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NLPWESSEX, natural law publishing

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

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

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



** To Go Direct To Current Energy News Reports - Click Here **
To Go Direct To 2011 News Reports Archive - Click Here **


Peak Oil and Energy Crisis News

Earlier Peak Oil And Energy Crisis News












Selected News Extracts 2011

"With the end of a 200-year resource glut, and the shift of economic power from West to East, you have a global system groaning under the pressure of unresolved tensions and problems.... "
David Miliband, British Foreign Secretary, 2007-10
Whatever you do, Mr Obama, don’t play safe
London Times, 23 May 2011, P20

"Cameco Corp., the world's largest uranium producer, said some investors underestimate the potential for supply shortfalls to spur higher prices for the nuclear fuel. Disruptions in mine production, the difficulty faced by development companies in raising funds for new mining projects, and the end of a Russian deal to supply uranium from scrapped atomic warheads may help create a supply deficit, chief executive Tim Gitzel said in an interview. 'People don't focus so much on the supply side,' he said. 'They take every possible project, think it's going to operate to perfection, and add it up and say 'there's lots of supply,'' Gitzel said. 'It's easier said than done.' ..... Global mined uranium supply was 53,663 tons in 2010, according to the World Nuclear Association. That's not enough to cover global demand, and so some utilities also use fuel recovered from Russian warheads under the Highly Enriched Uranium agreement, which has run since the 1990s. Gitzel said Russia will withdraw from the HEU accord by the end of 2013, removing 24 million pounds of supply. 'There's a lot, and I spoke to some of them this week, who think the HEU agreement is still going to be around,' Gitzel said. 'We don't.'"
Uranium supply shortage possible, Cameco says
Bloomberg, 6 December 2011

"Natural gas companies have been placing enormous bets on the wells they are drilling, saying they will deliver big profits and provide a vast new source of energy for the United States. But the gas may not be as easy and cheap to extract from shale formations deep underground as the companies are saying, according to hundreds of industry e-mails and internal documents and an analysis of data from thousands of wells. In the e-mails, energy executives, industry lawyers, state geologists and market analysts voice skepticism about lofty forecasts and question whether companies are intentionally, and even illegally, overstating the productivity of their wells and the size of their reserves. Many of these e-mails also suggest a view that is in stark contrast to more bullish public comments made by the industry, in much the same way that insiders have raised doubts about previous financial bubbles. 'Money is pouring in' from investors even though shale gas is 'inherently unprofitable,' an analyst from PNC Wealth Management, an investment company, wrote to a contractor in a February e-mail. 'Reminds you of dot-coms.' 'The word in the world of independents is that the shale plays are just giant Ponzi schemes and the economics just do not work,' an analyst from IHS Drilling Data, an energy research company, wrote in an e-mail on Aug. 28, 2009. .... There is undoubtedly a vast amount of gas in the formations. The question remains how affordably it can be extracted. The data show that while there are some very active wells, they are often surrounded by vast zones of less-productive wells that in some cases cost more to drill and operate than the gas they produce is worth. Also, the amount of gas produced by many of the successful wells is falling much faster than initially predicted by energy companies, making it more difficult for them to turn a profit over the long run. "
Insiders Sound an Alarm Amid a Natural Gas Rush
New York Times, 25 June 2011

"Peak oil is forcing its way to the top of the agenda with stark warnings from the International Energy Agency and others repeated on ABC radio and television this week, after an investigation by the Catalyst program. Following up a similar program she made in 2005, journalist Jonica Newby gained a rare interview with the IEA chief economist, Fatih Birol, who said crude oil production peaked in 2006 and, in veiled terms, added governments should have started working seriously on the problem a decade ago and warned of the threat of more oil wars. Whereas five years ago the agency expected total production - including oil from deep-sea drilling and unconventional sources such as tar sands - could rise to 120 million barrels a day by 2030, the agency now expects production will reach only 96 million barrels. And Birol reckons there are no guarantees it can be brought out of the ground in a timely fashion. 'Existing fields are declining so sharply that in order to stay where we are in terms of production levels, in the next 25 years we have to find and develop four new Saudi Arabias. That is a huge challenge.'... Ian Dunlop, a former Shell executive and deputy convenor of the Association for the Study of Peak Oil and Gas... says the manifestations of peak oil were temporarily masked by the financial crisis - itself partly triggered by high oil prices which hurt struggling homeowners in the subprime mortgage belts of the US - but are now confronting us as the developed world increases consumption. The world faces a 20-30 per cent reduction in oil availability by 2020, he says. ''It's a massive problem [that's] been pooh-poohed for a couple of decades.' The problem with future oil production, Dunlop says, is the amount of energy you get out for the energy you expend - your return on investment - is dropping. 'Cheap oil is disappearing,' he says. 'A lot of major exporting countries in the Middle East are now finding they need more for domestic markets, and there's not as much available for export.'"
Peak oil: it's closer than you think
The Age (Australia), 30 April 2011

"Huge demand for energy resources in China and India has pushed the price of thermal coal to an all time high, reinforcing fears about spiralling inflation. Thermal coal is the largest source of energy for the generation of electricity worldwide and demand could rise still further if nuclear power programmes suffer a setback following the crisis at the Fukushima reactors in Japan....China and India last year imported 197m tonnes of coal, around nine times more than in 2003, and there are signs the trend will continue for the foreseeable future. The price of coal has been buoyed by flooding in Australia's coal-rich state of Queensland, which interrupted supplies from the world's top thermal coal exporter."
Coal price reaches new heights as demand from Asia soars
Guardian, 1 April 2011

"The US fears that Saudi Arabia, the world's largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show. The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom's crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%. The revelation comes as the oil price has soared in recent weeks to more than $100 a barrel on global demand and tensions in the Middle East. '"
WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on prices
Guardian, 8 February 2011


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



"BP PLC said it will end its 13-year alliance with Russian state-owned oil company OAO Rosneft to explore for oil and gas in Sakhalin, due in part to the economics of the Far East project."
BP to End Sakhalin Venture With Rosneft
Wall St Journal, 30 December 2011

"Outside OPEC, things are clear: of 40 million barrels per day (mb/d) of conventional petroleum extracted from existing fields, we face an annual decline on the order of 1 to 2 mb/d.... [Inside OPEC] It’s more difficult to say; the data are still opaque. We are stuck in a haze. Nevertheless, I note that Barclays and Goldman Sachs banks estimate that the spare production capacity of OPEC, more particularly that of Saudi Arabia, is significantly lower that what is officially claimed....There are new projects off the coasts of Brazil, Ghana and Guyana. The Gulf of Mexico is far from being depleted. The Arctic is far less certain, but there is real potential for natural gas there. Nevertheless, we must still expect a decade before seeing eventual and significant production of petroleum.....We will certainly remain below 95 mb/d for the combined totals of conventional and non-conventional oil.... It is always delicate to project a precise date[for global peak production]. The recovery rate of existing fields is increasing. The US on-shore production is declining very slowly (and one must add that they are drilling in a frenzy over there). It is an error to underestimate the know-how of drilling engineers....The production of oil has already been on a plateau since 2005 at around 82 mb/d. [NB: with biofuels and coal-to-liquid, we approximate 88 mb/d for all liquid fuels.] It appears to me impossible to go much higher. Since demand is still on an increasing trajectory (unless, possibly, the economic crisis engulfs the emerging economies), I expect to see the first tensions arising between 2013 and 2015.... Afterwards, in my view, we will have to face a decline of the production of all forms of liquid fuels somewhere between 2015 to 2020. This decline will not necessarily be rapid, however, but it will be a decline, that much seems clear.... This will all depend on the speed at which streams of non-conventional oil will be able to be developed. Conversion of coal and natural gas to liquid fuels will remain infinitesimal. For first-generation biofuels, I believe we are already approaching the maximal limit. As for second-generation biofuels, we are still at the stage of industrial pilot projects. It should take another quarter century before we achieve a significant production on a world scale, let’s say around 2.4 mb/d."
Olivier Rech, former energy analyst at the Interantional Energy Agency
Interview with Le Monde, 30 December 2011

"Afghanistan on Wednesday signed an oil deal with China which could earn the war-torn country $7 billion over 25 years. Afghanistan's first major oil exploration contract will see state-owned China National Petroleum Corporation develop three oil fields in the relatively peaceful north of the country along the Amu Darya river."
Afghanistan signs first major oil deal with China
AFP, 28 December 2011

"Oil prices climbed around 14 per cent in 2011 and traded in a narrow $20 range for most of the year - but the relatively modest activity hid tumultuous geopolitical events that created great instability, and which promise to hold the key for crude prices in 2012. Brent crude prices grew from around $94 a barrel at the start of the year to around $108 now. Crude spent most of the year within the $100 to $120 range, spiking to $126 in April. Price movements this year have been shaped by government action, and inaction, social unrest and natural disasters.... 2012 starts with predictions of lower oil demand among leading economies. Fears of a new recession in Europe, including the UK, remain and analysts at the Centre for Global Energy Studies (CGES) have predicted an average Brent price of $111 for 2012 as a whole. While this would be a record annual average, it puts oil prices only slightly ahead of their current level and CGES said that the average could slump as low as $76 should falls in demand among the leading economies not be offset by growth in emerging nations. Morgan Stanley has said Brent crude could trade below $90 for the first half of 2012 if the crisis in the eurozone leads to a painful recession. But any fall in demand is likely to be met with a reduction in production by Opec that would prevent very sharp falls in the oil price. A significant uncertainty in 2012 will be Iranian oil supply. A deterioration of the relationship between Iran and the West has led to sanctions against the oil exporter."
Oil prices predictions: What moved the oil price this year and and what will 2012 hold?
ThisIsMoney, 28 December 2011

"Nearly half of the landowners who have leased their ground to shale gas developers in the north-east of America regret doing it, despite the money, according to a new report by Deloitte.In findings that will intensify opposition to the controversial process of hydraulic fracturing, some 47 per cent of respondents in the 'new shale' states of Pennsylvania and New York, who have rented out their land, said they wouldn't repeat the experience. Meanwhile, 48 per cent said they would advise family and friends against leasing their land for 'fracking', a process which blasts sand, chemicals and water into shale rocks to release the oil and gasthey contain. Fracking has become increasingly controversial in recent months, as the process was found to have caused earthquakes in Oklahoma in the US and near Blackpool inthe UK. A report by the US Environmental Protection Agency (EPA), disclosed in The Independent last week, linked fracking and water pollution for the first time, prompting the shadow Energy Minister, Tom Greatex, to demand a full investigation into the technique. But analysts say the Gasland documentary, which was nominated for an Oscar this year, has probably done the most to inflame opposition. In one scene, residents of Dimock, a small community in the heart of Pennsylvania's fracking industry, blamed the process for polluting their tap water with so much methane that they could light it. Fracking has been banned in New York, although the move is being reviewed, but the practice continues in Pennsylvania."
Landowners turn against leasing for 'fracking'
Independent, 19 December 2011

"[The US] began producing more crude oil in 2008 than the year before and accelerated that upswing 3% in the first nine months of this year compared with the same period in 2010. That production has helped reduce U.S. imports of crude oil by about 10% since 2006. 'It's dramatic. It's transformative,' Edward Morse, a former senior U.S. energy official who now directs global commodities research at Citigroup, says of the historic shifts. He says the U.S. is importing a smaller share — 49% in 2010, down from 60% in 2005 — of the oil it uses, adding: 'We're moving toward energy independence.'... Perhaps the bigger impact is on American foreign policy. The U.S. oil boomlet has amplified concurrent shifts in the global oil market. Today, half of net U.S. petroleum imports come from the Western Hemisphere, and half of that (or a quarter of the total) comes from Canada. Only 12% came from Saudi Arabia last year, down from nearly 19% in 1993. 'What's occurring is a rebalancing of the world oil supply,' says Daniel Yergin, energy historian and author of The Quest: Energy, Security, and the Remaking of the Modern World. He says Brazil's newly produced offshore oil, which he calls 'presalt' because it's beneath a thick layer of salt, will further tip the scales. 'The importance of the Middle East has decreased for us,' says Michael Klare, author of the forthcoming The Race for What's Left: The Global Scramble for the World's Last Resources. 'That's a dramatic change in the geopolitical equation.' What's driving the boomlet is increased production of two resources that previously weren't considered economically viable to develop. 'It's a double-barreled development, pardon the pun,' says Martin Tallett, president of EnSys Energy, a Massachusetts-based oil industry consulting firm. He did a study for the Department of Energy on the proposed $7 billion Keystone pipeline, which would carry oil or tar sands from Canada through six U.S. states to the Gulf Coast. This heavy crude — a mixture of sand, water, clay and a viscous oil known as bitumen — is found primarily in Canada's Alberta province. It's increasingly being exported to the U.S., where it's refined into petroleum products, many for export. Its production surpassed 1.1 million barrels per day in 2005 and is expected to nearly triple by 2015, according to Canada's National Energy Board. The other resource is sometimes called 'shale oil' but more accurately 'tight oil,' because it comes from shale and other rock formations. (It's different from 'oil shale,' which contains the oil precursor kerogen but remains costly to develop.) Tight oil, produced mostly from the Bakken shale formation in North Dakota and Montana and the Eagle Ford one in Texas, is extracted in much the same way as natural gas — pumping pressurized water, sand and chemicals underground to fracture the rock and break loose the oil so it can flow to the surface. This process is often called 'fracking.' 'It's the new, new thing,' Yergin, the energy historian, says of tight oil. He says its U.S. production could skyrocket to 2.9 million barrels per day by 2020. North Dakota, which accounts for the vast majority of this oil, produced 488,066 barrels per day in October 2011, up from 90,196 in January 2005, according to the state's Department of Mineral Resources. 'When shale gas worked, people said, 'Maybe this works for oil, too,' ' Yergin says, noting that oil brings a higher return than natural gas. The result? A surge in production within the last two years. Yergin says this has produced needed jobs in an overall weak U.S. economy and, by expanding the global oil supply, has helped prevent or offset price spikes. Tallett says the U.S. has been able to capitalize on that production because it has a flexible and efficient refinery network. 'We have some of the better refineries in the world — certainly the most complex,' he says, adding they can handle different types of crude oil and shift their product line quickly to meet demand. He says they've upped production of diesel fuel, which is in great demand worldwide, and reduced that for gasoline, now in surplus. Other factors contributing to the U.S. net export of petroleum products is the federally mandated use of ethanol, which has boosted its production and reduced demand for regular gasoline. Gasoline demand is also down because Americans are driving less. They've been driving fewer miles every month since March, according to a USA TODAY analysis of data from the Federal Highway Administration..... Environmentalists are concerned that the higher production of these unconventional, harder-to-reach oil resources carries increased dangers for air and water quality. The NRDC's Casey-Lefkowitz says the development of tar sands produces more greenhouse gas emissions than that of regular crude oil, and if spilled, the heavy crude can be more difficult to clean up because of its viscosity. She says its production has taken off without regard to safety. 'My fear is that the same is happening with tight oil deposits,' she says. 'Whenever you fracture shale to get at oil,' she says, 'you're flaring off methane.' The process wastes natural gas and uses huge volumes of water. On Dec. 8, the U.S. Environmental Protection Agency said fracking might cause groundwater pollution. It said compounds likely associated with fracking chemicals had been detected in the groundwater beneath Pavillion, in central Wyoming. Rifkin says the production of unconventional oil resources may provide a temporary boost, but it won't last — in the U.S. or worldwide. Citing a 2010 report by the International Energy Agency, a Paris-based organization, he says global peak production of crude oil probably occurred in 2006. 'We're now in the early stages of a volatile end game,' he says, especially as China and India continue to develop and increase their energy consumption. 'There's no easy way to drill our way out of this.'"
Oil boomlet sweeps U.S. as exports and production rise
USA Today, 16 December 2011

"Soaring gas prices are contributing far more to increases in household energy bills than policies designed to support renewable energy and the other elements of the green economy, the Committee on Climate Change (CCC) will say today. New analysis from the independent body finds the majority of homes have seen their annual bills rise from £604 in 2004 to £1,060 last year. But almost two thirds of that increase was down to rises in the wholesale gas price, compared to just a seven per cent increase resulting from renewable energy subsidies. The report breaks down the £455 increase in bills, concluding that rising gas prices accounted for £290, transmission and distribution costs accounted for £70, VAT added £20, and £75 was the result of policies to reduce carbon emissions. The cost of low carbon policies equated to £30 a year to support investment in renewable energy and £45 for energy efficiency schemes, which in turn help reduce energy consumption."
Gas, not renewables, is driving up bills, says Climate Committee
BusinsessGreen, 15 December 2011

