] by Peter Buchanan,
senior economist.... Mr. Buchanan ... notes that oil prices are cyclical and that there
has historically been four to five years on average between price peaks. 'That would
suggest 2012 or 2013 as the next high water mark for prices, although the exact timing
obviously depends on the pace of demand and capacity growth,' he says. 'Surging demand historically has amplified price shocks, leading
to recession or slower growth, which in turn has begat lower prices. Those have helped to
grease the wheels of economic recovery,' adds Mr.
Buchanan." |
"Over the past decade, a wave of
drilling around the world has uncovered giant supplies of natural gas in shale rock. By
some estimates, there's 1,000 trillion cubic feet recoverable in North America
aloneenough to supply the nation's natural-gas needs for the next 45 years. Europe
may have nearly 200 trillion cubic feet of its own. We've always known the potential of
shale; we just didn't have the technology to get to it at a low enough cost. Now new
techniques have driven down the price tagand set the stage for shale gas to become
what will be the game-changing resource of the decade. I have been studying the energy
markets for 30 years, and I am convinced that shale gas will revolutionize the
industryand change the worldin the coming decades. It will prevent the rise of
any new cartels. It will alter geopolitics. And it will slow the transition to renewable
energy. To understand why, you have to consider that even before the shale discoveries,
natural gas was destined to play a big role in our future. As environmental concerns have
grown, nations have leaned more heavily on the fuel, which gives off just half the carbon
dioxide of coal. But the rise of gas power seemed likely to doom the world's consumers to
a repeat of OPEC, with gas producers like Russia, Iran and Venezuela coming together in a
cartel and dictating terms to the rest of the world. The shale boom also is likely to
upend the economics of renewable energy. It may be a
lot harder to persuade people to adopt green power that needs heavy subsidies when there's
a cheap, plentiful fuel out there that's a lot cleaner than coal, even if gas isn't as
politically popular as wind or solar. But that's not the end of the story: I also believe
this offers a tremendous new longer-term opportunity for alternative fuels. Since there's
no longer an urgent need to make them competitive immediately through subsidies, since we
can use natural gas now, we can pour that money into R&Dso renewables will be
ready to compete without lots of help when shale supplies run low, decades from now.... When it comes to environmental risks, critics do have a point:
They say drilling for shale gas runs a risk to ground water, even though shale is
generally found thousands of feet below the water table. If a well casing fails, they
argue, drilling fluids can seep into aquifers. They're overplaying the danger of such a
failure. For drilling on land, where most shale-gas deposits are, the casings have been
around for decades with a good track record. But water pollution can occur if drilling
fluids are disposed of improperly. So, regulations and enforcement must be tightened to
ensure safety. More rules will raise costsbut, given the abundance of supply,
producers can likely absorb the hit. Already, some are moving to nontoxic drilling fluids,
even without imposed bans..... One of the biggest
effects of the shale boom will be to give Western and Chinese consumers fuel supplies
close to homethus scuttling a potential natural-gas cartel. Remember: Prior to the discovery of shale gas, huge declines were
expected in domestic production in U.S., Canada and the North Sea. That meant an
increasing reliance on foreign suppliesat a time when natural gas was becoming more
important as a source of energy.... Before the shale discoveries, experts expected liquefied natural
gas, or LNG, to account for half of the international gas trade by 2025, up from 5% in the
1990s. With the shale boom, that share will be more like one-third.... In the U.S., the impact of shale gas and deep-water drilling is
already apparent. Import terminals for LNG sit virtually empty, and the prospects that the
U.S. will become even more dependent on foreign imports are receding. Also, soaring shale-gas production in the U.S. has meant that
cargoes of LNG from Qatar and elsewhere are going to European buyers, easing their
dependence on Russia. So, Russia has had to accept far lower prices from formerly captive
customers, slashing prices to Ukraine by 30%, for instance. But the political fallout from
shale gas will do a lot more than stifle natural-gas cartels. It will throw world politics
for a loopputting some longtime troublemakers in their place and possibly bringing
some rivals into the Western fold.... Shale-gas
resources are believed to extend into countries such as Poland, Romania, Sweden, Austria,
Germanyand Ukraine. Once European shale gas
comes, the Kremlin will be hard-pressed to use its energy exports as a political lever. I
would also argue that greater shale-gas production in Europe will make it harder for Iran
to profit from exporting natural gas. Iran is currently hampered by Western sanctions
against investment in its energy sector, so by the time it can get its natural gas ready
for export, the marketing window to Europe will likely be closed by the availability of
inexpensive shale gas.... Shale-gas development could also mean big changes for China. The
need for energy imports has taken China to problematic nations such as Iran, Sudan and
Burma, making it harder for the West to forge global policies to address the problems
those countries create. But with newly accessible natural gas available at home, China
could well turn away from importsand the hot spots that produce them. The less
vulnerable China is to imported oil and gas, the more likely it would be to support
sanctions or other measures against petro-states with human-rights problems or aggressive
agendas. Moreover, the less Beijing worries about U.S. control of sea lanes, the easier it
will be for the U.S. and China to build trust. So, domestic shale gas for China may help
integrate Beijing into a Pax Americana global system.
With natural gas cheap and abundant, the prospects for renewable energy will change just
as drastically. I have been a big believer that
renewable energy was about to see its time. Prior to the shale-gas revolution, I thought
rising hydrocarbon prices would propel renewables and nuclear power into the marketplace
easilyalbeit with a little shove from a carbon tax or a cap-and-trade system. But
the shale discoveries complicate the issue, making it harder for wind, solar and biomass
energy, as well as nuclear, to compete on economic grounds. Subsidies that made renewables competitive with shale gas would get more
expensive, as would loan guarantees and incentives for new nuclear plants. Shale gas also
hurts the energy-independence argument for renewables: Shale gas is domestic, just like
wind and solar, so we won't be shipping those dollars to the Middle East." |
"The Obama White House is taking a tough line on big oil. At least,
that is how it appeared as pictures of the first oil-soaked birds in the Gulf of Mexico
filled TV screens. Ken Salazar, the US Interior Secretary, said he would 'keep the boot on
the neck of BP' over the Deepwater Horizon oil spill. But he needs to be careful. If he
treads too hard, his other boot will land on the neck of Joe Plumber and every American
who objects to $3 gasoline. Until the market mayhem
over Greece took the shine off the oil price, American petrol prices were hovering at that
critical $3 a gallon number, which causes blue-collar rage. Oil analysts are seeing demand
destruction, the point at which the price begins to alter motorist behaviour. Between
January and March, consumption of road fuel began to decline much as it did in 2008 when
American eyeballs were popping at $4 gallons. When prices are too high, Americans drive
fewer miles, not helpful when the world is on a cliff-edge of debt, insolvency and
possibly a new recession....America imports about 12
million barrels a day, 57 per cent of US demand for liquid fuels, according to the US
Energy Information Administration. There was a time in the mid-1980s when American oil
companies were pumping nine million daily barrels but the output is in decline, reaching a
nadir of 4.2 million a day in 2005. BPs big discoveries in Alaska helped to rescue
American necks from Opec boots in the 1980s. At one stage, the Prudhoe Bay oilfields on
Alaskas north shore were producing close to two million daily barrels but this has
dwindled to 600,000. Meanwhile, the old prospects onshore in Texas and Oklahoma are waning
rapidly. There is an alternative to explosions and oil-soaked birds. Canada provides a
fifth of Americas oil imports, but Canadian crude is controversial oil sands
bitumen, a poisoned environmental soup of blighted landscapes, tainted rivers and carbon
emissions. Who else might supply? One option is the other Gulf: there is President
Bushs Iraqi battleground, where American multinationals are trying to develop
oilfields. Beyond that is the oily carrot of political settlement with Iran....Who cares
to guess the price in dollars per gallon if the Deepwater Horizon and its sister ships had
not drilled the Gulf into a pin cushion? Its all horribly dangerous and
Americas safety record is poor. Every year lives are lost offshore in the Gulf,
since 2001 more than 50 deaths, perhaps a reflection of the gung-ho mentality of American
oil workers or just sloppy enforcement of rules. Still, the big issue for Mr Obama is not
safety but energy." |
"Energy companies in the UK, as the latest ENDS report shows, are now beginning to deploy a
technology that will greatly increase available reserves. Government figures suggest that underground coal gasification
injecting oxygen into coal seams and extracting the hydrogen and methane they
release can boost the UK's land-based coal reserves 70-fold; and it opens up even
more under the seabed. There are vast untapped reserves of other fossil fuels
bitumen, oil shale, methane clathrates that energy companies will turn to if the
price is right." |
"Even as the first oil from BP's stricken Macondo well in the US Gulf
of Mexico washed ashore this weekend, and as the clamour mounts, experts claim the slick
will be nothing like as catastrophic as forecast for either the environment or the
oil industry. However, some analysts warn the accident could still seriously hurt global
oil supply later this decade....The rising backlash against deepwater drilling
anything over 500 meters, far too deep for divers to work should anything go wrong
is unlikely to damage the industry as much as the noise on Capitol Hill would suggest,
because it is too vital to the oil supply. According to analysts Douglas Westwood,
deepwater oil production has soared from under two million barrels per day in 2000 to
eight mb/d in 2010, almost 10 per cent of global consumption, and must rise further as
onshore and shallow offshore production declines. 'They can't ban deepwater because the
industry has nowhere else to go', says chairman John Westwood. Last year, 500 deepwater
wells were drilled, costing up to $100m each, and Douglas Westwood predicts $167bn will be
spent on deepwater development to 2014. Deepwater drilling has provided substantial
discoveries recently, such as BP's Tiber field off Brazil, thought to contain some three
billion barrels of oil. But such is the industry's desperation it will also chase tiny
fields at depths unheard of a decade ago. The Macondo field probably contains less than 50
million barrels an oilfield minnow. A BP spokesman admitted "the easy stuff is
done first. We're now on to the stuff that is technically, politically or economically
difficult.' If a ban is unlikely, deepwater drilling will be far more tightly regulated,
as happened after the Piper Alpha disaster in 1988. Then British North Sea production
slumped for several years as safety equipment and procedures were upgraded, before
recovering. The difference is that many forecasters
now predict a global oil supply crunch by the middle of this decade, so any pause in US
deepwater drilling could have magnified consequences. The analysts Newedge USA say if the
moratorium on new drilling, announced by President Barack Obama after the accident drags
on, oil supply could suffer a shortfall of up to one mb/d by 2016 to 2018. Another analyst
said: 'They wouldn't be able to offset depletion with new drilling'. With forecasters
predicting peak oil in 2015, this could only make matters worse." |
"Oil fell $2 a barrel on Friday and posted its biggest weekly loss in
almost a year and a half following the sharp sell-off on Wall Street and on worries that the euro zone's debt crisis
will derail the global economic recovery. Better-than-expected U.S. jobs data for April
failed to calm fears in oil markets that the Greek's debt crisis could spread to other
euro-zone countries. U.S. crude oil futures fell for a fourth day in a row and settled
down $2, or 2.6 percent, at $75.11 a barrel, after falling further to $74.51, its lowest
since February 16." |
"For Tony Hayward, it was a moment to savour. Two years after his
appointment as chief executive, his decision to push BP to the outer limits of deepwater
oil exploration had borne fruit in spectacular style. The discovery last September
of the giant Tiber field in the Gulf of Mexico was the kind of achievement that makes
oilmen quiver. Containing in excess of 4 billion barrels of oil more than all the
proven reserves left in the North Sea it was found after months of drilling beneath
a mile of water and five miles of rock, salt and sand under the seabed, smashing industry
records as the deepest well drilled. At the time, Tiber seemed the ultimate symbol of
BPs prowess, and Mr Hayward seemed to have reversed the woes that had plagued his
predecessor, Lord Browne of Madingley. But just eight months later, the state-of-the-art
rig that made the discovery, Deepwater Horizon, lay wrecked on the seabed a watery
tomb for 11 workers and the source of a torrent of raw crude that threatens an
environmental catastrophe. It is an accident that has left Mr Haywards reputation in
the balance and raised questions about the wisdom of his aggressive push into deep
water....As supplies of easy oil the kind that
gushes from vast fields in the Middle East have become scarce, so the industry has
pressed further into more challenging environments. It has developed new technology to
produce oil in the Arctic, from fields rich in poison gas in Central Asia and from the
bitumen-rich sands of northern Canada. Few motorists consider where the hydrocarbon
molecules that power their cars actually come from but it is a journey that every
year becomes longer and more tortuous. For BP, which
led the way in the North Sea in the 1960s and 1970s, the push to produce oil from ever
deeper and more treacherous ocean depths had become a driving obsession. It was in the
Gulf of Mexico and off Angola and Egypt, that Mr Hayward felt BP could excel and trump its
rivals." BPs name is stained by its barrels of hubris London Times, 7 May 2010 |
"Iraq on Thursday invited international energy firms to submit bids
in a September 1 auction of three gas fields, in a third major tender aimed at developing
the war-torn state's oil and gas sectors. Oil
Minister Hussein al-Shahristani also announced that a long-running row between Iraq and
the autonomous northern region of Kurdistan over oil revenues had been resolved, in a
further boost to the government's energy sector. The
planned gas field auction follows the signing of contracts last year with foreign firms to
develop 10 oil fields across Iraq, aimed at raising crude output, currently 2.4 million
barrels per day, to between 10 to 12 million bpd.... Iraq produces a negligible quantity
of gas compared with the size of its reserves, and currently flares off most of what it
produces as it lacks the capture technology needed to use the gas for electricity
production. 'The reason behind offering these fields
is Iraq's increasing need to feed the electricity stations, because Iraq is suffering from
a chronic lack of electricity,' Shahristani added.
The three gas fields on offer contain total estimated reserves of 11.2 trillion cubic feet
(317 billion cubic metres). The biggest field, Akkaz, which is 50 kilometres (30 miles)
long and 18 kilometres wide, is west of Baghdad in Anbar province and contains 5.6 tcf.
The second field, Mansuriyah, is located in Diyala province northeast of Baghdad, and has
reserves of 4.5 tcf." |
"The U.S. needs energy lots and lots of energy and
37.1% of it is currently supplied by oil. As the population expands and the policy
decisions and technological innovations needed to make the switch to green, renewable
energy sources lag, thirst for the stuff is only going to grow. Critics have long lamented that when it comes to energy policy,
9/11 was an opportunity for the country to have an honest debate about the choices it
needs to make if it's ever going to break its addiction to oil. 'We need to address the underlying
issue,' says Lisa Margonelli, director of the New America Foundation's Energy Policy
Initiative, 'and that's our dependence on oil.'
Having a national conversation now an adult one is the only way
forward." |
"China vowed to use an 'iron
hand' and an extra $12 billion to reach efficiency targets after revealing
energy intensity rose 3.2% in the first quarter compared to last year, reversing a steady decline in the amount of energy used to produce each
dollar of gross domestic product. The increase in the amount of power Chinas economy
is using relative to how much its producing is a major setback in the push to cut
energy intensity by 20% by the end of 2010 from 2006. Up until last year, China was doing
pretty well, lowering the relative use of energy by 14.38%, according to a statement by
Premier Wen Jiabao." |
"Britain's most polluting power
stations due for closure in 2014 are likely to be granted a reprieve by the European
Union, giving the UK another four years to tackle its looming energy shortage. Experts had warned that taking this back-up generation off the system
before nuclear power plants are built would risk an 'energy gap' and potential black-outs.
But furious lobbying by UK energy companies forced the EU to back down on its directive on
Tuesday, with MEPs on the body's environmental committee voting to recommend that the
power stations another four years of life. The EU parliament will take a final decision in
July, but is likely to follow the committee's guidance. One regulatory source said British
lobbyists had put by far the most pressure on the EU to re-think its rules, warning that
the UK would simply have to flout the law if no changes were made. Ian Parrett, an energy
consultant at Inenco, welcomed the decision, saying that the previous timescale 'simply
wasn't realistic and threatened the UK's energy security. But he warned against
complacency about the UK's energy needs, with around £200bn of investment in new
generation and networks needed by 2020. 'A postponement will at least provide breathing
time,' he said. 'But even with the delay, any new Government will face energy as one of
its top priorities to avoid a looming energy gap casting a shadow over any economic
recovery'." |
"Will the unfolding environmental catastrophe from the ruptured
Deepwater Horizon well in the Gulf of Mexico become deep-water oils equivalent to
the Three Mile Island [nuclear] accident? ....President Barack Obama has suspended his
recent decision to open new offshore areas for oil development and has declared a
moratorium on new drilling. You can imagine what the regulatory environment will be like
after three months of the spill, just as you can imagine what those satellite photos of
the Gulf of Mexico will look like. But what you might not imagine are the implications for
world oil supply. Conventional oil supply has not
grown since 2005. Without a steady stream of oil from fields below the ocean floor, not
only cant world oil production grow, it cant even stand still, since we rely
on oil from new deep-water fields to replace the bulk of the four million barrels per day
of global production we lose every year to depletion (out of a total of roughly 86 million
barrels per day). If the Deepwater Horizon disaster
is the offshore energy industrys Three Mile Island, then not only has world oil
production already peaked, but it will also very soon start to shrink." |
"China has been self-sufficient
in coal until recently (importing some coal but exporting just as much or more), but
supply problems over the last couple of years have led to burgeoning imports and shrinking
exports. If Chinese coal mines can no longer cover the nation's demand, why not just
expand imports still further to make up the difference? China will import 150 million tons
(Mt) of coal this year, twice what it imported last year. That's not much, if we think of
it as a percentage of the nation's total coal consumption. But that 150 Mt represents over
60 percent of the total exports of Australia, the world's top coal exporter. This means if
Chinese imports double again next yearnot an unrealistic scenarioChina will
need to import more coal than Australia can currently provide. One more doubling of import demand and China will be wanting to import 600
million tons per year, about the total amount of coal exported by all exporting nations
last year. Can Australia expand its coal production? Yes, it can and no doubt will.
Likewise Indonesia and South Africa. But will any or
all of these countries be able to grow exports fast enough to keep up with Chinese demand? Again, expansion will be limited by infrastructure
requirementsships, ports, trains, and rails. It takes time to build all of
these." |
"It is as if the Orange
Revolution never happened. In a breathless few weeks since he came to power, President
Yanukovych has undone almost all of the pro-Western policies of his predecessor, Viktor
Yushchenko. The pro-Russian leader has been
love-bombed by President Medvedev and Vladimir Putin, the Prime Minister, as the Kremlin
has taken advantage of American indifference and European Union ineptitude to restore its
dominance in Kiev. Mr Yanukovych had ditched aspirations to join Nato before handing
Russias Black Sea Fleet a 30-year extension on its lease that leaves it secure in
Sevastopol until 2047. As opposition wrath filled Ukraines parliament with smoke and
smashed eggs, he was at the Council of Europe in Strasbourg renouncing another key
Yushchenko policy. He declared that the famine that killed millions of Ukrainians in the
1930s was not genocide perpetrated by the Soviet Union but a 'shared tragedy' with Russia,
Belarus and Kazakhstan at the hands of Joseph Stalin. Ukraine depends entirely on Russia
for its gas, which it will now get at a discount, and Mr Putin has proposed a merger of
their nuclear industries into a shared company as well as joint ventures in shipbuilding
and aircraft construction. This is music to the ears of supporters of Mr Yanukovychs
Party of Regions in his Russian-speaking strongholds in the east and south of Ukraine. But
it confirms the worst fears of nationalists in western Ukraine, who voted overwhelmingly
against him in Februarys presidential election. Opposition moves against Mr
Yanukovychs policies threaten to deepen a geographical divide that could mean that
western Ukraine rejects him as its president. The
EUs vaunted new foreign policy 'reach' is proving illusory in the rush by individual
member states to cut energy deals with Mr Putin. He
told a press conference with the Italian Prime Minister Silvio Berlusconi on Monday that
Italian companies had received $2 billion in contracts to build the Nord Stream gas pipeline
from Russia to Germany, while Frances EDF would have a 20 per cent stake in the South Stream project that
will carry energy to Europe under the Black Sea. Both
bypass Ukraines pipelines, crushing earnings from transit fees and making the
country even more dependent on Moscow." |
"For Big Oil the timing could not have been worse. Less than a month
ago President Obama announced a significant expansion of offshore oil drilling in the US.
His decision to open up new parts of the Gulf of Mexico, the East Coast and Alaskas
Beaufort and Chukchi seas was met with delight by the supermajors companies such as
BP, Chevron, ExxonMobil, Total and Shell that had been arguing that new technology and
safer processes had mainly done away with the threat of major oil spills such as the 1989
Exxon Valdez disaster. At a stroke, however, last
weeks deadly accident on board the Deepwater Horizon rig has reopened questions
about safety while galvanising opposition from environmentalists. Although Mr Obama is unlikely to reverse the decision on offshore
drilling much hinges on how quickly BP, which had leased the rig, and Transocean, its
owner, can contain the spill." |
"One of the Federal Government's top infrastructure advisers is
warning of an oil crunch that could send the global economy spiralling back toward
recession. Curtin University Professor Peter Newman sits on the Government's
Infrastructure Australia Council and says peak oil - when demand outstrips dwindling
supply - has already hit but that the global downturn has kept prices low. Professor
Newman even blames oil for causing the global recession in the first place, and he is not
alone.... Professor Newman says the world reached peak oil in 2008 when it spiked at about
$140 a barrel and sent petrol prices soaring. 'Peak oil did happen I believe in 2008 and
it didn't happen because some oil exporting country had a revolution or something. It just
happened because we couldn't produce enough to meet the demand,' he said. Professor Newman largely blames the global financial crisis on oil
prices. 'Subprime mortgages were mostly out on the urban fringes miles away from work.
People had to drive and when the price of fuel tripled in American cities they couldn't
pay their mortgages,' he said. As the global economy
has strengthened in recent months so has the oil price, and Professor Newman says it does
not bode well for recovery. 'As the demand increases again the supply crunch will happen
and the price will go up,' he said." |
"Saudi Arabias
long-standing status as a swing producer of crude oil could be drawing to a close
according to the head of national oil company Saudi Aramco. Global oil exports from Saudi
Arabia, the world's largest oil producer alongside Russia, will start to wane in the
coming years as domestic demand surges and spare capacity drops, warned Khalid al-Falih,
chief executive officer of Saudi Aramco in a speech published on the company's website. Domestic energy demand is expected to increase by almost 250%, from about
3.4 million barrels per day (b/d) in 2009 to about 8.3 million b/d by 2028, which will
eventually affect the country's ability to export oil, he said. 'Along with China and
India, we do expect Saudi Arabia to be one of the largest sources of global oil demand,'
says Amrita Sen, oil analyst at Barclays Capital.'"And given Saudi's importance in
the oil market as the swing producer, in the longer term, this can impact their ability to
control the market at the margin. However, this is unlikely to have a significant impact
this year, given the substantial spare capacity it is sitting on, though that buffer could
get eroded sooner rather than later in the coming few years.'" |
"John Watson, chief executive of
Chevron, is refusing to join rival international oil majors in the rush for US shale gas,
warning that the 'price tag is too high' to justify the investments required. Mr Watson, who has only been in the top job at the USs
second-biggest oil company for three months, is confident his decision not to follow the
pack into US shale gas is the right one. 'We havent seen the returns,' he told the
Financial Times. The Chevron chiefs comments come against a backdrop of US gas
producers struggling with low prices brought on by oversupply. Many in the industry
believe governments worldwide, under pressure to lower their dependence on carbon fuels,
will increasingly turn to natural gas until the technology is available to enable
renewables to produce a substantial portion of electricity demand. Shale gas is about 30
per cent less carbon intensive than oil and 50 per cent less than coal." |
"Global demand for gas is set to rise constantly over the next 20
years amid plentiful reserves and its increasing use to produce power, a senior executive
at Royal Dutch Shell (RDSa.L) said on
Thursday. 'We see global gas demand growing by at
least 2 percent a year over some decades, so by 2030 we look at gas demand hitting 4.5
trillion cubic meters of gas per year,' Malcom Brinded told an oil conference. 'That's 50
percent up from today's level.' Brinded was equally
bullish on prospects for liquefied natural gas, which he saw growing 'a lot faster' than
overall gas demand, driven by China's economic growth and higher demand in Europe and
countries such as Malaysia, Thailand, Singapore, Pakistan, Kuwait, the United Arab
Emirates and Bahrain. 'Despite the difficult market we've had in the last year in the
recession, we... expect global LNG demand to double this decade,' said Brinded, who
expects China's gas demand to 'double or treble' by 2020 from around 100 billion cubic
meters today. This boom in LNG demand will need to be matched by a similarly rapid
increase in supply, which is currently growing by at least 6 to 8 percent a year, he said.
Brinded said he was confident this was possible. 'There is enough gas around, this is
increasingly clear' he said, citing data from the International Energy Agency showing
recoverable gas reserves worth 250 years of current production. Some $5 trillion (3.24 trillion pounds) would be needed over the
next 20 years -- or $20 billion per year -- to extract this gas. 'These figures are
staggering,' he said. 'The gas is there, it is going
to take investments and it needs a lot of new
technology... This is truly an energy revolution.'
'People are looking for certainty around three key issues: availability, affordability and
environmental acceptability of gas. I think gas wins on all points.'" |
"The world's second-largest oilfield contains more oil than
previously estimated, Kuwait's state news agency reported a top official as saying on
Thursday. OPEC-member Kuwait is the world's fourth-largest oil exporter, and sits on
around 8 percent of global reserves. The Greater Burgan area is second only to Saudi
Arabia's Ghawar oilfield in size, according to U.S. government data. 'Oil reserves in the
Burgan field are much greater than what had been circulated,' agency KUNA said, citing
Sheikh Ahmad al-Fahad al-Sabah, the Gulf Arab state's deputy prime minister for economic
affairs. Sheikh Ahmad gave no details on how much oil
the field could hold." |
"Oil use will probably peak in emerging markets by early next decade,
a senior adviser to Saudi Arabia's oil minister said on Thursday in a further sign the
concept of peak demand has crept into the industry mainstream. Interest in the view oil
demand may soon reach a high point and then fall back has grown following a drop in global
oil use last year caused by the economic crisis, as well as efforts to combat climate
change and use fuel more efficiently. 'I think that peak demand will come before peak of
supply,' said Ibrahim Al-Muhanna, advisor to Saudi Oil Minister Ali al-Naimi, in answer to
questions at a conference in Paris.... Muhammed al-Sabban, head of the Saudi delegation to
U.N. talks on climate change, said in January the possibility oil demand might peak this
decade was a 'serious problem' for Saudi Arabia. The kingdom depends on oil income for
nearly 90 percent of state revenue and exports make up 60 percent of its gross domestic
product....The IEA has, however, not put a timeframe on when oil demand might peak in
emerging markets and forecasts economies such as China and India will drive global
increases in demand for the foreseeable future. A
six-year oil price rally that ended in 2008 had led to increased interest in the theory
world oil supply may be nearing its peak as easily accessible reserves dwindle. That issue
faded as economic slowdown eroded demand, resulting in abundant supply. One leading
proponent of the peak supply theory stands by his view conventional oil supply has peaked,
but has also turned his attention to peak prices and peak demand. 'We're sort of at peak
demand right now,' retired petroleum geologist Colin Campbell, who has long been
associated with the belief the world's oil supplies are dwindling, told Reuters earlier
this month." |
"The European Union, including the UK, has set a goal of obtaining 10
per cent of its road fuels from renewable sources by 2020. But a new report commissioned in Brussels found some biofuels can lead
to four times more carbon dioxide polluting the atmosphere than equivalent fossil fuels.
Biofuels have already been criticised for causing food shortages in countries where land
for rice or wheat has been displaced by fields of soy beans or sugarcane for fuel. Environmental campaigners say the latest report proves the renewable
energy source is also bad for climate change, since carbon dioxide is a greenhouse gas
that causes global warming. The report for the European Commission, released under Freedom
of Information rules, looked into the 'indirect emissions' from biofuels caused by land
use change. The worse example is soy beans in America. Because the land that
used to grow soy beans for animal feed is now being used for biofuels, it means that more soy beans must be grown
in the rainforests of Brazil to
make up for the loss in the domestic market. Soybeans grown in America therefore have an
indirect carbon footprint of 340kg of CO2 per gigajoule, compared to just 85kg for
conventional diesel or gasoline. Biodiesel from
European rapeseed has an indirect carbon footprint of 150kg of CO2 per gigajoule, while
bioethanol from European sugar beet is calculated at 100kg both much higher than
conventional diesel because of indirect use of land in other countries to replace the food
crops that are no longer grown in Europe. By contrast, imports of bioethanol from Latin
American sugar cane and palm oil from southeast Asia have relatively low indirect
emissions at 82kg and 73kg per gigajoule respectively. But these biofuels have high direct
emissions because although no land for food is being displaced, rainforest it being cut
down to grow the crops in the first place." |
"For most people the waste they eject from their bodies is something
they don't bother thinking about once they've shut the toilet door behind them. But there
are some who think human waste could be a major part of a stable gas supply.... The UK
produces 1.73 million tonnes of sewage sludge every year, which the Department for
Environment, Food and Rural Affairs says could potentially be used to produce biogas....
And, this summer British Gas, in partnership with Thames Water and Scotia Gas Networks,
plan to be the first to start piping biomethane, derived from faecal matter, into the
national network and straight back to the homes of 130 customers in Didcot in Oxfordshire.