"The Organization of the Petroleum Exporting Countries agreed on Wednesday to increase its production target for the first time in three years, a move that appeared to signal that Saudi Arabia and Iran had put aside their recent differences on oil policy, at least temporarily. The move should have little lasting effect on oil prices because the production target of 30 million barrels is closely in line with the current output by the organization, and targets were not set for individual countries. But the agreement had symbolic value coming six months after a meeting of OPEC ministers ended in disarray when they failed to reach a consensus to lift production."
OPEC Opts to Increase Its Level of Output
New York Times, 14 December 2011

"One of the world's leading nuclear power developers, Areva, has today confirmed a major reorganisation that will see a series of projects suspended in the wake of significant financial losses. The company announced yesterday that operating losses for this year could reach €1.6bn, primarily as a result of the Fukushima disaster on the value of its uranium mining operations."
Areva suspends raft of nuclear power projects
BusinessGreen, 13 December 2011

"The great Iraqi oil rush has started to exacerbate dangerous communal tensions after a major oil company ignored the wishes of the central government in Baghdad and decided to do business with its main regional rival. The bombshell exploded last month when Exxon Mobil, the world's largest oil company, defied the instructions of the Baghdad government and signed a deal with the Iraqi Kurds to search for oil in the northern area of Iraq they control. To make matters worse, three of the areas Exxon has signed up to explore are on territory the two authorities dispute. The government must now decide if it will retaliate by kicking Exxon out of a giant oilfield it is developing in the south of Iraq. Political leaders in Baghdad say the company is putting the unity of their country at risk."
Exxon's deal with the Kurds inflames Baghdad
Independent, 9 December 2011

"Large-scale biomass power plants have 'no appropriate role' in future electricity generation without carbon capture technology the government's emissions reduction advisors will say today, prompting further criticism of the decision to delay a promised £1bn of support for a large scale carbon capture demonstration project. A new report from the influential Committee on Climate Change (CCC) will say that meeting the UK's overall 2050 emissions targets will be difficult unless bioenergy increases it share of the country's energy mix from two per cent to 10 per cent. But it warns that in order to maximise emissions reductions carbon capture and storage (CCS) technology will have to be fitted to biomass power plants, in a move that would effectively remove carbon from the atmosphere. The committee advises that if CCS proves unfeasible the UK must ditch biomass power plants and focus its biomass resources on heat generation, assuming that technological breakthroughs, such as algae-based fuels, do not emerge and provide sustainable biomass materials. The report calculates that deploying biomass power plants without CCS could force the UK to roll out large numbers of such facilities in order to meet its emission reduction requirements, risking increased emissions elsewhere as a result of the deforestation and land use changes that could be required to provide sufficient biomass feedstocks."
Climate Committee: Biomass has 'no role' in electricity production without CCS
Business Green, 7 December 2011

"Water has always been a concern for 65-year-old Joe Parker, who manages a 19,000-acre cattle ranch here in South Texas. 'Water is scarce in our area,' he says, and a scorching yearlong drought has made it even scarcer. What has Mr. Parker especially concerned are the drilling rigs that now dot the flat, brushy landscape. Each oil well in the area, using the technique known as hydraulic fracturing, requires about six million gallons of water to break open rocks far below the surface and release oil and natural gas."
Oil's Growing Thirst for Water
Wall St Journal, 6 December 2011

"Cameco Corp., the world's largest uranium producer, said some investors underestimate the potential for supply shortfalls to spur higher prices for the nuclear fuel. Disruptions in mine production, the difficulty faced by development companies in raising funds for new mining projects, and the end of a Russian deal to supply uranium from scrapped atomic warheads may help create a supply deficit, chief executive Tim Gitzel said in an interview. 'People don't focus so much on the supply side,' he said. 'They take every possible project, think it's going to operate to perfection, and add it up and say 'there's lots of supply,'' Gitzel said. 'It's easier said than done.' Uranium prices have slumped 24 per cent since a magnitude-9 earthquake and tsunami struck Japan on March 11 caused a partial meltdown at Tokyo Electric Power Co.'s Fukushima Dai-Ichi nuclear plant. The crisis at Fukushima led to Germany's declaration in May that it would close its reactors by 2022. Cameco, which is based in Saskatoon, in August cut its full-year global uranium demand estimate to 175 million pounds (79,400 metric tons) from 180 million pounds. Global mined uranium supply was 53,663 tons in 2010, according to the World Nuclear Association. That's not enough to cover global demand, and so some utilities also use fuel recovered from Russian warheads under the Highly Enriched Uranium agreement, which has run since the 1990s. Gitzel said Russia will withdraw from the HEU accord by the end of 2013, removing 24 million pounds of supply. 'There's a lot, and I spoke to some of them this week, who think the HEU agreement is still going to be around,' Gitzel said. 'We don't.'"
Uranium supply shortage possible, Cameco says
Bloomberg, 6 December 2011

"The debate over whether the world's reserves of hydrocarbons have now peaked and are in decline has lost relevance over recent years as new technology allows oil companies to find and exploit new hydrocarbon sources, the CEO of Repsol Antonio Brufau said Tuesday.Brufau said progress made in exploring and developing ultra-deepwater areas, unconventional oil and gas sources and the move into remote areas such as the Arctic, have been key to growing global reserves of oil and gas.... Last month, Repsol said it has continued to more than replace its proven oil and gas reserves outside Argentina this year and will accelerate output from 2015 onwards as it converts contingent resources into proven reserves. Brufau pointed to developments in the US shale gas industry and highlighted Repsol's own plans to develop a huge shale oil and gas area in Argentina. Repsol has said it estimates the cost of fully developing its Vaca Muerta shale oil and gas discovery in Argentina at some $20 billion. The discovery covers nearly 1 billion equivalent barrels of recoverable shale oil at the Loma La Lata field. Brufau said Repsol's shale reserves in Argentina are currently profitable to develop at $30/barrel finding, development and operating cost."
Peak oil debate losing relevance due to new upstream technology: Repsol CEO
Platts, 6 December 2011

"Whisper it. Oil production in the US is increasing. The country where output peaked in 1970 and then shrank by 40 per cent over four decades, has turned some kind of corner. Between 2008 and 2010, production rebounded by 800,000 barrels per day to 7.5 million barrels per day, and analysts forecast more growth to come. Goldman Sachs predicts that by 2017 production in the US could reach almost 11 mb/d, just shy of its all-time high, restoring the country to its former glory as the world’s biggest producer. One reason is a sharp increase in production of 'shale oil'. In North Dakota,Texas and Oklahoma, companies are using hydraulic fracturing, or 'fracking' – a controversial technique that has revolutionised US natural gas production – to extract a range of liquid hydrocarbons from non-porous shale that used to be thought unworkable....Companies are now exploring to the ends of the earth – from the Falklands to the Arctic– and are drilling reservoirs that are deeper, hotter and higher pressure than ever, all of which raise new engineering challenges. That has pushed costs up massively, with effects that have yet to be widely understood. Offshore, companies are working at ever greater depths. During the 1980s and 1990s, for instance, Petrobras, Brazil’s state oil company, made most of its offshore discoveries beneath about 3 kilometres of sea and rock. In 2007, it found the Lula field, about 7 km down. Drilling Lula needed 4 km more specialist steel pipe at a time when steel prices were soaring because of higher energy costs. Even onshore, costs are rising. Shale-oil fracking wells typically run horizontally and need four times as much steel as a vertical well. According to analysts at JPMorgan, such inflation is rampant throughout the industry. Exxon’s production investments, for instance, soared from $15 billion per quarter in the 1990s to more than $100 billion in the second quarter of 2008 – while the amount of oil and gas it produced scarcely changed. Some of the most costly oil comes from the tar sands of Canada, with its vast open-cast mines and energy-intensive production processes. According to investment bank Barclays Capital, new projects here need to earn as much as $90 a barrel just to break even. Saudi Arabia, the only country with meaningful spare production capacity, could have produced oil more cheaply a few years ago, but not now. It has increased public spending following the Arab Spring, and now needs $95 per barrel to balance its budget. These pressures, says Paul Horsnell, director of commodities research at Barclays, mean that oil prices are unlikely to fall below these levels unless the economy collapses. He forecasts $137 per barrel in 2015, and $185 in 2020. So if there is lots of oil down there but it is much more costly to produce, can we have as much as we want if we are prepared to pay for it? Well, that depends on what you judge to be enough and who you mean by 'we', says Steven Kopits, US managing director of energy consultants Douglas Westwood. The trouble is, high oil prices don’t just encourage oil companies to innovate, they also damage national economies – although some countries are more resilient than others. A penetrating analysis by Kopits found that historically the US goes into recession whenever it spends more than about 4.5 per cent of its GDP on oil. Today, that would equate to $90 a barrel. That level also holds for others in the OECD club of wealthy nations, says Kopits. But the evidence suggests that China is willing to pay more; it only cuts back on oil purchases when they account for more than 6 per cent of its GDP, equivalent to about $110 per barrel. The disparity, says Kopits, arises because Chinese society assigns more value to a barrel of oil. Gaining a barrel can transform the lives of Chinese people – allowing them to travel by car for the first time, for example. In the west, losing a barrel merely means trading in a gas-guzzler for a more fuel efficient model. But oil is so useful that nobody cuts back voluntarily, meaning prices must rise to excruciating levels to force rich western consumers to economise. The first 'peak oil recession' started in 2009, says Kopits. It took oil at $147 a barrel and the deepest recession since the 1930s to prise oil from the grip of consumers in OECD countries. Since early 2008, OECD oil consumption has fallen by 4 mb/d, while non-OECD consumption – mainly inChina– has gained 6 mb/d. Global oil production rose 2 mb/d during that period, so developing countries have consumed all the additional supply plus that given up by industrialised economies.  'China is bidding away the OECD oil supply,' says Kopits, 'and recessions are the mechanism by which that oil is being transferred from weaker economies to faster growing economies.' With China embarking on rapid 'motorisation' – car sales in China leapfrogged those in the US in 2010 – the outlook is for repeated oil price spikes and recessions. We appear now to be entering the second peak oil recession, says Kopits, and others will follow. For the time being this is a problem for the west, but prices could rise to levels that are unsupportable even for China. On this view, peak oil is as much an economic construct as a geological one."
Has the world reached economic peak oil?
New Scientist, 5 December 2011

"Obama came through big-time last month. He backed his great E.P.A. administrator, Lisa Jackson, and Department of Transportation secretary, Ray LaHood, in producing a deal with all the top U.S.-based automakers that will go into effect in 2017 and require annual mileage improvements of 5 percent for cars, and a little less for light trucks and S.U.V.’s, until 2025 — when U.S. automakers will have to reach a total fleet average of 54.5 miles per gallon. The current average is 27.5 m.p.g. This deal will help America’s cars and trucks approach the mileage levels of Europe and Japan and spur innovation in power trains, aerodynamics, batteries, electric cars and steel and aluminum that will make cars lighter and safer. The E.P.A. and the Transportation Department estimate that these new innovations will gradually add about $2,000 to the cost of an average vehicle by 2025 and will save more than $6,000 in gasoline purchases over the life of that car — savings that will go into the rest of the economy. And all that assumes that gasoline prices will only moderately increase and there are no innovation breakthroughs beyond what we anticipate. If gasoline prices soar higher and innovation goes faster — both highly likely — the savings would be even more. The new vehicles sold over the life of the program — including its first phase between 2012 and 2016 — are expected to save a total of four billion barrels of oil and prevent two billion metric tons of greenhouse gas pollution."
This Is a Big Deal
New York Times, 3 December 2011

"Britain's plans for a new generation of nuclear power stations have suffered another setback after being delayed by at least a year. The first of the new plants will not be built until 2019 because of extra safety checks following Japan’s atomic disaster. Ministers originally hoped to get the first nuclear power station built by 2017, before revising this to 2018. Now there has been a further slippage, after an updated timetable showed the first station in Somerset is not expected until nearer the end of the decade."
Setback to nuclear power plans
Telegraph, 2 December 2011

"A $1bn (£640m) bet by a British firm to find commercial quantities of oil in the Arctic has ended in failure and there is now mounting speculation there will be no more drilling by Cairn Energy next year. The controversial exploration off Greenland was physically opposed by Greenpeace but Cairn has been forced to retreat by complex geology and growing criticism in the City. Shares in the business, which was set up by the former Scottish rugby star Sir Bill Gammell, fell by as much 6% at one point today to make it the biggest faller in the FTSE-100 index of leading companies after admitting no significant finds with its two latest wells off Greenland. Simon Thomson, Cairn's chief executive, said the company remained optimistic about the region generally but was looking for partners to take on some of the risk. Well placed sources admitted there may be no drilling in 2012. Cairn made spectacular discoveries in Rajasthan, India – which were sold off, partly to fund a new drive into the Arctic – but the City is now losing patience. Angus McPhail, an oil analyst at the investment bank Investec, said: 'They've drilled four wells – they haven't found anything. I think the company probably needs to refocus on another area, like Sri Lanka or [the] east Mediterranean.'"
Cairn finds no oil off Greenland
Guardian, 30 November 2011

"Drivers reserve their worst curses for when gasoline spikes above $4 a gallon. But when that happened in 2008, it didn't last long. Far more insidious is the situation now, with nominal prices not quite as high but consistently strong. One way to account for that stronger-for-longer factor is to look at fuel prices on a 12-month rolling average. On this measure, consultancy JBC Energy points out that oil price strength has actually surpassed 2008 levels."
Throwing Another Barrel of Fuel on the Euro Zone's Fire
Wall St Journal, 29 November 2011

"The IEA says that the Middle East and North Africa will need at least $100 billion a year in new investment for the foreseeable future even in a place where oil is still cheap to exploit. The problem, however, is that the rising expectations of Arab Spring is rapidly shifting oil revenues from investment in more oil production to the kinds of social spending that will keep people happy and out of the streets. In the closest the IEA comes to predicting peak oil, Birol says that without major increases in investment (an increasingly unlikely occurrence), Middle Eastern oil production will fall by 3.4 million barrels a day (b/d) by 2015 and 6.2 million by 2020. Should this happen, we will have oil prices in excess of $150 a barrel - until of course demand slumps from the high prices."
The Peak Oil Crisis: The IEA’s Road Show
Falls Church News-Press, 29 November 2011

"Mexico's state oil company Pemexsaid on Friday that oil production rose to 2.553 million barrels per day in October from 2.489 bpd in September. Mexican monthly oil output has been little changed since 2009 as Pemex has slowed the rate of natural decline at its giant Cantarell oil field in the southern Bay of Campeche. Oil production has fallen off since a peak of 3.4 million bpd in 2004, damaging government finances since Mexico depends on oil revenues to fund around a third of its budget. Mexico, the world's No. 7 oil producer, has to import around 40 percent of its gasoline needs because of a lack of in-country refining capacity."
Mexico's oil output rises in Oct-Pemex data
Reuters, 25 November 2011

"With debt crises either side of the Atlantic, Europe flirting with recession and Libyan oilfields returning to production, it is tempting to be bearish on oil. Despite all the financial and economic gloom, 2011 has been a record year for oil with Brent crude at its highest-ever average above $110 per barrel, and few analysts forecast a big drop in price, even those who expect an economic slowdown. Rising demand for fuel from China and other emerging economies, declining output from traditional suppliers including the North Sea and interruptions to production in key exporters such as Libya have kept the oil market tight. And unless the United States, the world's biggest oil consumer, slips into a double-dip recession, oil prices are likely to stay strong, at least until the end of the northern-hemisphere winter.... Global oil demand is likely to have increased by about 900,000 barrels per day (bpd) this year to more than 89 million bpd, according to the International Energy Agency (IEA), which advises major industrialised economies on energy policy. Next year, world demand for oil will rise even faster, by about 1.3 million bpd, the IEA forecasts, as China, India, Brazil and other emerging economies all use more. While headlines are full of ... the spectre of recession, it is easy to overlook the fact that oil demand has resumed its growth path and 2011 levels are the highest in history,' said David Wech, head of energy studies at consultancy JBC Energy. While demand has increased, supply has been inconsistent, with the uprising against former dictator Muammar Gaddafi removing up to 1.6 million bpd of high quality Libyan oil this year and hiccups in production in Russia, Britain, Norway and Nigeria. Other factors are also supporting oil."
Don't bet on big fall in oil – even as crisis looms
Reuters, 23 November 2011

"Google Inc has abandoned an ambitious project to make renewable energy cheaper than coal, the latest target of Chief Executive Larry Page's moves to focus the Internet giant on fewer efforts. Google said on Tuesday that it was pulling the plug on seven projects, including Renewable Energy Cheaper than Coal as well as a Wikipedia-like online encyclopedia service known as Knol."
Google quits plans to make cheap renewable energy
Reuters, 22 November 2011

"Saudi Arabia's state energy company said on Monday that its dominant role in world oil supply had been altered by large new reserves in North America, sapping the urgency to develop the kingdom's own reserves. The speech by Saudi Aramco's chief executive was the first from the globe's top oil exporter to acknowledge that unconventional oil was set to shift the energy balance of power and cut U.S. dependence on Middle East crude. 'The abundance of resources and the more 'balanced' geographical distribution of unconventionals have reduced the much-hyped concerns over 'energy security' which once served as the undercurrent driving energy policies and dominated the global energy debate,' Khalid al-Falih said. For years oil markets, nervously watching pressure on limited spare production capacity, have obsessed over Saudi Arabia's supply cushion as the last defense against prices spiraling higher. 'A few years ago, much of the global energy debate was based on the premise of acute resource scarcity and its economic and political ramifications,' Falih said.... Falih said in early October he saw no reason for Aramco to significantly increase its oil production capacity in the mid-term because of rising conventional output from countries like Brazil and Iraq. Weak U.S. economic data, mounting euro-zone sovereign debt and concern about the exposure of major banks to it raised 'the specter of a double-dip global recession,' he told the conference in the Saudi capital on Monday. 'All that makes spending on aggressive energy programmes unlikely,' he said, adding that abundant affordable hydrocarbon supplies challenged investment in renewable technologies. As a result, Saudi Aramco had no plans to increase its oil production capacity to 15 million barrels per day, Falih said.... OPEC expects global output of non-conventional oil to rise 3.4 million bpd by 2015, still dominated by oil sands, to 5.8 million bpd by 2025 and to 8.4 million bpd by 2035 when tight oil would be playing a much bigger role. In 2035, the group of conventional oil exporters expects the United States and Canada to still be dominating unconventional oil production with 6.6 million bpd, but China could be producing 1.1 million bpd of its own unconventional oil by then. OPEC estimated in a recent report that global reserves of tight oil could be as high as 300 billion barrels, well above current estimates of Saudi Arabia's conventional reserves of around 265 billion barrels."
Saudi sees threat of shale oil revolution
Reuters, 21 November 2011

"Chevron's oil spill off the Brazilian coast exposes the major environmental risks of tapping the country's new oil wealth and could further delay development by fuelling nationalistic oil politics. The accident, for which the U.S. oil company has taken responsibility, has quickly become politicized at a time when Rio de Janeiro and a handful of other 'producer' states are campaigning bitterly against a proposal in Congress to spread the oil wealth more widely. By drawing attention to the environmental risks of exploring at such massive depths, the spill could further delay the concession of new exploration areas and increase the power of state-controlled Petrobras at the expense of other oil companies, both national and foreign.... Chevron says the leak, which was caused by its underestimation of pressure in an offshore oil reservoir and overestimation of the surrounding rock's strength, totalled about 2,400 barrels and that it has plugged the rupture."
Chevron spill may complicate Brazil oil dreams
Reuters, 21 November 2011

"The race to deliver stockpiles of oil from Oklahoma to the world’s largest refining centre in Texas tightened Wednesday with rivals Enbridge Inc. and TransCanada Corp. both offering strategies that helped push the price of oil above $100 a barrel. Pipeline capacity envisioned by the Calgary firms will connect abundant oil supplies from the storage hub of Cushing, Okla. to Gulf Coast refineries and promises to narrow the price discount U.S. crude has fetched this year against the global benchmark. That discount reached $28 US a barrel last month, eating into the profits of North American energy firms....U.S. benchmark West Texas Intermediate climbed more than three per cent to $102.60 US a barrel Wednesday, topping the $100 mark for the first time in more than five months. Combined with pressure on U.K.-based Brent, which closed down 30 cents at $111.88 a barrel, the differential between benchmarks narrowed to $9.28 a barrel."
Oil prices surge on pipeline plans by Enbridge, TransCanada
Calgary Herald, 17 November 2011

"After 11 years and $39 billion of investment, Exxon Mobil Corp., Royal Dutch Shell Plc (RDSA) and their partners have yet to sell a drop of oil from what was touted as the world’s biggest discovery in four decades. Centered on a man-made island 70 kilometers (44 miles) from Kazakhstan’s coast, the Kashagan project is just months away from completion, $15 billion over budget and 8 years behind schedule. As the milestone of first oil nears, the Kazakh government is pressuring the group for a commitment on an even-bigger second phase, a project the oil companies are undecided on and one analyst says may not make money. 'The biggest worry is whether the project can ever be profitable given the huge cost escalation and start-up delays,'said Julian Lee, a senior analyst for the Centre for Global Energy Studies in London. It may be 'impossible for investors to earn a return on any investment in a second phase before their contract for the field expires' in 2041. Kashagan, which may hold enough oil to supply the world for six months, has become a cautionary tale for oil companies worldwide as they spend an estimated $20 trillion through 2035 finding supplies in ever more difficult places. Expenses mounted as engineers underestimated the complexity of drilling under a region of the Caspian Sea that’s frozen almost half the year. The government accused the partners, which are allowed to recoup spending before sharing the oil, of inflating costs. ... Kashagan has proved potentially lethal as well as complicated. The crude oil, locked 4,200 meters (2.6 miles) below the seabed in a highly pressurized reservoir, has a high concentration of poisonous 'sour gas,' according to North Caspian Operating Co., or NCOC, the venture formed to manage the project.... The geology, islands and ice and have inflated costs for the first phase to $39 billion from $24 billion estimated by the government in 2008. The prize for the five main partners is as much as 252,000 barrels of crude a day each from peak output once the second phase is running. That kind of production is growing harder to find worldwide as existing fields age and governments in theMiddle East, Russia and Latin America reserve control for state companies."
Biggest Find in Decades Becomes $39 Billion Cautionary Tale
Bloomberg, 17 November 2011

"On October 14, Secretary of State Hillary Rodham Clinton announced that the Department of State is establishing, for the first time, a Bureau of Energy Resources (ENR). As the Secretary noted, 'You can’t talk about our economy or foreign policy without talking about energy. With a growing global population and a finite supply of fossil fuels, the need to diversify our supply is urgent.' The Energy Resources Bureau is now operational and will ensure that all our diplomatic relationships advance our interest in having access to secure, reliable, and ever-cleaner sources of energy. .... The creation of the new Bureau emphasizes the important role played by energy in U.S. foreign policy, and energy’s complexity and importance. The U.S. has a long-standing interest in the secure supply of energy resources, as well as in the sustainability and diversification of those resources."
State Department Launches "Bureau of Energy Resources"
U.S State Department, 16 November 2011

"Investment in renewable power generation may double to $395 billion a year by 2020, led by growth in offshore wind and solar energy projects, Bloomberg New Energy Finance forecast. The total may rise further to $460 billion a year in real terms by 2030 from $195 billion last year, according to the research unit of Bloomberg LP. The investments would boost clean energy as a portion of total world generation capacity to 15.7 percent within 20 years from 12.6 percent last year. The findings suggest wind, solar and biofuel industries will continue quick growth through stumbling economic growth and a lack of commitment from the U.S. and China to restrain pollution blamed for global warming. 'Last year’s record renewable energy investment was no one-off despite the recent economic gloom,' Guy Turner, director of commodity market research at London-based New Energy Finance, said in a statement today. In 2014, China will likely take the lead over Europe in terms of money spent on clean energy projects, with annual outlays of almost $50 billion. The U.S. and Canada together will reach the same amount by 2020. The most rapid spending growth, ranging from 10 percent to 18 percent, will come in India, the Middle East and Africa, the report said. 'Big winners over the next 20 years will be the emerging renewable energy hubs in Latin America, Asia, the Middle Eastand Africa - by 2020 the markets outside of the European Union, U.S., Canada and China will account for 50 percent of global annual investment in renewable energy capacity,' Turner said. Offshore wind investment will grow fastest in terms of technologies, reaching $140 billion in 2020 compared with $82 billion last year. Solar installations will reach 1,137 gigawatts by 2030, compared with 51 gigawatts last year."
Clean Energy Investment May Double to $395 Billion by 2020
Bloomberg, 16 November 2011

"David Cameron is facing a fresh backbench revolt as Conservative MPs accused the Government of 'destroying rural communities' with soaring petrol taxes. Around 80 Tories, out of a total 116, have signed a motion urging the Government to take action on rising fuel prices. During a fiery debate in the House of Commons, MPs called for next year's 3p increase in fuel duty to be scrapped. They also want more help for people in the countryside who pay more for their petrol. Robert Halfon, the Conservative MP who sparked the debate, told fellow MPs that scrapping fuel tax increases was an 'issue of social justice'. 'This is especially true in rural communities which are being destroyed by fuel taxes,' he added. ... The Treasury has insisted that there are several key measures to help drivers in last year’s Budget, including a 1p cut in fuel duty. However, motoring groups are warning that petrol prices could actually rise 8p per litre next year, with increases to VAT and inflation adding to the January increase of 3p. Petrol prices are still not far off their record high of 137.43p reached in May this year, after the oil price spiked because of unrest in energy-rich Middle Eastern countries. This summer petrol prices were an average of 17.5p a litre higher than the year before and 19.7p more expensive for diesel, according to the AA. This means the typical family spent about £240 more on petrol over the summer than last year."
MPs attack Government for fuel taxes that 'destroy communities'
Telegraph, 15 November 2011

"Libya’s oil production remains at about 40 percent of the level that it was before the revolution began. But none of the country’s 40 critical oil and gas fields were seriously damaged in the war, according to Libyan officials and international oil experts. Now, most of the important oil ports and refineries, virtually idled by international sanctions and months of fighting, are ramping back up. Officials boldly predict that by June, the country will once again be pumping 1.6 million barrels of oil a day, although independent experts say that is conceivable only if the country can avoid a relapse into violence. ... Over all, only about 20 of the 2,000 foreign oil workers who provided critical technical functions for exploration and production before the war have returned, according to officials at the National Oil Company, which partners with foreign companies.... With proven reserves of 46.4 billion barrels — the largest in Africa — Libya is a great prize. But historically the country has been a disappointment for foreign oil companies. During his long rule, Colonel Qaddafi granted foreigners drilling rights on small patches of fields and made them sign agreements that gave the regime most of the profits and left them with most of the bills. Decades of Western sanctions also kept most companies away until 2006. Now, a new era could be dawning for a country that 50 years ago produced three million barrels a day — roughly double the output of recent years — and that might return to such lofty levels with ample investment and new technologies to exploit old and still-to-be-discovered fields deep in the Sahara. Mr. Scaroni, the Eni chief executive, is already angling for more business. His company, which produced 280,000 barrels of oil and gas a day in Libya before the war, was by far the biggest foreign producer and counted Libya as an important source of profits in recent years. Mr. Scaroni visited the rebel leadership in Benghazi last April, flying in via helicopter from an Italian warship, and has been shuttling in and out of Libya. 'The countries that have been involved in helping the new government in throwing out Qaddafi will have a strong relationship with the country,' he said. 'Libya remains a country where we want to be, to stay, and we want to grow our production.”
Spared in War, Libya’s Oil Flow Is Surging Back
New York Times, 15 November 2011

"Australia's Prime Minister Julia Gillard signaled on Tuesday an end to a decades-long ban on selling uranium to India, a move aimed at taking advantage of demand for cleaner-burning fuels and to offset a potential drop in sales to Japan following this year's earthquake. The policy shift—outlined by Gillard in a newspaper editorial on Tuesday—comes despite India's continued refusal to sign an international treaty aimed at preventing the spread of nuclear weapons. Uranium is widely used in the generation of nuclear power, but can also be enriched for use in warheads."
Australia Seeks End of India Uranium Ban
Wall St Journal, 15 November 2011

"The British government and former BP boss Tony Hayward yesterday waded into the legal battle over control of the oil in Kurdistan, calling on Baghdad to stop obstructing the development of the region's hydrocarbon reserves. The calls came as Baghdad renewed its threat to throw Exxon Mobil out of the country after the US giant cut a deal to explore for oil and gas in the rocks of its arch resources rival, the semi-autonomous Kurdistan Region of Iraq....The UK Government entered the quagmire yesterday when Michael Aron, British ambassador to Iraq, called on Iraq to 'resolve its differences [with KRD] and reach an agreement over hydrocarbon laws and revenue sharing'. Speaking at the Kurdistan-Iraq Oil & Gas conference in Erbil, Mr Aron said: 'The British Government would like a climate where British companies can work in and exploit the opportunities, with the Iraqi government and the KRG, across the whole of Iraq. 'Mr Hayward added: 'The British embassy was imploring both sides to resolve this issue and I would support that request.'....Baghdad has been keen to curb Kurdistan's oil development, partly because it fears that additional revenues will make it more powerful and increase its claim for greater autonomy."
Britain asks Iraq to back off after threats to Exxon
Independent, 14 November 2011

"It may seem strange in an era of cyberwarfare and drone attacks, but the newest front in the rivalry between the United States and China is a tropical sea, where the drive to tap rich offshore oil and gas reserves has set off a conflict akin to the gunboat diplomacy of the 19th century. The Obama administration first waded into the treacherous waters of the South China Sea last year when Secretary of State Hillary Rodham Clinton declared, at a tense meeting of Asian countries in Hanoi, that the United States would join Vietnam, the Philippines and other countries in resisting Beijing’s efforts to dominate the sea. China, predictably, was enraged by what it viewed as American meddling. For all its echoes of the 1800s, not to mention the cold war, the showdown in the South China Sea augurs a new type of maritime conflict — one that is playing out from the Mediterranean Sea to the Arctic Ocean, where fuel-hungry economic powers, newly accessible undersea energy riches and even changes in the earth’s climate are conspiring to create a 21st-century contest for the seas. China is not alone in its maritime ambitions. Turkey has clashed with Cyprus and stoked tensions with Greece and Israel over natural-gas fields that lie under the eastern Mediterranean. Several powers, including Russia, Canada and the United States, are eagerly circling the Arctic, where melting polar ice is opening up new shipping routes and the tantalizing possibility of vast oil and gas deposits beneath. 'This hunt for resources is going to consume large bodies of water around the world for at least the next couple of decades,' Mrs. Clinton said in a recent interview, describing a global competition that sounds like a watery Great Game.... 'Underlying all of this is the recognition that an increasing share of oil resources is offshore,' said Daniel Yergin, an energy expert and author of a new book, 'The Quest: Energy, Security, and the Remaking of the Modern World.' 'When you have energy resources on land,' he said, 'you know where things stand. When they’re offshore, things can get murkier.' Twenty-nine million barrels of oil a day, one-third of global production, now come from offshore fields, Mr. Yergin said, a share that will rise steadily. The South China Sea alone is estimated to have 61 billion barrels of petroleum — oil and gas — plus 54 billion yet to be discovered, while the Arctic is projected to have 238 billion barrels, with possibly twice that in undiscovered sources."
A New Era of Gunboat Diplomacy
New York Times, 12 November 2011

"This year, for the first time ever, we imported more gas – whether piped from Norway or shipped from Qatar – than we pumped from our own continental shelf.... We don’t yet know the full extent of the shale gas in the UK. We don’t know how economically or environmentally viable it will be to extract. At best, it is years away. As last week’s report on the Lancashire earthquakes showed, there remain issues to be addressed about hydraulic fracturing, or 'fracking'. And Britain is not the US. Our planning and regulatory frameworks, and our land ownership laws, are quite different: in particular, underground oil or gas does not belong to the landowner, but to the Crown."
Britain can’t afford to bet its future on shale gas - wind turbines are here to stay
Telegraph, 12 November 2011

".. a team of UK scientists reckon they may have found an extremely useful application for urine by turning it into electricity. Dr Ioannis Ieropoulos and his team of scientists at the University of the West of England, Bristol, published research this week investigating whether urine could be used in microbial fuel cells. The paper concludes that urine is rich in chemicals that can effectively be used in the cathode half of a fuel cell to react with bacteria in the anode. The initial tests confirmed that urine-powered fuel cells are technically feasible, and the team now hopes to scale up a prototype system capable of powering homes, businesses or even a small village. The researchers are particularly interested in using the 38 billion litres of urine produced each day by farm animals, which can have an adverse effect on the environment if not properly managed. The fuel cells would effectively clean the urine so that it could be safely discharged into the environment, removing the need for costly and energy-intensive treatment by wastewater companies."
'Pee power' is possible, UK scientists find
Guardian, 11 November 2011

"The oil price could soon spiral to an all-time high of $150 (£94) a barrel without enough investment in production, the International Energy Agency (IEA) has warned. The scenario could arise if investment in the Middle East and North Africa falls just a third short of the annual $100bn needed before 2015, the energy watchdog said. High oil prices are already undermining world economic growth, according to the IEA, which yesterday released its World Economic Outlook. 'In 2011, $102 is the average price through to today, which means the global economic recovery is at risk,' said Fatih Birol, the IEA's chief economist. 'We are in the danger zone for the global economy at current levels. 'Oil prices by 2015 may go to $150 in real terms and $176 in nominal terms [if investment is too low].'"
'Invest in production or see oil hit record $150 a barrel'
Telegraph, 9 November 2011