Anaerobic digesters - carefully managed bacteria - are already used to turn faeces into a
means of generating electricity, but the additional plant that British Gas will install
will clean up the spare biogas and turn it into biomethane which can be used on household
hobs and in gas central heating....A 2009
paper by the National Grid said with the 'right government policies in place,
renewable gas could meet up to 50% of the UK's residential demand for gas' but admitted
this would not be easy. It said that by 2020, a more
feasible projection could see sewage and waste water providing up to 270 million cubic
metres (0.28%) of the estimated 97,000 million cubic metres total demand for gas. In an
ideal scenario, by that same date, it could provide 629 million cubic metres (0.65%) of
the total UK gas demand." |
"Henry Groppe was a lonely voice when he forecast the right oil
price. Hes now going against the grain on another fuel.... When it comes to
predicting the price of oil, Henry Groppe has made a long career out of zigging when
others were zagging. So why should he be any different when talking about natural gas? Mr. Groppe the octogenarian patriarch of Texas petroleum
industry analysts Groppe Long & Littell doesn't buy the prevailing wisdom that
New York Mercantile Exchange natural gas prices are dead in the water, stuck around $4 to
$5 (U.S.) per million British thermal units even as demand recovers, awash in supplies and
with much more on the way. No, his analysis (and more than 50 years of experience) tells
him that gas inventories are about to get a lot tighter, that new supplies are overstated,
and that prices are headed north of $8 by the end of summer. Why is he so sure he's got it
right and most everyone else has it wrong? Because, he contends, shale gas the
previously unattainable source of vast gas supplies that has been unlocked by new
high-tech horizontal drilling advancements is not the holy grail it's been cracked
up to be. Not even close." |
"...the U.S. Joint Forces
command recently issued a Joint Operating Environment report warning that surplus oil
production capacity could vanish as soon as 2012, leading to serious oil shortages by
2015. Dire consequences, they predict, could follow quickly. What they are essentially
predicting is the onset of 'peak oil'the point at which the demand for oil will
always be higher than the actual supply. While it
will be hard to predict exactly what will happen in the face of such a drastic sea change
in the worlds energy supply, the report says 'it surely would reduce the prospects
for growth in both the developing and developed worlds.' It may cause fragile states to
become failing states and failing states to collapse, while also causing major problems
for overpopulated oil-guzzling states such as China and India. Here in the U.S., the
possibility of at least a difficult recession is very strong. The report notes, 'One
should not forget that the Great Depression spawned a number of totalitarian regimes that
sought economic prosperity for their nations by ruthless conquest.' If this were one study, it would be scary enough, but the
reports conclusion aligns with a peak oil study from Kuwait as
well as an estimate done by billionaire Richard Bransons energy
taskforce." |
"Rising oil prices pose a grave threat to global economic recovery, according to some
economists. Thus it was sobering this week to read that the US military has warned the
world faces a 'severe energy crunch' and looming oil shortages. According to a Joint Operating Environment report from the US Joint Forces Command, 'a
severe energy crunch is inevitable without a massive expansion of production and refining
capacity'. .... More ominously, the military predicts
a 'Peak Oil' scenario - where
demand outstrips the world's supply capacity - as soon as 2012. 'By 2012, surplus oil
production capacity could entirely disappear, and as early as 2015, the shortfall in
output could reach nearly 10 million barrels a day.' Current oil demand is about 86
million barrels a day. The repercussions of Peak Oil have potentially grave consequences
both economically and militarily. On the military
front the USFC notes that already Chinese 'civilians' are in the Sudan guarding oil
pipelines to protect supply, and that this 'could portend a future in which other states
intervene in Africa to protect scarce resources. The implications for future conflict are
ominous, if energy supplies cannot keep up with demand and should states see the need to
militarily secure dwindling energy resources,' the report says. 'While it is difficult to
predict precisely what economic, political and strategic effects such a shortfall might
produce, it surely would reduce the prospects for growth in the developing and developed
worlds. 'Such an economic slowdown would exacerbate other unresolved tensions, push
fragile and failing states further down the path toward collapse, and perhaps have serious
economic impact on both China and India. At best, it would lead to periods of harsh
economic adjustment." |
"Demand for oil will hit an all-time high this year, the
International Energy Agency has forecast. The agency also warned that increased global
consumption, fuelled by a near-20 per cent leap in demand in China, could choke off
economic recovery in the UK and continental Europe. The
energy adviser estimated that oil demand worldwide would hit 86.6 million barrels of oil
per day this year 2 per cent higher than last year and an increase of 1.67 million
barrels a day. Demand is expected to just exceed the
86.5 million barrels a day consumed in 2007, the last full year before the onset of the
global economic crisis. The forecast is an upward revision by 100,000 barrels a day
compared with the agencys estimates last month. The agency said that resurgent
demand showed the two-speed nature of the global economic recovery from recession and
highlighted the effect on the oil price, which hit an 18-month high of more than $87 a
barrel last week. The agency said in its report: 'Ultimately things might turn messy for
producers if $80-$100 per barrel is merely seen as the new $60-$80, stunting economic
recovery while prompting resurgent non-oil and non-Opec supply investment. A recovery in
oil demand is moving apace. The return of economic growth and hence oil demand growth is
fuelling the increase.' Higher prices allied with
still-tight credit conditions 'could stall OECD economic recovery' the agency said, adding that recent higher prices could be 'sustained, raising anew
concerns about the impact on the global economy'. It continued: 'Underlying concerns in
some quarters that oil markets are overheated remain, setting the stage for a sudden
reversal of fortune.' |
"Oil major BP Plc (BP.L) on Thursday
easily beat off challenges to a Canadian oil sands project and to its executive pay
policy. Europe's largest oil company by market value
said 94 percent of shareholders who voted in advance of the annual meeting rejected a call
to review its Sunrise project to squeeze crude from Alberta's bitumen-drenched soil. A
group of shareholders including California Public Employees' Retirement System (CalPERS),
ethical investor Co-operative Investments and a raft of environmental groups tabled the
resolution." |
"The International Energy Agency
bolstered its 2010 supply outlook for countries outside the Organization of Petroleum
Exporting Countries as production rose in Canada, the U.K. and Russia. Non-OPEC producers,
accounting for about 60 percent of the worlds supplies, will raise output by 600,000
barrels per day this year to average 52 million barrels a day, the IEA said in its monthly market report today.
Thats 220,000 barrels a day more than estimated last month. The agency left its
forecast for global oil demand in 2010 little changed, 30,000 barrels a day higher than in
last months report. 'Non-OPEC prospects are looking brighter,' the Paris- based
adviser to 28 countries said in the report. 'Upstream investment decisions made before
both 2008s price surge and slump are starting to bear fruit. New upstream projects
are coming online and ramping-up production.' |
"Saudi Arabia has emerged as the
second-biggest source of global oil demand growth after China. Higher oil consumption in
the Arab worlds biggest economy is forecast to account for 11.7 per cent of global
expansion this year, the International Energy Agency (IEA) said. While that is still well
behind Chinas projected 26 per cent share of worldwide growth in oil consumption
this year, the rising demand for crude and oil products in Saudi Arabia is outstripping
increases in the major developing economies of Russia, Brazil and India.... Riyadh had publicly acknowledged for the first time that direct crude
burning allowed the kingdom to increase light crude production while sticking to its OPEC
commitment to curb exports, meet stricter environmental standards and reduce or eliminate
fuel oil imports during summer, when demand for electricity peaks in the Gulf. Previously,
Saudi Arabia had been importing significant volumes of heavy fuel oil to burn in power
plants. That led to more carbon emissions and air pollution than if it had burnt Arabian
light crude..... Globally, the IEA said oil demand
might set a record this year, wiping out the big contraction of the previous two years
thanks to economies in Asia, the Middle East and North America recovering faster than
expected. It projects oil demand this year of 86.6
million barrels per day (bpd), up 30,000 bpd from last months forecast. The previous
annual peak was in 2007, when the world consumed 86.51 million bpd of oil. Oil demand
shrank to 86.21 million bpd in 2008 and 84.93 million bpd last year, for a total 1.8 per
cent decline, according to IEA data. That was the first contraction over two successive
years since the 1980s." |
"The US military has warned that surplus
oil
production capacity could disappear within two years and there could be serious shortages
by 2015 with a significant economic and political impact. The energy crisis outlined in a
Joint Operating Environment report from the US Joint Forces Command, comes as the price of
petrol in Britain reaches record levels and the cost of crude is predicted to soon top
$100 a barrel. 'By 2012, surplus oil production capacity could entirely disappear, and as
early as 2015, the shortfall in output could reach nearly 10 million barrels per day,'
says the report, which has a foreword by a senior commander, General James N Mattis. It adds: 'While it is difficult to predict precisely what economic,
political, and strategic effects such a shortfall might produce, it surely would reduce
the prospects for growth in both the developing and developed worlds. Such an economic
slowdown would exacerbate other unresolved tensions, push fragile and failing states
further down the path toward collapse, and perhaps have serious economic impact on both China
and India.' The US military says its views
cannot be taken as US government policy but admits they are meant to provide the Joint
Forces with 'an intellectual foundation upon which we will construct the concept to guide
out future force developments.' The warning is the latest in a series from around the
world that has turned peak oil the moment when demand exceeds supply from a
distant threat to a more immediate risk....But there are signs that the US Department of
Energy might also be changing its stance on peak oil. In
a recent interview with French newspaper, Le Monde, Glen Sweetnam, main oil adviser to the
Obama administration, admitted that 'a chance exists that we may experience a decline' of
world liquid fuels production between 2011 and 2015 if the investment was not forthcoming. Lionel Badal, a post-graduate student at Kings College, London, who has
been researching peak oil theories, said the review by the American military moves the
debate on. 'It's surprising to see that the US Army, unlike the US Department of Energy,
publicly warns of major oil shortages in the near-term. Now it could be interesting to
know on which study the information is based on,' he said....The Joint Operating
Environment report paints a bleak picture of what can happen on occasions when there is
serious economic upheaval. "One should not forget that the Great Depression spawned a
number of totalitarian regimes that sought economic prosperity for their nations by
ruthless conquest,' it points out." |
"The Gas Exporting Countries Forum (GECF), made up of nations
controlling 70 per cent of the worlds gas reserves, has dropped an Algerian proposal
to cut gas exports, thereby proving it is no 'Gas OPEC'. Instead, ministers from its
11-member states resolved yesterday to push for gas prices to be linked to market prices
for crude. 'All ministers agreed and supported that we continue our efforts to achieve
indexing gas to oil,' the Russian energy minister, Sergei Schmatko, said on Monday after
the groups latest meeting in Oran, Algeria. The Algerian energy minister, Chakib
Khelil, who headed the meeting, said he hoped the decision would 'mark a new era' for the
organisation. Hopes are one thing, results are another; and Mr Khelil, who may already be
frustrated by the groups lack of enthusiasm for his proposal to limit gas supplies,
is likely to be disappointed. Gas producers worldwide
have been dismayed by a roughly 50 per cent drop in the past two years in gas prices on
spot markets that are becoming increasingly international as improved technology for
liquefying gas, as well as larger tankers, has made it economical to transport the fuel
across oceans. The price decline has been blamed on the recession, which lowered global
gas demand, combined with an unexpected surge in US gas output just as other gas producers
were ramping up export capacity. The US emerged last
year as the worlds biggest gas producer, narrowly eclipsing Russia, although
unlike Russia it still consumes more gas than it pumps. The increased output was
due to a parallel round of technological improvements in a field so esoteric that it went
unnoticed by most market watchers. Little by little, the drilling engineers and fluid
mechanics who dabble in the down-and-dirty details of drilling-mud composition achieved
breakthroughs in 'hydraulic fracturing'. Through their efforts, it became possible to use
specifically formulated mixtures of pressurised fluids containing suspended solids to
crack open gas-bearing open rock formations that were reluctant to give up their payloads,
and keep the fissures propped open so that the gas could flow. In 2008, an enterprising analyst at the US Energy Information
Administration noticed that gas production in the country, which had been trending
downwards for a decade, was suddenly on the rise. Producers were tapping previously
uneconomic onshore shale gas deposits. Fortuitously, several of those not only held
abundant quantities of gas but were also close to the surface and to major US cities. The genie of abundant, affordable gas supplies was out of the bottle, at
least in North America. That ruined most gas exporters expectations that the US
would become a significant market for liquefied natural gas (LNG), and put the economics
of capital intensive gas liquefaction projects in jeopardy." |
"Construction of the
controversial Nord Stream pipeline from Russia to western Europe under the Baltic Sea has
been officially launched. Gazprom holds 51% of Nord
Stream, which will run from the Russian port of Vyborg to Germany's Greifswald. Russian
President Dmitry Medvedev and German Chancellor Angela Merkel attended the ceremony near
Vyborg. The project was given the go-ahead only in February amid fears that the pipeline
could damage the Baltic Sea. President Medvedev said at the ceremony that the pipeline
'for the first time - which may be one of its main achievements - will ensure direct
supplies of Russian gas to western Europe, bypassing transit territories'. The existing
pipelines run from Russia to EU countries via Ukraine, Belarus and Moldova. Russia
provides up to 30% of the gas consumed in Europe, and many European countries have been
keen to secure alternative energy supplies....Apart from the Nord Stream, Russia has been
planning another pipeline, the South Stream, which will run from southern Russia to
Bulgaria under the Black Sea. Meanwhile, Turkey, Romania, Bulgaria, Hungary and Austria
last July signed an agreement to construct the long-planned 3,300km Nabucco natural gas
pipeline. It is expected to pump up to 31bn cubic metres of gas annually from the Caspian
and the Middle East across Turkey and into Europe." |
"A collection of influential
international investors have added their support to a shareholder rebellion over BP's
plans to invest in the controversial Canadian oil sands. Pension funds from the US and Australia say they will back a resolution
at BP's annual general meeting next week that calls for the oil group to publish a report
on the financial and environmental risks involved in developing oil sands. Jack Ehnes,
chief executive of CalStrs, said: 'The environmental risks associated with oil sands
development comes with long-term financial risk for the CalStrs portfolio.' The investors
that have committed to the resolution hold stakes of less than 0.5pc in BP, but CalStrs
and CalPers are among the top ten largest pension funds in the world and their support is
a blow to BP. Oil sands, or tar sands as they are also know, are controversial because
extracting the oil requires significant amounts of energy giving off more carbon
dioxide and costing more than conventional methods, as well as potentially scarring the
landscape. BP does not have any oil sands production at present but expects to approve the
development of its Sunrise site in Canada later this year. The $10bn (£6.6bn) venture is
shared with US group Husky and covers an area in Alberta roughly the size of
England." |
"Camecos McArthur River mine, in Canada, was, in 2008, the
biggest single uranium mine in the world, with an output of 6 383 t of uranium, or 15% of
world mine production. The Ranger mine, in Australia, owned 68% by Rio Tinto, came second
at 4 527 t, or 10%, with Namibias Rössing (69%-owned by Rio Tinto) third at 3 449
t, or 8%, followed closely by BHP Billitons Olympic Dam mine, in Australia, at 3 344
t, or also about 8%. The WNA forecasts world uranium demand at 74 000 t by 2015, and
states that most of this will have to come directly from mines. In 2007, the worlds
known recoverable (reasonably assured and inferred) resources of uranium
(assuming a uranium price of $130/kg) amounted to 5 469 000 t. Of this total, 1 243 000 t
was in Australia (23% of the total), 817 000 t in Kazakhstan (15%), 546 000 t in Russia
(10%), 435 000 t in South Africa (8%), 423 000 t in Canada (8%), 342 000 t in the US (6%),
278 000 t in Brazil (5%), 275 000 t in Namibia (also 5%) and 274 000 t in Niger (5% as
well). It should be noted that the current long-term contract price for uranium is about
$132/kg ($60/lb), while the spot price is in the $88/kg ($40/lb) to $99/kg ($45/lb) range.
However, there was relatively little exploration for
uranium, worldwide, between 1985 and 2003. (The Chernobyl disaster was in 1986). The
restarting of exploration soon brought results: in just the two years, 2005 and 2006,
global uranium resources were increased by 15%. Moreover,
large parts of the world have not yet been explored for uranium. The Brazilian Ministry of
Mines and Energy points out that only 25% of that country has so far been prospected for
the energy metal. Yet, that limited exploration is still enough to rank Brazil seventh in
the world in terms of uranium resources. New uranium exploration and mining projects are
reportedly currently taking place, or planned, in 90 countries." |
"Are we heading for another oil price shock? I ask the question
because the price of a litre of unleaded petrol at the UK pumps has today reached a new
all time high, marginally surpassing the previous record set in July 2008. Back then, the
price of crude had reached a bubble inspired record of $147 a barrel. Then came the crash,
and the price collapsed, but never did it fall back to the sort of level that
traditionally would have been associated with such a severe recession, and it has been
rising steadily now for the last year. Today it stands at around $86 a barrel. What makes
the position in Britain feel much worse is the weakness of the pound. Oil is priced in
dollars, so when converted into sterling, the price of a barrel is not so far off what it
was back at the 2008 peak. The Bank of England may have to adjust its inflation forecasts,
and therefore its approach to monetary policy, accordingly. Thats just what the
policymakers dont want to do right now. They want to keep policy loose for as long
as possible to underpin the recovery. Yet even in the US, prices at the pumps have been
rising steeply....everyone thinks it was the shock of
the Lehman collapse that really did the mischief and no doubt this is partly true. But if
you look at the charts tracking consumer and business confidence, they were falling off a
cliff from about a month before Lehmans went down, and one of the prime reasons for
it was high gasolene prices. Gas prices are a much bigger driver of consumer behaviour in
the US than almost anywhere else, for the obvious reason that people drive everywhere.
American consumers took one look at rocketing gas prices and decided to stop spending en
masse. Tim Geithner, the US Treasury Secretary,
expressed confidence earlier this week that the US recovery was moving into
self-sustaining territory. If petrol prices continue to rise like this, he may have to eat
his words." |
"One of the factoids trotted out from time to time by proponents of
nuclear power is that conventional coal-burning power stations release more radioactivity
into the environment than nuclear stations do. The reason is that the ash left over when
coal is burned contains radioactive elements, notably uranium and thorium. Turn that logic
on its head and it suggests that such ash is worth investigating as a source of nuclear
fuel. And that is exactly what Sparton Resources, a firm based in Toronto, is doing. It
has signed a deal with the China National Nuclear Corporation (CNNC), the authority that
runs the countrys nuclear-power stations, to recover uranium from coal ash at a site
in Lincang, in Yunnan province. Uranium is usually extracted from ore that contains 1,000
or more parts per million (ppm) of the element. The
Lincang coal ash holds much less, about 300ppm. That said, it does not need to be
minedwhich brings costs down. Sparton says it can extract a kilogram of uranium for
$77 or less. Uraniums spot price is now near $90 a kilo. That is not a huge margin, but it is a profit nonetheless. To extract the
uranium, Sparton adds sulphuric and hydrochloric acids to the ash, along with water, to
make a slurry. With some sorts of ash, nitric acid is also used. The acids dissolve the
uranium, and various other things, leaching them from the ash. The trick is to get the
dissolved uranium out of the resulting solution....China is developing ash-mining for
reasons of energy security more than economics, according to Wang Hongfang, a marketing
manager at CNNC. The country wants to get uranium from 'every possible channel', Mr Wang
says. These include stripping it out of the tailings from gold and copper mines, and also
from phosphoric acid produced during the manufacture of fertiliser. Nor is CNNC alone in
this aspiration. NUKEM, a German-American company that enriches and sells nuclear fuel,
hopes soon to begin 'mining' fertiliser in Florida. Some
people are even turning to seawater as a source of uranium, in an eerie recapitulation of Fritz Habers attempt to pay off
Germanys first-world-war debts by extracting gold from the ocean. Though seawater
contains only three parts per billion of uranium, mostly in the form of uranyl
tricarbonate, the element can be sucked out of it by ion exchange....Several
organisations, including Japans Atomic Energy Agency and the Bhabha Atomic Research
Centre in India, are attempting to do so. Their methods include the use of strips of
ion-exchanging plastic, braided with polystyrene to toughen them up. These are placed in
wire cages and anchored in a current of seawater. After a month or two, the plastic is
removed and soaked in acid to dissolve the uranyl tricarbonate. The solution is then
treated to precipitate uranium oxide. At the moment, this process costs more
than ten times as much as conventional mining, but some countries might regard
that as a small price to pay for security of supply. Perish the thought that the supply is
for anything other than providing fuel for civilian nuclear-power stations." |
"The economic shock of global recession has led a prime exponent of
the theory conventional oil output has peaked to shift his view of the consequences, but
he still thinks the world has to go green. Retired petroleum geologist Colin Campbell, who
worked for major oil companies as well as smaller firms, has long been associated with the
belief the world's oil supplies are dwindling. He does not waver from that and dismisses
the argument of the so-called optimists that technology will manage to keep eking out more
and more oil to keep pace with rising demand. What
has changed is his opinion of the price impact and implications for fuel consumption after
the spike of July 2008 to nearly $150 a barrel was followed by world economic recession, a
deep drop in fuel use and a crash in oil futures to just above $30 in December 2008. 'I have changed my point of view about future prices,' said Campbell, who
used to think the peak in conventional oil production, which he believes happened in 2005,
would lead to a relentless price surge. Instead, the
record rally led to a peak in demand in the developed world. 'Peak oil drives prices up in the first place. It has its own mechanism.
We're sort of at peak demand right now,' Campbell told Reuters from his home in the
village of Ballydehob, West Cork. 'I think presently the price limit is about $100.' For
those who have painted alarming pictures of civil unrest as the world economy is forced to
move away from conventional fuel and pay high prices for it in the interim, an inbuilt
price mechanism to limit demand and move the world to other forms of energy should be a
good thing. 'We have no alternative but to go green,' Campbell said. But he does not think
reduced demand is enough to offset the gravity of peaking supply. He still sees a
possibility of social anger as millions are forced to change their lifestyles in a
too-sudden structural shift from economic growth driven by cheap conventional fuel." |
"Oil hit an 18-month high of $86.70 a barrel in New York yesterday,
adding to expectations that petrol prices will today pass the record levels of the summer
of 2008. Fadel Gheil, an energy analyst at Oppenheimer & Co, thought prices could hit
$100 in the second quarter on the back of positive economic data such as car sales
figures. However, he said that such levels were not sustainable. He thought the 'real'
price for crude should be about $60 per barrel. 'Demand
will never return to 2007 levels,' he said, not
least because of restrictions on carbon emissions. 'The market is being driven by
financial players. The same speculators that pushed prices up to $150 [in mid-2008] will
keep pushing the envelope until they reach a point at which they all jump.'
Yesterdays increase was driven by better-than-expected US unemployment figures that
were released on Friday, when markets were closed. The momentum continued with the release
of statistics indicating an unexpected rise in home sales and a surge in activity in US
service industries, suggesting that the recovery was no longer confined to the
manufacturing sector." |
"American technology to produce shale gas is unleashing a scramble
for drilling rights in Poland, where experts believe vast reserves of unconventional gas
exist that could help to weaken Russias grip on Europes energy supplies.
ConocoPhillips is poised to launch Polands first shale gas drilling programme next
month near Gdansk on the Baltic coast. Two other American oil groups Exxon-Mobil
and Marathon and Talisman Energy, of Canada, are set to follow. The technology has
transformed Americas energy industry and driven gas prices to their lowest level in
years. Wood Mackenzie, the oil and gas research group, estimates that there could be as
much as 48 trillion cubic feet (1,36 trillion cubic metres) of unconventional gas
stretching across northern and central Poland. The gas, which does not lie in conventional
reservoirs but inside tight rock formations, has become accessible only recently through
the use of new hydraulic fracturing technology developed in the United States. If confirmed, Wood Mackenzies estimate would boost the
European Unions proven reserves of natural gas, which stand at 101 trillion cubic
feet, by 47 per cent and be enough to make Poland, which imports 72 per cent of its gas,
self-sufficient for the foreseeable future....
Poland consumes about 14 billion cubic metres of gas per year and has been heavily
dependent on Russian imports. Mr Fanning said that the shale gas in Poland was of high
quality and relatively shallow. It is similar to gas found in the Montney shale deposits
in British Columbia and Alberta, Canada. He said that the licence areas were also thinly
populated an advantage, because shale gas
production involves the drilling of dozens of wells across a relatively small area. Water
and sand are pumped in at high pressure to fracture rocks and create reservoirs from which
the gas can be extracted.... Some have been sceptical that unconventional gas production will
take off as quickly in Europe as it has in America, where output has grown fourfold since
1990 to more than 50 per cent of total production. One reason is a shortage of land-based
drilling rigs in Europe. The number of rigs in the
US stands at 949, according to figures from Baker Hughes, an oil services company based in
Houston. In Europe it is thought there are about 100 rigs. European Union gas demand is
expected to rise by 2 per cent this year to 554.1 billion cubic metres, with domestic
output meeting about half of that total, according to Wood Mackenzie. Russia supplies
about 25 per cent of the EUs gas needs." Dash for Polands gas could end Russian stranglehold London Times, 5 April 2010 |
"BP is lobbying on Capitol Hill against a
federal US environmental agency being given jurisdiction over the use of a controversial
method of extracting gas from shale deposits, ahead of an important meeting this week. The
London-based oil company wants decisions on drilling techniques such as hydraulic
fracturing which uses high-pressure liquids to force fissures to be taken at
state level, rather than being left to the Environmental Protection Agency (EPA), whose
specialist committee meets on Wednesday to discuss its concerns. BP is also opposed to the
public disclosure of the chemicals used in fracturing, on the basis that the information
is commercially sensitive something that will anger environmentalists, who are
highly suspicious of the process." |
"Large shareholders will be
pitted against each other this week in a row over oil
giant BP's involvement with tar sands in a
battle that is set to dominate this year's round of company annual meetings. A special
resolution has been filed by 143 shareholders for BP's annual meeting on 15 April,
demanding the company provide a full report by next year about the risks of its planned tar
sands development in Canada. The Local Authority
Pension Fund Forum (LAPFF) has sparked conflict in the normally torpid world of
institutional investors by calling on the 52 schemes it advises to vote with BP's
management, saying talks with the company suggested its approach to oil sands was
'well-grounded'. But the Merseyside Pension Fund, which holds the deputy chair position of
the LAPFF and is one of the largest in the UK, has decided to abstain, as has the London
Borough of Camden Fund. The Environment Agency Pension Fund, also a member of the LAPFF,
has said it supports the campaigners. International investors including some large
Australian pension funds, the Swiss Ethos Foundation and dozens of large pension funds and
ethical fund managers in the US are expected to come out in support. Mercer Investment
Consulting, one of the world's leading pension fund advisers, has taken the unusual step
of writing to 120 big investors asking how they intend to vote at the BP and Shell
AGMs." |
"In a coup that achieves
something President Clinton promised but never delivered, President Obama has forced the
big three US carmakers, and their unions, to accept tough mileage rules for cars and SUVs.
The rules will cut emissions from vehicles by more than a third over the next four years. Whether the new rules end Americas love affair with huge cars
remains to be seen. But they are being introduced at a time when SUV sales are at a
fraction of their peak level five years ago. Their demise coincides with the
countrys first mass-produced 'plug-in' electric car, which finally rolled off a
Michigan production line this week. From 2016, new cars and SUVs will have to deliver an
average of 35.5 miles per gallon (42.6 miles per British gallon), comparable for the first
time with European and Japanese requirements. SUV
mileage under the new regime is expected to average 28.8mpg (34.5mpg in Britain), or
nearly three times that of the Hummer H1 that Arnold Schwarzenegger once drove into Times
Square in New York to begin the vehicles transition from armoured personnel carrier
into celebrity runabout. The new rules end a
notorious loophole in US law by which SUVs were exempt from emissions standards that
applied to cars. This made them so much more profitable that at the peak of the sport
utility boom, a single Ford plant was generating up to $15 million (£9.8 million) a day
in pre-tax profits.....General Motors new management has famously 'bet the company'
on the Chevy Volt, an electric super-mini with a small petrol engine designed only to
recharge its batteries on long journeys. Its 40-mile range on batteries alone means that
commuters living less than 20 miles from work would almost never have to fill their tank.
GM has high hopes, despite its price tag of $40,000 before federal tax rebates. Its main
competitor at the New York International Auto Show is the allbattery Nissan Leaf, which
will cost $32,000 with a range of 100 miles and no petrol-powered back-up. US motorists
have shown repeatedly that their affection for big cars rebounds as petrol prices fall,
but the new regulations reflect a long-term trend. On average, Ford sold 412,000 Explorer
SUVs each year from 1995 to 2003. By 2008 sales had slumped to 78,000. GM has sold the
Hummer brand to a Chinese rival and SUV sales fell overall by 52 per cent last year alone.