"Saudi Arabia will overtake Russia as the world's largest crude oil producer in about 2015 as output at new Russian fields fails to offset fast decline at mature deposits, the International Energy Agency (IEA) said on Wednesday. In its World Energy Outlook the IEA also said Russia would eventually start to supply natural gas to China, becoming a major source of the fuel despite gas export monopoly Gazprom's failure so far to secure a supply deal after five years of talks. Russia overtook Saudi Arabia as the top producer of oil when the Organisation of the Petroleum Exporting Countries cut crude output during the economic crisis in 2009. But while Russia's output will plateau at 10.5 million barrels per day, Saudi Arabia's will rise to match Russia's in roughly 2015, and hit 14 million bpd by 2035.... The government forecasts steady output of roughly 10 million barrels per day until 2020. IEA figures are likely to be higher due to a difference in the basis for its calculations. Russia - where production peaked at 11.41 million barrels per day (bpd) in 1988 under Soviet rule - has driven output to post-Soviet highs above 10 million barrels per day by bringing new fields on stream but these will not prevent decline from setting in later this decade. 'Russian fiscal policy is a key determinant of when and how quickly Russian production will decline. Current terms limit the incentive to invest when prices rise; our projections assume sympathetic evolution of taxation,' the IEA said. By 2035, Russia will still be the world's largest gas producer and natural gas exports should more than double to 330 billion cubic metres (bcm) due to new deliveries to China. Russia aims to start gas export to China by 2016 of as much as 68 bcm per year, equal to nearly half of Europe's intake. But Gazprom officials have conceded that an agreement on Chinese supplies will not be concluded this year, implying a delay to the planned start to deliveries."
Saudi set to overtake Russia as top oil producer
Reuters, 9 November 2011

"The European Union is expected to overtake the United States as the world’s biggest oil importer in 2015, the International Energy Agency said Wednesday in its annual report. Oil imports to the United States are expected to decline significantly over the coming years because of new efficiency standards for cars and trucks and an increase in domestic oil and natural gas production, said Fatih Birol, chief economist of the agency. By 2020, China should overtake the European Union to become the world’s biggest importer of oil, according to the Paris-based agency, which acts as a policy adviser to governments. 'The U.S. would be less and less vulnerable to oil price shocks,' Mr. Birol said at a news conference in London. 'But increasing reliance on oil imports elsewhere heightens concerns about the cost of imports and supply security.'.... Oil-importing nations will increasingly rely on a small number of producing nations, the agency said. Oil production is expected to grow mainly in Iraq, Saudi Arabia and Brazil. More than 90 percent of growth will come from the Middle East and Africa, the agency said. Greater dependence on oil imports in Asia, where demand is rising because more people are buying cars, could raise concerns about the reliability of oil supply. Much of world oil supplies are transported via vulnerable routes in the Gulf, the Malacca Straits and elsewhere, the energy agency said. The agency said it was unclear whether production from the Middle East and North Africa would actually grow as expected because some nations, including Libya, might find it difficult to find the necessary investment in exploration and production. 'After the Arab Spring there might be different priorities,' Mr. Birol said. 'If they were investing a third less, then 2015 oil prices may go up to $150 per barrel.' Global oil demand is expected to rise to 99 million barrels a day in 2035 from 87 million barrels a day last year, mainly because of a growing transport sector in China and other faster-growing economies, the agency said."
E.U. Poised to Overtake U.S. as Biggest Oil Importer
New York Times, 9 November 2011

"On 5 November an earthquake measuring 5.6 rattled Oklahoma and was felt as far away as Illinois. Until two years ago Oklahoma typically had about 50 earthquakes a year, but in 2010, 1,047 quakes shook the state. Why? In Lincoln County, where most of this past weekend's seismic incidents were centered, there are 181 injection wells, according to Matt Skinner, an official from the Oklahoma Corporation Commission, the agency which oversees oil and gas production in the state. Cause and effect? The practice of injecting water into deep rock formations causes earthquakes, both the U.S. Army and the U.S. Geological Survey have concluded. The U.S. natural gas industry pumps a mixture of water and assorted chemicals deep underground to shatter sediment layers containing natural gas, a process called hydraulic fracturing, known more informally as 'fracking.' While environmental groups have primarily focused on fracking’s capacity to pollute underground water, a more ominous byproduct emerges from U.S. government studies – that forcing fluids under high pressure deep underground produces increased regional seismic activity. As the U.S. natural gas industry mounts an unprecedented and expensive advertising campaign to convince the public that such practices are environmentally benign, U.S. government agencies have determined otherwise.... It seems likely that Washington will eventually be forced to address the issue, as the U.S. Army and the USGS have noted a causal link between the forced injection of liquids underground and increased seismic activity. While the Oklahoma quake caused a deal of property damage, had lives been lost, the policy would most certainly have come under increased scrutiny from the legal community. While polluting a local community’s water supply is a local tragedy barely heard inside the Beltway, an earthquake ranging from Oklahoma to Illinois, Kansas, Arkansas, Tennessee and Texas is an issue that might yet shake voters out of their torpor, and national elections are slightly less than a year away."
U.S. Government Confirms Link Between Earthquakes and Hydraulic Fracturing, 8 November 2011

"Global oil demand is expected to peak before 2020 as a 'perfect storm' of regulation promotes energy efficiency, new technology and biofuel use across the world, according to a new study. The report, by respected industrial consultancy group Ricardo, challenges the widespread view that 'peak oil' will come as soaring emerging market demand causes oil supplies to diminish. The report concludes that the peak in demand will be no more than 4pc above the record set in 2010, when the world consumed 87.4m barrels of oil a day. Demand in 2035 is expected to be 3pc below the 2010 level. 'The world is nearing a paradigm shift in oil demand,' said Peter Hughes, managing director of the energy practice of Ricardo Strategic Consulting. 'The drivers working against oil demand growth are increasing in number and intensity, with the world's consuming nations increasingly focused on their need to reduce their dependency on oil, supported by an ever stronger legislative framework.' Mr Hughes said that even emerging countries will attempt to limit consumption, as energy security moves up the agenda following supply shocks in the Arab Spring. He also cited the undesirability of price volatility seem in the market."
Oil demand globally to peak before 2020
Telegraph, 7 November 2011

"Ricardo today announced the results of a landmark multi-client research study conducted by Ricardo Strategic Consulting in association with Kevin J. Lindemer LLC, and involved participation of some of the world's leading energy and technology companies and organizations. The research challenged the concept that 'Peak Oil' will be a supply side phenomenon and predicts that the demand for oil may well peak before 2020 and then fall back to levels significantly below 2010 demand by 2035. The study findings suggest that there is a strong chance of oil demand reaching its peak before 2020, at no more than about 4 percent above 2010 levels, before falling into a long-term decline trend, with demand in 2035 back down to some 3 percent below 2010 levels. This would also involve significant changes in the geographic distribution of demand and the mix of refined products required by the market. After incorporating a greater take-up of first generation biofuels, demand for hydrocarbon oil by 2035 may actually be more than 10 percent below its 2010 level, and its share of global energy demand fallen below 25 percent (from circa 33 percent today). Regional differences and legislation: Oil demand growth will have its limits in every country. Ricardo believes that there has been a general underestimation of the future impact of government policies to improve fuel efficiency and promote alternatives to oil. This will be the case everywhere, including, very importantly, in China, where although demand is projected to grow by nearly 60 percent in the meantime, the study assesses that a peak could be reached as early as 2027, before starting to fall back thereafter. The effect of fuel-efficient technology: Evolutionary change in the automotive sector will bring about a revolutionary change in fuel demand. The transportation sector will continue to see significant growth in the vehicle fleet, increasing by over 80 percent from 2010 to 2035. However the results of a detailed modeling exercise drawing on Ricardo's deep expertise in this field suggest that efficiency improvements in the internal combustion engine will more than offset the rise in fuel demand deriving from the increase in the number of vehicles. Although new technologies, such as the battery electric vehicle, will be introduced and will have an increasing impact over time, the projected reduction in road transport oil demand does not derive primarily from the rapid penetration of such technologies."
Ricardo Study Suggests Global Oil Demand May Peak Before 2020
MarketWatch, 7 November 2011

"In light of recent events such as the Arab Spring and Occupy Wall Street I thought it would be pertinent to review Hubbert's Third Prophecy about the cultural crisis he expected. He wrote about it in the article entitled 'Exponential Growth as a Transient Phenomenon in Human History'. In case you are not familiar with Hubbert's first two prophecies, he predicted both the US and world oil peak very accurately. In 1956 Hubbert predicted the US oil peak would be sometime between 1969 and 1971. For this he was ridiculed and laughed off the face of the earth (almost). Turned out the US oil peak was in 1970. This is something the drill-baby-drill, it's all the environmentalists' fault, ditto heads don't know anything about. Next in 1974 Hubbert predicted the world oil peak to happen about 1998. However he DID say that if OPEC were to restrict the supply, then the peak would be delayed by 10-15 years which would put it at 2008-2013, or exactly right. Here is what Hubbert's prediction (to scale by MBPD) looks like overlayed onto a reasonably close estimate of the actual global oil peak which started in 2005 and has continued as a plateau up to now.... Hubbert said, 'The third curve (on the left) is simply the mathematical curve for exponential growth. No physical quantity can follow this curve for more than a brief period of time. However, a sum of money, being of a nonphysical nature and growing according to the rules of compound interest at a fixed interest rate, can follow that curve indefinitely...Our principle constraints are cultural...we have evolved a culture so heavily dependent upon the continuance of exponential growth for its stability that it is incapable of reckoning with problems of behooves begin a serious examination of the...cultural adjustments necessary... before unmanageable crises arise...'.... Debt can continue to increase indefinitely, while oil can't. And since our entire money system is based on debt with interest attached there is no way to escape it. All money is debt because we have allowed banks and the fed to create all our money through interest-bearing loans by using the fractional reserve system. The details are unimportant, the main point is that our money supply is created by interest-bearing loans of banks and the fed. Therefore, the economy must always grow in order to pay back the interest. When the economy can't grow anymore...collapse.....As we all know, we had a stock market crash, a housing crash, an oil price spike and crash, and an employment crash. Because we don't have a real economy any more we have papered over these problems by creating more debt. The taxpayers bailed out the criminal fraudsters on Wall St., taking on more government debt, and the fed bailed out many bankrupt banks internationally ($12 Trillion), indenturing the taxpayers for future debt. Since debt represents ultimately a claim on real assets, debt cannot continue forever if growth of the real resource based economy has stopped. This is Hubbert's Third Prophecy: When economic growth cannot continue due to the lack of affordable oil, then we will have a cultural crisis. The solution of the powers that be? Create more funny money through the fed's 'quantitative easing program'. The solution of the Keynesian economists? Take on more government debt through interest bearing loans by selling Treasury bonds to the fed, China, and other parties (stimulus). The solution of the right-wing 'deficit hawks'? Cut government (social) spending to the bone to 'cut the deficit' which they created through monstrous military spending, and tax cuts to themselves. Guess what. None of these are going to work. The solution is structural in the monetary system itself. When all money is debt, there is always interest to pay and growth is required. Hubbert didn't mention one other notable feature of a debt-money system. It systematically pumps wealth from the bottom 80% of the population in wealth to the top 20%. The bottom 80% pay interest while the top 20% collects it, and of course most of the interest is collected by the top 10%. When all money is debt, that's a lot of money going to the top. The Occupy Wall Street people aren't stupid. They know the game is rigged."
Gary Flomenhoft - Hubbert's third prophecy, 5 November 2011

"Global energy markets stand at a crossroads. The big themes that dominated the opening years of the century (prosperity, markets, peak oil, global warming and clean technology) are giving way to a different set of concerns centred on inequality, affordability, regulation and techniques for extracting oil and gas from tight rock formations and ever-deeper below the surface. Some changes have come from outside the energy industry. The financial crisis has diminished confidence in free markets. Falling real incomes and rising unemployment in the advanced economies have pushed climate concerns into the background in favour of a focus on jobs and cutting household bills. Other changes have come from within the energy markets. A decade of soaring real oil prices is at last beginning to transform the long-neglected supply side of the industry, encouraging widespread employment of technologies such as ultra-deepwater drilling and hydraulic fracturing to extend conventional oil and gas reserves. High prices have begun to concentrate consumers' minds on cutting consumption. But they are also sapping support for expensive policies to remake the electricity industry by switching from burning coal and natural gas to alternatives such as solar and wind. In the emerging world, rising oil and gas prices have brought an enormous influx of wealth for producing countries, though in many cases the inequitable distribution of income is contributing to political unrest. For consuming countries, however, the mounting financial burden, mostly aimed at the middle class, is straining government budgets and may prove unsustainable in the long run....politicians and voters want both: cheap energy and environmental responsibility. But it may not be possible. For now, voters' preferences seem to be shifting from consciousness about the environment towards worries about affordability.... Will higher prices spur a faster rise in conventional oil supplies or will price increases be swallowed up by increasing costs? Dramatic price rises have so far failed to produce a faster increase in non-OPEC output. Lack of spare capacity has left the market permanently worried about disruptions such as Libya and production problems in the North Sea. But there is now a significant increase in investment and exploration and production activity. The question is how quickly that will translate into enhanced volumes of oil and gas, and at what sort of costs and prices? Costs have risen tremendously across the industry, but there are also signs of technological innovation, rising capacity and learning-by-doing that may bear down on costs in future.... Will hydraulic fracturing and horizontal drilling be allowed to revolutionise the global oil and gas industries? Fracking has already transformed the North American gas market and has resulted in an oil boom in North Dakota. But elsewhere the technology is running into increasing opposition. France has banned its use. In the United Kingdom and in the United States it has been blamed for triggering (small) earthquakes. Fears about groundwater contamination and the visual and environmental impact of surface facilities could also limit political acceptability and the widespread deployment of the technology. The reserves and the technical ability to get at them are there, but the political acceptability is questionable."
Energy landscape in 2012 and beyond: John Kemp
Reuters, 3 November 2011

"An influential military thinktank is urging America to cut its oil use by 30% over the next decade, as a national security imperative. In its report, the Military Advisory Board said the US should aim to drastically reduce its energy imports over the next decade – or else risk exposing the economy to devastating oil price shocks. 'This is a national security threat that grows ever year, and we as a nation need to recognise is at such,' said vice admiral Dennis McGinn, a former deputy chief of naval operations, and one of the authors of the report. 'This isn't just about the volatility of gas prices at the pump. This isn't just about big oils vs the environment. This is a national security problem, manifesting itself economically, diplomatically and militarily, and it is not just going to go away.' The report, entitled Ensuring America's Freedom of Movement: a National Security Imperative to Reduce America's Oil Dependence, describes America's reliance on imported oil as the 'Achilles heel of our national security'. It deploys strong language to describe the consequences of this dependence. "Our reliance on this single commodity makes us vulnerable … We are held hostage to price fixing by a cartel that includes actors who would do our nation harm, and we are too often called upon to risk the lives of our sons and daughters to protect fragile oil supplies form this very cartel,' the report says."
Military thinktank urges US to cut oil use
Guardian, 2 November 2011

"Belgium's main political parties have agreed on a plan to shut down the country's two nuclear power stations, but they have not yet set a firm date. A new coalition government is being set up and the nuclear shutdown will be on its agenda, officials say. If alternative energy sources are found to fill the gap then the three oldest reactors will be shut down in 2015."
Belgium plans to phase out nuclear power
BBC Online, 31 October 2011

"Saudi Arabia, one of the world's largest oil producers, may soon cut oil production....'We believe Saudi Arabia now requires oil at $92 a barrel to break even fiscally, up from $60 a barrel in 2008, on higher post-Arab Spring spending,' Deutsche Bank oil analyst Paul Sankey wore in a research note earlier this month. The Saudis 'will cut production to defend $92.' Sankey thinks that the production cut already began in September. Saudi Arabia was producing about 9 million barrels of oil a day before hostilities broke out in Libya, according to the U.S. Energy Information Administration. When the Libyan civil war shut down nearly all of that country's 1.6 million barrel-a-day production, the Saudis increased output to nearly 10 million barrels a day. But now Libya's oil is beginning to come back online. It's thought the country is producing between 300,000 and 500,000 barrels a day. That might rise to a million barrels a day by the middle of 2012. Iraq has also been steadily increasing its production, if slowly. That country, which holds enormous oil reserves, has seen production grow by about 300,000 barrels a day in the last year, according to EIA. It's now producing about 2.6 million barrels a day."
Saudi oil production cut looms
CNN, 27 October 2011

"The Energy Trap is a project of the New America foundation, a non-partisan think tank funded by the Rockefeller Foundation, which recently conducted a survey on just how the American public is holding up under the high cost of energy. The idea of the trap is that an increasing number of Americans are caught between the cost of gasoline and a systemic inability to stop driving their cars. In the last 60 years America has become a "motorized society" in which most of our citizens have become totally dependent on daily travel by car for their existence. Take away our cars and most of us would be hard pressed to reorganize our lives to provide for the essentials of life - earn an income, and provide food, shelter, and education for ourselves and our families. The current recession has compounded the troubles, forcing many to travel further afield to find employment - often in more than one underpaying job. The Energy Trap study found cases in which more than 50 percent of a family's income was going into paying for and fueling the car. What is most alarming is that 30 years ago the spike in gasoline led to a 12 percent reduction in the demand for gasoline as consumers drove less, switched to smaller cars, and sort of adhered to the 55 mph speed limit that had been put in place to save gasoline. It is now more than three years since the $4+ price spike of 2008 and demand has only fallen some 3 percent. The problem starts with the nation's collective gasoline bill which is on track to reach a new high of nearly $500 billion this year. This, of course, is only for gasoline; if we add in the other oil products we burn here in America each year - diesel for trucks and trains, jet fuel for planes, propane for heating, and numerous other uses the total is in the vicinity of $1 trillion. It is looking as if this year's fuel bill will be on the order of $100 billion higher than last for gasoline and another $100 billion for other oil consumption. If we have to spend an additional $200 billion just to keep even, it is not hard to understand that the $200 billion increase in the cost of energy is coming out of other family expenditures. There are geographic and income level differences in the impact the energy trap is having on families with rural and lower income families bearing more of the burden. When gasoline was over $4 a gallon three years ago the average family in NY and Connecticut was spending 8 percent of its incomes on transportation, while in Montana it was over 19 percent. Drivers in Mississippi go twice as far each year as those in NY where many have easy access to buses, commuter trains and subways. As could be expected, families earning under $25,000 a year are spending around 9 percent of their incomes on transportation vs. 3.6 percent for those earning $75-85,000 per year...The long term solution to all this is rather straight forward -- better public transit, far more efficient cars, housing closer to work. But these are all long term solutions, expensive and years to implement. All indications are that the energy trap can only get worse, perhaps much worse, in the next few years."
The Peak Oil Crisis: The Energy Trap
Falls Church News-Press, 26 October 2011

"China's thirst for oil will squeeze prices higher and destroy demand in developed economies if world oil supply growth does not exceed current trends, said senior commodity fund managers who did not expect fast oil output rises in Libya and Iraq. 'In the last 12 months China's demand for diesel for power generation has been one of the major drivers (of the market),' Tony Hall, chief investment officer of the Duet Commodities Fund, said at a conference in London on Tuesday. 'They do tend to step in and stockpile,' he said. Hall did not see any prospect of the much-debated economic 'hard landing' in China and said supply would not be able to keep pace with the fast-expanding economy's need for oil. 'We are not seeing any significant squeezes yet but this is a supply side story - if we carry on with this current trend we will have some problems in the light, sweet products,' he said. He highlighted a projection of global oil demand growth of 1.4 million barrels per day for next year. 'I don't believe supply can keep pace.' Hall's comments were supported by Todd Gross, chief investment officer of Hudson Capital Group, which runs an energy-focused fund. With spare capacity at just two million barrels per day, he saw little slack in the system. 'That's a critical level,' said Gross. He argued that Iraq's production increases would have to accelerate to make sure the market was balanced. 'It's likely that prices will just go higher and ration demand at some point, largely in the OECD (Organisation for Economic Co-operation and Development) countries.' Michael Rothman, president of Cornerstone Analytics, a research firm, said oil is used differently today than in the 1970s, when some 30 percent of the barrel went into heating and power and it was relatively simple to substitute oil with coal or gas. Now transport is a much bigger part of the barrel and there are few alternative fuels. As a result, a much higher oil price will be required to ration demand, and that demand destruction is likely to be felt in the OECD rather than nations where oil is subsidised. All three panellists, who were speaking at the World Commodities Week conference, expressed doubts that Iraq would meet its targets and that Libya would be able to ramp up production quickly. 'The amount of crude coming out of Iraq will be disappointing,' said Hall. 'And Libya won't come back for six months to a year.' Rothman said that even though ousted leader Muammar Gaddafi had been killed, the biggest concern in Libya was still civil war. 'The companies that have a strong vested interest in maintaining their presence there are putting on a hopeful face but the reality is that things will be slower.' Even if Libya were able to get to one million barrels per day by the middle of next year, the effective OPEC spare capacity would still be between zero and 1 percent, he added. With Iraq, he said anyone who argued there would be a sharp rise in oil output was being unrealistic. 'They are still producing less oil than they were before the war,' he pointed out. 'They were supposed to be at 3.5 million by 2005, 5.5 million by 2008 and 8.5 million by next year. We're at 2.7 million and over the last several months we have seen arms flowing in from Iran.' With the U.S. troop presence dropping to zero next year, he said there was a high risk of civil unrest."
China's oil thirst will squeeze market - funds
Reuters, 25 October 2011

"By the time the costs of gas, insurance, tolls, parking, and car payments are added up, the average American family spends more on driving than on health insurance or taxes. And for the bulk of society—those who use cars every day to commute, drop the kids off at school, and run errands—it seems impossible to trim the high costs of transportation in any substantial way. These are the main findings of 'Energy Trap,' a new study conducted by the non-partisan New America Foundation. Generally speaking, consumers scale back on purchasing products and services as they get more expensive. What we’ve seen over the past few years, however, indicates that people need gasoline so badly, and driving is incorporated so deeply into every part of modern-day American life, that demand remains quite high even when gas prices spike. When gas prices hit $4 in 2008, demand dropped by just 3%.... One part of the problem can be traced back to the real estate bubble. As housing prices soared, more workers were forced to move further and further away from the workplace. Gas prices remained subdued, and at some point over the past decade or so, living in the distant exurbs and commuting 90 minutes each way to work became fairly commonplace. Even though gas prices have receded from the $4-per-gallon summer, they remain high. The study estimates that a family earning $50,000 to $60,000 per year pays around $10,000 annually in automobile costs—including gas, insurance, and other related expenses. According to the Department of Commerce, that family is paying more for transportation than health insurance or taxes."
We Pay More to Drive Than We Spend on Taxes
TIME, 24 October 2011

"Four months ago, the world's energy watchdog took historic action to reduce oil prices. Since then, the financial outlook has considerably worsened and some Libyan oil has returned to the market. But the price has remained above $100 a barrel. Releasing 60m barrels of reserves was meant to dampen the high price of $113 per barrel, attributed to lost ouput from war-torn Libya and worries that the Arab Spring could spread to more oil producers. The International Energy Agency (IEA) made no secret of the fact it was worried that oil above $100 was unsustainable and damaging to the global economy. Since then, the world's financial outlook has considerably worsened and about 430,000 barrels of Libyan oil have returned to the market. Surely, amid the doom and gloom, plus extra production, the natural direction of oil ought to be down? However, the price, though volatile, has remained stubbornly above the $100 level. And last Monday, Brent crude even returned to the $113 per barrel level seen before the emergency release of supplies. Data on oil speculation also shows that more traders are betting on higher prices. At the end of last week, data from the US Commodities and Futures Trading Commission (CFTC) showed an increase in long positions in oil futures. From a macro viewpoint, such continued support for oil doesn't appear to make sense given the number of predictions that the world is on the brink of another recession, tipped over the edge by a volatile eurozone. From America to Europe, countries are struggling with sovereign debt. And even China is not immune, with demand for oil at its lowest level so far this year. There is no doubt that the pace of consumption is slowing. Opec, the cartel of producers, the IEA, the Energy Information Agency and numerous companies all say the economic downturn is taking its toll on world oil demand. This leaves the most plausible explanation for such high prices as tight supply, counteracting the economic gloom. According to Bank of America Merrill Lynch, the extra culprits on top of Libya's lower output are North Sea maintenance and pipeline attacks in Nigeria. ... Adam Sieminski of Deutsche Bank also mentions 'slower than expected ramp-up of new production and unplanned outages' from non-Opec producers. There is a similar picture in America, where stockpiles of its benchmark WTI crude are remarkably low. This has turned out to be a function of lower imports rather than increased consumption. While supply remains problematic, only one thing is going to cause a collapse in prices – even lower demand in the face of a full blown economic crisis. It appears that the market is not pricing this in just yet. ... For the moment, lower oil prices are only going to come at the expense of lower growth – and nobody's rooting for a recession."
Why is the oil price still so high?
Telegraph, 23 October 2011

"Almost three quarters of councils have already reduced street lighting in their area, or are considering doing so. The blackouts are being rolled across thousands of streets in rural areas, suburbs and city centres in almost every county in the UK, despite concerns from residents and police that the moves will lead to an increase in traffic accidents and crime. In total, 98 out of 133 local authorities who responded to a survey said were scaling back street lighting, or were looking into doing so."
Thousands of streets left in darkness to save money
Telegraph, 22 October 2011

"The boom is no more in the Barnett Shale. Drilling in the natural gas-rich North Texas field has sunk to its lowest level in more than seven years and is barely more than one-quarter of its 2008 peak. Meanwhile, new drilling booms focus on oil and natural gas liquids in other areas of Texas, such as the long-standing Permian Basin in West Texas and the up-and-coming Eagle Ford Shale in South Texas. Those 'oily' plays are sending the U.S. and Texas drilling rig counts soaring. Oil production nationally and in the Lone Star State is increasing, a phenomenon that many industry veterans thought they might never again see after a steep decline in oil output that has been nearly 40 years in the making. Amid the new craze for crude, the Barnett Shale rig count plummeted to 53 active rigs Oct. 14, the fewest since June 11, 2004, according to information compiled by RigData. That's barely more than one-fourth of the peak count of 203 active Barnett rigs on Sept. 5, 2008, a year when gas prices soared above $13 per million British thermal units. Prices began plunging in the latter part of 2008, have generally been in a funk since and have recently been in an anemic range of $3.50 to $4. Barnett Shale gas drilling has been discouraged by the fact that prices for oil, condensate and natural gas liquids such as ethane, propane and butane are much more attractive for energy producers, causing them to divert rigs to the liquids-rich areas. Oil prices have been in a healthy range of $80 to $110 much of this year. While Barnett Shale drilling languishes, the Texas and U.S. rig counts are at vigorous levels and, for the first time in 16 years, more rigs in America are drilling for oil than gas. The horizontal drilling and hydraulic fracturing technologies, vastly improved in the Barnett, are greatly boosting production in the 'oilier' areas now in drilling booms. 'If you look at the drilling rig count for crude oil, compared to natural gas, it gives you a strong visual of what's happening in the industry,' said Alex Mills, president of the Texas Alliance of Energy Producers. 'There's just an oversupply of natural gas right now and that has kept gas prices soft. That has made the industry divert the rigs from looking for natural gas to crude oil.' Union Drilling Co., a Fort Worth-based oil and gas drilling contractor, is a prominent example, having moved most of its Texas rigs from the Barnett Shale to the Permian Basin. 'We had only one rig out of our Texas fleet that was running in West Texas back in early 2010,' Union CEO Christopher Strong said. 'Now we have 16 over there and only four running in the Barnett. It's been a huge shift.' The reason is obvious, Strong said: 'the relative value of oil compared to natural gas.'"
In the Barnett Shale, the bloom is off the boom
Star-Telegram, 21 October 2011

"A much-trumpeted partnership of one of today's most celebrated scientists and the world's largest publicly traded oil company seems stalled in its aim of creating mass-market biofuel from algae, and may require a new agreement to go forward. The disappointment experienced thus far by scientist J. Craig Venter and ExxonMobil is notable not only because of their stature, but that many experts think that, at least in the medium term, algae is the sole realistically commercial source of biofuel that can significantly reduce U.S. and global oil demand. Venter, the first mapper of the human genome and creator of the first synthetic cell (pictured above), said his scientific team and ExxonMobil have failed to find naturally occurring algae strains that can be converted into a commercial-scale biofuel. ExxonMobil and Venter's La Jolla, Ca.-based Synthetic Genomics Inc., or SGI, continue to attempt to manipulate natural algae, but he said he already sees the answer elsewhere -- in the creation of a man-made strain. 'I believe that a fully synthetic cell approach will be the best way to get to a truly disruptive change,' Venter told me in an email exchange."
Trouble in the algae lab for Craig Venter and Exxon
Foreign Policy, 21 October 2011

"Controversial gas drilling did cause a series of earthquakes along the Lancashire coastline, a report today confirmed. Gas company Cuadrilla Resources, which is extracting shale gas in the region, commissioned the independent study after two tremors shook Fylde coastline in April and May this year. Energy chiefs have now sent a stark warning to the firm - either stop the earthquakes or be shut down."
Earthquakes along Lancashire coast WERE caused by drilling for gas
Mail, 17 October 2011

"The International Energy Agency, responding to statements by officials of Saudi Aramco, said it is 'very important' that oil producers in the Middle East and North Africa (MENA) continue to invest in increasing their oil production capacity. 'In the next 10 years, more than 90% of the growth in global oil production needs to come from MENA countries,' said IEA Chief Economist Fatih Birol. 'There are major risks if this investment doesn’t come in a timely manner,' he said. 'Oil demand is set to increase.' Birol’s comments came just days after Saudi Arabian Oil Co. Chief Executive Officer Khalid Al Falih told the Wall Street Journal that his country had no plans to increase oil production capacity to 15 million b/d, given the expansion plans of other producers such as Brazil and Iraq. 'There is no reason for Saudi Aramco to pursue 15 million b/d [of output capacity],' said Al-Falih, whose remarks ended speculation that arose in 2008 when Saudi Arabia’s Oil Minister Ali I. Al-Naimi said his country could boost its capacity by another 2.5 million b/d to 15 million b/d."
IEA chides MENA producers to increase output capacity
Oil & Gas Journal, 12 October 2011

"The International Energy Agency Wednesday once again trimmed its forecast for oil demand due to the worsening economy, but said production will likely fall by a similar amount, leaving the supply balance largely unchanged. The IEA also highlighted data that are potentially bullish for oil prices, including an unusual reduction in oil held in storage in August and a larger forecast for the amount of oil that world markets will need from the Organization of Petroleum Exporting Countries in the fourth quarter. Despite a more optimistic outlook for Libyan oil production and a greater risk of a slowdown in the world economy, the IEA warned OPEC not to prematurely cut back its oil output. '[Oil] demand has continued to run ahead of supply by an average of 0.6 million barrels a day so far in 2011,' and oil inventories are well below their five-year average, the IEA said in its monthly oil market report. IEA said this expected decline in output in 2012 will largely match the expected drop in demand, meaning the supply-demand balance in the market is largely unchanged. For this reason, 'calls by other OPEC members, including Iran, Iraq and Venezuela, for Saudi Arabia to rein in supplies now that Libyan output has restarted may be premature,' it said. 'The group's output is still running 300,000 barrels a day below pre-Libyan crisis levels of 30.5 million barrels a day.' Saudi Arabia cut its production by 200,000 barrels a day in September and, 'sent the clearest signal yet that it intends to protect revenues, despite declining output, with its decision to raise prices to record levels for Arab Light for Asian buyers for November,' the IEA said."
IEA Cuts Demand Forecast
Wall St Journal, 12 October 2011

"Sir Richard Branson aims to introduce a 'green aviation fuel' on Virgin Atlantic aircraft within three years claiming 'one of the most exciting developments of our lifetime and a major breakthrough in the war on carbon'.. His company hopes to help convert waste gases from industrial steel production into a jet propuslion that could ultimately account for nearly a fifth of the present annual global consumption of aviation fuel. A demonstration flight is planned within 12-18 months, the airline announced on Tuesday."
Virgin Atlantic unveils plan to use 'green' fuel
Guardian, 11 October 2011

"Oil prices have tumbled on world exchanges raising hopes among consumer groups that one silver lining from the eurozone crisis will be lower petrol prices. Brent crude dropped below $100 a barrel while US crude oil prices fell to $75 a barrel, levels not seen since late September 2010 and marking a nearly 35% decline from 2011 highs hit in early May. Goldman Sachs, which has been typically bullish for commodities, sounded another note of caution as it cut its 2012 forecast for Brent by $10, to $120 a barrel. Stock markets also reacted to the lack of decision-making inside the EU with steep falls that took the US markets in the early hours of trading into bear territory. Analysts said the 20% drop in values that marks a bear market reflected the poor economic data coming out of Europe and the US and the inability of EU leaders to agree a rescue package for Greece."
Hopes that economic crisis will deliver cheaper oil
Guardian, 4 October 2011