The new standards are based on a 2007 Supreme Court Ruling that reclassified carbon
dioxide as a pollutant. They will be enforced by the Environmental Protection Agency,
whether Congress approves or not." |
"Only hours after President Obama opened up vast tracts of
Americas coastline to exploration, Royal Dutch Shell said yesterday that it plans to
start drilling for oil in the Arctic Sea, north of Alaska, within weeks. However, Shell
said it had received a government permit yesterday allowing it to drill in Chukchi, the sea between northwest Alaska and northeastern Siberia. It is
believed to hold 15 billion barrels of oil and 76 trillion cu ft of gas, according to US government figures. Shell cautioned that an appeal could
still be made against the permit within 30 days. The group said it was waiting for a final
permit for the Beaufort Sea, which is also thought to be rich in oil. Mr Odum said that
Shell was 'absolutely' interested in bidding for new exploration licences in the eastern
Gulf of Mexico, which had previously been off-limits. He said: 'We have made discoveries
right up to the area where leasing had been stopped. We know a lot about that trend and
think those discoveries will continue. Its a very good fit for us.' He said that the
opening of large parts of the American East Coast to oil exploration presented big
opportunities but that the impact would be long-term. Years of seismic investigations
would be necessary before drilling or production would begin. Mr
Odum was speaking as Shell announced the start-up of its Perdido floating production
facility in the Gulf of Mexico, producing 100,000 barrels a day. It is the worlds
deepest offshore production platform and stands in water as deep as five Empire State
Buildings. The decision to open up new areas of the
American coastline to oil and gas development is part of a calculated political move by
the Obama Administration to win Republican support for proposed climate change
legislation. The decision has upset environmental groups, but was welcomed yesterday by
other oil companies....Under Mr Obamas proposals, oil companies will not be able to
drill on the West Coast or New England, but will be able to explore off the Atlantic Coast
from Delaware to Florida and 125 miles beyond Floridas shore in the eastern Gulf of
Mexico. The plans also permit development in Alaska, but not in the sensitive Bristol Bay
area, which includes Alaskas richest fishing grounds. The
Gulf of Mexico is thought to contain up to 40 billion barrels of oil and up to 200
trillion cu ft of natural gas, according to the Minerals Management Service. As much as 63
billion barrels of oil and 294 trillion cu ft of natural gas could lie within eight leases
in the Arctic and Atlantic oceans set to be awarded between 2012 and 2017." |
"President Obama took a gamble with the environment and his political
base yesterday, opening up 167 million acres (67 million hectares) of coastal waters to
oil drilling, in an attempt to limit Americas dependence on foreign energy and to
win Republican backing for a stalled climate change Bill. In a reversal of policies that
have protected American shorelines since the Exxon Valdez disaster in 1989, Mr Obama paved
the way for a new energy rush off the US Atlantic and Gulf coasts by allowing exploratory
drilling for trillions of cubic feet of natural gas and oil reserves that could exceed
eight billion barrels. Speaking at Andrews Air Force
Base in front of an F16 fighter modified to fly on biomass jet fuel, Mr Obama presented his plan as part of a broad shift to clean energy by
an economy that consumes a fifth of the worlds oil. He concluded: 'The bottom line
is this: given our energy needs, in order to sustain economic growth, produce jobs and
keep our businesses competitive, were going to need to harness traditional sources
of fuel.' The spectacle of a Democratic President conceding a long-running battle to the
oil and gas industry was condemned by some environmentalists as an echo of Sarah
Palins 'drill, baby, drill' slogan from the 2008 campaign trail but welcomed
as brilliant politics by others who see a deal with the energy lobby as vital for progress
towards climate change legislation. 'This is the best-timed policy announcement this
President has yet accomplished,' Paul Bledsoe, of the National Commission on Energy
Policy, said. 'At a time of rising oil prices and on the heels of healthcare, he has
triangulated the Republicans on energy security. Its very difficult for them now to
say with a straight face that his energy policies lack balance.' Under the proposals vast
areas of ocean off the coasts of Alabama, Florida and eastern states from Delaware to
Georgia will be opened to exploration by the sale of drilling leases starting next year.
The Pacific Coast from Canada to Mexico will remain off-limits, but 130 million acres of
Alaskan waters will be studied to see if the potential economic benefit of drilling
outweighs the ecological risk.... Known oil reserves
in the newly opened areas are modest: fields under the East Coasts outer continental
shelf and the single largest new parcel of the Gulf of Mexico would provide barely four
years supply proof that yesterdays announcement was more about politics
than long-term energy supply." |
"Experts attribute much of the recent rise in prices to flows of
speculative money into oil markets. These bets are fueled by investor expectations that
the U.S. and global economies are poised to return to growth and thus spark increased use
of oil. Strong growth in China supports the narrative of rising oil consumption and
tightening supplies....While there are signs of U.S. economic recovery, such as a slight
uptick in consumption and strong manufacturing data, there are plenty of ho-hum signs too,
including dismal construction spending and continued high unemployment....On the last day
of July, oil traded at $67.50 a barrel and gasoline sold at a nationwide average of $2.52
a gallon for regular unleaded. On Thursday, oil prices settled at $84.87 on the New York
Mercantile Exchange, and regular unleaded gasoline averaged $2.80 a gallon and more than
$3 on the West Coast, according to the AAA.... What's
different about today's price run-up from two or three years ago is that oil is now in
ample supply.... Perhaps the only argument that would justify rising prices is that global
consumption is expected to grow by 1.6 million bpd to 86.6 million bpd this year,
according to the Paris-based International Energy Agency. Even so, there's 6 million bpd
of oil that's shut-in, a technical way of saying that recoverable oil is being left in the
ground by the world's oil producers.... The
Organization of Petroleum Exporting Countries signaled this week its concerns about rising
prices by not calling for hard enforcement of production quotas by its members. That
suggested the cartel will tolerate an open-spigot policy by its 12 members as needed to
stabilize prices." |
"Iraq's current 'highly
ambitious plans' to expand oil production are unlikely to be fully realized given
political, security, operational and infrastructure challenges, according to a new report,
Fields of Dreams: The Great Iraqi Oil Rush -- Its Potential, Challenges, and Limits by IHS
Cambridge Energy Research Associates (IHS CERA). Iraq currently plans to expand production
to as much as 12 million barrels per day (bpd) in the next six to seven years. Achieving
levels around half that in the next decade would be more likely and would still constitute
'a significant expansion,' the report emphasizes.
IHS CERA's current outlook for Iraq is 4.3 mbd in 2015 and 6.5 mbd in 2020 -- still big
growth numbers. The report points out that Iraq starts out with rich oil resources that
have suffered from 'underinvestment and underdevelopment for decades.' 'But Iraq's new
expansion timetable would dwarf the most rapid buildups that we have recently seen in
places such as Russia and Saudi Arabia,' said IHS CERA Senior Middle East Director,
Bhushan Bahree. 'The political, security, operational and infrastructure challenges in the
country, along with a likely shortage of skilled personnel, are likely to hamper progress
towards such an unprecedented achievement.'...The report identifies infrastructure and
logistics as 'major challenges.' Iraq is responsible for providing the infrastructure
needed to receive the extra oil but its plans for providing a 'complex network of
capital-intensive infrastructure' -- from ports and roads to power and water crucial for
operations -- in synchronization with the development oil fields are not known,
representing a major potential bottleneck. 'Iraq's expansion timetable appears
extraordinarily ambitious in comparison to the recently completed capacity increase in
Saudi Arabia,' said Bahree. 'Saudi Arabia has significant security and infrastructure
advantages yet it took Saudi Arabia between four and five years to expand its net output
capacity by some 2 million barrels per day. Iraq will certainly be challenged to match
this pace, much less exceed it.' Though Iraq is
unlikely to meet its 'very stretch target' of elevating its capacity to 12mbd in six to
seven years, the expansion of its production capacity still represents a significant
increase with strong implications for OPEC and the regional balance, the report finds. Iraq is not currently a party to OPEC's production quota system. A
significant ramp-up in Iraqi production would put the issue of bringing Iraq back into the
quota system back on the agenda. Any issue within OPEC is likely years away, however, as
it is widely assumed that the major producers will wait until Iraqi output begins to
approach its OPEC share negotiated in 1988, which is at parity with Iran." |
"The head of the International
Energy Agency, the developed worlds energy watchdog, has called for China to join
the agency and warned that the institution risked losing relevance as energy demand
shifted eastward away from its current members. Nobuo
Tanaka, executive director of the IEA, told the Financial Times: 'Our relevance is under
question because half of the energy consumption already is in non-Organisation of Economic
Cooperation and Development countries. And for oil it is soon coming that the majority of
consumption is happening in non-OECD countries.' He added: 'In many ways they [the
Chinese] are already working closely with us. But eventually we wish they would join us.'
Beijing has been wary of joining multilateral organisations it sees as being controlled by
rich developed countries, particularly the US. IEA officials do not expect Chinese
membership overnight, but do believe it could be possible within the next five
years." |
"Hopes that the Falkland Islands would emerge as a significant oil
producer were dealt a significant blow yesterday when it emerged that the first well to be
drilled in the region for more than 12 years had yielded only small traces of oil and gas.
The announcement from Desire Petroleum sent its shares plunging 48 per cent to 50½p,
wiping about £160 million off the companys market value to £163 million. Two other
companies exploring for oil in the same region Rockhopper Exploration and Falkland
Oil & Gas were also struck sharply lower. Rockhopper closed at 45p, down 8½p,
and Falkland was off 15¼p at 121p.However, the news may help to deflate a simmering
territorial dispute with Argentina over the legal rights to oil production in the
Falklands....Richard Rose, oil and gas analyst at Oriel Securities, said the announcement
had diminished the prospectivity of all the other wells due to be drilled in
the North Falkland Basin that he described as 'very high risk'. No drilling has been
carried out in the Falklands since 1998, when Shell and Lasmo drilled six wells in a
nearby area. Oil was discovered in all but one of them where gas was found instead
but the following year the global price of crude collapsed, undermining the
commercial logic of developing oilfields in such a remote area. If any commercial finds
were made, it would cost billions of pounds to build pipelines and other infrastructure
needed to develop them. While diplomats may be quietly relieved that the failure of the
Liz well to find oil has taken some of the heat out of the dispute with Argentina,
yesterday the South American nation appeared to be in no mood to abandon its claims....It
was the oil well that triggered a war of words and a flurry of South Atlantic
sabre-rattling not seen since the 1980s. But in the end Desire Petroleums decision
to drill for oil at its Liz prospect turned up little more than mud and oily sand. This
should come as no great surprise. Even at the best of times, wildcat oil exploration is a
high-stakes business. With the hire of a drilling rig costing upwards of $200,000 per day,
success depends on a shrewd understanding of geology, technical excellence with the
drillbit and more than bit of luck. But in a remote corner of the South Atlantic,
where only a handful of wells have ever been drilled, the risks are about as high as they
get. Of course, this failure is not the end of the story. With five more still left to
drill by Desire and three other companies, yesterday's news does not rule out the
possibility that commercial quantities of oil may yet be found in the Falklands. However, if a discovery is made, it will have to be very large to
justify the cost of development. The Falklands are so remote that it would cost billions
of dollars to build the necessary pipelines and infrastructure to allow for export. And,
with big uncertainties hanging over the political future of the islands, many big oil
companies might be reluctant to get stuck in." |
"Britain will this week rule out
stockpiling national reserves of gas, despite concerns about the country's lack of storage
and over-reliance on foreign imports, according to industry sources. It is understood that
the Government has decided against keeping national stocks of gas, which is the practice
in some European countries such as Holland. The decision will be contained in a paper
examining Britain's security of gas supply. The decision flies in the face of a
recommendation from its own adviser, Malcolm Wicks MP, who published a paper last August
urging the Government to consider reserving 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 shortfall which
happened during the dispute between Russia and the Ukraine just over a year ago. Greg
Clark, the Tory shadow Energy Secretary has repeatedly warned that the UK's gas storage
facilities are inadequate, calling for the Government to 'ensure that we always have a
prudent security margin of gas supply'. However, energy companies that own gas storage
plants insisted that the market can provide all the necessary facilities, if tax
incentives and lower land rental fees are provided by the government. A spokesman for the Department of Energy and Climate Change
declined to comment, but added that it had been reluctant to sanction national storage in
the past for fear of discouraging commercial investment. The news comes as a group of influential MPs condemned the Crown Estate, the
state-owned body responsible for Britain's seabed, for taking advantage of its monopoly
position to charge too much rent for gas storage sites projects." |
"Saudi Arabian Oil Minister Ali al- Naimi said he 'hopes' prices
remain in the $70-a-barrel to $80-a-barrel range, signaling the worlds largest
producer may be willing to boost output if crude accelerates further. The country could
boost production by as much as 4.5 million barrels a day and is 'waiting' for demand to
rise after increasing capacity to 12.5 million barrels, Al-Naimi told reporters yesterday in Cancun, Mexico. Prices in the
$70-to $80- range are 'as close to perfect as possible,' he said, adding today that he
'hopes' prices remain in that range. Oil surged 78 percent last year as the Organization
of Petroleum Exporting Countries implemented cuts to output quotas of 4.2 million barrels
a day and the global economy emerged from its worst slump since World War II. Saudi
Arabia, the groups largest producer, made the biggest cut. Oil has remained within a
$68- to $84-a-barrel range since October and prices gained about 3.8 percent this quarter.
The kingdom pumped 8.25 million barrels a day in February, according to Bloomberg
estimates. Its output target is 8.051 million barrels a day. Crude for May delivery rose
20 cents to settle at $82.37 a barrel on the New York Mercantile Exchange. OPEC kept its
production ceiling unchanged at 24.845 million barrels a day at a meeting March 17 in
Vienna. It also didnt change individual allocations. OPEC set the quotas at the end
of 2008, amid the onset of the global economic recession. The groups next scheduled
meeting is Oct. 14. OPEC plans to add 12 million
barrels to its daily production capacity by 2015, equal to Saudi Arabias capacity.
The gains would exceed the expected growth in demand, according to the International
Energy Agency. 'The need for additional supply has
nothing to do with price,' al-Naimi said. 'When we see an imbalance in fundamentals, we
try to restore it'....Global oil demand is expected to advance 1 percent a year to 105
million barrels a day by 2030 from 85 million barrels a day in 2008, the IEA said in
November in its annual World Energy Outlook. The group is the adviser to 28 nations. 'Most
of the increase in output would need to come from OPEC countries, which hold the bulk of
remaining recoverable conventional oil resources,' the IEA said. |
"Britain faces the worst energy
crisis in Europe, according to the boss of one of the biggest power companies. 'The
country has to build two large plants or more every single year,' said Volker Beckers in
his first interview since becoming chief executive of RWE Npower two months ago. 'This has
never happened in Britains history, so theres no time to lose.' Homeowners
will end up footing much of the estimated £200 billion bill for the new plants through
higher energy prices. 'The government faces the
biggest challenge in Europe,' said Beckers, whose company supplies power to 6.4m British
homes. 'In a world where capital is scarce and the economic case is unclear, its not
an easy sell to my board. Right now, I cant do it.' Within the next decade. a
quarter of Britains fossil-fuel plants will be retired, to be replaced by more
costly low-carbon alternatives. Offshore wind and nuclear are the governments
favoured options. The £200 billion bill for pipes, plants and turbines predicted by
Ofgem, the regulator, translates to a cost of £8,000 for each of Britains 25m
households. Both Labour and the Conservatives have said the state needs to take a more
active role in guiding the makeover. They expect the industry to bear virtually all the
upfront costs. However, the uncertainty over future energy prices and how much of the
additional cost, such as for waste clean-up, will have to be shouldered makes it hard to
proceed with big investments such as nuclear reactors, said Beckers. 'At the moment nobody
really knows the rules of the game. If the uncertainty prevails, investors will simply do
what they understand best in this market and that is gas generation. That is exactly what
we as a company have done in the past few years, but as a country its not what gets
the UK to the [carbon reduction] targets we have for 2020.'" |
"Gazprom, Russias
state-owned gas giant, is preparing an audacious bid to become one of the biggest fuel
suppliers in Britain. The company is expected to lodge an offer this week for a network of
800 petrol stations and the Lindsey oil refinery at Killingholme, Lincolnshire. The assets have been put up for sale by Total, the French oil group. It
has hired JP Morgan, the investment bank, to sell its UK business, which employs 5,000
people. The business is expected to fetch more than £1 billion. The prospect of the
Kremlincontrolled giant owning key parts of the UK oil infrastructure could worry the
government. When Gazprom was rumoured to be looking at a bid for Centrica, owner of
British Gas, in 2006, ministers met to examine the 'possible consequences resulting from
any takeover of a major UK energy supplier'. The auction is part of a remarkable shake-up
of Britains oil refining and distribution industry. Half of the refining capacity,
built up in the 1960s and 1970s to take production from a booming North Sea, is up for
sale as energy giants look to sever ties with the low-margin, low-growth British
market." |
"Tesco will start selling solar
panels this week, leading a stampede of retailers aiming to cash in on a controversial new
subsidy scheme. The rush has been triggered by the launch of the governments new
feed-in tariff (Fit) programme. Taking effect on
Thursday, this pays homeowners and small firms for generating electricity from
photovoltaic solar panels and wind turbines, either for their own use or to be sold back
to the grid. The payments are guaranteed for up to 25 years to ensure payback on the
costly technologies. The government claims the scheme can generate up to £950 in cash
payments and energy savings annually. Philip Wolfe, a director at the Renewable Energy
Association, the trade body, said: 'All sorts of new companies will be coming up with
offers. Tesco is just one of them.' Some campaigners are less enamoured with the idea of
low-carbon power for the masses, labelling the Fit scheme the great green
rip-off. They warn it will hurt the poor by pushing up household bills artificially
and the billions the government will pay out over the life of the programme would be
better spent on proven measures like insulation." |
"The UK governments tax take from oil and gas production in the
North Sea fell to its lowest ever level, under the current fiscal regime, in the year
ended March 31, 2010, according to government data published on Wednesday 24th March 2010.
The UK treasury expects to take £6.4 billion (GBP) in corporation tax and petroleum
revenue tax from companies producing oil and gas in the UK over the year. This is less
than half the tax take in the previous year, during which oil prices hit their record
high. It is the lowest level since then Chancellor of the Exchequer Gordon Brown doubled
the supplemental tax on oil companies in late 2005. The fall in revenue is due to both a
lower average oil price in 2009 and the rapid decline in output from aging UK oil fields. Total oil and gas output in 2009 fell 5.2% on the year. The average price of North Sea benchmark Brent crude oil futures was 37%
down on the year. The UK government expects North Sea revenues to rise in the 2010 and
2011 tax years to £8.5 billion (GBP), but the outlook for UK oil industry is weak." |
"Jim Mulva, the 63-year-old chairman and chief executive, spent a
decade building the Houston-based company into a global energy giant, buying assets and
companies around the world, often at steep prices. But on Wednesday, Mr. Mulva said
Conoco, the third-largest U.S. oil company by revenue and market capitalization, must now
make do with what it has. Finding it increasingly
difficult to win access to new sources of oil and facing stiff competition for the oil
that is available, the company will pull back from its strategy of rapid growth and
instead focus on producing the oil and gas it already controls." |
"The fact that corn-ethanol production has continued to grow, despite
the failure of a number of firms in late 2008 and early 2009, points to the efficacy of
the various protections and subsidies it enjoys (falling maize prices helped too), though it says nothing about
their efficiency or wisdom. Ethanol, which is used
mainly as an additive to petrol, is not a particularly good fuel: it offers only about
two-thirds as much energy as petrol and can corrode pipelines and car engines. By 2014 or
earlier, ethanol production is expected to reach 10% of Americas total fuel demand,
and thus to hit a 'blend wall', since the EPA does
not at present allow blends of more than 10% for mainstream use. Even as producers have
urged the EPA to lift this bar, it has challenged them to move beyond corn and make ethanol from cellulose, the
abundant, inedible portion of most crops. Using inedible inputs avoids fights about
diverting food crops for fuel, and frees the industry from reliance on a single commodity.
Despite ample investment, however, production costs
remain high and commercialisation elusive. Since
2007 one company, Range Fuels, has received more than $150m in federal grants and
guarantees for a large cellulosic-ethanol plant, but has yet to produce any. Still, it and
others are gamely pushing ahead. A boost came last month, when Novozymes and Danisco, two
Danish firms, unveiled new, cheaper enzymes which are needed to break down cellulose. Even
if cellulosic ethanol were to get cheaper, though, it would still be ethanol, a poor fuel.
The alternative is to produce something better, such as an advanced biodiesel. According
to Lux Research, based in Boston, venture capitalists invested $208m in algae technologies
with this sort of thing in mind during 2008, six times as much as they spent in 2007. But building vast pools for algae and turning them into fuel remains
tremendously expensive. Solazyme, a Californian
firm, is a promising anomaly, using algae to make fuel from sugars in dark industrial vats
rather than pools. Such strategies may work, but have yet to be scaled up. Solazyme,
tellingly, has developed other sources of revenue." |
"The first detailed study of onshore wind farms has found that 20 of
the sites produce less than 20 per cent of their maximum output with some producing less
than 10 per cent. Blyth Harbour in Northumberland is thought to be the least efficient
wind farm producing just 7.9 per cent of its maximum capacity while Chelker reservoir in
North Yorkshire operates at 8.7 per cent of its capacity. The figures were compiled by
lobby group Clowd using data collected by energy regulators Ofgem. The best wind farms operate at about 50 per cent of their
predicted maximum capacity while the majority produce around 25 per cent to 30 per cent." |
"The world's oil reserves have
been exaggerated by up to a third, according to Sir David King, the Government's former
chief scientist, who has warned of shortages and price spikes within years. The scientist
and researchers from Oxford University argue that official figures are inflated because
member countries of the oil cartel, OPEC, over-reported reserves in the 1980s when
competing for global market share. Their new research argues that estimates of
conventional reserves should be downgraded from 1,150bn to 1,350bn barrels to between 850bn and 900bn barrels and claims that
demand may outstrip supply as early as 2014. The researchers claim it is an
open secret that OPEC is likely to have inflated its reserves, but that the International
Energy Agency (IEA), BP, the Energy Information Administration and World Oil do not take
this into account in their statistics. 'It is necessary to investigate ambiguities and
sources of error that are broadly acknowledged but not taken into account in public data
due to political sensitivities,' the researchers said. The paper also raises concerns that
public statistics have started to incorporate non-conventional reserves such as the
Canadian tar sands, where oil and gas are much more difficult to extract and may never
be economically attractive to develop. Sir David said that although the IEA was doing a
good job of warning that more investment in oil and gas exploration is needed, governments
need to pay more attention to independent research. 'The IEA functions through fees that
are paid into it by member companies and has to keep its clients happy,' he said. 'We're
not operating under that basis. This is objective analysis. We're not sitting on any oil
fields. It's critically important that reserves have been overstated, and if you take this
into account, we're talking supply not meeting demand in 2014-2015.' The concept of 'peak
oil' has gained traction in recent years, although energy companies such as BP and Shell
insist that production will be able to keep pace with growing Asian energy needs. Sir David said he was 'very concerned' that Western governments
were not taking the concept of 'peak oil' where demand outstrips production
seriously enough, while China is throwing all its efforts into grabbing as many energy
resources as possible....Dr Oliver Inderwildi, who
co-wrote the paper with Sir David and Nick Owen for Oxford University's Smith School,
believes radical measures such as switching freight transport to airships could become
common in future. 'The belief that alternative fuels such as biofuels could mitigate oil
supply shortages and eventually replace fossil fuels is a pie in the sky. Instead of
relying on those silver bullet solutions, we have to make better use of the remaining
resources by improving efficiency.'" |
"The status of world oil reserves is a contentious issue, polarised
between advocates of peak oil who believe production will soon decline, and major oil
companies that say there is enough oil to last for decades. In reality, much of the
disagreement can be resolved through clear defnition of the grade, type, and reporting
framework used to estimate oil reserve volumes. While there is certainly vast amounts of
fossil fuel resources left in the ground, the volume of oil that can be commercially
exploited at prices the global economy has become accustomed to is limited and will soon
decline. The result is that oil may soon shift from a demand-led market to a supply
constrained market. The capacity to meet the services provided by future liquid fuel
demand is contingent upon the rapid and immediate diversifcation of the liquid fuel mix,
the transition to alternative energy carriers where appropriate, and demand side measures
such as behavioural change and adaptation. The successful transition to a poly-fuel
economy will also be judged on the adequate mitigation of environmental and social
costs....This paper supports the contention held by
many independent institutions that conventional oil
production may soon go into decline (Alekkett, 2007; Campbell
and Laherrere, 1998; IEA, 2008; Laherrere, 2009a; Robelius, 2007; Sperling and Gordon,
2007; USGAO, 2007) and it is likely that the era of plentiful, low cost petroleum is
coming to an end (Hirsch, 2005). Significant supply challenges in the near future
are compounded against a backdrop of rising demand and strengthening environmental policy.
Key conclusions include: The age of cheap
liquid fuels is over. A condition of meeting additional demand is to develop
unconventional resources, which translates to an increase in the price of petroleum
products. Oil reserve data that is available in the public domain is often
contradictory in nature and should be interpreted with caution. World oil reserve estimates are best described by 2P reporting. This means
public reserve figures should be revised down-wards from 11501350 Gb to 850900 Gb. Supply and
demand is likely to diverge between 2010 and 2015, unless demand falls in parallel with
supply constrained induced recession. Reserves that provide liquid fuels today will
only have the capacity to service just over half of BAU demand by 2023. The
capacity to meet liquid fuel demand is contingent upon the rapid and immediate
diversi?cation of the liquid fuel mix, the transition to alternative energy carriers where
appropriate, and demand side measures such as behavioural change and adaptation.
The negative effect of oil price on the macro-economy is signi?cant, and should be used to
build the business case to invest in alternative energy carriers. Many alternative fuel
carriers also present the double dividend of improving energy security (i.e. utilize local
resources) and reducing emissions (i.e. electricity, hydrogen)." |
"Buried deep underground in Merseyside could be a solution to
Britains energy woes. Canary-killing methane gas one of the biggest dangers
coal miners faced offers great potential as our North sea output shrinks. But the
technology needs to catch up. Management at Royal Dutch Shell and PetroChina are not
chumps they understand whats going on in the global energy business very
well. The two companies have teamed up to launch a A$3.3bn (£2bn) bid for
Australias Arrow Energy, one of the largest coal-bed methane (CBM) groups in the
country. They understand the future potential of this game-changing source of energy. The
long-abandoned coal seams that stretch from the Pennines to the Irish Sea are also rich in
methane gas and this could be tapped to produce electricity for the national grid. CBM is rapidly being developed all over the world as countries
attempt to cut reliance on Middle Eastern oil and Russian gas. The UK needs to catch up and all eyes are on Liverpool as it leads
the way in the UKs newest source of energy. A number of companies are developing CBM
sites across the country. Two acres of land in Ellesmere Port adjacent to the
Vauxhall plant now owned by General Motors could be the UKs first site
producing electricity generated by CBM.... CBM technology in the US is much further ahead
and UK players could learn much from their more experienced counterparts. With UK production falling at a rate of 7pc a year and with the
country having minimal gas storage facilities, security of future supply will be a major
problem until new nuclear kicks in. Developing CBM
appears essential." |
"Lord Hunt, the energy minister, is to meet
industrialists in London tomorrow in a bid to calm mounting fears about the disruption
that could follow a sudden shortage of oil supplies. In a significant policy
shift, the government has agreed to undertake more work on whether the UK needs to take
action to avoid the massive dislocation that could be caused by the early onset of 'peak
oil' the point that marks the start of terminal decline in global oil production. Jeremy Leggett, the executive chairman of the renewable power company
Solar Century and a leading figure in the UK industry taskforce on peak oil and energy
security, said the meeting, to be held at the Energy Institute, showed a welcome new sense
of urgency. 'Government has gone from the BP position '40 years of supply left, the
price mechanism works, no need to worry' to 'crikey',' he said. 'BP and others are
telling us that, but you lot, Virgin, Scottish and Southern, and others are telling us
something completely different. We do not know who to believe. Let's do a proper risk
assessment with industry,' he said. The meeting is expected to include executives from the
taskforce members including Virgin, Arap, Stagecoach, Scottish and Southern Energy, and
Solar Century as well as other industrialists. The decision to hold the talks came after
the UK industry taskforce on peak oil and energy security last month issued a provocative
report, The Oil
Crunch: a Wake-up Call for the UK Economy, in which it warned of the dangers of
complacency.... A spokeswoman for the Department of Energy and Climate Change confirmed
last night that Hunt and a range of energy-policy civil servants would be holding 'private
and behind-doors' talks at the Energy Institute. But she played down the significance of
the session, saying the government had always taken supply issues seriously and met
different parts of industry on a regular basis. 'We do this all the time; it is just a
normal stakeholder meeting,' she insisted, adding that there was no 'marked' change in
ministerial policy. The issue of peak oil arose last
November when whistleblowers inside the International Energy Agency alleged the problem
had been deliberately downplayed over a long period.
BP and other oil companies insist that there is little danger of the world running out of
oil because new areas such as Brazil, and more recently Uganda, are always opening up to
development. BP chief executive, Tony Hayward, believes demand will fall as prices move
up., pushing back any major peak-oil dislocation. But booming demand in China, India and
the Middle East has pushed up the price of crude to more than $80 a barrel and UK petrol
prices are close to record levels. Amrita Sen, an oil analyst at Barclays Capital,
believes the price of crude could pass $100 this year and reach nearly $140 by 2015.