"The French government on Monday canceled all three exploration permits on shale-gas fields after oil major Total SA and U.S.-based Schuepbach Energy LLC—which hold the rights—maintained their intention to drill the potential fields using hydraulic fracturing, a controversial technique that was banned in the country earlier this year. In a joint statement, France's energy minister, Éric Besson, and environmental minister, Nathalie Kosciusko-Morizet, said that the three permits, which represent all of the country's potential shale-gas fields, had been cancelled after the companies submitted a mandatory report about their drilling techniques in which they maintained their plans to use hydraulic fracturing, or 'fracking.'."
France Cancels Shale-Gas Permits Over Fracking Impasse
Wall St Journal, 4 October 2011

"Former Japanese prime minister Naoto Kan concluded in March that nuclear power was no longer worth the risk after the world's worst nuclear accident in 25 years. His successor seems less convinced. Prime Minister Yoshihiko Noda's month-old government let a panel of experts begin debate on Japan's energy policy on Monday, but Noda has already signalled that nuclear power could play a role for decades. Six months after an earthquake and tsunami crippled the Fukushima plant, which is still leaking radiation, critics say powerful pro-nuclear interests are quietly fighting back."
Nuclear seeps back into favour as Japan begins energy debate
Reuters, 3 October 2011

"Smart meters are billed as the key to solving Britain's looming energy crisis. But while a live display of energy costs and consumption may help parents bribe teenagers to spend less time in the shower, the results of a key trial indicate the meters will barely affect overall power consumption.... The idea is that, by observing their usage, people will realise how wasteful they are and reduce their electricity and gas consumption, lowering their bills and carbon dioxide emissions. In some trials, the meters provided information parents needed to give their children extra pocket money – or reduce housekeeping payments from working offspring – in return for turning the heating down and the lights off. But in many other cases, they yielded negligible savings – and often at the expense of family unity, with people bickering over energy usage, says Tom Hargreaves, of the University of East Anglia's School of Environmental Sciences. Separately, the biggest trial of smart meters so far, conducted in 18,000 households by energy regulator Ofgem, reveals how difficult it would be for many people to reduce their power consumption. The two-year trial found that participating households used only 3 per cent less energy than they would have without the smart meter. This figure is higher than the 2.8 per cent reduction in electricity consumption and the 2 per cent fall in gas use that the Government expects the smart meters to facilitate. But there is one huge qualification – the trial was conducted among a group of volunteers, not imposed upon a cross-section of the population in the way that smart meters will be from 2014."
The Smart answer to the energy crisis?
Independent, 1 October 2011

"Scottish and Southern Energy (SSE) has confirmed it will withdraw from plans to develop nuclear power, deciding that wind farms provide a better investment.... The utility company will sell its 25pc stake in the NuGen consortium to its partners GDF Suez and Iberdrola. NuGen is only at the very preliminary stages of an investment in nuclear, having bought an option to purchase land near Sellafield for £19.5m two years ago. It would not have a fully completed power station for at least a decade. SSE is still in favour of nuclear power as part of the UK's mix of generation, but it concluded that the process would consume too much management time. Alistair Phillips-Davies, generation and supply director, said 'our core investment in generation should be in renewable energy'."
Scottish and Southern Energy abandons nuclear plans for wind
Telegraph, 1 October 2011

"Britain's oil production from the North Sea has fallen by 16pc since last year in a drastic drop that will cost the Treasury millions of pounds in lost taxes. Officials from the Department for Energy and Climate Change put the unexpectedly large fall down to 'maintenance and other production issues' on top of the long-term trend of declining output. Oil platforms only pumped 947,000 barrels of oil per day in July, down from 984,000 barrels per day in June and more than 1m barrels per day in May. The Health and Safety Executive has warned that only one in 30 of the UK's North Sea oil rigs is in a good condition. A number of large platforms have closed for major maintenance this year.... However, the business climate may also have something to do with the drop in oil output. Producers have been unhappy that the Treasury raised taxes by 12 percentage points to between 70pc and 82pc depending on the size of the fields at the Budget this spring. This has added millions of pounds to the tax bills of big producers. Whatever the cause, the fall is likely to have a substantial impact on the Chancellor's tax revenue from the the oil industry, which amounted to £9bn last year. Malcolm Webb, chief executive of industry group Oil & Gas UK, said: 'On the face of it, a production decline of this magnitude is extremely worrying and we need to investigate and fully understand what has happened here.....' The UK used to produce 2.7m barrels a day but its output has been declining since 1999. This is the first time output has been below 1m for two consecutive months. Experts believe smaller owners could rejuvenate older fields and extract more difficult oil, as the energy majors look to sell off their most mature assets. However, the cost of decommissioning is a major hurdle to fields changing hands. Earlier this month, BG Group, BP, Total, Shell and TAQA Bratani highlighted the problems associated with winding down old infrastructure, with executives calling on ministers to clarify the Government's role in helping meet the costs."
North Sea oil slump will cost UK Treasury millions in lost taxes
Telegraph, 30 September 2011

"Renewable electricity contributed an all time high of 9.6 per cent of the UK's grid mix in the second quarter of this year, statistics released today by the Department of Energy and Climate Change have revealed. The 7.86TWh (terawatt hours) contributed by green energy generators represented a 50 per cent rise on the same time last year. The surge in green energy was led by the wind energy sector, which saw output rise 120 per cent year on year, and hydroelectricity where output rose 75 per cent year on year. Dr Gordon Edge, director of policy at trade group RenewableUK, said wind is now providing enough power to supply nearly three and a quarter million homes in the UK."
UK renewable electricity output reaches all-time high
BusinessGreen, 29 September 2011

"North America appears headed for an oil renaissance, with crude production expected to hit an all-time high by 2016, given the current pace of drilling in the U.S. and Canada, according to a study released by an energy research firm this week. U.S. oil production in areas including West Texas' Permian Basin, South Texas' Eagle Ford shale, and North Dakota's Bakken shale will record a rise of a little over 2 million barrels per day from 2010 to 2016, according to data compiled by Bentek Energy, a Colorado firm that tracks energy infrastructure and production projects. Canadian crude production is expected to grow by 971,000 barrels per day during the same period, with much of the oil headed for the U.S. Combined, the U.S. and Canadian oil output will top 11.5 million barrels per day, which is even more than their combined peak in 1972. Goldman Sachs has estimated the U.S. could move from being the No. 3 oil producer behind Saudi Arabia and Russia to the No. 1 spot by 2017. It's a reversal of the steady downward production trend that started after 1971, when U.S. oil production peaked around 9.5 million barrels per day. And the pace of production now has caught quite a few people by surprise, says Joseph Pratt, a historian at the University of Houston who has written extensively about the oil and gas industry. 'We have this momentum out there to set about doing what we said we wanted to do back in the 1970s: reduce the flow of imports from volatile regions,' Pratt said. 'It was like the Holy Grail back then. And suddenly it seems possible.' The surge is fueled by the same drilling and production techniques that opened up natural gas production in recent years - the combination of horizontal drilling and hydraulic fracturing - as well as the success of deep-water Gulf of Mexico projects and the ramp-up of Canadian oil sands projects. The natural gas glut has kept its price low, prompting producers to focus more effort on oil and natural gas liquids, which fetch better prices. Earlier this year, the number of land and offshore oil rigs working in the U.S. exceeded the number of natural gas rigs for the first time in 18 years, according to data compiled by IHS-CERA. And Texas oil and gas industry employment returned to its pre-recession highs in June, according to the Texas Petroleum Index, topping the last boom that peaked in October 2008, thanks largely to oil drilling."
N. American oil output could top 40-year-old peak
Houston Chronicle, 28 September 2011

"Experts have cast doubt on claims of a giant shale gas find in northwest England, leaving opponents to accuse the company behind it of painting an excessively rosy picture to win political support for the controversial project. Cuadrilla Resources is owned by Australian drilling company AJ Lucas and private equity firm Riverstone, and has former BP Chief Executive John Browne on its board, said on Wednesday it had found 200 trillion cubic feet of gas in place at its licenses in Lancashire. The announcement made front page news in the UK, with one national newspaper predicting that Blackpool, the fading seaside resort nearby, would become another Dallas, and a local journal celebrating a 'gas gold rush' and 'jobs bonanza'. Even discounting the find to allow for the fact that typically only around 20 percent of gas locked in shales -- rocks with low permeability which require considerable coaxing to give up their treasure -- is recoverable, the find would classify as one of the biggest gas discoveries in the world in the past decade. The news was welcomed by some politicians who see the project as a boost to UK energy security, with North Sea reserves declining sharply. But it was met with dread by environmentalists who say the drilling process behind shale gas --known as fracking -- can pollute ground water. Yet the excitement may be premature. The resource estimate has not been independently verified and the company has so far only drilled two wells in the basin. Even though it says it has taken account of data from another three wells drilled 10-15 years ago by another company, which chose not to develop the area, some experts are not convinced. 'It seems an awfully large number to extrapolate (from so few wells),' said Jeffrey Callard, Assistant Professor at Mewbourne School of Petroleum and Geological Engineering, at the University of Oklahoma. Steve Holditch, Professor of Petroleum Engineering at Texas A&M University said one would need to drill dozens of wells to come up with a reasonable estimate of resources."
Doubts raised about giant shale gas find in England
Reuters, 23 September 2011

"Libyan oil workers and officials say damage to ports and oil terminals is so severe and security so poor that the large-scale resumption of exports to Western markets could be delayed longer than some officials had predicted. The Ras Lanuf oil terminal in eastern Libya was attacked by Gadhafi loyalists on Sept. 12, leaving 15 people dead. At Brega, also in eastern Libya, extensive damage and the presence of unexploded missiles have blocked the start of operations. The Zawiya refinery in western Libya and the massive Es-Sider terminal in central Libya are also damaged. Those four terminals account for about one million barrels a day of Libya's prewar export capacity of 1.5 million barrels a day, suggesting considerable obstacles ahead as Libya takes steps to revive its oil industry following the toppling of Col. Moammar Gadhafi by rebel forces after months of fighting. 'There will be some [export] bottlenecks,' said Shokri Ghanem, Libya's former oil head, who defected in May from Col. Gadhafi's regime.'Some oil ports have lots of damage and there are mines' at these facilities, he said. Mr. Ghanem estimated it will take up to two years to restore Libyan output to prewar levels."
Damage, Poor Security Slow Libyan Oil Flow
Wall St Journal, 23 September 2011

"In the name of fighting pollution, China has sent the price of compact fluorescent light bulbs soaring in the United States. By closing or nationalizing dozens of the producers of rare earth metals — which are used in energy-efficient bulbs and many other green-energy products — China is temporarily shutting down most of the industry and crimping the global supply of the vital resources. China produces nearly 95 percent of the world’s rare earth materials, and it is taking the steps to improve pollution controls in a notoriously toxic mining and processing industry. But the moves also have potential international trade implications and have started yet another round of price increases for rare earths, which are vital for green-energy products including giant wind turbines, hybrid gasoline-electric cars and compact fluorescent bulbs.General Electric, facing complaints in the United States about rising prices for its compact fluorescent bulbs, recently noted in a statement that if the rate of inflation over the last 12 months on the rare earth element europium oxide had been applied to a $2 cup of coffee, that coffee would now cost $24.55."
China Consolidates Grip on Rare Earths
New York Times, 15 September 2011

"Researchers at the Royal Institute of Technology (KTH) in Stockholm have managed to prove that fossils from animals and plants are not necessary for crude oil and natural gas to be generated. The findings are revolutionary since this means, on the one hand, that it will be much easier to find these sources of energy and, on the other hand, that they can be found all over the globe....'Using our research we can even say where oil could be found in Sweden,' says Vladimir Kutcherov, a professor at the Division of Energy Technology at KTH. Together with two research colleagues, Vladimir Kutcherov has simulated the process involving pressure and heat that occurs naturally in the inner layers of the earth, the process that generates hydrocarbon, the primary component in oil and natural gas. According to Vladimir Kutcherov, the findings are a clear indication that the oil supply is not about to end, which researchers and experts in the field have long feared. He adds that there is no way that fossil oil, with the help of gravity or other forces, could have seeped down to a depth of 10.5 kilometers in the state of Texas, for example, which is rich in oil deposits. As Vladimir Kutcherov sees it, this is further proof, alongside his own research findings, of the genesis of these energy sources – that they can be created in other ways than via fossils. This has long been a matter of lively discussion among scientists."
Fossils From Animals And Plants Are Not Necessary For Crude Oil And Natural Gas, Swedish Researchers Find
ScienceDaily, 10 September 2011

"Tony Hayward has outlined plans to dominate the vast reserves of newly accessible oil in the semi-autonomous Kurdistan region of northern Iraq. The former BP chief executive said his $2.1bn (£1.3bn) acquisition of Genel Enerji was just the beginning of his activities in the region. Potential targets are understood to include Gulf Keystone, the Aim-listed oil explorer focused on Kurdistan, which is rumoured to be preparing for a sale, as well as other operators in the region. The group, which has enough cash to finance an estimated $4bn of further acquisitions, has also identified Libya as a potentially rich source of business, putting operators in the country on its list of possible targets....Mr Hayward said: 'The Kurdistan region of Iraq is undoubtedly one of the last great oil and gas frontiers. Arguably, it is the last big onshore 'easy' oil province available for exploration by private companies anywhere in the world.' He said Genel's cash reserves provided the opportunity 'to participate aggressively in the significant consolidation we expect to see in the [Kurdistan] region over the next few years and to expand elsewhere if good opportunities arise'."
Tony Hayward nets £14m in first Middle East adventure
Independent, 8 September 2011

"UK oil production fell below 1 million barrels per day (bpd) for only the second time in more than 30 years this summer as maintenance exacerbated a decline in output from depleted North Sea oilfields. The British sector of the North Sea pumped 984,000 bpd of oil in June, down from just over 1 million bpd in May and a peak of more than 2.7 million bpd in 1999, industry data show. 'The decline is worrying,' said Mike Tholen, economics director of industry lobby Oil & Gas UK. Britain first produced commercial quantities of oil in 1975 and the country has enjoyed billions of dollars in revenue over the last 35 years as its light, high quality grades of crude oil have become a benchmark for the international spot market. It was a net oil exporter until 2005. But British oil reserves, mostly deep below inhospitable waters far offshore, are gradually running dry and cost more and more each year to maintain and operate as the large, easily accessible oilfields are exhausted. Oil & Gas UK says there are still billions of barrels of hydrocarbons in the UK Continental Shelf (UKCS), but much of these reserves are in the form of natural gas and lie in very difficult areas to explore. 'The figures for the quarterly decline in production of oil and gas highlight the need to focus on investing in the UKCS and on long-term trends in the basin,' Tholen said. Michael Wittner, head of commodities research at Societe Generale in New York, said Britain would still be an oil producer for many years but the trend lower would continue. 'The long-term decline will not be reversed,' Wittner said."
UK oil production falls to 984,000 bpd in June
Reuters, 8 September 2011

"Libyan oil exports are unlikely to return to their pre-war level before 2013, the new head of the International Energy Agency said on Thursday. 'Our experts think that 2013 or beyond will most probably show the complete full restoration of the Libyan supply to the market, but not before that,' Maria van der Hoeven told AFP in an interview. Libya, a key African oil exporter, produced about 1.6 million barrels per day (bpd) before the rebellion against Moamer Kadhafi broke out in mid-February, and then slowed to a trickle. Around 85 percent of Libyan oil output was exported to Europe, with the disappearance of its high quality light sweet crude from the market one of the reasons why Brent crude from the North Sea has been trading much higher than oil quoted on US exchanges. Just how quick Libyan oil will return to the market remains one of the key questions of the post-Kadhafi era, not only for European consumers but for Libya's new rulers who badly need oil export revenue to fund reconstruction. Western oil groups that had been present in Libya, Italy's Eni, France's Total and Spanish Repsol have sent or are preparing to send staff to begin repairing damaged facilities despite the security situation remaining a concern."
Libya oil exports not to return to normal until 2013: IEA
AFP, 7 September 2011

"At the height of a new round of quarreling between Russia and Ukraine over natural gas prices, Russian Prime Minister Vladimir Putin on Tuesday launched a major pipeline that will start pumping gas to Western Europe next month, bypassing Ukraine. With the click of a computer mouse in front of flashing cameras, Putin opened the valve to let the gas into the first Nord Stream pipeline at the Portovaya compressor station at the Russian-Finnish border, a stone's throw from his hometown of St. Petersburg. According to the Russian state-controlled gas-and-oil giant Gazprom, the 765-mile long Nord Stream pipeline -- costing more than $12 billion -- directly links Russia with the European Union via the Baltic Sea bed. 'The amount of energy that will be delivered to Germany is comparable to the combined output of 11 nuclear-power plants," Putin said. "This is a solid contribution not only to the European but also to the world energy sector.'... For the next 50 years, Nord Stream will supply an annual 55 billion cubic meters of gas not only to Germany but to France, the United Kingdom, the Netherlands and Denmark, Putin said. Putin said the launch of the Nord Stream means Ukraine is finally losing its exclusive status as a transit country for Russian gas to Europe. 'Any transit country has always the temptation to take advantage of its transit status,' he said. 'That exclusivity is now disappearing,' he said."
Russia launches major new gas pipeline to Europe, bypasses Ukraine
CNN, 7 September 2011