Francisco Blanch, of Bank of America Merrill Lynch, has speculated it could hit $150
within four years." |
"A Conservative government would
allow a new nuclear power station to be opened every 18 months to address the threat of a
power shortage according to Greg Clark, the shadow energy spokesman. Mr Clark said the Tories would allow energy companies to open at least one
new nuclear facility every year and a half to boost the country's power supply. Mr Clark
added there would be 'no limit' on the growth of nuclear power in Britain under a
Conservative administration. He told the Daily Mail: 'In the past we haven't been entirely
clear - this is a very clear statement that we are in favour of nuclear power.' Under Tory
proposals, a national energy plan would be submitted to Parliament to restrict the
possibility of legal objections by environmental campaigners. In a bid to promote
renewable energy, communities which allowed wind farms to be built would be rewarded with
a reduction on electricity bills and would be allowed to retain business rates of around
£70,000 a year for local projects. Mr Clark, who was due on Friday to announce the
Conservatives' policy on energy alongside David Cameron, accused Labour of not ensuring
that Britain had a secure and varied energy supply. The government has previously accepted
that the first power cuts since the 1970s are likely to take place at peak times due to a
shortage of energy. Nuclear power stations currently
produce 13 per cent of the country's electricity - half the level when Labour won the
general election in 1997. All but one - Sizewell, in Suffolk - are scheduled to be
obsolete by 2023, by which time new green regulations will in effect make a third of
Britain's coal and gas facilities illegal. Mr Clark
also promised the Conservatives would increase Britain's gas storage capacity, which is
currently just 15 days, compared with 99 days in Germany and 122 days in France. He said
Britain would become more reliant on gas reserves for the three years before new nuclear
power stations begin to be opened in 2018." |
"Huge offshore wind parks and
new nuclear reactors to be financed by a state-backed Green Investment Bank would be built
under plans to reform energy policy and meet tough emission reduction targets to be
announced by the Conservatives today. In a package
of measures with far-reaching implications for industry and consumers, David Cameron is
also expected to call for a floor price for carbon to be set as a way of stimulating
investment in cleaner forms of energy. The policy will punish coal and gas-fired power
generation while benefiting producers of wind and nuclear electricity. Greg Clark, Shadow
Energy Secretary, did not reveal details, but said: 'We believe that the time has come to
establish new financial mechanisms to make it easier for people to invest. At the moment
it is too difficult.' The policies will also include a measure that marks a return to the
same principle used to defeat Nazi Germany in the 1940s. Mr Cameron will for the first
time set out plans for government-backed green 'war bonds' to help to finance energy
projects of up to £200 billion that are considered critical for Britain to meet its goal
of cutting carbon emissions by 34 per cent by 2020. The scheme will allow money to be put
into clean energy through the purchase of Treasury-backed 'Green ISAs' linked to renewable
projects including tidal, solar and wind farms. The Conservatives also announced the
creation of a working group to examine how to create a public-private funded Green
Investment Bank to provide additional financial support. Loosely modelled on
Germanys KfW bank, which invested nearly 20 billion in environmental projects
last year, it would form a key plank of a Tory push to make Britain a global centre for
environmental finance and green manufacturing of everything from wind turbines to
components for nuclear plants. The Tories said the bank would consolidate existing sources
of funding for green energy, such as the Carbon Trust and the Marine Renewables Deployment
Fund. It would act as an intermediary to help to attract and package green energy
investment opportunities." |
"Energy policy is 'nowhere near'
having the right framework in place to deliver the investment and job creation that will
be needed to hit government targets for cutting greenhouse gas emissions, a group of
leading academics backed by the Royal Academy of Engineering warns. The academy on Thursday publishes the groups report on the
prospects for the energy system to 2050, saying 'fundamental restructuring' will be needed
to prevent blackouts while delivering the governments objective of an 80 per cent
reduction in emissions. Sue Ion of Imperial College London, who led the group, said
spending on low-carbon technologies could be very important
for job creation. However, she warned that market mechanisms alone would not push
Britains fragmented energy industry into making the necessary investment. 'Its
a fantastic industrial opportunity for us in the UK,' she said. 'But we are nowhere close
to having a sensible plan or framework for how it would be implemented or financed. The
academys report sets out scenarios for how the 80 per cent emissions reduction can
be achieved, all of which demand massive investment in renewable energy. For example, the
academics argue Britain will need 38 wind farms the size of the London Array the
worlds largest windfarm, now under construction in the Thames estuary and
9,600 onshore turbines, which would mean erecting one a day for 25 years. On top of that,
there will probably have to be huge
investment in nuclear power and coal or gas-fired power stations that capture and
store their carbon dioxide emissions. If demand can be cut by improving energy efficiency
for example with better home insulation the number of those new nuclear and
carbon capture plants could be kept to 30-40: already a stretch given that the government
is planning about 10 new nuclear plants and four carbon capture pilots. If demand cannot
be cut, there would have to be 80 of those new plants, the engineers say, and 'building
new power stations on this scale is probably only achievable by monopolising most of the
national wealth and resources'. There is likely to have to be widespread deployment of
electric cars, and electric heat pumps to replace gas boilers in homes. Roger Kemp of Lancaster University, a member of the group, said
restructuring the energy system 'needs the same political enthusiasm as was applied to the
War on Terror after 9/11'. Ms Ion said: 'We have to
create the right framework for investment. These things are going to be around for two or
three generations, and are not going to have an investment payback of five or 10 years. So
the market is not going to deliver.' She said the private sector had to be given certainty
over returns for longer terms than the five-year life of a parliament to encourage
investment in energy infrastructure, and warned that energy prices were bound to rise.
'The changes required to the UK energy system to meet the 2050 emissions reduction targets
are so substantial that they will inevitably involve significant rises in energy costs to
end users.'" |
"Drivers will be hit by the
scrapping of a subsidy the Government has been paying to the producers of 'environmentally
friendly' biofuels, which account for 3 per cent of
each litre of petrol and diesel. This subsidy will end on April 1, raising the cost
of biofuels for petrol producers - an increase which will be passed onto consumers.
According to industry sources, this could add as much as 1.5 pence to the pump price a
litre of petrol or diesel." |
"The key remaining question of the peak oil crisis is just when world
production is going to start on an unstoppable decline. A few years ago those analysts who
were deeply enmeshed in the problem were saying that 2011 or 2012 looked like the fateful
year. But then the unexpected happened -- a great recession came along and the demand for
oil plunged. Although global oil production set a nominal high during the great price
run-up back in the summer of 2008, production soon fell away as the deepening recession
cut demand by some 4 million barrels a day. As prices collapsed in the winter of
2008-2009, OPEC got its act together and cut production dramatically, leaving the world,
or at least a few OPEC countries with what is known as spare productive capacity --- oil
wells that are ready to produce, but have been shut down because there is no market for
their product. Keep in mind when you have to shut down some of your oil wells, you usually
stop those with the heaviest most sulfur-laden oil first as this oil does not bring as
good a price as better grades. World oil production, including about 10 million barrels a
day (b/d) of various forms of combustible liquids such as biofuels that are usually
counted as 'oil,' currently stands at about 86 million b/d. This number got as high as 87
or 88 million (depending on whose numbers you like) back in the summer of 2008, fell to 83
or 84 million b/d in the winter of 2009, and then has been climbing back slowly as China,
India, and the oil exporting countries step up their demand. Behind
these numbers however are two forces, the inexorable depletion of existing fields which is
currently running about 4 million b/d each year and new oil fields coming into production
which for 2009 and 2010 is expected to add about 6 million b/d of new productive capacity
each year. As long as the completion of new oil production projects exceeds 4 million b/d
-- all is well. Indeed for the last few years the capacity to produce more oil has been
growing ahead of the demand so spare capacity to produce more oil is now in the vicinity
of 5 or 6 million b/d. This means that if there were sufficient demand, global oil
production could be cranked up to 91 or even 92 million b/d - for awhile. As even the Chinese don't seem to need an additional 5 billion b/d, at
least not right away (their current consumption is about 8-9 million b/d), those 5 or 6
million b/d seem destined to remain spare for a while. Now
if the world's oil producers could add another 5 or 6 million b/d of oil production each
year indefinitely, there would not be a problem and you would not be reading this article.
Unfortunately, however, they can't. People who follow these matters, and it is rather
straight forward to do, say that for the next few years we will only be adding about 3-4
million b/d of new capacity to produce oil and by 2015 this will be down to about 2
million b/d. This, of course, is well below the annual drop of 4 million barrels per day
from the existing fields due to depletion. As long as the additions to our capacity to
produce oil do not get too far below the pace of depletion, there would seem to be no
reason for wild spikes in oil prices - in the near term. If the world continues to bump
along in its current state for the next 3 or 4 years, it would seem that the availability
and price of oil will not upset the apple cart with shortages or unaffordable gasoline
prices. After 2013, however, all bets are off as there does not seem to be enough new
production starting up to balance depletion. These days, new oil production capacity, on
the scale of millions of barrels a day, does not appear overnight from the drill of a
lucky wild catter. Large new oil production projects take five, six, or seven years before
the first oil can be shipped and cost billions of dollars. If a major project is not
already well along, we are unlikely to see any oil from it until the latter half of the
decade. For the next five years we are stuck with those projects that are already
underway. This train of thought seems to say that somewhere around 2014, world oil
production, which has been on a rough plateau since 2005, will start to decline, perhaps
rapidly.There are a number of forces already in motion which could interrupt this rather
tidy schedule of four more good years and then 'le deluge.' Believe it or not the only good news in sight could come from Iraq which
seems to be the last remaining place on earth where lots of cheap and easy-to-produce oil
is still available. The Iraqis recently let contracts to increase their oil production by
7 or 8 million b/d in order to become the world's biggest and richest oil producer.
However, anyone familiar with the history of Iraq over the last century has reason to be
skeptical that the Iraqis, even with the help of nearly all the world's major oil
companies, can save the world by stopping the decline in oil production for very
long." |
"The problem with wind power is that is cannot always be relied upon.
The windand other transient, environmental energy sources such as solarmust
either be used when it is harvested or stored expensively in batteries or specially
designed hydroelectric schemes that use the resulting energy to pump water uphill.
Alternatives would be extremely welcome. Alexander
Slocum, of the Massachusetts Institute of Technology, thinks he has one. Observing
that the fashion among wind-power fans is to build turbines out at sea, where the wind
blows strongest, he proposes a pumped-storage system
that uses seawater. Dr Slocums scheme involves
anchoring a hexagonal array of hollow, 31-metre-diameter concrete spheres to the ocean
floor at a depth of approximately 350 metres. Floating turbines would be tethered to these
spheres and surplus power from these turbines, generated during periods of high wind and
low electrical demand, would be used to pump water out of the spheres, evacuating the
central chamber. When the wind faltered or the lights went back on, water forced into the
central chamber by the pressure of the surrounding ocean would pass through a turbine and
generate electricity. Each sphere would provide a
five megawatt turbine with four hours of storage capacity." |
"There needs to be a 'radical overhaul' of road travel in the UK to
avoid future gridlock, the CBI business organisation has warned. It said measures that
need to be explored include staggered work commutes, increased car sharing, and more
working from home. The CBI estimates road congestion now costs the UK economy up to £8bn
a year. It warned this could more than double by 2025
unless more action is taken to tackle the problem." |
"Predicting the
end of oil has proven tricky and often controversial, but Kuwaiti scientists now say
that global oil production will peak in 2014. Their work represents an updated
version of the famous Hubbert model, which correctly predicted in 1956 that U.S. oil reserves would peak
within 20 years. Many researchers have since tried using the model to predict when
worldwide oil production might peak. Some have said production already peaked. One earlier
model by Swedish researchers suggested that oil would peak
sometime between 2008 and 2018. And other researchers have argued there are decades to go
before oil production goes into irreversible decline. The only thing they all agree on:
Oil is a finite and very valuable resource. The issue's profile was raised today with a
new report projecting increased demand. After peaking above $130 a barrel in mid-2008,
crude oil prices dipped to below $40 in early 2009 as global demand tanked amid the
recession. Prices have been rising ever since and are above $80 now. Today, the
International Energy Agency said it expects demand to resume the sort of growth that was
common in recent years. Much of that growth has involved the modernizing economies of
China and India. The scientists from Kuwait University and the Kuwait Oil Company adopted
a newer approach by including many Hubbert production cycles, or bell-shaped curves
showing the rise and fall of a non-recyclable resource. Earlier models typically assumed
just one production cycle, despite the fact that most oil-producing nations have
historically experienced more of a roller coaster ride in production. Such production
cycles reflect the influence of new technological innovations in the oil industry,
government regulations, economic conditions and political events. The factors include the
discovery of new
oil deposits, the recent economic recession and the rise of renewable energy. Take
Mexico as just one example. The nation that has long represented a top oil exporter has
experienced plummeting oil production and might even begin importing oil within the
decade, the New York Times reports. Its troubles have arisen from a lack of technology to
explore more inaccessible oil deposits, and a conundrum stemming from a 1938 law that
banned foreign oil companies. Caltech physicist David Goodstein has argued for a practical
approach that focuses on preparing for the end of oil,
regardless of when it happens. He noted that the latest prediction seems to represent a
serious, thoughtful estimate. 'Of course there are large uncertainties in estimates of
this kind, but this one is as good as any I've seen,' Goodstein told LiveScience. Some oil
companies and consultancy firms such as Cambridge Energy Research Associates have
speculated that oil will peak sometime after 2020, but a number of oil geologists and
executives predict it will happen much sooner. The
Kuwaiti study created its world model for peak oil based on 47 individual models for each
major oil-producing nation. It also took a separate
look at the Organization of the Petroleum Exporting Countries (OPEC), which includes
nations that control about 35 percent of the world's oil reserves. More complications may
still change the ultimate end date for peak oil. OPEC's latest projection suggests that
world oil demand will grow by 900,000 barrels per day in 2010, according to an Associated
Press story this week. That follows a period of low oil demand during the height of the
worldwide recession in 2009." |
"The International Energy Agency
raised its forecast for global oil demand this year for a second month as fuel consumption
in Asia rises more than expected. The IEA increased its estimate for world demand in 2010
by 70,000 barrels a day to 86.6 million barrels a day. That would mean a gain of 1.6 million barrels a day, or 1.8 percent, from
2009 levels, it said. Economies outside the Organization for Economic Cooperation and
Development continue to lead the recovery in consumption, the IEA said. 'Global oil demand
resumed growth on a yearly basis in the fourth quarter of 2009 after five consecutive
quarters of decline,' the Paris-based agency said in its monthly oil market report today.
'This years global oil demand growth will be driven entirely by non-OECD countries,
with non-OECD Asia alone representing over half of total growth.'....Oil consumption in
non-OECD countries is forecast to average 41.2 million barrels a day in 2010, an increase
from last year of 1.7 million barrels a day, or 4.3 percent, according to the IEA. That is
190,000 barrels a day more than the agency estimated last month..... Preliminary data
indicate Chinese apparent demand surged by an 'astonishing,' 28 percent year-on-year in
January, with the biggest increase in naphtha demand, according to the IEA. The agency
raised its 2010 demand forecast for China by 130,000 barrels a day to 9 million barrels a
day, representing an increase of 6.2 percent from 2009. In contrast, the IEA cut its
forecast for oil consumption in OECD countries by 120,000 barrels a day from last month to
45.4 million barrels a day. That means it now expects demand in those economies to shrink
0.3 percent this year. Even as consumption rises globally, the IEA also cut the estimate
for the amount of crude OPEC will need to pump to balance demand and supply as production
estimates from outside the group rise. The agency estimates that the Organization of
Petroleum exporting countries will have to produce 29.3 million barrels a day this year,
100,000 barrels a day fewer than it estimated last month. OPEC, which accounts for more
than a third of global supply, will meet in Vienna next week to decide on production
quotas. Members pumped the most in 14 months in February, according to the IEA, with Iraq accounting for more than half the monthly increase.
OPECs compliance with record supply cuts announced in 2008 slipped to 56 percent in
February, from 58 percent the previous month, the IEA said. The groups 11 members
bound by production quotas raised output by 80,000 barrels a day to 26.70 million a day
last month. That means OPEC exceeded its collective target by about 1.9 million barrels a
day. Non-OPEC production is now estimated at 51.8
million barrels a day in 2010, an increase of 330,000 barrels a day from 2009, a stronger
outlook from the North Sea, Egypt, Russia, Thailand and Colombia, as well as revisions to
Canadas production data, the IEA said. That is 205,000 barrels a day more than it
forecast last month." |
"BP was preparing last night for
a possible legal battle over a giant oilfield in the Caspian Sea as it announced a $7 billion (£4.6 billion) deal designed to bolster its
position in three of the worlds most promising oil provinces. The purchase of a
string of offshore assets in Brazil, the Gulf of Mexico and Azerbaijan from Devon Energy,
of the United States, represents BPs biggest acquisition since 2003, when the oil
giant invested $8 billion in its Russian joint venture TNK-BP. It also marks a turning
point for Tony Hayward, the chief executive, who has made a strategic bet on BPs
ability to discover deepwater fields in the Campos Basin off Brazil. The basin is close to
an area where a spate of recent discoveries have been made that promise to transform
Brazil into one of the worlds top oil exporters. However, it emerged last night that
a key plank of the deal the acquisition of Devons 5.6 per cent stake in a
giant offshore field in Azerbaijans Caspian Sea, could be vetoed by Devons
partners in the project, triggering a potential legal battle." |
"Some time in 2014 natural gas
will be condensed into liquid and loaded onto a tanker docked in Kitimat, on Canadas
Pacific coast, about 650km (400 miles) north-west of Vancouver. The ship will probably
take its cargo to Asia. This proposed liquefied natural gas (LNG) plant, to be built by
Apache Corporation, an American energy company, will not be North Americas first.
Gas has been shipped from Alaska to Japan since 1969. But if it makes it past the planning
stages, Kitimat LNG will be one of the continents most significant energy
developments in decades. Five years ago Kitimat was intended to be a point of import, not
export, one of many terminals that would dot the coast of North America. There was good economic sense behind the rush. Local production of
natural gas was waning, prices were surging and an energy-hungry America was worried about
the lights going out. Now North America has an unforeseen surfeit of natural gas. The
United States purchases of LNG have dwindled. It has enough gas under its soil to
inspire dreams of self-sufficiency. Other parts of the world may also be sitting on lots
of gas. Those in the vanguard of this global gas revolution say it will transform the
battle against carbon, threaten coals domination of electricity generation and, by
dramatically reducing the power of exporters of oil and conventional gas, turn the
geopolitics of energy on its head. The source of Americas transformation lies in the
Barnett Shale, an underground geological structure near Fort Worth, Texas. It was there
that a small firm of wildcat drillers, Mitchell Energy, pioneered the application of two
oilfield techniques, hydraulic fracturing (fracing, pronounced 'fracking') and
horizontal drilling, to release natural gas trapped in hardy shale-rock formations.
Fracing involves blasting a cocktail of chemicals and other materials into the rock to
shatter it into thousands of pieces, creating cracks that allow the gas to seep to the
well for extraction. A 'proppant', such as sand, stops the gas from escaping. Horizontal
drilling allows the drill bit to penetrate the earth vertically before moving sideways for
hundreds or thousands of metres. These techniques have unlocked vast tracts of gas-bearing
shale in America. Geologists had always known of it, and Mitchell had been working on
exploiting it since the early 1990s. But only as prices surged in recent years did such
drilling become commercially viable. Since then, economies of scale and improvements in
techniques have halved the production costs of shale gas, making it cheaper even than some
conventional sources. The Barnett Shale alone
accounts for 7% of American gas supplies. Shale and
other reservoirs once considered unexploitable (coal-bed methane and 'tight gas') now meet
half the countrys demand. New shale prospects are sprinkled across North America,
from Texas to British Columbia. One authority says supplies will last 100 years; many
think that is conservative. In 2008 Russia was the worlds biggest gas producer (see
chart 1); last year, with output of more than 600 billion cubic metres, America probably
overhauled it. North American gas prices have slumped from more than $13 per million
British thermal units in mid-2008 to less than $5.... Shale is almost ubiquitous, so in
theory North Americas success can be repeated elsewhere. How plentiful
unconventional resources might be in other regions, however, is far from established. The
International Energy Agency (IEA) estimates the global total to be 921 trillion cubic
metres (see chart 2), more than five times proven conventional reserves. Some think there
is far more. No one will really know until companies explore and drill. The drillers are
already arriving in Europe and China, which are both expected to import increasing amounts
of gasand are therefore keen to produce their own. China has set its companies a
target of producing 30 billion cubic metres a year from shale, equivalent to almost half
the countrys demand in 2008. Several foreign firms, including Shell, are already
scouring Chinese shales. After a meeting between the American and Chinese presidents last
November, the White House announced a 'US-China shale gas initiative': American knowledge
in exchange for investment opportunities. The IEA says China and India could have 'large'
reserves, far greater than the conventional resource. Exploration
is also under way in Austria, Germany, Hungary, Poland and other European countries. The oil industrys minnows led this scramble, but now the big firms
are arriving too. Austrias OMV is working on a promising basin near Vienna. Exxon
Mobil is drilling in Germany. Talisman recently signed a deal to explore for shale in
Poland. ConocoPhillips is already there. The first results from wells being drilled in
Poland, in what some analysts believe is a shale formation similar to Barnett, should be
released this year. No one expects production of
shale gas in Europe to make a material difference to the continents supply for at
least a decade. But the explorers in China and
Europe present a long-term worry for those who have bet on exporting to these markets.
Gazprom, Russias gas giant, is the company most exposed to this threat, because its
strategy relies on developing largeand costlygasfields in inhospitable places.
But Australia, Qatar and other exporters also face a shift in the basics of their
business. These producers are already getting a taste of the global gas glut. Almost in tandem with the surge in American production, recession
brought a slump in world demand. The IEA says
consumption in 2009 fell by 3%. In Europe, the drop was 7%. Consumption in the European
Union will grow marginally if at all this year and will not be sufficient to clear an
overhang of supplies, contracted through take-or-pay agreements signed in the dash for gas
of the past decade. IHS Global Insight, a consultancy, reckons that the excess could
amount to 110 billion cubic metres this year, almost a quarter of the EUs demand in
2008. The glut has been exacerbated by the suddenly greater availability of LNG. Importers
with the infrastructure to receive and regasify LNG can now easily tap the global market
for spot cargoes. This is partly a product of the recession, which dampened demand from
Japan and South Korea, the leading LNG buyers. But another cause is that many exporters,
not least Qatar, the worlds LNG powerhouse, spent the past decade ramping up
supplies aimed at the American market. That now looks like a blunder.... Qatars low
production costs mean it can still make money, even in North America. Others cannot. In February, for example, Gazprom postponed its Shtokman gasfield
project by three years because of the change in the market. Some of the gas from that field, in the Barents Sea, was to be exported
to America. But Shtokmans gas will be costly, because the field is complex and its
location makes it one of the worlds most difficult energy projects to execute. Some
analysts now wonder whether gas will ever flow from Shtokman.... In 2007 Gazprom talked of increasing its annual exports to the EU
to 250 billion cubic metres. Now, says Jonathan Stern, of the Oxford Institute for Energy
Studies, Gazprom will probably only ever supply the EU with 200 billion cubic metres a
year (it shipped about 130 billion in 2008). The company forecast in 2008 that its gas
prices in Europe would triple, to around $1,500 per 1,000 cubic metres, on the back of
rising oil prices, which help set prices in long-term contracts. But the price dropped to
about $350 last year and is expected to fall again in 2010. The weak market could last for
another five years, believes Wood Mackenzie. Gazprom
has been renegotiating with leading customers, injecting elements of spot pricing into
contracts to make them more attractive.... Even
without recession or European shale, the assumption that Europes consumption will
keep growing is looking shaky, because the EUs efforts to boost efficiency and
reduce carbon emissions are making gradual headway. Edward Christie, an economist at the
Vienna Institute for International Economic Studies, says the EU could be importing a
third less natural gas in 2030 than the European Commission forecast in 2005. That makes
the case for additional supply lines much less compelling. The IEA expects rich European
countries demand to grow by only 0.8% a year in the next two decades, against 1.5%
for the world as a whole. An age of plenty for
gas consumers and of worry for conventional-gas producers thus seems to be dawning. But two factors could reverse the picture again. The first
surrounds the uncertainty about how fruitful shale exploration will be outside North
America. A clearer understanding of the geology will emerge from pilot wells in the coming
months. Second, there are reasons for caution above ground, too. Despite natural
gass greener credentials than oils or coals, shale drilling has critics
among environmentalists, who worry that water sources will be poisoned and landscapes
despoiled. The industry says cement casing of wells and the depth to which they are
drilled make the practice safe and relatively unobtrusive. But so far it has been drilling
mainly in North America, where land is plentiful and people are accustomed to the sight of
oilmens detritus. In densely populated Europe, the rapacious rate at which shale
plays must be drilled to sustain production is less likely to be tolerated....A more radical idea, and one that
would have ramifications for the global oil sector, is to gasify transport. T. Boone
Pickens, a corporate raider turned energy speculator, has launched a campaign to promote
this, and has support from the gas industry. By
converting North Americas fleet of 18-wheeled trucks to natural gas, says Randy
Eresman, boss of EnCana, a Canadian gas company, America could halve its imports of Middle
Eastern oil. EnCana is promoting 'natural gas transportation corridors': highways served
by filling stations offering natural gas. All this is some way off. The coal industry will
not surrender the power sector without a fight. The
gasification of transport, if it happens, could also take a less direct form, with cars
fuelled by electricity generated from gas. A
gasified American economy would have profound effects on both international politics and
the battle against climate change. Displacement of oil by natural gas would strengthen a
trend away from crude in rich countries, where the IEA believes demand has already peaked
as a result of the recent spike in oil prices. Another consequence of the energy
markets bull run, the unearthing of vast new supplies of gas, could bring further
upheaval. If the past decade was characterised by the energy-security concerns of
consumers, the coming years could give even the worlds powerful oil producers reason
to worry, as a subterranean revolution shifts the geopolitics of global energy supply
again." |
"New forecasts suggest the
European Union will exceed its target of getting 20 percent of its energy from renewable
sources in 2020, the European Commission said Thursday. The latest national projections submitted by governments to the EU
executive suggest the 27-nation bloc could reach an overall renewable share of 20.3
percent by the end of the decade." |
"Tullow said that a huge new oilfield in Ghana contains at least 60
per cent more crude than previously thought. Tullow raised its reserve estimate for the
offshore Tweneboa discovery from 250 million to 400 million barrels of oil, increasing its
total reserves in the country to 4.5 billion barrels." |
"Iranian President Mahmoud
Ahmadinejad warned Gulf countries on Thursday against the U.S. presence in the region,
saying Washington aimed to dominate their energy resources in the name of fighting
terrorism. Iran opposes the U.S. military presence
on its borders in Iraq, Afghanistan and the Gulf, saying western military intervention is
the root of insecurity in the region. 'We warn the countries in the region over the
presence of bullying powers ... they have not come here to restore security or to counter
drug trafficking,' Ahmadinejad said in a speech during a visit to the southern province of
Hormuzgan. The hardline president accused the West of planning to dominate energy
resources in the Gulf and said: 'People in the region will cut off their hands from the
Persian Gulf's oil.'" |
"Some of the nation's biggest
oil companies are looking at permanently reducing how much gasoline and diesel fuel they
make, a move that analysts say would almost certainly trigger higher prices for drivers.
Energy companies are suffering huge losses from refining because of slumping gasoline use
-- a product of the economic downturn and changing consumer habits and preferences. Energy experts say refining cutbacks have begun and will accelerate as
corporations strive for profits..... Major refiners have been circumspect about their
plans, saying that they are considering options that could include closing refineries,
selling parts of their operations, laying off workers and slashing spending. 'Refineries
will have to be closed,' said Fadel Gheit, senior energy analyst with Oppenheimer &
Co. 'Unless this excess capacity is permanently shuttered, a recovery in refining margins
is unsustainable.' This week Chevron Corp. launched an overhaul of its fuel-making and
retailing business with a plan to cut at least 2,000 jobs, put a refinery in Wales up for
sale and take a hard look at its Hawaii refinery. Royal Dutch Shell said it was reviewing
its refinery operations with the idea of keeping only those with the best growth
potential. Sunoco Inc. has sold one plant and said last month that its previously idled
Eagle Point, N.J., refinery was being shut down permanently. Valero Energy Corp., the
nation's largest refiner, last year closed a Delaware refinery, laying off 500 workers,
and mothballed a plant in Aruba. 'We're actually assessing the entire East Coast, whether
we should be there or not,' Valero Chief Executive William R. Klesse told executives at a
recent energy conference. Energy industry executives say they are facing up to what was
previously inconceivable: that the nation's appetite for petroleum products may never
return to levels seen earlier in the decade, even if a strong economic recovery takes
hold. 'None of us will sell more gasoline than we did in 2007,' Tony Heyward, group CEO
for oil giant BP, said during a recent earnings teleconference. For motorists, talk of
refinery cuts promises to be anything but cheap. It's feared that leaner supplies will
translate into higher pump prices punctuated by expensive spikes when operations are
disrupted by weather or other events." |
"In a finding that may speed
efforts to conserve oil and intensify the search for alternative fuel sources, scientists
in Kuwait predict that world conventional crude oil production will peak in 2014 almost a decade earlier than some other predictions. Their study
is in ACS' Energy & Fuels, a bi-monthly journal." |
"Ambitious plans to build a new
generation of nuclear power stations across Britain will fail because of a lack of skills
and funding, engineers have warned. The Institution
of Mechanical Engineers (IMech) said the UK needs to have the first new nuclear power
stations up and running by the end of this decade to avoid the lights going out. However a
lack of skilled engineers, delays in the planning process and a shortage in funds mean the
building programme is in danger of stalling." |
"When will we reach the peak of global oil production? Its a
question of crucial importance as governments around the world prepare for a world of declining oil resources,
in which we will be much more reliant on alternative sources of energy. The body on which
the UK and others rely heavily to make that assessment is the International Energy Agency (IEA) based in
Paris and set up in the aftermath of the oil crisis between 1973 and 1974. For years, IEA reports have been reiterating the conclusion that
peak oil was not a problem. Behind the scenes however, it is now clear that senior staff
thought otherwise. It was only through the work of 22-year-old Lionel Badal, a politics
student at Exeter University, that the truth about this cover-up finally emerged. It
started innocently enough, as Lionel, working on his undergraduate dissertation on peak
oil, set about trying to arrange interviews with politicians and figures working inside
and outside the oil industry. He was surprised when the IEA agreed to allow him to
interview one of their top officials. In the end the first official pulled out of the
interview but he was replaced by one of his colleagues, a senior economist at the
organisation. The new interviewee turned out to be far more forthcoming than his superiors
might have wanted.... Most of the interview was
interesting but nothing revelatory, remembers Lionel, but that changed towards
the end when the official was asked for his opinion on predictions for peak oil.The IEA
has repeatedly said oil output can increase until at least 2030 as long as 'adequate
investments are made in exploration and development'. Other analysts, including those
behind the UK Energy Research Centre report on peak oil, say this is 'wildly
optimistic' and that the IEA does not have the evidence to back up this prediction. Far
from sticking to the IEA line, the official said he was actually very worried about peak
oil and shared some of the more pessimistic concerns.? From that meeting I
understood there was a problem, says Lionel, as publicly the IEA did not say
this type of thing. Over the next few months Lionel continued his research and met
with politicians in France....By July, Lionel had managed to arrange a meeting between
himself, the IEA official and the MEP Corrine Lepage, a former French environment minister
and well-known figure in French politics. ??Clearly pleased to meet such a respected
figure, the IEA official became much more open about the downplaying of peak oil concerns
at the agency. He told her reports had been modified and that there were pressures
on the IEA from the US not to make too pessimistic predictions,' Lionel remembers. 'He
said just as peak oil theorists claimed, there was a big problem with oil. By the
end of the meeting the IEA official had agreed to write a briefing note for the MEP on the
issue. But by then Lionel thought the issue needed to be made public.... Having been given
the green light, Lionel contacted two journalists at the Economist and the Independent.