"Long before it understood the value of oil, the desert kingdom of Saudi Arabia knew the worth of water. But the leading oil exporter's water challenges are growing as energy-intensive desalination erodes oil revenues while peak water looms more ominously than peak oil -- the theory that supplies are at or near their limit, with nowhere to go but down. Water use in the desert kingdom is already almost double the per capita global average and increasing at an ever faster rate with the rapid expansion of Saudi Arabia's population and industrial development. Riyadh in 2008 abandoned what was in retrospect clearly a flawed plan to achieve self-sufficiency in wheat and aims to be 100 percent reliant on imports by 2016. 'The decision to import is to preserve water,' said Saudi Deputy Minister of Agriculture for Research and Development Abdullah al-Obaid. 'It's not a matter of cost. The government buys wheat at prices higher than in the local market.' Critics complain the policies are still not joined up, however, and say the risk is that Saudi farmers will turn to even thirstier cash crops. Saudi Minister of Water and Power Abdullah al-Hussayen said in May the nation's demand for water is rising by more than 7 percent each year and that more than 500 billion riyals ($133 billion) of investment in the water and power sector will be required over the next decade.Consultancy Booz and Company estimates Saudi water use is around 950 cubic metres per capita each year, compared with a world average of 500 cubic metres. Agriculture is the single biggest user, absorbing 85-90 percent of the kingdom's supplies, according to Saudi's deputy minister of agriculture for research and development. Of that, almost 80-85 percent came from underground aquifers. With average annual rainfall around 100 mm (4 inches), Saudi's ancient underground aquifers are its lifeblood. But just as peak oil theorists believe the world's conventional oil supplies are at or near their peak, proponents of the peak water view have said the resource has been irreversibly drained. Booz and Company has said some of the region's aquifers -- also referred to as 'fossil water' as they contain rain that fell thousands of years ago -- have become too salty to drink. Injecting water into oilfields has also had an impact, although sea water is now generally used to maintain reservoir pressure. The alternative to desalination -- the energy-intensive process of converting salt water to fresh water -- robs Saudi Arabia of its other precious resource, oil, by eating up both fuel and fuel revenues....By burning up energy, desalination reduces the amount of crude available for lucrative export markets. Takekoh estimated energy represented between 45 and 55 percent of unit production costs. The International Energy Agency and analysts at HSBC bank estimated Saudi Arabia's rate of direct crude burning more than doubled from 2008 to 2010 because of a rapid rise in power demand and a shortage of natural gas. How much of that went to desalination is not known but experts believe it is significant. Industry officials and experts say the fact that Saudi Arabia is adjusting its agriculture policies shows it is aware of the challenges but like the rest of the world, it needs to move fast."
Saudi Arabia's water needs eating into oil wealth
Reuters, 7 September 2011

"It's the melting of the Arctic ice, as the climate warms, that makes it possible — and you can understand why they're all piling in. In July 2008, the US Geological Survey released the first ever publicly available estimate of the oil locked in the earth north of the Arctic Circle. It was 90 billion barrels, representing an estimated 13 per cent of the world's undiscovered oil resources. If you're an oil company, or an oil-hungry economy, that's more than enough to make your mouth water. But wait. Less than a year later, the geologists involved in the programme, known as Cara, the Circum-Arctic Resource Appraisal, had radically revised their estimate – upwards. Now – in June 2009 – they said the Arctic might in fact hold as much as 160 billion barrels, which would amount to more than 35 years of US oil imports, or five years of total global oil consumption, and be worth, at current prices, more than 18 trillion dollars. Forget mouthwatering. Think drooling. In the historic opening-up to exploitation of the frozen north, hydrocarbons are the greatest prize (there is likely to be even more natural gas than there is oil.) No matter that the polar regions are the most inhospitable parts of the whole globe. And no matter, either, that the Arctic constitutes the world's most untouched ecosystem. The oil industry's motto has always been 'Can Do', and in the Arctic, it's already doing. Cairn Energy, an Edinburgh oil exploration company founded by the former Scotland rugby player Sir Bill Gammell, was the first in: it is now in the process of drilling four test wells in Baffin Bay, off the west coast of Greenland (it began last year with three wells, none of which struck oil). Next year Cairn will be followed into the high north by Shell: the Anglo-Dutch giant has already spent more than $2bn (£1.24bn) on seabed leases and hopes to start a massive programme of oil exploration in July 2012, with up to ten wells in the Beaufort and Chukchi seas off the north coast of Alaska, a region that, according to US Geological Survey estimates, holds 25bn barrels of oil. Shell will be followed in turn by the biggest of all the oil "supermajors", and the world's largest company – ExxonMobil."
Unlocked by melting ice-caps, the great polar oil rush has begun
Independent, 6 September 2011

"Nearly seven miles below the Gulf of Mexico, oil company BP has tapped into a vast pool of crude after digging the deepest oil well in the world. The Tiber Prospect is expected to rank among the largest petroleum discoveries in the United States, potentially producing half as much crude in a day as Alaska's famous North Slope oil field. The company's chief of exploration on Wednesday estimated that the Tiber deposit holds between 4 billion and 6 billion barrels of oil equivalent, which includes natural gas. That would be enough to satisfy U.S. demand for crude for nearly one year. But BP does not yet know how much it can extract.... The Tiber well is about 250 miles southeast of Houston in U.S. waters. At 35,055 feet, it is as deep as Mount Everest is tall, not including more than 4,000 feet of water above it. Drilling at those depths shows how far major oil producers will go to find new supplies as global reserves dwindle, and how technology has advanced, allowing them to reach once-unimaginable depths. Deep-water operations are considered to be the last frontier for pristine oil deposits, and the entire petroleum industry is sweeping the ocean floor in search of more crude. BP needs to invest years of work and millions of dollars before it draws the first drop of oil from Tiber. Such long waits are not uncommon. Three years after announcing a discovery at a site in the Gulf called Kaskida, BP has yet to begin producing oil there.... 'Early indications are that it's a significant positive discovery,' said Matt Snyder, lead analyst with Wood MacKinzie's Gulf of Mexico research team. Exploration companies recently have been pushing drilling operations farther from shore because of technological improvements that allow them to handle extreme depths and pressure, Snyder said. It's an expensive process. A production platform costs more than $1 billion to build. Drilling a deep-water well can add another $100 million, and if crude is located, it could cost another $50 million to bring the oil to the surface. 'And when they finally get down there, it's very hot,' said Leta Smith, a director with Cambridge Energy Research Associates' Global Oil Supply Group. 'It could be upwards of 250 degrees Fahrenheit. The pressures can be the most challenging aspect of it. These rocks are over-pressured, which means you need to have a lot of special equipment.' For an ambitious project like Tiber to pay off, experts say crude must cost at least $70 to $75 per barrel, though lower prices have never slowed the industry. When crude prices fell below $20 per barrel in the late 1990s, exploration and Thunder Horse never slowed. 'They're not swayed by daily price swings when it comes to planning deep-water exploration,' Priest said."
World's deepest oil well may rival Alaskan field in production
Lubbock Avalanche-Journal, 3 September 2009

"The starting pistol has been fired on bids by Britain and other western powers to secure a slice of the oil prize in Libya when France said it was 'fair and logical' for its companies to benefit. Alain Juppé, the French foreign minister, planted his flag in the sand as the Guardian was told that BP was already holding private talks with members of Libya's interim government. Libya is a vital energy producer, and BP had previously committed itself to spending more than $1bn on exploration plans under Muammar Gaddafi's government. Shell was also becoming active before the civil war broke out, as was Total of France, but the conflict over the past few months has brought the country's existing oil production of 1.6m barrels a day – 2% of the world's total – to a halt. Rebel leaders had already made clear that countries active in supporting their insurrection – notably Britain and France – should expect to be treated favourably once the dust of war had settled. But they were anxious to shut down any suggestion that firm promises had already been made to carve up the country's only real wealth-providing industry with foreign powers or companies. The new Tripoli government has denied the existence of a reported secret deal by which French companies would control more than a third of Libya's oil production in return for Paris's support for the revolution. The French foreign minister said he was also unaware of the letter referring to the reported deal, which was dated 3 April and published on Thursday in the French daily newspaper Libération. It purported to show an undertaking by the National Transitional Council (NTC) to reserve '35% of total crude oil in exchange for the total and permanent support for our council'. The document was addressed to the Qatari government, which Libération described as acting as an intermediary between Libya and France, and says the NTC authorised "brother Mahmoud" to sign the deal with France – a reference to Mahmoud Shammam, the interim government's information minister, according to Libération."
The race is on for Libya's oil, with Britain and France both staking a claim
Guardian, 1 September 2011

"Last month Wards Auto published a story pointing out that the world's motor vehicle count was now over 1 billion. As could be expected, registered vehicles in China grew by 27.5 percent to 78 million last year. Don't worry; the U.S. is still well ahead in the who-has-the-most-cars race with 240 million registered vehicles, but I am afraid that the Japanese have fallen into second place. The thought occurred, that if we squeezed a bit, all seven billion of us currently inhabiting the earth with a little organization might be able to climb aboard a car, truck or bus and go for a simultaneous ride - just before the fossil fuel age comes to an end. I was curious as to whether Wards could draw any profound conclusions from this milestone, but other than mentioning that it took 24 years to go from 500 million to a billion vehicles and that the global vehicle fleet grew by 35 million last year, there was little of note. Those 35 million new gas tanks that hit the road last year should give peak oil doubters some insight into why it will become increasingly difficult to keep up with new demand for oil. This milestone, however, is a good opportunity to ponder just where transportation is going in the next 25 years and beyond. There are of course many unknowns to this question, but trends are already in place. The most important development affecting the automobile over the next quarter century will be the amount of economic growth that can take place in an era of shrinking natural resources - minerals, food, water, good climatic conditions. While some corners of the globe should be able to grow for a while, these situations are likely to have very short half-lives. For most of mankind, the next 25 years and beyond will be an era of contracting economies and smaller pies. In the United States, we have reached the stage where there is a motor vehicle for every 1.3 people and at least one for every licensed driver. This situation is unlikely to obtain in an era of little or no economic growth, limited employment opportunities and undreamed of energy costs. It is highly unlikely that there will be anything approaching 240 million registered vehicles in the U.S. 25 years from now. From the vantage point of 2011, it seems probable that many will not be able to afford to own and operate personal motor vehicles of the size and types we have today. The configuration and energy consumption of vehicles are likely to undergo more changes in the next 25 years than they have in the last 100. After all, the car and truck of 1910 was not all that much different than what we have today. Given what we now think of as high gas prices, vehicle manufacturers are falling all over themselves in efforts to produce much more fuel efficient vehicles. In the U.S. we are now facing standards requiring that cars achieve an average of 54.5 MPG 15 years from now. First will come all sorts of weight reductions, such as eliminating spare tires, and adding more plastic and aluminum parts. Engines will become more efficient and car bodies will become more aerodynamic. All this will be good for another five or maybe 10 miles per gallon, but to get to savings envisioned in the new regulations, we are going to see a widespread change to more hybrid or all electric vehicles. The most efficient of these vehicles, such as the Toyota Prius, are already meeting the standards envisioned for 2025. Although these changes will be costly, it does not take much arithmetic to conclude that if energy costs are three or four times higher than they are today then mileage will become the key factor by which motor vehicles are judged. Detractors of these new mileage standards are usually people who have little grasp, or prefer not to think about where real energy costs are going to be 15 years from now. They point out the advanced materials required to build a low-weigh, high mileage, vehicles will be so great that it will push cars beyond what many, if not most, can afford. There is probably a lot of truth in this if one thinks of cars only in the manner that most of us do - hulking things with 4,6, or more seats that are in most cases rarely used. The message here is that an all-purpose motor vehicle that can move 6-10 people 300 miles in exquisite comfort in any weather is what we will no longer be able to afford. Specialized motor vehicles ranging from electric bicycles and tricycles through one or two passenger cars can be manufactured and operated for a tiny fraction of the average car on the road today. The folks over at Volkswagen say they are about to announce a single seat electric car that will be powered only by renewable energy. They have already demonstrated a two passenger car capable of 260 miles per gallon. In short the form factor for cars and trucks has got to change to something more efficient."
The Peak Oil Crisis: A Billion Vehicles
Falls Church News-Press, 31 August 2011

"OPEC oil output is expected to rise in August to its highest in almost three years due to higher Nigerian exports and smaller increases from Saudi Arabia and other Gulf producers, a Reuters survey found on Tuesday. Supply from all 12 members of the Organisation of the Petroleum Exporting Countries is expected to average 30.15 million barrels per day (bpd) this month, up from 30.07 million bpd in July, the survey of sources at oil companies, OPEC officials and analysts found. The survey indicates no sign, yet, that Saudi Arabia and other Gulf countries are cutting back on the extra supplies they provided to help cover the loss of Libyan output. August's total is expected to be OPEC's highest since October 2008 based on Reuters surveys."
OPEC oil output set to hit three-year high in August
Reuters, 30 August 2011

"Not since the grim period after World War II has Germany had significant blackouts, but it is now bracing for that possibility after shutting down half its nuclear reactors practically overnight. Nuclear plants have long generated nearly a quarter of Germany’s electricity. But after the tsunami and earthquake that sent radiation spewing from Fukushima, half a world away, the government disconnected the 8 oldest of Germany’s 17 reactors — including the two in this drab factory town — within days. Three months later, with a new plan to power the country without nuclear energy and a growing reliance on renewable energy, Parliament voted to close them permanently. There are plans to retire the remaining nine reactors by 2022. As a result, electricity producers are scrambling to ensure an adequate supply. Customers and companies are nervous about whether their lights and assembly lines will stay up and running this winter. Economists and politicians argue over how much prices will rise. 'It’s easy to say, ‘Let’s just go for renewables,’ and I’m quite sure we can someday do without nuclear, but this is too abrupt,' said Joachim Knebel, chief scientist at Germany’s prestigious Karlsruhe Institute of Technology. He characterized the government’s shutdown decision as 'emotional' and pointed out that on most days, Germany has survived this experiment only by importing electricity from neighboring France and the Czech Republic, which generate much of their power with nuclear reactors."
Germany Dims Nuclear Plants, but Hopes to Keep Lights On
New York Times, 29 August 2011

"An explosion of designs for harvesting wave energy could make the process competitive at last – and they're heading out to the ocean for testing Wringing electricity from the sea is no small task. But as firms start to test their wave-energy harvesters in the open ocean that could be about to change. Heaving water holds 40 times more energy than air moving at the same speed, and sea states change more slowly than breezes, making it easier for utilities to predict the availability of energy. Yet the tools needed to make use of the sea's energy are gargantuan.... Last month, Aquamarine Power finished the construction of its second full-scale wave power device, the Oyster 800. This consists of a hinged flap that sticks out of the water and is pushed shut with each passing wave. When the flap moves, it drives hydraulic pistons that deliver high-pressure water via a pipeline to an onshore turbine. With an output of 800 kilowatts, the device is built to be 2.5 times as powerful as its predecessor (see 'The ocean is your oyster'). 'If you can get that sort of level of performance improvement then the economics suddenly start to look a lot more favourable,' says Stephen Wyatt, head of technology acceleration at The Carbon Trust, a UK-government-funded organisation charged with catalysing a low-carbon economy. A study published by The Carbon Trust in July estimated the cost of energy harvested from waves at 43 pence per kilowatt-hour, or almost three times the cost of offshore wind. To become cost competitive with other sources of renewable energy, companies will have to find ways to squeeze more power out of their devices, says Wyatt."
New power wave heads out to sea
New Scientist, 26 August 2011

"China has 'vastly increased' the risk of a nuclear accident by opting for cheap technology that will be 100 years old by the time dozens of its reactors reach the end of their lifespans, according to diplomatic cables from the US embassy in Beijing. The warning comes weeks after the government in Beijing resumed its ambitious nuclear expansion programme, that was temporarily halted for safety inspections in the wake of the meltdown of three reactors in Fukushima, Japan. Cables released this week by WikiLeaks highlight the secrecy of the bidding process for power plant contracts, the influence of government lobbying, and potential weaknesses in the management and regulatory oversight of China's fast-expanding nuclear sector."
WikiLeaks cables reveal fears over China's nuclear safety
Guardian, 25 August 2011