The Independent was slow to respond and did not seem convinced by the story, remembers
Lionel, but the Economist journalist agreed to meet the following month when he was in
London. However, at the meeting he said he could not immediately write about the issue as
he was working on other stories. I also got the feeling his position was isolated at
the Economist and that the magazine would not want to take a stance by running such a
story on peak oil, says Lionel. Soon after these first attempts to make the issue
public, the respected NGO Global Witness released a report on peak oil, Heads in the Sand. Reading Guardian journalist Ashley Seager's article
on this report, Lionel decided to contact him and sent information about his IEA
whistleblower to both Seager and the papers environment columnist, George Monbiot.
Seager forwarded it onto the Guardians energy editor, Terry Macalister. By
coincidence the IEA was preparing to publish its latest annual report on oil supply and
demand in early November. With the launch scheduled to take place in London, the Guardian
had the perfect opportunity to maximise exposure of the story. Macalister spoke to
Lionels IEA official, and on November 10th, 2009 - the same day that the IEAs
chief economist Dr Fatih Birol was launching the agencys major annual report - the story appeared on the Guardians frontpage. As expected, the
reaction was huge. Peak oil whistleblower stories were splashed across the
media." |
"Big Oil is bent on making natural gas the core of its business,
arguing that its abundance, cheapness and environmental friendliness will change the
energy landscape forever. The fuel seems bound to reshape an industry known for its booms
and busts into a more predictable, staid creature. Companies
such as Exxon Mobil Corp. (XOM), Royal Dutch Shell PLC (RDSB, RDSA, RDSB.LN) and
ConocoPhillips (COP) are making the transition from dealing mostly in oil, a commodity
that's increasingly scarce and difficult to produce, to natural gas, a fuel that's
suddenly become ubiquitous. Their profits, which can
reach unfathomably high levels during good times, are likely to go down accordingly,
executives and analysts say. So will the companies' adventurous ventures in the deep
waters and in dangerous regions of the globe. The industry now needs to learn the shale
gas business, which has played a major role in spurring the transition and which can only
be profitable if it runs like an assembly line. 'It's a manufacturing industry, and it's
not at all what we're doing at Total,' said Patrick Pouyanne, senior vice president for
strategy business development at Total S.A. (TOT, FP.FR), which recently entered into a
shale gas joint venture in the U.S. and is acquiring shale positions in France, Denmark,
Argentina and North Africa. Until now, Total's focus has been on projects such as wells in
deep waters in Africa and in the North Sea, each worth $50 million and each project
unique. 'Here in this (shale) business you have to be more like a Ford (Motor Co.). ...
This is what we want to understand and obviously we do not have these types for oil, but
it's maybe the future of the industry,' he said in an interview on the sidelines of the
IHS Cambridge Energy Research Associates conference in Houston. The unexpected bounty of
natural gas became evident in recent years as independent U.S. energy companies found
profitable ways to tap tight rock formations known as shales. U.S. gas reserves, once in
seemingly permanent decline, doubled in the past few years, according to IHS CERA. Since
2008, several Big Oil companies have plunged into North American shale gas - culminating
with the announcement last December of Exxon Mobil's agreement to buy energy independent
XTO Energy Inc. (XTO) for $31 billion. Exxon's move 'signals that gas is the way to go,'
said Fadel Gheit, a New York-based analyst with Oppenheimer & Co. In a way,
international oil companies are changing their business model 'because they have no
choice,' Gheit said. National oil companies such as Brazil's Petroleo Brasileiro S.A.
(PBR, PETR4.BR), or Petrobras, and Saudi Aramco, which control access to some of the best
crude oil deposits, increasingly call the shots there, relegating Western companies to a
minor role. In the gas business, which requires big
investments in infrastructure while returning more moderate profits, the larger companies
can use their size and deep pockets to gain an edge." |
"Saudi Arabias 4 million barrels a day of spare capacity can
easily be absorbed into the market when global energy demand recovers after the recession,
the head of the kingdoms state owned oil company said today. In a speech at a
Cambridge Energy Research Associates confernce in Houson, Khalid al Falih, chief executive
officer, Saudi Arabian Oil Co, said: 'Oil supply will
decline if there is no investment, so that 4 million could be absorbed by demand alone.' The kingdom, the worlds largest producer, raised output by 100,000
barrels a day to 8.25 million in February, the highest level since December 2008, a
Bloomberg survey of oil companies, producers and analysts showed last month." |
"Taking up more than a week of your life, the train journey from
London to Beijing is not one most people would currently consider. But fast forward a few
years and you could find yourself stepping off in the Chinese capital in a mere two
days. The prospect of the incredible journey
came closer to reality yesterday with China's ambitious plans to build a high-speed rail
network to Europe....The new service will not be
arriving in Britain just yet, but the Chinese are hopeful it could be here within ten to
15 years. China already has its own high-speed railway network, and is negotiating to
extend this to up to 17 countries. Mr Wang said most of the countries already at the
negotiating table are in south-east and central Asia. The talks involve a trade of
resources for technology. Many of the countries are under-developed but mineral
rich." |
"The top U.S. environmental
regulator said she was 'very concerned' about fluids blamed by some for polluting water
supplies near sites where drillers use them to extract natural gas from shale deposits. U.S. Environmental Protection Agency chief Lisa Jackson said she hopes
her agency will launch a study this year into the nature of fluids used in the hydraulic
fracturing process of natural gas drilling. 'We are going to look at what the fluids are,
what's in them. We are very concerned about that,' she told Reuters after a speech at the
National Press Club. Exploitation of the cleaner-burning fuel could allow the United
States to reduce greenhouse gas emissions and cut its dependence on coal and petroleum
imports. When burned, natural gas emits only half of the carbon dioxide per unit as does
coal, which generates about half of the electricity in the United States. Critics,
however, say the chemicals used in fracturing can contaminate water supplies. Hydraulic
fracturing injects millions of gallons of water, sand, and a proprietary mix of chemicals
up to two miles underground where it breaks open fissures in the gas-bearing shale.
Drilling companies are scrambling to develop vast shale deposits that are estimated to
contain enough natural gas to meet U.S. needs for up to a century. Industry maintains its
processes are safe. Energy companies say fracking chemicals are injected into the ground
thousands of feet below drinking water aquifers and that well shafts are encased in layers
of steel and concrete, preventing any escape of chemicals into groundwater. But some
residents who live near gas-drilling rigs say their water has become foul-tasting,
discolored or even flammable because methane from gas wells has seeped into domestic water
supplies. Industry spokespeople say there has never been a proven case of groundwater
contamination from fracking. A bill in Congress would require gas companies to disclose
the chemicals used in fracking and give the EPA oversight of the industry, which is now
regulated by the states." |
"Britain £9.5 billion plan to bury power station pollution under the
seabed will move a step closer this week. Ed Miliband, the Energy Secretary, is ready to
give tens of millions of pounds to E.ON and ScottishPower, the utility groups, to finish
designs for carbon capture and storage equipment that would be fitted to coal-fired power stations. CCS catches
carbon dioxide generated by burning fossil fuels, liquefies it and pumps it into
underground storage caverns. The Government sees it as a key element of its plans to cut
Britains greenhouse gas emissions. Last year, it introduced a carbon levy to raise
£9.5 billion to fund up to four of the experimental plants. Mr Miliband will also supply
fresh details of the Governments vision to build 'carbon clusters' in regions where
heavy industry and power plants are located. Moving millions of tonnes of carbon from
plants to spent oil and gasfields in the North Sea will require a large new pipeline
network." |
"Ethiopia is only one of 20 or more African countries where land is
being bought or leased for intensive agriculture on an immense scale in what may be the
greatest change of ownership since the colonial era. An Observer investigation estimates
that up to 50m hectares of land an area more than double the size of the UK
has been acquired in the last few years or is in the process of being negotiated by
governments and wealthy investors working with state subsidies. The data used was
collected by Grain, the International Institute for Environment and Development, the
International Land Coalition, ActionAid and other non-governmental groups. The land rush,
which is still accelerating, has been triggered by the
worldwide food shortages which followed the sharp oil price rises in 2008, growing water shortages and the European Union's insistence that 10% of
all transport fuel must come from plant-based biofuels by 2015. In many areas the deals
have led to evictions, civil unrest and complaints of 'land grabbing'. The experience of
Nyikaw Ochalla, an indigenous Anuak from the Gambella region of Ethiopia now living in
Britain but who is in regular contact with farmers in his region, is typical. He said:
'All of the land in the Gambella region is utilised. Each community has and looks after
its own territory and the rivers and farmlands within it. It is a myth propagated by the
government and investors to say that there is waste land or land that is not utilised in
Gambella. 'The foreign companies are arriving in large numbers, depriving people of land
they have used for centuries. There is no consultation with the indigenous population. The
deals are done secretly. The only thing the local people see is people coming with lots of
tractors to invade their lands. 'All the land round my family village of Illia has been
taken over and is being cleared. People now have to work for an Indian company. Their land
has been compulsorily taken and they have been given no compensation. People cannot
believe what is happening. Thousands of people will be affected and people will go
hungry.' It is not known if the acquisitions will improve or worsen food security in
Africa, or if they will stimulate separatist conflicts, but a major World Bank report due
to be published this month is expected to warn of both the potential benefits and the
immense dangers they represent to people and nature. Leading the rush are international
agribusinesses, investment banks, hedge funds, commodity traders, sovereign wealth funds
as well as UK pension funds, foundations and individuals attracted by some of the world's
cheapest land. Saudi Arabia, along with other
Middle Eastern emirate states such as Qatar, Kuwait and Abu Dhabi, is thought to be the
biggest buyer. Together they are scouring Sudan, Kenya,
Nigeria, Tanzania, Malawi, Ethiopia, Congo, Zambia, Uganda,
Madagascar, Zimbabwe, Mali, Sierra Leone, Ghana
and elsewhere. Ethiopia alone has approved 815 foreign-financed agricultural projects
since 2007. Any land there, which investors have not been able to buy, is being leased for
approximately $1 per year per hectare. Saudi Arabia, along with other
Middle Eastern emirate states such as Qatar, Kuwait and Abu Dhabi, is thought to be the
biggest buyer.... Some of the African deals lined up are eye-wateringly large: China has
signed a contract with the Democratic Republic of Congo to grow 2.8m hectares of palm oil
for biofuels. Before it fell apart after riots, a proposed 1.2m hectares deal between
Madagascar and the South Korean company Daewoo would have included nearly half of the
country's arable land. Land to grow biofuel crops is
also in demand. 'European biofuel companies have acquired or requested about 3.9m hectares
in Africa. This has led to displacement of people, lack of consultation and compensation,
broken promises about wages and job opportunities,' said Tim Rice, author of an ActionAid
report which estimates that the EU needs to grow crops on 17.5m hectares, well over half
the size of Italy, if it is to meet its 10% biofuel target by 2015. 'The biofuel land grab in Africa is
already displacing farmers and food production. The number of people going hungry will
increase,' he said. British firms have secured
tracts of land in Angola, Ethiopia, Mozambique, Nigeria and Tanzania to grow flowers and
vegetables. Indian companies, backed by government loans, have bought or leased hundreds
of thousands of hectares in Ethiopia, Kenya, Madagascar, Senegal and Mozambique, where
they are growing rice, sugar cane, maize and lentils to feed their domestic market.
Nowhere is now out of bounds. Sudan, emerging from civil war and mostly bereft of
development for a generation, is one of the new hot spots. South Korean companies last
year bought 700,000 hectares of northern Sudan for wheat cultivation; the United Arab
Emirates have acquired 750,000 hectares and Saudi Arabia last month concluded a
42,000-hectare deal in Nile province." |
"China's western Qinghai
Province, containing major deposits of the country's 'combustible ice,' will see increased
explorations for this emerging clean energy, Provincial Governor Luo Huining said on
Saturday. The plateau province plans to allow large energy companies along with
researchers to tap this new source of energy while minimizing environmental threats, Luo
said on the sidelines of the annual session of the National People's Congress (NPC),
China's top legislature. 'Combustible ice,' or natural gas hydrate, is mainly found in
deep seas and atop plateaus. Approximately one cubic meter of 'combustible ice' equals 164
cubic meters of regular natural gas. At a time of energy bottlenecks, the new energy
resource has drawn interest from many countries.
Additional attention has focused on the 'ice' having a low proportion of impurities,
resulting in it generating almost no pollutants when burned. More than 100 countries
around the world have found deposits of 'combustible ice.' The deposits in Qinghai
Province, home to one-quarter of China's total reserve on the Qinghai-Tibet Plateau, were
discovered in September 2009. 'Combustible ice' reserves on the Qinghai-Tibet Plateau are
estimated to equal at least 35 billion tonnes of oil, which could supply energy to China
for 90 years. Luo said tapping this new energy resource should be given high priority in
China's energy strategy." |
"2010 is a big year for nuclear
fusion but experts fear that a lack of fuel could push the dream of cheap, safe, clean and
limitless energy far into the future. As fossil
fuels run dry and increasingly desperate attempts are made to control carbon emissions,
the seductive promise of fusion energy has attracted billions of pounds of international
funding. Later this year the payback on this investment should begin. A laser at the
National Ignition Facility in California will fuse together pairs of hydrogen nuclei,
releasing high energy neutrons that should, for the first time, produce more power than
the laser itself has put in. As Professor Mike Dunne, head of Europe's laser fusion
project says, 'The first credible attempt is now just a few months away after 50 years of
trying. Incredibly exciting times.' Rumbling voices of discontent may, however, be audible
beneath the Californian back-slapping. At Greenpeace International, Jan Beranek worries
about the safety and security of the radioactive tritium used in the reactor. 'There is
always a risk that either the technology or the nuclear materials can fall into the wrong
hands... Some of the materials can be used for hydrogen bombs.'... Dr Marc Beurskens at
the Culham Centre for Fusion Energy in Oxfordshire says that nuclear waste is not a
serious problem as tritium decays relatively quickly. There is, he says, 'a proliferation
issue with tritium because it is used in weapons and obviously decent security has to be
set up, but it's much easier to control than stocks of uranium.' That still leaves the fundamental problem with fusion - the fuel
supply. Professor Steve Cowley, director of the fusion programme at the United Kingdom
Atomic Energy Authority explains that the fuel is derived from two different forms of
hydrogen. 'Deuterium is in sea water. The oceans of the world contain sixty billion year's
worth of deuterium. Tritium comes from lithium, lithium salts are in sea water.' Things,
sadly, aren't quite as simple as that sounds. There are only around 20 kilograms of
tritium in the world. Supplies come principally from nuclear reactors, specifically
Canadian heavy water reactors. They can produce enough tritium to supply current
experimental fusion plants but not enough for commercial production. Jan Beranek of
Greenpeace claims that, 'to sustain a reaction for a year for just one reactor it would
need to burn 50 kgs of tritium... at the moment we are able to get one kg for about $30
million (£20 million)'. And that price is expected to rise. So where could affordable
fuel come from? Professor Cowley admits: 'That's part of the problem that we haven't done
yet but we do know how to do it because it's been done with nuclear reactors.' Cowley and
his colleagues expect fusion reactors to become self-sustaining, 'breeding' their own fuel
supply. 'The principles are right, but there's a lot
of difference between principles and practice and that's where we have to do our work,' he
says. Dr Michael Dittmar, a physicist at CERN working
for the Swiss Federal Institute of Technology thinks this is a comforting folly, a process
fraught with problems in physics, mathematics and engineering. 'You put 20 kgs of this tritium in and then you start to operate a kind
of chain reaction. Even to come to the chain reaction there are so many fundamental
problems that cannot be addressed at a single place in the world.' He says the vast
expenditure on experimental reactors should be halted until that basic problem is
resolved. Some $3.5 billion (£2.1 billion) is being spent on America's National Ignition
Facility and, at least 10 billion euros (£9 billion) on the ITER reactor under
construction in France. 'If this doesn't work we can forget the entire rest of the
project,' he says." |
"Todays biofuels targets
risk causing another oil supply crunch in the middle of this decade, a key report for the
international energy ministers meeting in Mexico this month has warned. The report,
which will be a central topic for discussion at the summit, says there is an 'urgent need'
to review existing biofuel policies. It says targets
to boost the use of biofuels create uncertainty over future oil demand, and so ran the
risk of prompting oil-producing countries to cut investments in projects needed to ensure
sufficient oil supply once the world emerges from recession. 'Oil-producing countries ...
are justified in being cautious in making new investments in new production capacity if
there is a risk that energy security and climate change policies in consuming countries
could destroy the corresponding demand,' says the report, which was written by a former
head of Opec, the oil producers cartel, and a former head of the International
Energy Agency, the oil-consuming countries watchdog. New targets for more advanced
forms of biofuel should be considered only after careful evaluation of their long-term
sustainability, the report states. 'Setting strong and ambitious targets before ensuring
sustainability, as has been the case for most first-generation biofuels, adds to
uncertainty of supply, which could increase market volatility in the medium term. This in
turn would increase energy security risk rather than improve it,' it says. The main
opposition to biofuels targets, such as the European Unions goal of their comprising
10 per cent of all transport fuel by 2020, has come from those who argue biofuel
production pushes food prices higher. However, such opposition generally does not
encompass second-generation biofuels, which have smaller carbon footprints and use sources such as algae that
do not compete with food." |
"Russia crude production neared
a post-Soviet record in February as TNK-BP, the
venture owned by BP Plc and a group of billionaires, raised output at new fields in both
western and eastern Siberia. Crude production reached almost 10.08 million barrels a day,
a gain of 3.3 percent from a year earlier and 0.2 percent from the previous month,
according to preliminary data from the Energy Ministrys CDU-TEK unit. Output, which has exceeded 10 million barrels a day for six months in a
row, was slightly below Novembers record. Oil exports
slumped to 5.21 million barrels a day, down 1.3 percent from
January and 5.7 percent on the year, as the export
tax climbed following the price of Urals, Russias benchmark blend. TNK-BP boosted output to 1.42 million barrels day after ramping up new
projects, such as the Uvat and Kamennoye fields in western Siberia and Verkhnechonsk in
the east. Production advanced 4.5 percent from a year earlier and 0.5 percent from the
previous month, not including its OAO Slavneft venture." |
"Capturing heat from power
plants could help reduce Britains future generation capacity, projected to exceed
150 gigawatts by 2050, by 13 percent, according to a
Combined Heat and Power Association report. Diversifying the ways heat is supplied and
using combined heat and power, or CHP, plants would reduce peak demand, making it easier
to manage electricity usage, the report said. Heat represented 41 percent of
Britains total final energy consumption in 2007." |
"Asian buyers are taking record
volumes of West African crude oil this year as fuel consumption rises in India, China and
other East Asian countries, a Reuters survey of
trade sources showed on Monday. Imports of cargoes of unrefined oil from Nigeria, Angola
and other African producers via Atlantic ports averaged around 1.79 million barrels per
day (bpd) in the first quarter, up from about 1.53 million bpd in the fourth quarter and
close to 1.1 million bpd a year ago. In the first three months of this year, Asia consumed
about 40 percent of all the West African crude produced, up from around 25 percent in Q1
2009, the Reuters survey shows. Asian buyers have so far taken 52 cargoes of West African
crude oil due to load in March, compared with around 50 in February and at least 59
cargoes loading in January." |
"The oil supply challenge is often summarized in terms of the
production volume equivalent of Saudi-Arabias that needs to be replaced. This
popular metric is based on in-depth studies of global
decline rates that show a decline range between 4.5 and 6 percent over the current 73
million barrels of crude oil produced per day. By
using such literature values for all types of production, it can be shown that: |
"Using fossil fuel in vehicles is better for the environment than
so-called green fuels made from crops, according to a government study seen by The Times.
The findings show that the Department for Transports target for raising the level of
biofuel in all fuel sold in Britain will result in millions of acres of forest being
logged or burnt down and converted to plantations. The study, likely to force a review of
the target, concludes that some of the most commonly-used biofuel crops fail to meet the
minimum sustainability standard set by the European Commission. Under the standard, each
litre of biofuel should reduce emissions by at least 35 per cent compared with burning a
litre of fossil fuel. Yet the study shows that palm
oil increases emissions by 31 per cent because of the carbon released when forest and
grassland is turned into plantations. Rape seed and soy also fail to meet the standard. The Renewable Transport Fuels Obligation this year requires 3¼ per cent
of all fuel sold to come from crops. The proportion is due to increase each year and by
2020 is required to be 13 per cent. The DfT commissioned E4tech, a consultancy, to
investigate the overall impact of its biofuel target on forests and other undeveloped
land. The EC has conducted its own research, but is refusing to publish the results. A
leaked internal memo from the ECs agriculture directorate reveals its concern that
Europes entire biofuels industry, which receives almost £3 billion a year in
subsidies, would be jeopardised if indirect changes in land use were included in
sustainability standards....Last year, 127 million litres of palm oil was added to diesel
sold to motorists in Britain, including 64 million litres from Malaysia and 27 million
litres from Indonesia. Kenneth Richter, biofuels campaigner for Friends of the Earth,
said: 'The billions of subsidy for biofuels would be better spent on greener cars and
improved public transport.'" |
"The Canadian Oil Sands Trust
has announced it will increase synthetic crude oil production capacity at its Syncrude
project near Fort McMurray, Alberta. The
company said that, based on preliminary scoping and design work by Syncrude and
ExxonMobil, the existing Mildred Lake upgrading facility has latent capacity that can be
'unlocked' through a series of steps, allowing
synthetic crude oil production to grow to approximately 425,000 barrels per day (bpd) by the end of the decade. The projects include accessing excess
coking capacity, modifying facilities, and potentially adding new ancillary units. Alberta
tar sands project will increase production." |
"Shell Oil Co. said Tuesday it is abandoning its quest for water
rights from the Yampa River in northwest Colorado to develop oil shale production, citing
delays in the project due to the global economic downturn. The Yampa is the last
free-flowing river in Colorado, uninterrupted by dams or other diversions. It winds
through Dinosaur National Monument and is a popular rafting spot for the region's boaters.
Colorado, Wyoming and Utah are thought to hold 800 billion barrels of recoverable oil in
shale. But critics of a federal management plan for developing oil shale on public lands
say the process would use too much of the region's scarce water. Though Shell dropped its
bid for Yampa water this week, the company left open the possibility of pursuing the
oil-shale project in the future. 'The exact scale and timing for development will depend
on a number of factors, including progress on our technology development, the outcome of
regulatory processes, market conditions, project economics and consultations with key
stakeholders' the company said in a statement. Shell was seeking a conditional water
right to take up to 375 cubic feet per second, about 8 percent of the Yampa's average
April-to-June flow. The company would have pumped the water into a new reservoir covering
1,000 acres and holding 45,000 acre-feet of water, or about 15 billion gallons." |
"A survey of 70 active companies by industry body Oil & Gas UK
shows that there are more projects under consideration than at this time last year.
However, difficulties raising finance and the fact
that the easiest and therefore cheapest reserves to extract have already
been exploited means fewer projects are actually being developed. This will lead to a fall
in the UK's domestic oil production and increase the need for imports. There are 11bn barrels of oil and gas in existing projects, up 15pc from
the previous year enough to meet half the UK's demand in 2020. However, companies
will need to raise £60bn of capital expenditure to extract this oil. Oil companies are
planning to extract only 5.25bn barrels from approved projects, up from a target of 6bn
barrels at this time last year. Mike Tholen, the industry group's economics director and
author of the report, said confidence had improved, but the investment climate was still
not good." |
"Five years ago, when oil prices were climbing steadily and
economists were stoking fears about peak oil and gas, it seemed that major energy
producers like Russia were holding all the cards. Then-president Vladimir Putin spoke of
his country as an 'energy superpower' and used energy supplies as a blunt instrument of
Kremlin foreign policy. Gas cutoffs to Ukraine caused panic in Europe, while Western
energy companies fell over each other to get a slice of Russia's oil and gas fields. But
all that is over. Today, the super-giant Shtockmann
natural-gas field under the Arctic seaRussia's only big hydrocarbon discovery since
Soviet timeshas just been mothballed due to the towering cost of extracting the
undersea gas. At the same time, worldwide demand for Russia's gas has plummeted. And
meanwhile, the government has punctured investor confidence by pressuring BP, one of the
few major foreign investors left in Russia's energy sector, to hand over a giant Siberian
gas field to a government-owned rival. It's time for Moscow to kiss goodbye those dreams
of energy hegemony. One problem is that the recession has eviscerated European demand for
Russian natural gas (consumption dipped by 7 percent in 2009). Another is that demand in
the United States for imported natural gas has fallen off too. Thanks to shale gas and
other unconventional sources like tar sands, the U.S. is now close to self-sufficient in
natural gas. It's a nightmare for Shtockmann, where
the business plan hinged on freezing the product into liquified natural gas, or LNG, for
export to the United States....The $20 billion cost of extracting the deep-buried gas in
the harsh conditions of the Arctic has proved prohibitive for Gazprom and its minority
partners, Total of France and Statoil of Norway....Now the European market seems
oversupplied. More worrying still, Gazprom's traditional suppliers (gas fields in the
Central Asian nations of Turkmenistan and Kazakhstan) have begun opening their own direct
pipelines to China, where gas consumption has a future. And though Gazprom still controls
about 17 percent of the world's proven natural-gas reserves, many of its existing fields
are beginning to run dry. Getting at the remainderfor instance at the Bovanenkovo
field in the remote Yamal Peninsula in Siberiawill need massive investment of cash
and know-how. Who wants to sink in that kind of money with no guarantee of returns?....Russia remains the largest exporter of oil and gas in the
worldbigger even than Saudi Arabia. But unlike the Gulf nations, Russia is fast
pumping its existing wells of both oil and gas dry.
To tap its reservesand to maintain Russia's status as an 'energy
superpower'Russia needs to stop ripping off its investors just because a demand
falloff has hurt its bottom line. Gas consumption will come back. But Russia's superpower
aspirations won't also rise if Russia has alienated its partners. Without them, its new
reserveslike the Shtockmann fieldwill remain buried in the ground." So Long, Salad Days Newsweek, 24 February 2010 |
"Forget global warming the more pressing problem is that the
lights are about to go out. Look at the projections, and you will see why Ed Miliband, the
Cabinet minister responsible for energy (there have been eight since 1997), should be up
at night worrying. Over the next seven years, all the assumptions about where our power
comes from will be overturned. Five years ago,
Britain became a net importer of fossil fuels. The depletion of North Sea oil and gas
means that we are depending increasingly on foreign supplies. In 2000, we imported just
one per cent of our natural gas supplies; now it's nearly half, and the National Grid
expects it will reach 70 per cent by 2018. On Tuesday, Oil & Gas UK, which represents
the industry, issued a warning that without more investment in the North Sea, its
contribution towards our energy needs will continue to dwindle. At the same time,
generating capacity is set to drop off sharply, as ageing coal, gas and nuclear power
stations are taken out of service. As so often,
Europe is playing its part, in the shape of the EU Large Combustion Plant directive, which
says that they should be cleaned up at vast cost or closed. The
Government admits that by 2020 the lost capacity will be vast 22.5 gigawatts, or
almost a third of our total requirements....the
present Government has done to address the looming blackout. It has stuck to a policy
designed for an age of plenty, when what is needed is one to deal with the insecurities of
the 21st century. How, for example, should we protect
ourselves against the prospect of rising oil prices at a time when economic growth
elsewhere will drive up demand for ever scarcer supplies? How do we insure against political instability abroad? When Russia
tightened the tap on its natural gas pipelines last year in a dispute with Ukraine,
Britain suffered, because we are at the other end of that network and have far smaller
stockpiles than our European counterparts. Argentina's sabre-rattling over oil exploration
in the Falklands may be comical today, but what about a nuclear-armed Iran blockading the
Strait of Hormuz, through which much of the world's oil supplies must pass? Last year, the
Government admitted that by 2017, demand will at times exceed supply, and that we could
expect the first power outages since the rationing of the 1970s. That would mean up to 16
million households sitting in the dark for an hour. Charts from Mr Miliband's own
department show that the situation will be even worse a decade later....Energy security or our lack of it is where those on
either side of the [climate change] debate can find common ground....We face a looming
crisis that has inescapable parallels with the banking disaster that nearly brought the
world's money system to a halt." |
"Spare capacity, the market term for difference in supply and demand
of crude, has remained constrained despite recession and a massive reduction in oil demand
in 2009, Francisco Blanch, Global Head of commodities research at Bank of America Merrill
Lynch, said in his latest report. Blanch cited the decline in supply from non-Opec
suppliers for the reduction in spare capacity without giving a figure. He warned
geopolitics and protectionism may play spoilsport for the oil markets. 'Last year, we
estimated that global non-Opec production decline rates averaged 4.8 per cent for fields
producing between 2003 and 2008. When adding 2009, we find non-Opec
decline rates have increased from 4.8 per cent to 4.9 per cent. This step up shaves one
million barrels a day by 2015 from our non-Opec supply projections,' Blanch wrote in his report. The global demand for oil will rise two
million barrels a day this year with emerging economies accounting for three-fourth of
this rise, Blanch had told Emirates Business earlier. 'While the demand in emerging
economies will rise by 1.5 million barrels a day, it will rise by 0.5 million barrels a
day in the OECD economies.' Oil will average at $85 a barrel this year, Blanch said. 'It
will potentially get close to $90 a barrel by the third quarter. It will break into a
hundred in the first quarter of the next year,' the analyst credited for forecasting $147
a barrel price for oil almost on the nose in 2008 had told this newspaper earlier. For
most industries around the world the crisis was exceptional, but not for oil, Blanch's new
report said adding that the commodity has fared the crisis with strength. Oil had already
suffered two back-to-back recessions in the 80s and 90s, where utilisation rates dropped
to very low levels. The first recession in oil occurred in the early 80s as increased
North Sea crude production and a major switch in OECD oil demand towards natural gas and
nuclear power forced Saudi Arabia to cut output by 6.7 million barrels a day. In the early
90s, the oil industry suffered a second large recession, as the economic collapse of the
Soviet Union left five million barrels a day of spare capacity. Blanch has predicted that the non-Opec supply will peak by 2011. 'We conclude that non-Opec supply,
including non-conventional oil, NGLs and biofuels, will likely peak by 2011 at around 52.3
million barrels a day. Thereafter we see steady declines in production, reaching 51
million barrels a day by 2015. The world will thus become more reliant on Opec and we see
utilisation rates reaching 95 per cent by 2014,' he
said.... Reliance on Opec crude will only grow from
now to 2015, Blanch said. 'We see Opec utilisation
rates reaching 94 per cent by 2014 despite large investments in Saudi Arabia, Angola and
Algeria.' Blanch reiterated his opinion that the emerging markets (EMs) will drive the
demand for oil until 2015....With Opec capacity utilisation rates now running at around 81
per cent, any return to the recent demand growth path will likely eat into spare capacity
sooner rather than later, Blanch said.....As a result, large fluctuations in prices will
likely remain the norm to bring medium-term supply and demand trends into balance. 'In
line with this view, we see the band for oil prices widening from $70-$85 per barrel at
present, to $65-105 barrel the next year. By 2014, the range could expand again to the
$50-150 barrel band observed in 2008,' Blanch wrote in his report..... Following two decades of exceptionally high spare productive
capacity in the 80s and 90s, the global oil market tightened at a very rapid pace in the
2000s as robust demand from emerging economies stumbled against limited supply growth, said Blanch. However, the recession brought about a substantial
contraction in OECD oil demand, forcing Opec cartel members to cut supply by 3.1 million
barrels a day in early 2009 and late 2008. 'While oil demand has started to recover again,
the medium-term outlook for oil and the global economy remains extremely uncertain. What
does oil have in store for the 2010s. A potential four-fold surge in Iraqi production,
dramatic increases in oil efficiency and substitution or a demand bubble in the emerging
economies could all create large swings in global oil supply and demand balances. But the
departure point matters, suggesting that oil the oil markets could be very tight again by
2014,' said Blanch. He sees large fluctuations in oil prices after 2014....Taking the Iraqi government's announcement of raising its oil
production capacity from 2.5 million barrels a day to 10-12 million barrels a day over the
next decade with a pinch of salt, blanch said that
such a development would keep oil prices below $100 a barrel. 'While we remain sceptical that these large increases in volumes can be
achieved, a four-fold increase in Iraqi production
over the coming years could be sufficient to keep oil prices from rising above $100 a
barrel for much of this decade,' said Blanch." |
"BP Plc and Royal Dutch Shell Plc may falter in their campaigns to save billions in
oil and gas project costs as a resurgence in drilling and demand for engineers threaten to
revive inflation in the industry. Crude prices doubled to near $80 a barrel in the past
year, prompting producers to resume projects put on hold during the recession. Oil and gas
industry spending will rise 11 percent this year to $439 billion, according to Barclays
Capital. 'Oil price inflation and cost inflation are highly correlated, albeit with some
delay,' said Paul Wheeler, a London-based managing director in the oil and gas group at
investment bank Jefferies International Ltd. 'The oil
industry is always people constrained. Its one of the biggest challenges: a lack of
young engineers and geologists.' |
"When world oil producers and consumers convened in Jeddah for an
emergency summit in June 2008, Samuel Bodman, then US energy secretary, had a simple
message for Saudi Arabia: pump more oil now. As Steven Chu, his successor, flies to the
kingdom this week, the agenda instead has a heavy focus on research and technology. The
different messages underscore the fact that crude prices have fallen from $130 a barrel in
June 2008 to $80 a barrel. They also reflect a further tilt in the balance of demand
growth from west to east. While the US's thirst for
oil still leads the world, demand fell in 2008-09 and most analysts expect that efficiency
measures and bad memories of the recent price spike will keep a lid on any rebound. The US
has also been diversifying its sources of oil. Canada has overtaken Saudi Arabia as the
top supplier amid aggressive investment in its tar sands region. Angola, Nigeria and Brazil have also contributed. More important, these
producers are competing for a smaller market. US crude imports peaked above 10m barrels a
day in 2005, and in the past two years have fallen 9 per cent as recession thinned traffic
and pared industrial activity. China's crude imports, meanwhile, rose about 14 per cent
last year. Purchases from Saudi Arabia, its largest supplier, rose faster and reached a
record 1.2m b/d in December. Saudi imports averaged 843,000 b/d last year, still lower
than the US average in the first 11 months for which data are available. Jim Burkhard,
managing director of global oil at IHS Cambridge Energy Research Associates, the
consultant, said: 'This is a reflection of the global economy. China has been growing. The
US hasn't. We've seen that reflected in oil demand figures.' For Saudi Arabia, in need of
stable markets for 264bn barrels in oil reserves, China promises reliable demand as slower
economic growth and efficiency measures take hold in the west. Analysts do not expect the
shift in oil flows to undermine the strong political relationship between the US and the
kingdom. Mr Chu's office said his visit is meant to strengthen US partnerships in the
region. Greg Priddy, global oil analyst at Eurasia Group, a political risk consultancy,
said the US was 'actually encouraging the Saudis to export more to China as an offset to
Iran', which faces increasing international pressure over its nuclear programme. Saudi
Aramco, the state oil company, owns half of Motiva Enterprises, a US refinery joint
venture that it helps to supply. Still, there are
signs the world's top crude producer is shifting attention east. Saudi Arabia is ending a
lease for some of the vast storage facilities in the Caribbean it used to dispatch cargoes
to US refineries. Ali Naimi, Saudi oil minister, recently said the kingdom was leasing new
storage in Okinawa, Japan, from which to ship oil to the booming Asian market. 'Asia will
be a huge market,' Mr Naimi said. Saudi Arabia has shouldered the bulk of the output cuts
announced by Opec, the oil cartel. Analysts say it shut in cheaper, heavier crudes in
order to preserve profit margins. This has squeezed
operations at US refineries that specialise in the heavier grades, further damping US
demand for Saudi oil. Amy Myers Jaffe, a research fellow at Rice University in Houston,
said that while market forces had redirected Saudi exports, US energy policy was also a
factor. 'Everything in oil is geopolitical,' she said. 'For sure, the Saudis have commercial reasons . . But oil is
never 100 per cent commercial.'" |
"BP Plc and Royal Dutch Shell Plc may falter in their campaigns to
save billions in oil and gas project costs as a resurgence in drilling and demand for
engineers threaten to revive inflation in the industry. Crude prices doubled to near $80 a
barrel in the past year, prompting producers to resume projects put on hold during the
recession. Oil and gas industry spending will rise 11 percent this year to $439 billion,
according to Barclays Capital. 'Oil price inflation and cost inflation are highly
correlated, albeit with some delay,' said Paul Wheeler, a London-based managing director
in the oil and gas group at investment bank Jefferies International Ltd. The oil
industry is always people constrained. Its one of the biggest challenges: a lack of
young engineers and geologists. |
"The API reported that total US oil consumption is now at the lowest
level, 18.4 million b/d, in 12 years despite the fact that gasoline rose steadily in
January. US gasoline consumption is now about 8.7
million b/d as opposed to a high of 9.6 million reached in July 2007. Consumption of low sulfur diesel fuel, used in heavy trucks is down by
11.5 percent, a bad sign for the US economy." |
"The worlds most powerful investors have been advised to buy
farmland, stock up on gold and prepare for a 'dirty war' by Marc Faber, the notoriously
bearish market pundit, who predicted the 1987 stock market crash. The bleak warning of
social and financial meltdown, delivered today in Tokyo at a gathering of 700 pension and
sovereign wealth fund managers. Dr Faber, who advised his audience to pull out of American
stocks one week before the 1987 crash and was among a handful who predicted the more
recent financial crisis, vies with the Nouriel Roubini, the economist, as a rival claimant
for the nickname Dr Doom. Speaking today, Dr Faber said that investors, who control
billions of dollars of assets, should start considering the effects of more disruptive
events than mere market volatility. 'The next war will be a dirty war,' he told fund
managers: 'What are you going to do when your mobile phone gets shut down or the internet
stops working or the city water supplies get poisoned?' His investment advice, which was
the first keynote speech of CLSAs annual investment forum in Tokyo, included a
suggestion that fund managers buy houses in the countryside because it was more likely
that violence, biological attack and other acts of a 'dirty war' would happen in
cities....One of Dr Fabers darker scenarios
involves growing military tension between China and the United States over access to
limited oil resources. Today the US has a
considerable advantage over China because it has free access to oceans on both coasts, and
has potential energy suppliers to the north and south in Canada and Mexico. It also
commands an 11-strong fleet of aircraft carriers that could, if necessary, secure supply
routes in a conflict situation. China and emerging Asia, meanwhile, face the uncertainty
of supplies that must travel from the Middle East through winding sea lanes and the
Malacca bottleneck. American military presence in Central Asia, Dr Faber said, may add to
the level of concern in Beijing. 'When I tell people to prepare themselves for a dirty
war, they ask me: 'America against whom?' I tell them that for sure they will find
someone.' At the heart of Dr Fabers argument is a fundamentally gloomy view on the
US economy and its capacity to service a growing mountain of debt. His belief, fund
managers were told, is that the US is going to go bankrupt. Under President Obama, he
said, the countrys annual fiscal deficit will not drop below $1 trillion and could
rise beyond that figure." |
"Bank of America and Barclays
Capital, two leading oil traders, have told clients to brace for crude above $100 (£64) a
barrel by next year, before it pushes relentlessly higher over the decade. This is a stark
contrast from recessions in the 1980s and 1990s, when it took years to work off excess
drilling capacity built in the boom. 'Oil has the
potential to flirt with $100 this year. We forecast an average price of $137 by 2015,'
said Amrita Sen, an oil expert at BarCap. The price has doubled to $78 in the last year.
'The groundwork for the next sustained step up
in oil prices is now almost complete. Global spare capacity is likely to be reduced to low
levels within a relatively short time. The global economic crisis has postponed, but not
cancelled, a crunch which would otherwise be starting to bite now,' said Barclays. Francisco Blanch, from Bank of America Merrill Lynch, said crude may touch
$105 next year, with $150 in sight by 2014. 'Approximately 1.7bn consumers in emerging
markets with a per capita income of $5,000 to $20,000 are eagerly waiting to buy cars,
air-conditioning units, or white goods,' he said. China has overtaken the US as the
world's top car market. Mr Blanch expects oil demand to rise by a further 2.8m barrels per
day (bpd) in China and 2.5m bpd in India by 2015, when two giants will be absorbing the
lion's share of Gulf output. Consumption in the West
has already peaked and will fall each year as populations shrink and we waste less, but
the West no longer sets the price. Global use will increase by 8.8m bpd to 95m bpd....Mr Blanch said output from
non-OPEC states is falling by 4.9pc each year, despite Russia's reserves. Saudi Arabia and
the Emirates can plug a quarter of the gap, but global spare capacity must soon drop to
wafer-thin levels leaving us vulnerable to the sort of 'super-spike' seen in 2008.
The wildcard is whether Iraq can quadruple output to Saudi levels this decade, a target
dismissed by most analysts as pie-in-the-sky. Painfully high prices are needed to unlock
fresh supplies as reserves are depleted in the North Sea and the Gulf of Mexico.
Deep-water rigs off Brazil are costly and require drilling far below the seabed. Canadian
oil sands and US biofuels have break-even costs near $70. While the US, UK, and the Far East are turning to nuclear power, it takes
a decade to build reactors. 'peak uranium' lurks in any case. The oil spike brought the
global economy to a shuddering halt in 2008. This time the crunch may hit before the West
has fully recovered. Whatever happens, the US, Europe and Japan will soon transfer a chunk
of their wealth to the petro-powers. It is a new world order." |
"Billions of barrels of oil may lie trapped in the rocks deep beneath
the ocean floor of the South Atlantic, but finding them and bringing them to market is
likely to be a big struggle vastly expensive and fraught with political
complications. A study by the British Geological Society suggested that the region could
contain up to 60 billion barrels of oil a similar-sized deposit to the North Sea.
But such figures may give little sense of how much is recoverable using existing
technology. No drilling has been carried out in the Falklands since 1998, when Shell and
Lasmo drilled six wells in an area to the north of the islands, not far from where the
current drilling programme is set to start next week. Traces of crude were discovered in
all but one of the wells where gas was found instead but the following year
the global price of oil fell to $10 per barrel, ending the commercial logic of further
exploration....The drilling site lies in relatively shallow waters about 400 metres
(1,300ft) deep and between 30 and 60 miles north of the islands. Two of the other
companies, Falkland Oil and Gas and Borders & Southern, are prospecting in another
region that lies to the south of the islands in deeper and more challenging waters up to
1,200m (3,900ft) deep. There is a reasonable chance
that at least one of the companies will find oil but whether it is found in
commercial quantities is less clear. The Falklands are so remote that any oil discovery
would need to be large to justify the multibillion- pound costs of building pipelines,
export terminals and other infrastructure. Then there are the political obstacles with
Argentina, which are likely to deter industry giants such as BP, Shell and Exxon. Until a
resolution with Argentina can be reached over who owns the oil, they are likely to remain
sceptical." |
"With oil majors given the
cold shoulder in many developing countries, it is no mean feat that Exxon
Mobil managed to replace 100 percent of last years production with new reserves.
Even so, not all energy is equal. The stuff Exxon
is using to fill its pipeline will be harder to extract and of lower value to
investors....clearing the crucial 100 percent hurdle by S.E.C. standards should be
childs play in 2010. With reserves of more than two billion barrels of oil
equivalent, Exxons latest acquisition, XTO Energy, will replace more than a year of
Exxons output at a stroke. The bigger concern for Exxon will be the nature of these
new reserves. On the bright side Exxon is steering away from capricious developing
nations, meaning fewer political headaches. Recent reserve additions have been in
politically placid areas, notably Canada and Australia. But economic risks may offset
fewer political ones. Discoveries of oil that is easy
to extract and refine are failing to keep pace with output. The barrels taking their place
may be tougher or more costly to reach, and therefore less profitable. Hopes are high that cleaner-burning natural gas will
grow in popularity. The trouble is that gas still trades at a discount to its liquid
cousin crude, especially in the United States, where it is worth about half the price of a
barrel of oil. Liquids, about 57 percent of Exxons
reserves 10 years ago, are now just half, according to IHS Herold. And squeezing energy
from oil
sands, an increasingly important source for Exxon, is often economical only when oil
trades above $60 a barrel. Conventional wells are generally profitable at just half that
level." |
"EDF could face 'massive' new investment to extend the life of its
French nuclear reactors beyond 40 years, the countrys safety authority has warned.
Extending the life of its French reactors is crucial to EDF,
which is hoping to secure 60-year life-cycles for its plants a term that is already common in the US. The move comes as the
French state-owned utility faces the prospect of greater competition in its home market
and struggles to
cope with record debt. André-Claude Lacoste, president of the French nuclear safety
authority, said on Tuesday that the watchdog was 'beginning to treat' the question of the
conditions EDF would have to meet to extend the life of its reactors beyond 40 years. 'To
go beyond that without doubt would require massive investment,' he warned. The warning
came as the regulator revealed that EDF has already been forced to commit hundreds of
millions of euros to replacing the ageing steam generators on 34 of its 58 reactors." |
"Two of Britains biggest
energy companies are lobbying the Conservative Party to keep some of the nations
most polluting power stations operating beyond a deadline set by the European Union, The
Times has learnt. RWE npower and E.ON, the two German-owned companies, have held private
talks with senior Conservative politicians about the legal position of nine coal and
oil-fired power plants due to close by the end of 2015 under new EU pollution rules.
Together, the six coal and three oil-fired plants generate 12.3 gigawatts of electricity,
about 15 per cent of total UK electricity supplies. E.ON and RWE are pressing for at least
some of the plants to be exempted from the EU rules on the grounds that, without them,
Britain could face blackouts by 2015 because not enough replacement stations are being
built." |
"EU companies have taken
millions of acres of land out of food production in Africa, central
America and Asia to grow biofuels for transport,
according to development campaigners. The consequences of European biofuel targets, said
the report by ActionAid, could be up to 100 million more hungry people, increased food
prices and landlessness. The report says the 2008
decision by EU countries to obtain 10% of all transport fuels from biofuels by 2020 is
proving disastrous for poor countries. Developing countries are expected to grow nearly
two-thirds of the jatropha, sugar cane and palm oil crops that are mostly used for
biofuels. 'To meet the EU 10% target, the total land area directly required to grow
industrial biofuels in developing countries could reach 17.5m hectares, over half the size
of Italy. Additional land will also be required in
developed nations, displacing food and animal feed crops onto land in new areas, often in
developing countries,' says the report. Biofuels are estimated by the
IMF to have been responsible for 20-30% of the global food price spike in 2008 when
125m tonnes of cereals were diverted into biofuel production. The amount of biofuels in
Europe's car fuels is expected to quadruple in the next decade. The report attributes the
massive growth in biofuel production to generous subsidies. It estimates that the EU biofuel industry has already received
4.4bn (£3.82bn) in incentives, subsidies and tax relief and that this could triple
to over 13.7bn if the EU meets its 2020 target. The greatest support to the industry
is exemption from excise duties. Duty at the pump is 20 pence less per litre compared to
conventional fuels although this exemption due to end in 2010, a change which supermarket
Morrisons cited last week as the reason for dropping one of its biodiesel blends. In
2009, the duty on low- sulphur petrol and diesel in the UK was 54.19 pence per litre; for
biodiesel and ethanol it was 34.19 pence per litre." |
"A 'miracle' plant, once thought to be as the answer to producing
renewable biofuels on a vast scale, is driving thousands of farmers in the developing
world into food poverty, a damning report concludes today. Five years ago jatropha was
hailed by investors and scientists as a breakthrough in the battle to find a biofuel
alternative to fossil fuels that would not further impoverish developing countries by
diverting resources away from food production. Jatropha was said to be resistant to
drought and pests and able could grow on land that was unsuitable for food production. But
researchers have found that it has increased poverty in countries including India and
Tanzania. Seeds of discontent: the 'miracle' crop that has failed to deliver... Millions
of the plants have been grown in anticipation of rich returns, only for growers to be hit
by poor yields, conflict over land and a lack of infrastructure to process the oil-rich
seeds. Oil giant BP, which planned to spend almost £32m on a joint venture to set up
jatropha plantations, has now pulled out and the charity ActionAid today warns that
jatropha needs to be cultivated on prime food-growing land to produce significant yields.
According to one estimate, up to one million hectares of jatropha an area
equivalent to Devon and Cornwall combined are being cultivated around the globe,
despite little evidence that it can produce enough oil to make the crop commercially
sustainable....despite jatropha's much-lauded ability
to grow where food crops cannot flourish, campaigners say there is evidence that
commercially viable yields can only be obtained in fertile soil. In India, forecasted
annual yields of three to five tonnes of seeds per hectare have been scaled back to 1.8 to
two tonnes. The Overseas Development Institute, a leading international development
think-tank, has stated that 'as the mainstay of people's livelihoods, jatropha looks
distinctly marginal'." |
"Saudi Arabia must be 'very serious' about any possible peak in oil
demand, which is an 'alarm' for OPECs biggest exporter to diversify its economy, a
Saudi Oil Ministry adviser said. Saudi Arabia is making a push into renewable energy and
is starting its first carbon-capture project, Oil Ministry adviser Mohammad al-Sabban said today at the
Jeddah Economic Forum. The country will start
injecting carbon dioxide into Ghawar, the worlds largest oilfield, in 2012, he said. 'Talk of oil demand peaking is an alarm to speed up the economic
diversification process,' al-Sabban said. 'The challenges facing Saudi Arabia are huge: we
need to develop Saudis in order to be innovative, creative, to catch up with the rest of
the world.' The worlds largest oil producer is investing in new industries such as
aluminum and steel and pushing for more science and technology in education as it seeks to
diversify away from dependence on income from exporting crude oil. More than 25 percent of
the kingdoms youth are unemployed. Oil demand in some developed industrialized
nations is contracting, partly as a result of the economic slowdown. Those concerns are
different from 'peak oil' theorists who say oil production has already reached maximum
levels and will inevitably decline." |
"Britain's gas storage capacity
will increase by a third after the Government today officially licenced a new development
but the £600m investment will only be capable of meeting five days' average demand. The Gateway Project, 15 miles offshore, south west of Barrow-in-Furness
will store 1.5bn cubic meters of gas in 20 salt caverns 750 meters below the seabed. It
will be linked by pipeline to the national gas transmission system but will not be in
service until 2014. Britain currently has only one offshore gas storage facility,
Centrica's Rough field in the North Sea, and is vulnerable to winter surges in demand when
supplies are stretched. Total gas storage is equivalent to 16 days demand compared with 88
in France and 77 in Germany." |
"After attacking America's efforts to develop shale gas last week as
'dangerous to drinking water', it seems Russia has decided that not all unconventional
supplies are bad news. Gazprom, the Russian state
energy monopoly and world's largest gas producer, has decided to dip its toe into coal bed
methane. It wants 1.5bn cubic metres of output a year by 2012 from a field in Siberia's
coal-rich Kuzbass area. Russia may have 87 trillion cubic metres of coal-bed methane,
which is the size of 'two Gazproms', says President Dmitry Medvedev. And it's even more
than the 57 trillion cubic metres that has changed the face of US gas production." |
"Canada,
faced with growing political pressure over the extraction of oil
from its highly
polluting tar sands, has begun courting China and other Asian countries to
exploit the resource. The move comes as American firms are turning away from tar sands
because of its heavy
carbon footprint and damage to the landscape.
Whole Foods, the high-end organic grocery chain, and retailer Bed Bath & Beyond last
week both signed up to a campaign by ForestEthics
to stop US firms using oil from Canadian tar sands. The Pentagon is also scaling down its
use of tar sands oil to meet a 2007 law requiring the US government to source fuels with
lower greenhouse gas emissions. Major oil companies such as Shell are also coming under
shareholder pressure to pull out of the Canadian projects. Earlier this year, Shell
announced it was scaling back its expansion plans for the tar sands after a revolt
by shareholders. Producing oil from the Alberta tar
sands causes up to five times more greenhouse gas emissions than conventional crude
oil, according to the campaign group Greenpeace. In
the most significant deal to date, the Canadian government recently approved a C$1.9bn
(£1.5bn) investment giving the Chinese state-owned oil company PetroChina a majority
share in two projects. Prime minister Stephen Harper said: 'Expect more Chinese investment
in the resource and energy sectors
there will
definitely be more.' China's growing investment in the tar sands is seen in Canada as a
useful counter to waning demand for tar sands oil from the US, its biggest customer. The
moves, which have largely gone unnoticed outside north America, could add further tension
to efforts to try to reach a global action plan on climate change." |
"The brains trust of the
Pentagon says it is just months away from producing a jet fuel from algae for the same
cost as its fossil-fuel equivalent. The claim, which comes from the Defense Advanced
Research Projects Agency (Darpa) that helped to develop the internet and satellite
navigation systems, has taken industry insiders by surprise. A cheap, low-carbon fuel
would not only help the US military, the nation's single
largest consumer of energy, to wean itself off its oil addiction, but would also hold the
promise of low-carbon driving and flying for all. Darpa's research projects have already
extracted oil from algal ponds at a cost of $2 per gallon. It is now on track to begin large-scale refining of that oil into jet
fuel, at a cost of less than $3 a gallon, according to Barbara McQuiston, special
assistant for energy at Darpa. That could turn a promising technology into a
market-ready one. Researchers have cracked the problem of turning pond scum and seaweed
into fuel, but finding a cost-effective method of mass production could be a game-changer.
"Everyone is well aware that a lot of things were started in the military,"
McQuiston said. The work is part of a broader Pentagon effort to reduce the military's
thirst for oil, which runs at between 60 and 75 million barrels of oil a year. Much of
that is used to keep the US Air Force in flight. Commercial airlines such as
Continental and Virgin Atlantic have also been looking at the viability of an
algae-based jet fuel, as
has the Chinese government. 'Darpa has achieved the base goal to date,' she said. 'Oil
from algae is projected at $2 per gallon, headed towards $1 per gallon.' McQuiston said a
larger-scale refining operation, producing 50 million gallons a year, would come on line
in 2011 and she was hopeful the costs would drop still further ensuring that the
algae-based fuel would be competitive with fossil fuels. She said the projects, run by
private firms SAIC and General Atomics, expected to yield 1,000 gallons of oil per acre
from the algal farm. McQuiston's projections took several industry insiders by surprise.
'It's a little farther out in time,' said Mary Rosenthal, director of the Algal Biomass
Association. 'I am not saying it is going to happen in the next three months, but it could
happen in the next two years.' But the possibilities have set off a scramble to discover
the cheapest way of mass-producing an algae-based fuel. Even Exxon
which once notoriously dismissed biofuels as moonshine invested $600m in
research last July. Unlike corn-based ethanol, algal farms do not threaten food
supplies. Some strains are being grown on household waste and in brackish water. Algae
draw carbon dioxide from the atmosphere when growing; when the derived fuel is burned, the
same CO2 is released, making the fuel theoretically zero-carbon, although processing and
transporting the fuel requires some energy. The industry received a further boost earlier
this month, when the Environmental Protection Agency declared that algae-based diesel
reduced greenhouse gas emissions by more than 50% compared with conventional diesel. The
Obama administration had earlier awarded $80m in research grants to a new generation of
algae and biomass fuels. For Darpa, the support for algae is part of a broader mission for
the US military to obtain half of its fuel from renewable energy sources by 2016." |
"Britains relations with Argentina fell last night to their
lowest point since the Falklands conflict in a row over an oil platform that is due to
arrive north of Port Stanley next week. The Ocean Guardian is expected to complete its
journey to the disputed waters 100 miles off the Falklands coast from the Scottish
Highlands as part of a campaign that Britain hopes will bring a black-gold rush to the
windswept, sparsely populated islands. But, almost three decades after Britain and
Argentina fought a bloody 72-day conflict over the islands, its impending arrival has
stoked fury in a country that is still intent on claiming the territory as its own....The
British Foreign Office denied that the oil operations were illegal. 'We are absolutely
clear this is legitimate business in Falkland Islands waters and we will continue to
reiterate our position that we have no doubt about our sovereignty over the Falkland
Islands and the surrounding maritime areas,' a spokesman said. Analysts say that as many as 60 billion barrels of high-grade oil
could be found in a 200 sq mile zone surrounding the islands, which is to be developed by
Desire, AGR and Diamond Offshore Drilling. That could make the Falklands one of the
worlds largest oil reserves, comparable with the North Sea, which so far has
produced about 40 billion barrels." British drilling for Falklands oil threatens Argentine relations London Times, 13 February 2010 |
"Fresh controversy is mounting within the European Union over
biofuels and their unintended impact on tropical forests and wetlands, documents show. One leaked document from the EU's executive, the European
Commission, suggests biofuel from palm oil might get a boost from new environmental
criteria under development. But another contains a warning from a top official that taking
full account of the carbon footprint of biofuels might 'kill' an EU industry with annual
revenues of around $5 billion. The European Union aims to get a tenth of its road fuels
from renewable sources by the end of this decade, but has met with criticism that biofuels
can force up food prices and do more harm than good in the fight against climate change. Most of the 10 percent goal will be met through biofuels, creating a
market coveted by EU farming nations, which produce about 10 billion litres a year, as
well as exporters such as Brazil, Malaysia and Indonesia. Environmentalists say biofuels
made from grains and oilseeds are forcing farmers to expand agricultural land by hacking
into rainforests and draining wetlands -- known as 'indirect land-use change' (ILUC).
Clearing and burning forests puts vast quantities of carbon emissions into the atmosphere,
so the EU risks promoting damage to the climate by creating such a valuable market." |
"Cameco Corp., the worlds
second- largest uranium producer, said crews safely re-entered the main working level of
the Cigar Lake mine in Canadas Saskatchewan province yesterday after the site was
fully drained of water. Access was established to
480 meters (1,575 feet) underground and inspections of the development are under way,
Saskatoon, Saskatchewan-based Cameco said today in a statement. Cigar Lake, which sits
atop the worlds richest untapped uranium deposit, flooded in October 2006 and again
in August 2008. Work to secure the underground is
expected to be completed before October and an
update on the project will be included in Camecos earnings release on Feb. 24, the
company said." |
"The International Energy Agency (IEA) gave the market some fresh
optimism today by boosting its global oil demand forecast by 50,000 barrels per day for
2009 and by 170,000 bpd for this year, on the back of stronger economic projections by the
International Monetary Fund (IMF). Global oil demand
is now estimated at 86.5 million bpd for 2010, up 1.8% year-on-year and a 170,000 barrel
increase compared with agency's last report.
For 2009, global demand is expected to come in at 84.9 million bpd, down 1.5% year-on-year
but 50,000 barrels higher than the last forecast....Growth comes entirely from
non-Organisation for Economic Co-operation & Development (OECD) countries and higher
demand readings from China and Asian countries, the agency said. Demand in non-OECD is now
forecast to increase by 4%, while stagnating at 2009 levels in OECD countries. Meanwhile,
oil price projections for 2009 and 2010 were revised up $1 and $4 respectively, to $58 per
barrel and $75 per barrel." |
"As Europe's leaders gather in Brussels today, they have only one
crisis in mind: the debts that threaten the stability of the European Union. They are
unlikely to be in any mood to listen to warnings about a different crisis that is looming
and that could cause massive disruption. ....the work of the Industry Taskforce on Peak
Oil and Energy Security shouldn't be disparagingly dismissed. Its arguments are well
founded and lead it to the conclusion that, while the global downturn may have delayed it
by a couple of years, peak oilthe point at which global production reaches its
maximumis no more than five years away. Governments and corporations need to use the
intervening years to speed up the development of and move toward other energy sources and
increased energy efficiency. In the first report from the task force, Lord Ron Oxburgh, a
former chairman of Shell, wrote that 'It is pretty clear that there is not much chance of
finding any significant quantity of new cheap oil. Any new or unconventional oil is going
to be expensive.'... The Taskforce, assimilating
various opinions, believes 92 million barrels a day will be the most that global supplies
will be able to generate, 'unless some unforeseen giant, and easily accessible, finds are
reported very soon.' It may be that the oil
companies are keeping some giant secrets from us but that seems unlikely. So what lies
ahead is a mismatch between supply and demand. According to Chris Skrebowski, of the Peak
Oil Consulting firm, mid-2015 is when the crunch hits. 'This is when capacity starts to be
overwhelmed by depletion and lack of new capacity additions.' Some dubious emails and
slightly dodgy dossiers have cast a new, and unflattering, light on the global-warming
debate, raising the risk of a return to the belief that we can go on consuming oil with
impunity. Being a 'climate-change denier' is in danger of becoming almost fashionable. But
whatever the risk to the climate, scarce and
expensive oil would be a threat to established economies. We need alternatives." |
"Venezuela awarded on Wednesday the largest oil investment of
President Hugo Chavez's 11-year rule, drawing tens of billions of dollars of much-needed
foreign finance to the Orinoco Belt just three years after the leftist leader nationalized
operations there. U.S.-based Chevron (CVX.N) and Spain's Repsol (REP.MC) led groups that
looked beyond the risks of operating in Venezuela to tap into the OPEC member's 100-plus
billion barrels of reserves, a sign oil giants need to replenish crude reserves that are
increasingly under control of producer nations. The results show victories for both sides.
Oil companies agreed to tough conditions laid down by Caracas while Venezuela softened
fiscal terms in another sign resource nationalism around the world has been weakened by
falling oil prices.....Analysts say the world's reserves of easy-to-produce light oil are
quickly running out, meaning the future of the industry is in difficult production areas
such as the Orinoco Belt, Brazil's deep water fields or Canada's tar sands.....Venezuela's oil production has fallen below 2.5 million barrels
per day (bpd) from more than 3 million bpd in 2001, according to the U.S. Department of
Energy, due principally to limited oilfield investment and lack of qualified personnel." |
"Finding oil and gas to replace the world's fast dwindling reserves
is increasingly risky as rigs probe areas once seen as too difficult or too dangerous, and
costs are rocketing, which could imperil future supply. The cost of discovering each new
barrel of oil and gas has risen three-fold over the last decade as technology has pushed
the frontiers of exploration into ever more remote areas. As old fields run dry, oil
companies are drilling wells in some of the most inhospitable regions, where political,
physical, geological, geographical, technical and contractual risks are high, and they
have had remarkable success....unless consumers pay more for oil in future, some analysts
think we could face an energy supply crunch within a few years. 'The age of cheap oil has
gone and it is not going to come back,' said Paul Stevens, senior research fellow at the
Royal Institute of International Affairs at Chatham House in London. 'The world is not
going to run out of oil tomorrow, but it is more and more expensive to find and will
continue to be so,' he said. 'The worry is that investment may be squeezed as risks rise,
and that could bring us to a looming supply crunch.'....The search for oil has always been
costly and involved risk taking, but the challenges facing explorers have intensified as
wells have moved further offshore, into deeper reservoirs and to places with much higher
political and physical risks. Figures from upstream consultant Wood Mackenzie in Edinburgh
show the cost of finding oil has almost tripled over the last decade even though the rate
of discovery has barely changed. Each barrel of oil equivalent cost an average of just
over $3 to discover last year, compared with just $1.18 in 2001, according to Wood
Mackenzie. Data from BP Plc for the cost of finding new oil show an even bigger increase
-- more than four fold in the five years to 2008. Those figures may seem low given that
world spot oil prices are close to $75 per barrel, but discovery costs need to be
multiplied many times as oil is pumped out of the ground, processed at a refinery and
becomes fuel at a service station. Even established
oilfields, such as those in the North Sea, now have breakeven costs of around $50 per
barrel. The new ultra-deep offshore fields that lie
beneath oceans more than 3 km (1.88 miles) deep and in positions up to 5 miles from rigs
impose even higher costs. Because the rigs work in deeper water, they use more steel, new
technology and are operated by highly trained and expensive specialists." |
"OPEC expects the world will need more of its crude oil this year
than previously forecast, as the organization lowered its outlook for production of
natural gas liquids. The Organization of Petroleum Exporting Countries, responsible for 40
percent of global supplies, predicted in a monthly report today that consumers worldwide
will need 28.75 million barrels a day of OPEC crude in 2010. While thats 150,000
barrels a day more than anticipated in last months report, the resulting 'call on
OPEC' in 2009 is unchanged from last year. 'Required demand for OPEC crude is forecast to
remain almost at the same level as last year, following two consecutive annual declines,'
the groups Vienna-based secretariat said in the report. 'World oil demand and
non-OPEC supply remained almost unchanged' while 'OPEC NGLs experienced a downward
revision.'....OPEC, next scheduled to meet on March 17 in Vienna, left its forecast for
worldwide oil consumption in 2010 at 85.12 million
barrels a day, which
equates to growth from last year of 800,000 barrels a day. The groups implementation of a record supply cut announced in 2008
slipped to 53 percent as oil prices around $70 a barrel encouraged members to exceed their
quotas. OPEC Secretary-General Abdalla El-Badri told reporters in
London on Feb. 2 that if market conditions change little and prices stay in their current
range, then ministers will be 'reluctant' to alter their production target at next
months gathering." |
"It's not been a great week for the 'greener driver'. First, Toyota
announced it was recalling all its Prius hybrids after detecting a potential fault
with the braking system. And yesterday Morrisons,
the largest supplier of biofuels in the UK, announced
it is withdrawing one of its most popular blends from its forecourts. From 1 April, it
says it will no longer be selling B30, a blend of 30% rapeseed and recycled vegetable oil
and 70% ordinary mineral diesel. The move follows
last November's pre-budget report announcing the '20p per litre duty differential'
subsidy for biofuels was to be axed, although the subsidy for 'used cooking oil biofuels'
would remain for two years.... This is undoubtly a big blow for the fledgling biofuel
industry. However, the true environmental credentials of these blends is debatable.
While they might offer marginal reductions in greenhouse gas emissions compared to pure
mineral diesels, do they, by being reliant on biomass from food crops, act to drive up
prices of commodities such as corn and wheat?" |
"An oil crunch
more serious than the financial crisis threatens to strike Britain within five years,
Sir Richard Branson and other business leaders have warned. Consumers face a spike in costs for heating, transport, food and other
goods, according to the report
entitled 'The Oil Crunch - a wake up call for the UK economy'. It said the challenges
facing the UK would exceed those presented by the financial crisis and said the poorest in
society were most vulnerable to potentially significant increases. The report said
Government must acknowledge the risks to the economy and to produce contingency plans for
transport, retail, agriculture and alternative power. 'Unless we do so, we face a
situation during the term of the next government where fuel price unrest could lead to
shortages in consumer products and the UK's energy security will be significantly
compromised,'' it said. The report was compiled by the Industry Taskforce for Peak Oil and
Energy Security, a group of private British companies whose members include Sir Richard,
Brian Souter, chief executive of Stagecoach, Scottish & Southern Energy boss Ian
Marchant and Philip Dilley, chairman of consultancy firm Arup. Virgin Group founder Sir
Richard - whose airline and rail businesses are sensitive to volatility in the cost of
crude - said businesses and Government should work together to prepare the economy. 'UK
competitiveness will be hampered unless we can develop viable, affordable and secure long
term sources of alternative energy,' he said.... Energy watchdog Ofgem has warned
electricity and gas may become unaffordable for an increasing number of households unless
drastic action is taken to secure power supplies. Oil prices have been particularly
volatile in recent years, spiking at $147 a barrel in July 2008 before plummeting to $32 a
barrel that December amid the financial crisis and onset of the economic downturn. It
climbed again to around $70 to $80 late last year and has stayed relatively static as many
world economies remain under pressure. Global economic woes have pushed the 'oil crunch'
point - when global demand will use up stocks faster than they can be replaced by new
production - back by two years and given governments and firms more time to work out how
to act. But oil prices are still predicted to climb to a sustained level above $100 a
barrel within the next five years. And the UK is seen to be particularly vulnerable to
price fluctuations as it increasingly relies on energy imports." |
"Sir Richard Branson and fellow
leading businessmen will warn ministers this week that the world is running out of oil
and faces an oil crunch within five years. The
founder of the Virgin group, whose rail, airline and travel companies are sensitive to energy prices, will say that the
coming crisis could be even more serious than the credit crunch. 'The next five years
will see us face another crunch the oil crunch. This time, we do have the chance to
prepare. The challenge is to use that time well,' Branson will say. 'Our message to
government and businesses is clear: act,' he says in a foreword to a new report on the
crisis. 'Don't let the oil crunch catch us out in the way that the credit crunch did.'
Other British executives who will support the warning include Ian Marchant, chief
executive of Scottish and Southern
Energy group, and Brian Souter, chief executive of transport operator Stagecoach. Their call for
urgent government action comes amid a wider debate on the issue
and follows allegations by insiders at the International Energy Agency that the
organisation had deliberately underplayed
the threat of so-called 'peak oil' to avoid panic on the stock markets. Ministers have
until now refused to take predictions of oil droughts seriously, preferring to side with
oil companies such as BP and ExxonMobil and crude producers such as the Saudis, who insist
there is nothing to worry about. But there are signs this is about to change, according to
Jeremy Leggett, founder of the Solarcentury renewable power company and a member of a peak
oil taskforce within the business community. '[We are] in regular contact with government;
we have reason to believe their risk thinking on peak oil may be evolving away from BP et
al's and we await the results of further consultations with keen interest.' The issue came
up at the recent World Economic Forum in Davos where Thierry Desmarest, chief executive of
the Total oil company in France, also broke ranks. The world could struggle to produce
more than 95m barrels of oil a day in future, he said 10% above present levels. 'The problem of peak oil remains.' Chris Skrebowski, an
independent oil consultant who prepared parts of the peak oil report for Branson and
others, said that only recession is holding back a crisis: 'The next major supply
constraint, along with spiking oil prices, will not occur until recession-hit demand grows
to the point that it removes the current excess oil stocks and the large spare capacity
held by Opec. However, once these are removed, possibly as early as 2012-13 and no later
than 2014-15, oil prices are likely to spike, imperilling economic growth and causing
economic dislocation.'" |
"BP has become the latest oil company to face a shareholder revolt
over its investments in Canadas controversial oil sands. A coalition of shareholders
has tabled a resolution for the oil giants annual meeting on April 15 highlighting
what they describe as the environmental and social risks of tar sands development. The
resolution, which follows a similar action taken by investors in Royal Dutch Shell,
follows BPs announcement last week that it is set to press ahead with a $10 billion
investment in the industry. Vast reserves of oil lie locked in the bitumen-rich sands of
Northern Alberta but processing them into a heavy form of synthetic crude oil is an
expensive and environmentally fraught activity which critics say is unsustainable and
should be stopped. Shareholders sponsoring the resolution, led by FairPension, include the
Co-operative Asset Management, the Unison Staff Pension Scheme, Rathbone Greenbank, CCLA
Asset Management and other fund managers, foundations and faith groups. Niall O'Shea, head
of responsible investing at the Co-operative Asset Management said: 'BP, which previously
made a virtue of its lack of exposure to oil sands, is now gearing up to exploit them. We
believe that environmental costs may make an expensive business prohibitively so - without
fundamentally addressing the issue of a large net rise in emissions. BP should reassure
shareholders that what they're embarking on is fully costed, prudent and can withstand a
more carbon-constrained world.' The resolution raises
questions about the high costs of producing oil sands, and the risks to BPs future
profits presented by rising costs for emitting carbon dioxide as well as the legal and
reputational risks stemming from environmental damage." |
"On the face of it the worlds big and publicly quoted oil
companies should be celebrating some pleasing results this week. Royal Dutch Shell
unveiled its results on Thursday February 4th, reporting that it had made $9.8 billion in
2009. Two days earlier BP boasted profits of $14 billion for the same year. Yet these
billions are a disappointment compared with the bonanza of previous years (Shell, for
example, raked in $31.4 billion in 2008 alone) when soaring oil prices pulled profits ever
higher. In the long term, however, the firms success depends on sustaining reserves.
The big western oil companies are trying to expand through acquisitions and investment,
but the opportunities do so are becoming scarcer. The firms are spending where they can.
Exxon Mobil, the biggest listed oil company, says that exploration and capital spending
hit $27.1 billion in 2009, 4% higher than in 2008. The company expects to spend $25
billion to $30 billion annually to the same end over the next five years. BP intends to
spend some $20 billion this year on investment in new projects and drilling, roughly the
same level as last year. But there are limits to what money can buy. State-controlled
rivalsin the Middle East, Russia and beyondjealously guard oil reserves on
their home patches. Few new big fields of oil, at
least those that are easy to reach and cheap to exploit, have been discovered in recent
years. And where new opportunities emerge, such as
in Iraq, Western oil giants are scrambling to pay big sums at auctions for drilling rights
in territory where the local government tightly limits their returns. Even then,
competition from Chinese, Russian and other state-run oil firms can be severe. National
oil companies will often pay prices that would alarm shareholders in the big listed oil
companies. Thus Western firms are increasingly looking for different sorts of growth. One
option is to deploy their expertise in the hunt for oil that is harder to reach, for
example deep offshore, or to go for reserves such as tar sands that are trickier, and so
much pricier, to refine. Another route is to speed up the quest for other energy reserves.
Frances Total has branched out into nuclear-power generation. This week Shell
announced a $12 billion joint-venture with Cosan, a Brazilian producer of ethanol from
sugar cane. This is something of a change of tack. Exxon and Shell are both spending money
on second generation biofuels made from algae or waste materials, but these
could take years to develop. Now Shell can sell Cosans 'first generation' wares
through it global distribution network. By far the biggest bet laid, however, has been on
natural gas. Around 40% of Shells daily production is now in the form of gas. Total
and BP are not far behind. Gas is increasingly important for power generation and heating
and the global market is expected to grow by half by 2030. Big oil companies are keen to
expand, calculating that their skills at managing huge capital projects will be useful
when building gas-liquefaction plants that make the stuff readily transportable. Late last
year Chevron, Shell and Exxon agreed to spend $37 billion to develop the Gorgon field off
Australia, another potentially huge source of gas." |
"Britains energy regulator yesterday warned of power blackouts
and spiralling consumer prices and raised the prospect of partial renationalisation of the
industry. In a damning report, Ofgem says Britains power industry is in a dire state
and in desperate need of investment. The regulator raised the prospect of direct
government intervention that would wind back the clock on 20 years of deregulation.
Alistair Buchanan, Ofgems chief executive, said: 'We do not advocate change lightly,
but all the facts point to the need for reforms now ... Leaving the present system
unchanged is not an option.' In remarks akin to proposals by Ed Miliband, the Energy
Secretary, in an interview with The Times on Monday, Mr Buchanan said that there was
'reasonable doubt' over the security of Britains energy supplies before 2015 and set
out proposals to unlock an estimated £200 billion of investment needed to solve a looming
energy crunch. 'Acting earlier will also help keep costs as low as possible for consumers
and business,' he said. Mr Buchanan claimed that the
crisis had been compounded by an 'unholy trinity' of factors including the impact
of the recession on energy industry investment, Britains growing reliance on
imported gas as North Sea supplies are depleted and the closure of nine ageing coal-fired
and oil-fired power stations by 2015 in order to meet new EU pollution laws, a move that
will at a stroke scrap almost a third of UK generating capacity." |
"China overtook the USA for
volumes of new installations and manufacturing of wind turbines for the first time in
2009, according to a
report by the Global Wind Energy Council (GWEC). The worlds wind power capacity
grew by 37.5GW to 157.9GW during the year, with a third (13GW) of these additions made in
China, which doubled its capacity in the period.
'China is putting strong efforts into developing the countrys tremendous wind
resource. Given the current growth rates, it can be expected that the even the unofficial
target of 150GW will be met well ahead of 2020,' said Li Junfeng, secretary general of the
Chinese Renewable Energy Industries Association." |
"ENI SpA's chief executive said Thursday that the Italian energy
company will pull out of Iran after current contracts to develop two gas fields there run
out, as international pressure grows to isolate the country over its disputed nuclear
program. Paolo Scaroni also said the company plans to raise around euro1.5 billion from
selling off shares in three gas pipelines in order to settle a European Union antitrust
dispute. He told reporters that the company won't prolong contracts it signed in 2001 to
develop two Iranian gas fields. Iran has the world's second largest gas resources after
Russia and has resisted global pressure - including U.S. sanctions - over its program to
enrich uranium. Iran says its program is peaceful but the U.S. says it suspects Iran is
trying to build nuclear weapons." |
"The last time Britain suffered a
winter this bitter, the phrase 'energy security' meant having a full coal scuttle. Now
it's all about natural gas. Forty years ago, few houses had central heating and those that
did ran on imported oil. Today, following the North Sea bonanza of the 1970s and 1980s,
gas heats almost every home and generates over 40 per cent of our electricity, making
Britain the world's fifth largest consumer. Only the US, Canada, Russia and Iran guzzle
more. But these days Britain's gas supply is apparently on thin ice. Until the beginning
of this year, National Grid had only once been forced to issue a Gas Balancing Alert
warning the market that supply might not meet demand and urging suppliers to pump
harder. Since then it has issued another four. The first came early in the big freeze,
when demand was running 30 per cent higher than a normal January day. A fault at Troll,
one of the main Norwegian gas fields, caused imports through the Langeled pipeline to drop
sharply and the wholesale gas price to jump from 30p to 60p per therm. Eventually, more
gas started to flow and the danger passed, but not before electricity generators had
switched from gas to coal-fired power stations, and industrial customers with
interruptible supply contracts had been cut off, disrupting businesses around the
country....None of this would have happened a few years ago, when North Sea production
meant Britain was more than self-sufficient in gas. But after a 30-year boom, UK output
finally peaked in 2000 and started to fall slumping more than a third by 2008. In
2004 Britain became a net importer for the first time, and National Grid expects we will
have to import three-quarters of our gas by 2015. That makes Britain increasingly
vulnerable to any future supply interruptions like those last month, or when Russia next
cuts off Ukraine in their long-running dispute over gas prices. The Government insists
energy security is enhanced by having a range of sources of imported gas: pipelines from
Belgium, the Netherlands and Norway, along with three new Liquefied Natural Gas (LNG)
terminals in Wales and Kent, where tankers can deliver from as far afield as Qatar and
Trinidad & Tobago. But having the infrastructure does not guarantee the gas will come
to Britain. According to John Hall, countries like France and Germany that have long-term
contracts with major suppliers such as Norway are far better placed than Britain, which
buy on the open market. 'We have the import facilities but we don't have the contracts to
safeguard supplies when things go wrong,' says Mr Hall. 'Britain comes after everyone else
as far as Norway is concerned.' Britain's rising import dependency makes it increasingly
vital to have substantial amounts of gas in storage to draw down in a crisis, and the
Tories jumped on the spate of alerts in the New Year to charge the Government with
negligence over the issue. Britain has 4.3 billion cubic metres of storage capacity, which
amounts to less than 5 per cent of annual consumption, compared with more than 20 per cent
in Germany and almost 25 per cent in France. With British storage already depleted by
winter demand, Shadow Environment Secretary Greg Clark said remaining stores would last
only eight days at current levels of consumption. In fact, storage levels have fallen far
lower during previous crises down to less than three days' supply last February,
which is when Russia last cut off supplies to Ukraine. Energy Secretary Ed Miliband
accused the Tories of using meaningless statistics, and in one sense he's right, but not
necessarily in a good way. Expressing storage in terms of days' supply overstates the
safety margin, because the gas could never be withdrawn that quickly. Three quarters of
Britain's gas storage is held at Rough, a depleted gas field off the Yorkshire coast
operated by Centrica, where suppliers can deposit gas during the summer when prices are
low, and withdraw it for sale in the winter when prices are higher. During the recent
alerts, Rough was delivering gas at its maximum rate 45mcm per day which
represents just 10 per cent of current demand. The vulnerability of having so much storage
in a single field was highlighted three years ago, when a fire at Rough closed the
facility for six months. The closure came just two months after an earlier Ukraine crisis
and, had the two coincided, the consequences could have been severe....Luckily the recent
alerts came at a time when the world is awash with gas, the result of new LNG production
capacity in the Middle East, new 'non-conventional' sources of gas in the US, and the
recession, which has depressed demand in Europe by some 10 per cent. The International
Energy Agency expects this glut to continue until around 2015, but many analysts predict
the market will then tighten sharply. 'Around the
middle of the decade we expect a perfect storm of falling domestic gas production,
economic recovery and tightness in the global LNG market,' says Professor Stern, 'and we
might not get very much warning. It could flip in a matter of weeks.' Britain's vulnerability to interruptions in the gas supply could be
worsened by our response to the "energy gap" resulting from the closure of
ageing coal and nuclear power stations over the next decade. In total, the closures amount
to 20 gigawatts (GW), or one third of peak electricity demand. The Government hopes much
of the gap will be filled by renewables, and last month announced the companies that have
won the right to build offshore windfarms under its ambitious plans to develop 32GW
offshore by 2020. But given the Government's record on renewables, many fear the targets
will not be met. If so, the 'energy gap' is likely to be filled by new gas-fired power
stations. Figures from New Power, an industry
journal, show that 15GW of new gas-fired stations are either under construction or have
received planning permission, with a further 15GW in the wings. Editor Dominic Maclaine says 'there is a new dash for gas in power
generation'. That is likely to raise the proportion of electricity generated from gas even
further, and increase Britain's vulnerability in the case of supply disruptions. In that
case, without a major increase in storage capacity, future gas supply crises could also
leave us in the dark." |
"Britain's offshore wind revolution, launched with great fanfare by
Gordon Brown last month, may struggle to get halfway to its ambitious goals and should be
scaled down in favour of a new dash for gas to keep the lights on over the next
10 years, BP warned last night. Tony Hayward, chief
executive of the UK's largest oil company, said that British government ministers risked
being seduced by 'headline-grabbing options' such as offshore wind and clean coal in a bid
to bolster energy security and meet
climate-change goals. BP makes billions of pounds a year from oil and gas, but is also
investing in onshore wind farms in America. Talking to the Guardian exclusively, the BP
boss said he was not calling for the third round of wind licensing in the deep waters of
the North Sea to be shelved. But he did believe that the heavily subsidised move into wind power should be slowed
down, because it would not deliver anything like the targets set for it: possibly 15
gigawatts of power rather than the 25GW the wind industry expects. And in a speech due to
be delivered to the London Business school today, he says: 'Energy efficiency, gas-fired
power, lighter cars and biofuels all offer relatively low-cost routes, while other
headline-grabbing options are not the most cost-effective. With today's technology, carbon
capture to make clean coal, for example, is very expensive. Offshore wind is also costly
for example in comparison to onshore wind, which is now a big business for BP in
the United States and indeed to nuclear.' Hayward told the Guardian that wind
power, like nuclear energy, was nowhere near being commercially viable and would rely for
some time on "sovereign" intervention by governments. Instead, he said, there
should be more emphasis put on gas, which was very commercial, using a mixture of what
remained of UK North Sea supplies and imports. The BP man believed the UK should drop its
'paranoid' concerns about gas imports from Russia and accept that piped and
liquefied natural gas from overseas sources offered a better solution to help beat global
warming and energy insecurity in the short term. 'There is a lot of gas in the world.
There are a lot of diverse sources of gas in the world. The paranoia has been about
Russia, but it is misplaced. We have approximately
zero Russian gas in the UK [imported currently] and if you look at Europe, the imports of
Russian gas into Europe have halved since 1980.' Hayward, whose Russian TNK-BP joint
venture is a major part of the wider oil company's business, said the fear of Russia using
energy as a political weapon was 'massively exaggerated'. He believed Britain should not
be concerned even if Siberian gas accounted for 10% of Britain's imports, as long as 90%
came from a diverse group of suppliers such as Norway, Qatar and Algeria, as they already
did....The BP chief executive did agree with Ofgem's
Alistair Buchanan that the UK had reached a critical point in its energy history and
needed to change the market model with increased government involvement. 'It has been true
throughout history that at certain points in time government has had to intervene to shift
the boundaries of the market to allow the right market structure to evolve,' said Hayward.
He added: 'We did not displace coal with gas in the 1960s and 1970s without a massive
government intervention ... we are probably at one of those points again.'" |
"BP raised its oil and gas production levels by 4%, while Shell saw a 2%
fall over 2009. But the latter has also been looking madly for cost-savings and has rowed
back on plans to invest more heavily in carbon-intensive
tar sands. Hayward has kept Browne's sunburst logo
and 'beyond petroleum' slogan on its marketing material but has followed Shell into
Canada's tar sands. The BP boss an improbably youthful 52-year-old says he
is not cutting back there despite mounting criticism from green groups that they are in
danger of triggering runaway global warming. He is keen to emphasise that BP is engaged in
a much more limited way than Shell while steering clear of the more controversial mining
techniques. 'BP has never been in the strip-mining of the tar sands and never will be. We are focused on so-called steam-assisted gravity drainage, which is much more akin to conventional reservoir engineering
therefore the environmental footprint on the ground is no more or worse than normal oil or
gas operation.' 'It is clearly carbon-intensive and we also see that it will remain
commercial even with a very high legislative price of CO2'. Tar sands are part of a wider
diversity of supply of energy sources that the world is going to require, Hayward argues,
dismissing the idea that the growing pressure on the US military not to use these imports
will bear fruit. By 2015 BP could be providing
100,000-200,000 barrels a day from this source for which the company is preparing two US
refineries specially to process the crude. 'The likelihood of the US army not using a
secure local supply of energy is quite low
Canadian heavy oil is going to be a very important part of America's energy,' he argues.
He rejects the suggestion that exploiting tar sands contradicts the "beyond
petroleum" mantra, seeing it instead as just another fuel source on top of its wind,
solar and biofuel investments. He is particularly upbeat about the prospects of the latter
even allowing for the food-not-fuel arguments that arose when crop-price increases were
blamed on biofuels. By 2020 up to 10% of global petrol supplies will be made up of
plant-based biofuels, Hayward believes, while the figure could be as high as 20% in the
US. BP is preparing for this by making big investments of between $5bn-$6bn in Brazil on
sugar-based ethanol 'first-generation' biofuels. But BP is also working on synthetic
'second generation' biofuels in conjunction with US chemical group, Du Pont, in this
country. The wind operations that BP is involved
with are based onshore in the US where the land is cheap and planning easy to obtain. But
Hayward makes clear he has enormous reservations about the North Sea wind 'revolution'
launched by the UK government. He questions whether the UK can build 14 to 15 gigawatts
(GW) of offshore wind by 2020, never mind the 25-27GW the total expected by
ministers and industry here. Equally, he questions how quickly nuclear power plants can be
built and whether a rush will help either develop in the most cost-efficient way....The straight-talking oil explorer, who is said to still enjoy the
occasional triathlon, is an optimist and has little time for those who argue the world has
passed, or is even approaching, peak oil supplies. 'I personally and BP have
never believed we will see peak oil because of supply. We always believed we would see
peak oil because of demand. There will come a time I believe it is beyond 2020
when because of the changes in the energy portfolio, because of the drive for
energy efficiency, because of the introduction of biofuels, demand for oil will peak.'
There is plenty of oil in the world, he argues, not least in Iraq, where BP has staff
working on the ground, even ahead of important political elections. Hayward expects Iraq's oil production to grow from a couple
of million barrels a day today to close to 10m, putting it on par with Saudi Arabia. This
makes it 'a big part of oil security for the world.'" |
"Bankers and the financial
sector may have displaced energy from the front pages of the newspapers right now, but Energy Security remains at the top of the global political and economic agenda....The need to balance energy security, jobs and economic development
while addressing the problem of climate change all contributed to the challenge
politicians faced in Copenhagen. And that challenge
means that energy security will dominate politics and policy for the next 12 months and
considerably beyond.... Reliable and affordable
supplies of hydrocarbon energy were taken for granted through much of the 20th century and
laid the foundation for the worlds extraordinary economic progress. When concerns
arose, it tended to be at times of war or turbulence, notably in the Middle East, or,
closer to home, with industrial action. Whats
different now is that energy security has become a defining issue for the 21st
century, as one element in a complex energy challenge with
strategic, economic and environmental dimensions....
Opening access to a range of potential operators encourages the most efficient solutions,
and often involves partnerships that provide new combinations of skills. Iraq is a very
good example. BP is teaming up there with CNPC of China and Iraqs South Oil Company
to drive a major investment programme that will nearly triple production from the
super-giant Rumaila field. With this and the other agreements concluded with national and
international oil companies in the last six months, Iraq has the potential to contribute 10mmb/d to global supplies in the next
10-15 years. Thats a big piece of the additional
resource we need....The current debate about
Copenhagen and sustainability add new urgency and importance to the broader discussion of energy security. The
challenge of creating a low-carbon economy is far from easy, requiring
the wholesale re-engineering of the global economy over time." |
"Total has previously mentioned 100 Mb/d [for the peak of global oil
production] and that they are now saying 95 Mb/d shows that they are approaching the
conclusion that my Ph.D. student Fredrik Robelius presented in his thesis. That scenario had a maximal production of 93 Mb/d in 2018. The
requirement for that level of production was that production from 7 giant oil fields in
Iraq would commence immediately. The fact that this
has been delayed makes it all the more difficult to reach that production level." |
"Energy regulator Ofgem today
warned Britons may not be able to afford to heat their homes in the years ahead unless
there is radical overhaul of the country's energy supplies. The regulator warned the
country's current system may not be sufficient to ensure 'secure and sustainable' power
across the country beyond 2015. In announcing
proposals for a radical range of options (pdf), including setting up central buying of
power, Ofgem's chief executive, Alistair Buchanan, admitted that maintaining the current
free-market approach was no longer an option. Energy
bills could rise between 14% and 25% by 2020 as the industry pays for the £200bn cost of
investment needed to overhaul of the current system. He warned that increasing number of
consumers would be unable to afford the cost of heating their homes. The proposals could
force the government to undo the privatisation of the energy markets led by Margaret
Thatcher and could force a form of nationalisation again if it decides to implement
central buying of power. The regulator had previously warned that average household gas
and electricity bills could reach nearly £2,000 a year without drastic action to shore up
supply. Buchanan said: 'Our evidence shows that
Britain has a window of opportunity to put in place far-reaching reforms to meet the
potential security of supply challenges we may face beyond the middle of this decade. We
do not advocate change lightly, but all the facts point to the need for reforms now to
provide resilient supply security. Acting earlier will also help keep costs as low as
possible for consumers and business.'...The regulator
said reform was needed because of a confluence of events ranging from the global financial
crisis, significant worldwide demand for investment in energy, tough EU emissions targets,
the closure of ageing power stations and an increasing dependency on gas imports. The regulator set out five key issues: A need for unprecedented
levels of investment over many years in difficult financial conditions and against a
background of increased risk and uncertainty. The uncertainty in future carbon
prices is likely to delay or deter investment in low carbon technology and lead to greater
decarbonisation costs in the future. Short-term price signals at times of system
stress do not fully reflect the value that customers place on supply security which may
mean that the incentives to make additional peak energy supplies available and to invest
in peaking capacity are not strong enough. Interdependence with international
markets exposes Britain to a range of additional risks that may undermine the country's
security of supply. The higher cost of gas and electricity may mean that increasing
numbers of consumers are not able to afford adequate levels of energy to meet their
requirements and that the competitiveness of industry and business is affected." |
"Global oil demand is set to
peak between 2020 and 2030, as falling developed
world demand balances growing demand in emerging markets, the chief executive
of Europe's largest oil company said on Tuesday. Tony Hayward told Reuters
Television that government policies in the developed world were eroding demand at the rate
of 1 percent per year. Hayward said this was contributing to an oversupply of refineries,
which was prompting rivals to close and sell facilities. However, he added: 'We've got the
right set of refineries.'" |
"China aims to raise the annual
production capacity of shale gas to 15-30 billion cubic meters by 2020 as part of its
response to recent widespread gas shortages, the
Ministry of Land and Resources said. The National Development and Reform Commission, the
country's top economic planner, is reviewing a plan to encourage the development and
utilization the unconventional gas source in an effort to meet rising energy demand
without excessively increasing greenhouse gas emissions, the ministry said in its in-house
newsletter..." |
"Royal Dutch Shell, Europe's
second biggest energy company, is poised to become the biggest oil major in biofuels as it battles to
reassure investors about profitability. The Anglo-Dutch company has signed a memorandum of
understanding with the most powerful Brazil bioethanol producer, Cosan, in a joint venture
said to be worth $12bn (£8.19bn). The move, if
finalised, will cement Brazil's position as the world's alternative energy superpower with
the potential to ship huge quantities of fuel to the United States and Europe. Shell will
now lobby the US administration to reduce its tariffs on biofuel imports in a move that
could transform profitability. The company hopes the aggressive moves into biofuels it has
plotted for two years will signal to investors that it has growth potential as it readies
itself to announce what is expected to be a 40% drop in quarterly profits on Thursday.
Analysts expect the group to report a quarterly profit of $2.9bn. This would take its
annual profit to $13.4bn, down on the $31.4bn it made in 2008. There are suggestions the
company will make further job losses on top of the 5,000 already announced. The joint
venture is intended to more than double Cosan's existing bioethanol production, which
currently stands at 2bn litres. Cosan is Brazil's leading bioethanol producer in a country
where virtually all new cars run on sugar cane. But there are serious reservations among
environmentalists that the growing attraction of biofuels in Brazil could see agricultural
land earmarked for food shifted to fuel crops, creating pressure to chop down more
rainforests....Biofuel in the UK powers 2.7% of the country's transport according to the
Renewable Fuels Agency. Britain is on target to meet its 5% target by 2014." |
"The Government is drawing up plans for a wholesale reform of
Britains energy markets that could wind back the clock on 12 years of deregulation.
In an interview with The Times, Ed Miliband, the Energy and Climate Change Secretary, said
that Britains existing, highly liberalised market regime, introduced under Labour in
1998, was failing to deliver the investment needed to cut UK carbon emissions by more than
a third by 2020. A market structure was being designed to boost long-term investment in
low-carbon sources of electricity, including wind parks, nuclear reactors and fossil fuel
stations equipped with carbon capture and storage (CCS) technology. Mr Miliband said: 'We
are going to need a more interventionist energy policy to deliver the low-carbon
investment we need....Mr Miliband said that details
of the reforms would be in a document to be published in April called Roadmap to 2050,
published with the 2010 Budget. He said that the changes were essential to help Britain to
prepare for a doubling of electricity demand by 2050, driven by other policy objectives
such as a growth of electric cars and a move from gas to electricity for heating.'" Labour prepares to tear up 12 years of energy policy London Times, 1 February 2010 |
"In their exuberance, oil- and gas-industry officials repeat a single
refrain when describing the natural gas from Pennsylvania's Marcellus Shale: A
game-changer. Tony Hayward, chief executive officer of oil giant BP P.L.C., was the latest
to gush enthusiastically when he called unconventional natural gas resources like the
Marcellus 'a complete game-changer.' 'It probably
transforms the U.S. energy outlook for the next 100 years,' Hayward said Thursday at the World Economic Forum in Davos, Switzerland.
The breathtaking emergence of natural gas as America's energy savior was not in the cards.
Just four years ago, after Hurricanes Katrina and Rita devastated Gulf Coast rigs and
rattled gas markets, energy pundits forecast a bleak winter of short supplies, high
prices, and low thermostats. The vast scale of
shale-gas resources has come into focus quickly, and industry officials are touting the
possibility of steady supplies for decades to come. The Potential Gas Committee in
Colorado last year revised its outlook of America's future gas supply - up 35 percent in
just two years. The forecast was the highest in its 44-year history. The Marcellus Shale is the nation's fastest-growing producing area.
Though it lies under five states, about 60 percent of its reserves are in Pennsylvania,
according to Terry Engelder, a Pennsylvania State University geologist. 'In terms of its
impact on Pennsylvania, this is probably without peer in the last century,' said Engelder,
whose projections in 2008 alerted the public about the size of the Marcellus. 'America's energy portfolio has undergone a first-order paradigm
shift just in the last two years,' he said. 'This is
such an exciting thing.'....Not everyone has climbed aboard the bandwagon. Some
environmentalists are uneasy about the hydraulic-fracturing process that has unlocked the
shale gas. The technique requires the injection of millions of gallons of water into a
well to break up the shale to initiate production. And some
analysts say they believe the gas industry's estimates are too optimistic. 'I would look
at all this with a bit of healthy skepticism,' said Arthur E. Berman, a Houston
gas-industry consultant, who says he believes some operators have overstated the
production potential and understated the cost of Texas shale-gas wells. His pointed criticism got him banished from one trade journal - and
invited to speak at scores of investor workshops. 'Two years ago, we were talking about
importing gas from the Middle East,' he said. 'And now we have a hundred-year supply of
domestic gas?' Berman said he had been unable to conduct a similar analysis of Marcellus
wells because Pennsylvania law allows operators to keep their production data secret for
five years, unlike other states, where output is reported to taxing authorities
promptly. 'If something looks too good to be true,' he said, 'I need to look more
closely.' Questioning voices such as Berman's are uncommon in the industry, which portrays
natural gas as abundant, cheap, and cleaner than coal and oil - a domestically produced
'bridge fuel' to ease the transition to renewable wind and solar generation." |
"The International Energy Agency
(IEA) expects total natural gas output in the EU to decrease from 216 billion cubic meters
per year (bcm/year) in 2006 to 90 bcm/year in 2030. For the same period, EU demand for
natural gas is forecast to increase rapidly. In 2006 demand for natural gas in the EU
amounted to 532 bcm/year. By 2030, it is expected to reach 680 bcm/year. As a consequence,
the widening gap between EU production and consumption requires a 90% increase of import
volumes between 2006 and 2030. The main sources of
imported gas for the EU are Russia and Norway. Between them they accounted for 62% of the
EUs gas imports in 2006. The objective of this thesis is to assess the potential
future levels of gas supplies to the EU from its two main suppliers, Norway and Russia.
Scenarios for future natural gas production potential for Norway and Russia have been
modeled utilizing a bottom-up approach, building field-by-field, and individual modeling
has been made for giant and semi- giant gas fields. In order to forecast the production
profile for an individual giant natural gas field a Giant Gas Field Model (GGF-model) has
been developed. The GGF-model has also been applied to production from an aggregate of
fields, such as production from small fields and undiscovered resources. Energy security
in the EU is heavily dependent on gas supplies from a relatively small number of giant gas
fields. In Norway almost all production originates from 18 fields of which 9 can be
considered as giant fields. In Russia 36 giant fields account for essentially all gas
production. There is limited potential for increased gas exports from Norway to the EU,
and all of the scenarios investigated show Norwegian gas production in decline by 2030.
Norwegian pipeline gas exports to the EU may even be, by 2030, 20 bcm/year lower than
todays level. The maximum increase in exports of Russian gas supplies to the EU
amount to only 45% by 2030. In real numbers this means a mere increase of about 70 bcm In
addition, there are a number of potential downside factors for future Russian gas supplies
to the European markets." |
"Using biofuel in vehicles may
be accelerating the destruction of rainforest and resulting in higher greenhouse gas
emissions than burning pure petrol and diesel, a watchdog said yesterday. The Renewable
Fuels Agency also warned that pump prices could rise in April because of the
Governments policy of requiring fuel companies to add biofuel to petrol and diesel.
More than 1.3 million hectares of land twice the area of Devon was used to
grow the 2.7 per cent of Britains transport fuel that came from crops last year.
Under the Renewable Transport Fuels Obligation, a growing proportion of biofuel
must be added to diesel and petrol. This year fuel must be at least 3.25 per cent biofuel
on average. By 2020 the proportion will be 13 per cent. The agencys first annual report revealed that fuel companies had
exploited a loophole to avoid reporting the origin of almost half the biofuel they
supplied to filling stations last year. The origin of fuel from land recently cleared can
be described as 'unknown'. Last year Esso reported the source of only 6 per cent of its
biofuel and BP reported 27 per cent. Shell was the best-performing of the main oil
companies but still failed to report the origin of a third of its biofuel....From March
2011 companies will be required under a European directive to report the previous use of
all the land from which they derive their biofuels. However, they will also gain an
additional loophole because they will not have to admit using rainforest land if the trees
were removed before 2008." |
"Algae have
been touted as a solution to environmental worries over biofuels, but they may be a
long way from providing a truly green option. Unlike maize, soya beans and oilseed rape
(canola), algal farms don't take up valuable farmland, so algae-based biofuels don't
threaten food supplies. However, Andres Clarens at the University of Virginia in Charlottesville has
modelled the environmental impacts of algal farms and concludes that they require six times as much energy as growing land plants - and emit
significantly more greenhouse gases (Environmental
Science and Technology, DOI:
10.1021/es902838n). 'You have to add a whole lot more fertilisers, and the
environmental cost of producing these is the primary drawback,' Clarens says. Using waste
water instead of fertilisers helps, but not enough, he says. The only trick that tipped
the balance in favour of algae in his models was to use nutrient-rich household waste like
concentrated urine to fertilise the algae, but this would require new infrastructure and
so is no short-term fix." |
"Royal Dutch Shell chief
executive Peter Voser cannily chose the safe ground of an exclusive interview with
the Financial Times to finally admit the all-too-obvious - the Canadian oil sands
development Shell has touted as a major growth driver is instead a costly distraction, on
which time is now being called. Mr Voser said the massive expansion the company had
previously planned for its Athabasca Oil Sands Project (AOSP) - envisioning growth from
the current 155,000 barrels per day (bpd) capacity to an eventual 770,000bpd - was now
'clearly scaled down' and would be 'very much slower'. Over the past few years Shell has emphasised heavy investment in
so-called 'unconventional' hydrocarbon sources, both Canadian oil sands and gas-to-liquids
projects elsewhere, as a substitute for the new conventional oil and gas resources the
company has been notably lacking since its reserves-booking scandal of 2004. But the
relatively high costs of new oil sands developments in particular mean scant profits with
oil prices anchored stubbornly in a $70-$80 a barrel trading range. As recently as
November, Shell oil sands head John Abbott indicated the in-construction $14bn (£8.69bn)
AOSP Expansion 1 project, coming onstream later this year to boost total AOSP output to
255,000bpd, needs oil prices around $60 per barrel just to break even. And new investments
would require higher prices. Two previously-slated medium-term expansions of 100,000bpd
each are on ice indefinitely, and any serious AOSP growth beyond de-bottlenecking, which
could add perhaps some 100,000bpd in small increments by 2020, seems moot. Mr Voser was
not questioned on what this strategic U-turn means for Shell's resource base, defined as
its portfolio of hydrocarbon exploitation opportunities not yet migrated into developed
reserves. But the effective scrapping of further large-scale AOSP growth will presumably
have a material impact - while oil sands currently account for 8.4 per cent of proved
Shell reserves, totalling 11.9bn barrels-of-oil-equivalent (boe), they were previously
thought to account for perhaps a third of Shell's total resource base, estimated at 66bn
boe." |
"At a meeting of oil leaders at
the World Economic Forum at Davos, Tony Hayward, group chief executive of BP, said that
there was a 'supply challenge' for the industry which would have to increase output to
100mbd - a new peak for oil. Mr Hayward said that at present the world was producing
between 83 and 84mbd. He said he hoped Iraq would become a major oil player,
producing up to 10mbd in the next decade if the political situation remains relatively
stable. A need for a new peak in oil production will
dismay environmental campaigners who hoped that the Wests declining reliance on oil
would mean less CO2 emissions. Instead, demand from the emerging economies, including
India and the other BRIC countries, China, Russia and Brazil, will lead to new record
levels of consumption. Mr Haywards comments were supported by Peter Voser, the chief
executive of Shell, who said that the industry would have to find up to $27trn of
investment over the next 20 years to meet demand. At the session new figures from
PriceWaterhouseCoopers revealed that non-OECD countries will account for two-thirds of
world consumption by 2030. Mr Hayward said that demand from non-OECD nations would
increase by 40pc. 'The obvious thing in the mature markets of Europe and the United States
is that demand for oil products is in structural decline,' Mr Hayward said. He argued that
demand was now coming from the East, pointing out that China sold 13m cars last year. 'The challenge is how do we meet this growing demand for oil and
keep a lid on price?' Hayward said.....Turning to Iraq, Mr Hayward said that he was 'cautiously
optimistic' that the country could increase world supply. 'BP has a major contract to
redevelop an existing field that BP first found in 1953,' Mr Hayward said, revealing that
he wanted to increase BP production from 1mbd to 3mbd. Iraq could eventually produce
10mbd. Mr Voser said that although much of the oil in Iraq was 'easy oil' (onshore and
relatively accessible) its technology was 20 years behind much of the rest of the sector. He also argued that although renewables would be able to supply some of
the increase, there needed to be a 'more balanced discussion between oil and renewables'
and that increasing gas supply had a lot of potential. 'There is plenty of gas. Here we
have an energy source which from a CO2 point of view is better than other fuels
than for example coal for electricity generation.' Andrew Liveris, chairman and chief
executive of Dow Chemical Company, one of the largest industrial users of oil in the
world, said that price stability was essential for economic growth. He revealed that in
2002 the cost to the company of its oil needs was $8bn and that had risen to $32bn by
2008. At times such was the volatility of the market there would be a '10pc aberration' in
the oil price in a week. 'We need certainty, we need predictability,' he said." |
"A controversial method of
extracting gas from shale rocks and coal seams pioneered in the US has been described by
the head of BP as a 'complete game changer' that would transform the future of energy in
that country over the next 100 years. Excitement in the industry over 'unconventional' gas
supplies has led to a wave of investment in America which Tony Hayward, BP's chief
executive, believes could eventually spread around the world. '[Unconventional gas is a]
complete game changer in the US,' he said in answer to a question at an energy summit
which was part of the World Economic Forum in Davos, Switzerland.' 'It probably transforms the US energy outlook for the next 100 years.
It's yet to seen if it can be applied globally.'....There
is also speculation that there could be shale-based gas schemes available in mainland
Europe now that new drilling and extraction techniques have been proven in the US, largely
Texas, Wyoming and Pennsylvania. Development of
these reserves in major quantities has sent the price of natural gas spinning downwards in
America but promises a much-sought increase in self-sufficiency. It also offers a lower
carbon footprint than oil....Unconventional gas has burst to prominence as US-based oil
companies often led by smaller independents have used new directional and
horizontal drilling techniques to exploit new reserves. But rock formations have to be
broken up with a mixture of water, sand and chemicals in a process called hydraulic
fracturing.....Environmentalists have major reservations about these techniques, saying
enormous amounts of water are needed and that the drilling can pollute local water tables.
The Texas Oil and Gas Accountability Project has blamed hydraulic fracturing for making
people ill and poisoning cattle by polluting water supplies, which is denied by the oil
and gas industry....But there are already bills being prepared for Congress that would
tighten restrictions on unconventionals and Exxon has inserted a clause in its takeover
documents for XTO that enable it to scrap the transaction if there were changes to the law
that made hydraulic fracturing 'illegal or commercially impracticable'." |
"There is still plenty of oil in
the ground and the world should put aside fears about 'peak oil', the head of the Saudi
state oil firm Saudi Aramco said on Thursday. 'The concern about peak oil is behind us,'
chief executive Khalid al-Falih told a session on energy supplies at the World Economic
Forum in Davos. The peak oil theory that oil supply
is at or near its peak gained currency when prices zoomed to a record of nearly $150 a
barrel in 2008. The issue remains a concern for many in the industry. Total's chief executive Thierry Desmarest said the world would
struggle to surpass 95 million barrels per day (BPD) in the future -- 10 percent above
present levels. 'The problem of peak oil remains,'
he told the same panel. His contention was swatted aside by Falih. 'Of the 4 trillion
(barrels) of oil the planet is endowed with, only 1 has been produced,' Falih said.
'Granted most of what remains is more difficult and complex (to exploit) ... there's no
doubt we can do a lot more than the 95, 100 (million barrels) that are projected in the
next few decades. Saudi Arabia has a long list of projects in its portfolio that would
more than offset declines, he said." |
"Venezuela Oil Minister Rafael Ramirez was leaving Wednesday
for Russia and then to China to discuss plans for developing heavy crude blocks in the
eastern Orinoco region, the Venezuelan government said in a statement." |
"CNNC International Ltd. on
Monday said it will acquire a 37.2% stake in the Azelik uranium mine in Niger through an
acquisition of Ideal Mining Ltd. for as much as $414 million Hong Kong dollars (US$53.3
million), extending its footprint to Africa for the first time. The deal comes as China rapidly expands its capacity to generate nuclear
power as part of a strategy to minimize use of coal and crude oil, which are widely blamed
for making Chinese cities among the smoggiest in the world. CNNC International is the sole
platform for its parent, China National Nuclear Corp., to secure uranium resources
overseas. Shares of CNNC International jumped 8.3% to HK$8.88 in Hong Kong trading Monday.
CNNC International's financial controller, Philip Li,
said the company is looking for acquisition targets in Kazakhstan to boost its uranium
reserves in order to fuel China's nuclear power boom.
'We hope to become the largest uranium supplier in China in the long run. We will buy more
uranium mines through acquisitions or our parent if the project can deliver a reasonable
return for us,' he said. The Africa mine is expected to start production in the second
half of the year, Mr. Li said." |
"It is past midnight in a jet high above the Persian Gulf, and one of
the key figures in global energy shows no sign of retiring. Instead, Christophe de
Margerie, CEO of the French oil giant Total, zeroes in on a favorite target: criticisms of
oil companies by environmental groups, gathered in Copenhagen for the U.N. Climate Summit.
'People say they are inventing electric cars,' de Margerie says, puffing on a Marlboro.
'Well, where is the electricity coming from? Flowers? Maybe someday. But what is available
now is oil and gas.' The argument is delivered in de Margerie's trademark style: blunt and
impassioned, with an almost cocky certitude. He credits his confidence to years spent
traveling 'moving my ass,' as he calls it and witnessing the world up close.
All that time on the road has convinced him of this: oil supplies will soon run seriously
short, and until we come up with something better we need to make sure we suck every last
drop from every last nook and cranny on the planet. 'We don't know everything,' he says.
'But on oil reserves and production we know a lot. And it's our duty to speak out.'....In
an industry famous for being opaque, de Margerie speaks openly about the nightmare
scenario oil shortages that most energy firms prefer to avoid or deny. De
Margerie says the possible effects on the world economy of dwindling oil supplies are so
great 'I am not prepared to shut my mouth.' Shortly after taking over at Total, he jolted
oil executives at a London conference by stating the industry would be unlikely to produce
more than 100 million barrels a day, far below the 120 million or so the International
Energy Agency estimates the world could produce by 2030, and which will be needed for
Asia's galloping growth. De Margerie now says 90
million barrels a day is 'optimistic.' Audiences
regularly ask him when he thinks we might use earth's last drop of oil, and de Margerie
says that date is decades off. But it's important to realize, he says during an interview
with TIME, 'what will happen very soon is that oil supplies will not cover demand. That
won't mean there is no oil. There are oil reserves,
but you will need to invest billions and billions to get it.'" |
"United Nations climate talks are a bigger threat to top oil exporter
Saudi Arabia than increased oil supplies from rival producers, its lead climate negotiator
said on Sunday. Saudi Arabia's economy depends on oil exports so stands to be one of the
biggest losers in any pact that curbs oil demand by penalizing carbon emissions.....The possibility that oil demand might peak this decade was a
'serious problem' for Saudi Arabia, Sabban said. The
kingdom had looked at the assumptions behind studies that pointed to demand peaking in 2016 and
saw 'some truth in it,' Sabban said. The kingdom was
watching future demand projections closely and would match any future investment in
capacity expansion with demand, Sabban said. 'We
will continue keeping the same spare capacity but no more,' he said. Saudi had plenty of
spare capacity to increase output if global demand warrants, Sabban said. Demand should
grow this year with the economic recovery, he added. The kingdom completed a program to
boost its capacity last year, coinciding with the global contraction in oil demand due to
the economic recession, and led record OPEC output cuts, leaving it with more than double
the spare capacity it targets. The kingdom has around
4.5 million bpd of spare capacity while having a policy of holding 1.5 million to 2.0
million bpd to deal with any surprise outage in the global oil supply system. The kingdom
is producing around 8 million bpd. Meanwhile Saud
Arabia plans to invest heavily in solar energy technology, Sabban said, and hopes to begin
exporting power from solar energy by 2020. Saudi Oil Minister Ali al-Naimi has said the
kingdom aims to make solar a major contributor to energy supply in the next five to 10
years." |
"It is only a matter of days before the last of Iraqs yet-to-be awarded oil contracts are due to be signed, bringing to a close a two-stage, seven-month process under which Western energy majors have gained access to a country with the planets third-largest oil reserves. Such deals will inevitably be a focus of the UK oil sectors year-end reporting season, which begins the following week, and the annual round of strategy presentations to investors that starts shortly after. No more so than for BP, which has a 38 per cent interest in Rumaila, the vast 18 billion-barrel field in southern Iraq that was the biggest single project on offer, and Shell, which has stakes in two other bumper schemes: the first phase of West Qurna, where it is working alongside ExxonMobil, and Majnoon, where it has teamed up with Malaysias Petronas. Indeed, with the exception of Chevron, which failed to secure licences in either round, Iraq is destined to become a significant contributor to the output of the worlds 'super major' oil companies for many years to come. But rather than welcoming such deals as a fillip to future profitability, shareholders might instead come to rue them. Not because of the large sums of capital expenditure involved, or the political and security risks of operating in what remains a volatile territory. Rather, contends RBS, the opening up of Iraq or rather the unprecedented production commitments the majors have signed threaten to pull long-term oil prices steadily lower. 'Investors expecting the imminent return of oil price rises fuelled by increasing Chinese demand may be disappointed,' says David Cline, RBSs oil and gas analyst. 'Instead, the rehabilitation of Iraq may dominate oil markets and weigh on prices for much of this decade.'... It is that view that underpins Mr Clines prediction that oil prices, currently hovering around $75 a barrel, will inexorably slide over the next few years to touch $50 by 2016 not far above the nadir reached in late 2008 amid the height of the financial crisis. That perspective sets RBS firmly apart from both the oil futures market, which prices in a rise in Brent crude to $94 a barrel by the middle of the decade, and rival investment banks, whose consensus forecasts assume a price of $82 a barrel by 2013. Mr Clines case is persuasive. If newly agreed contracts are honoured, Iraq faces a period of output growth unparalleled in the history of the oil industry: a quintupling of production capacity to nearly 12 million barrels a day by 2017, about the same level that Saudi Arabia, the worlds biggest producer, is forecast to reach in the next few years. On consensus forecasts of global oil consumption that take Chinas growth into account that is, consecutive annual rises of 1.5 per cent RBS calculates that Iraqs increase in output will satisfy 88 per cent of projected oil demand over the next eight years (see chart, below). If further Iraq contracts are signed and production from Kurdistan also starts to pick up, that figure would be even higher. RBS believes that such developments could between them add a further 4 million barrels a day by the end of the decade. What is unusual about Iraq is that its oilfield contracts are predicated on oil production rising to a peak within six or seven years of the licence award but then staying at those levels for at least as long: seven years in the case of those granted under the first licence round (such as Rumaila and West Qurna phase 1) and up to 13 years for those handed out in the second (including West Qurna phase 2, won by Lukoil of Russia and Statoil of Norway). Such terms are in |