"Among the energy targets in China's 12th Five Year Plan, released this year, is a scheme to significantly boost production of coalbed methane (CBM) which is found not in pockets, like natural gas, but actually absorbed into the coal at a molecular level. Fortune Oil, a China-focused oil and gas explorer listed in London, is among a small clutch of foreign companies hoping to profit from a coming expansion in CBM production, which is being backed at central government level. Although final targets have yet to be publicly confirmed, industry analysts say China aims to increase CBM production tenfold to 10bn cubic metres a year by 2015, a target that some describe as 'very aggressive'....Michael Jones, Fortune's technology and development director who quit oil giant BP after 24 years to join a far smaller, but much nimbler, outfit, says the size of the China CBM is vast when set against the country's dizzying demand. 'In China only about 3.7pc of the energy mix is currently provided by gas, but its total consumption is already 110bn cubic metres. To put that into perspective, the UK gets 37pc of its energy from gas, and the European average is 25pc,' he says, looking out over a flaring test well. 'The Chinese target is to have 10pc of its energy provided by gas by 2020, which would equate to 200bn cubic metres, and the word in the industry is that the government is pushing to hit that target even earlier now. The potential in those numbers is obvious.'"
China has been forced to dig deep to meet its energy needs
Telegraph, 28 August 2011

"Beijing used to be famous for the millions of bicycles thronging its streets. But it is the success of the motor car there and in other Chinese mega-cities that has now tipped the number of cars in the world over the 1bn mark. According to a report by the trade journal Ward's, 35m new cars and lorries were sold worldwide last year – the second-biggest increase ever recorded. That is 95,500 extra vehicles being added to the global traffic jam every day. Almost half of the new growth is in China, which recently overtook the US as the world's biggest car market thanks to the sales of 13.8m new passenger vehicles. Despite the surge in sales, car ownership in China is still only half the global average. But hopes that the country will also become a pioneer in the shift towards "clean car" technology have suffered a setback as the Chinese show little sign of interest in electric and hybrid vehicles despite ambitious government plans. Last year, Toyota managed to sell only one Prius – the world's most commercially successful hybrid car – in the fastest-growing market. Sports utility vehicle sales, by contrast, are surging."
China's love affair with the car shuns green vehicles
Guardian, 24 August 2011

"When Brazil discovered huge offshore crude reserves four years ago, state oil company Petrobras (PETR4.SA) sketched out plans to become a regional fuel exporter. That plan has since been turned upside down. Rapid domestic economic growth and rising fossil fuels use has turned it into a recurrent fuels importer, with occasional gasoline purchases in 2010 evolving into regular imports that may not cease until the end of the decade. This leaves Brazil following the path of other emerging markets such as China, which upended the oil products markets ten years ago with explosive demand, and the Middle East, where rising incomes have spurred demand growth. With few signs that Brazil in the short term will be able to boost supply of sugar cane ethanol, which supplies almost half the fuel for its cars, the country is shaping up to be a demand center that energy markets will watch more closely. 'In 2006 and 2007 the focus of our discussion was adding value to Brazilian petroleum and exporting products. We were going to have a surplus of products. But in 2010 the world changed,' said Paulo Roberto Costa, Petrobras refining chief. 'The rule was that fuel demand grew slower than GDP, but this changed,' he said, adding Petrobras will likely maintain its dependence on foreign fuel markets. Petrobras says gasoline imports will reach 3.2 million barrels by the end of August, an amount almost equal to the total imported in 2010. It is likely to rise by the end of the year on the seasonal demand increase."
Analysis: Brazil boom takes world fuel markets by surprise
Reuters, 23 August 2011

"China's largest oil and gas producer has shut down six major projects in war-torn Libya, Syria and other restive nations because of political instability, state media said Tuesday. The decision came as Libyan leader Moamer Kadhafi's regime appeared close to collapse after rebels took over the capital Tripoli, and as other countries in the Middle East and Africa experienced bouts of unrest. The projects in Libya, Niger, Syria and Algeria were run by Great Wall Drilling Co (GWDC), a subsidiary of the state-owned giant China National Petroleum Corp (CNPC), the Beijing Times newspaper reported....the state-run Beijing Times said experts had warned Chinese companies to be cautious about investing in politically turbulent areas, citing the risks involved."
Chinese oil giant ends ops in Libya, Syria: report
Agence France Presse, 23 August 2011

"Oil companies active in Libya before the war began gearing up for the challenge of resuming operations in the country on Monday as rebel forces moved closer to taking over Tripoli. While significant uncertainty remained about when conditions would be stable enough to return, at least one company said it already has made contact with Libyan rebels to help gauge the condition of its operations. A rebel victory could pave the way for restoring the North African nation's production, which hit 1.8 million barrels of day of oil and petroleum products in 2010, according to U.S. figures. But there remain major hurdles, including potential damage to infrastructure and the risk of persistent unrest. Houston-based Marathon Oil Corp. has had 'preliminary discussions' with rebels over the condition of facilities where it has interests, with a goal of making a plan to restore production, a company spokesman said. A BP PLC spokesman said Monday the company was committed to returning to Libya 'as soon as conditions allow,' though it had no time frame. Royal Dutch Shell PLC, Total SA and Repsol YPF SA, also previously active in Libya, declined to say when they might begin production. With the largest proven oil reserves in Africa and its major role in export markets, Libya's importance to the oil industry and its potential future production present a big lure to international oil companies that have increasingly grown accustomed to operating in politically perilous conditions around the world. The rebel council said in July that it would honor oil contracts made y Col. Gadhafi's regime, at least during the country's transition to democracy. But it is still unclear how a new regime in Libya will develop, and that could influence how oil firms view the opportunity in Libya and how soon they would be able to restore prior production levels or try to boost output further. Libya has 'upside potential,' said Lawrence Eagles, an analyst at J.P. Morgan Chase & Co. But he added, 'We are still talking about a situation where no one can say with any clarity what' the governance will be. 'We essentially have a blank sheet in front of us.'"
Oil Producers Take Steps to Return
Wall St Journal, 23 August 2011

"With the regime of Moammar Gadhafi on the verge of collapse, international oil companies began preparing Monday for what they hope will be a quick return to production in Libya, a move that’s expected to reduce the global price of crude and help drive down U.S. gasoline prices. Companies, most of which withdrew their expatriate staffs when fighting began in February, said that Libya's oil installations appeared largely undamaged from months of warfare and that once peace was restored, production and exports should resume quickly. 'Our people are ready to go back to work when the conflict is resolved. From that point forward, they can return to production in four weeks or less,' said Carmen Herrero, a spokeswoman in Madrid for the Spanish oil company Repsol. Before the war, Repsol’s joint venture with the National Oil Corp. of Libya was producing about 35,000 barrels of oil daily at the El Shararah oil field in the central Libyan desert near Ubari. The last word Repsol officials had from their Libyan staff, in late July, was that the fighting hadn't affected the installations.... Before the war, Libya provided about 1.1 million to 1.6 million barrels per day, roughly about 2 percent of the world’s daily oil demand. But while that production made Libya only the world's 17th largest oil producer, it has the largest proven reserves in Africa and it played an outsized role in supplying Western Europe, where refineries easily process its lighter grade of crude. Saudi Arabia stepped into produce more oil, but Saudi oil is more difficult for European refineries to process. 'There is a great incentive for the Europeans to get this oil back on line quickly because they’ve been hurt,' said John Kilduff, a veteran oil expert for Again Capital, an energy-trading hedge fund in New York. The conflict in Libya sparked a spike in energy prices in the spring, as traders fretted that the civil war could spread to other oil-producing nations. Economists now think that price spike significantly slowed U.S. economic activity in the first half of the year. Kilduff said American consumers should see the impact of the return of Libyan oil in lower gasoline prices, even if the oil wasn't directly distributed in the United States. 'There should be a decent decline as a result of this oil coming back on line,' he said. “Once you start to see the first … exports, you will see further (downward) pressure on prices rapidly.' Gadhafi and the opposition appear to have spared most of the nation’s oil and natural gas infrastructure, viewing oil as a cash cow that must be preserved."
Oil companies see quick return to Libya, once peace restored
McClatchy Newspapers, 22 August 2011

"Power transmission companies want to be able to charge households an extra £13 per year on their energy bills by 2021 to cover the cost of connecting wind farms and other new generation to the national grid.Scottish Power, Scottish & Southern and National Grid collectively want to spend £21bn over the next eight years on improving their systems, mostly to prepare for new wind farms coming on to the grid. Transmission currently accounts for about £17 of the average £424 per year electricity bill. National Grid estimates that its £14bn of major projects will be cost consumers another £10 each by 2021, increasing by about £1 every year. Scottish and Southern Energy said £4bn of investment will add £2.37 by that time. But Scottish Power believes its £3bn investment ought only to cost the average household an extra £1 per year by 2021, increasing by just 13p per year. Costs are rising because the companies are having to build more electricity substations and overhead power lines, especially in Scotland, to accommodate wind farms."
Electricity bills could rise by £13 a year to fund infrastructure expansion
Telegraph, 17 August 2011

"Is the west falling out of love with the car? For environmentalists it seems an impossible dream, but it is happening. While baby boomers and those with young families may stick with four wheels, a combination of our ageing societies and a new zeitgeist among the young seems to be breaking our 20th-century car addiction. Somewhere along the road, we reached 'peak car' and are now cruising down the other side. Peak car takes several forms. Sales of new cars have almost halved in the US, down from nearly 11 million in 1985 to about 5.5 million in 2009. We shouldn't take much notice of that, though. Cars last longer these days, and sales go up and down with the economy. But we have hit peak car ownership, too. And, more to the point, peak per-capita travel. The phenomenon was first recognised in The Road... Less Traveled, a 2008 report by the Brookings Institution in Washington DC, but had been going on largely unnoticed for years. Japan peaked in the 1990s. They talk there of 'demotorisation'. The west had its tipping point in 2004. That year the US, UK, Germany, France, Australia and Sweden all saw the start of a decline in the number of kilometres the average person travelled in a car that continues today. In Australia, car travel peaked in every city in 2004 and has been falling since (World Transport Policy and Practice, vol 17, p 31). It is a similar picture in the UK, where per-capita car travel is down 5 per cent since 2004. What could be driving us off the road? Fuel costs and rising insurance premiums may be a factor. And urban gridlock, combined with an absence of parking places and congestion charging, makes the car a dumb way to move around in cities where there are public transport alternatives. In the US, however, the decline of the car is most dramatic not in the gridlocked city centres but in the car-dependent suburbs. In sprawling cities like Atlanta and Houston where the automobile is king, driving is down by more than 10 per cent. Of course the end of the love affair with the car may just be a sign of the economic times: the much-discussed 'hollowing out' of the middle classes, with jobs available at the top and bottom of society, but less so for the white-collar workers. Still, a study by Lee Schipper of the Global Metropolitan Studies unit at the University of California, Berkeley, found that while rising wealth correlates with more travel up to a per-capita income of $30,000, beyond that the link breaks down (Transport Reviews, vol 31, p 357). Demographics is a more likely explanation. It is surely no accident that peak car happened first in Japan, which has the world's oldest population. Pensioners do not drive to work, and many don't drive at all."
The end of the road for motormania
New Scientist, 16 August 2011

"If history is any guide, another oil-induced recession may be just around the corner, at least for the United States and some of the other developed economies. Every time that the cost of oil relative to global economic output has hit current levels - and that's even after sharp falls in spot prices this month - it has heralded a slump. And while economists and analysts say a serious slowdown can still be avoided, many add that unless oil and energy prices fall much further and -- most important -- stay down, the world economy could be in serious trouble. 'We are in a danger area for the world economy,' said Christophe Barret, global oil analyst at Credit Agricole. The warning signal flashing is what economists call the "oil expense indicator': the share of oil expenses as a proportion of worldwide gross domestic product (GDP) (oil prices times oil consumption divided by world GDP). Since 1965, this has averaged roughly 3 percent of GDP, and it has only exceeded 4.5 percent during three periods: in 1974, between 1979 and 1985 and in 2008. Each period has seen severe global recessions. In 1973/74, during the first global 'oil shock,' oil prices rocketed after an Arab oil embargo in response to an Arab-Israeli war disrupted oil flows and triggered panic buying. In 1979, revolution in Iran knocked out much of the country's oil output and was followed by a long Iran-Iraq war, bringing a second 'oil shock.' In 2008, propelled by a housing bubble, speculative buying of new debt instruments and a commodities boom, oil prices exceeded $100 per barrel for the first time and soared to a record high above $147, helping trigger financial crisis and the worst slump since World War II. This time, oil prices have soared following the loss of around 1.6 million barrels per day (bpd) of Libyan oil, uprisings across the Middle East and North Africa and rapid economic growth in China, India and other developing economies. Using the oil expense indicator, economists say Brent crude, the international oil benchmark, would need to be in the low $90s per barrel to be under the 4.5 percent danger mark. In fact, Brent hit a two-and-a-half-year high of more than $127 per barrel in April and, with the exception of an intra-day dip on Tuesday, has been over $100 for six months. Even after a fall of more than $20 from its early-August high on worries over a slowdown in the developed economies, Brent is still not far off $110 per barrel. Oil is a key global cost because it is crucial to every part of the economy, powering manufacturing and the production of food and other commodities, fuelling transport as well as being a building block for industries such as plastics and electronics. If it is too high for too long, the results are dramatic. 'The last two times that energy as a share of global GDP neared ... the current level, the world economy experienced severe crises: the double dip recession of the 1980s and the Great Recession of 2008,' Merrill Lynch analysts led by Francisco Blanch said in a note to clients. Economists reinforce their warnings over the possibility of an impending slowdown with data showing that oil demand has begun to shrink in some countries in response to high prices. Oil data lags, but the latest US figures, for May, show a drop of 4.7 percent year-on-year in US gasoline demand. Deutsche Bank analyst Adam Sieminski says he is concerned by a trend toward lower US oil demand evident since last summer: 'The last time US oil demand was falling was in 2007 and early 2008,' Sieminski said in a note written with analyst Michael Lewis. 'This was a leading indicator of the economic troubles that would hit the US in the middle of 2008.....most economists argue there is a level at which fuel input costs become incompatible with continuing economic growth. James Zhang, an analyst at Standard Bank, says the danger level comes with the oil expense indicator at around 5 percent: '$100 per barrel represents about 5 percent for the 'oil expense indicator', which we think would be a threshold on an annual average level to potentially kill off global growth,' he said....Barret said record high oil and commodity prices were putting unsustainable pressure on household expenditure, and while he like other economists is reluctant to predict recession, he thinks the warnings should be heeded: 'There is still a chance that oil prices will go down very significantly, and that could be a strong support to the economy. But if prices stay near $110 per barrel until the end of the year, we will have a major problem by the start of 2012,' he said. 'We either get sharply lower prices or a recession that will bring down prices. Either way, oil prices must come down.'"
Oil not Wall Street is top US threat
Reuters, 15 August 2011

"US farmers are growing the first corn plants genetically modified for the specific purpose of putting more ethanol in gas tanks rather than producing more food. Aid organisations warn the new GM corn could worsen a global food crisis exposed by the famine in Somalia by diverting more corn into energy production.... The corn, developed by a branch of the Swiss pesticide firm Syngenta, contains an added gene for an enzyme (amylase) that speeds the breakdown of starches into ethanol. Ethanol plants normally have to add the enzyme to corn when making ethanol. The Enogen-branded corn is being grown for the first time commercially on about 5,000 acres on the edge of America's corn belt in Kansas, following its approval by the US Department of Agriculture last February. In its promotional material Syngenta says it will allow farmers to produce more ethanol from the corn while using less energy and water. Meanwhile, campaigners say the corn will heap pressure on global food supplies and contribute to environmental degradation. They argue Enogen will lead to an increase in the amount of food crops going to fuel, leaving less for human consumption and leading to food price rises."
GM corn being developed for fuel instead of food
Guardian, 15 August 2011

"The IMF forecast Kuwait’s oil production at around 2.41 million barrels per day in 2011, below the peak output of 2.68 million bpd in 2008. But its figures showed crude prices in 2011 would exceed those in 2008 as it forecast them at $104.1."
Kuwait oil exports to peak in 2011: IMF
Emirates 24/7 - 13 August 2011

"Oil fell in New York, heading for a third weekly decline, on concern that volatility in financial markets will worsen an economic slowdown. Futures slid as much as 1.7 percent today, ending a two-day climb. Crude has traded from $75.71 a barrel, a 10-month low, to as high as $85.97 in intraday trading this week. Reports today may show manufacturing stalled in the euro region and Greece’s economy shrank. Prices surged yesterday after applications for U.S. unemployment benefits unexpectedly slid to the lowest in four months. 'The biggest downside risk is that all this volatility cripples confidence,' said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, who predicts oil in New York will average $98 a barrel in the third quarter. 'There are continued concerns around Europe and sovereign debt and when you overlay that on weaker than expected macro data, it can cause people to fear for the worst.'”
Oil Set for Third Weekly Drop as Financial-Market Swings Threaten Recovery
Bloomberg, 12 August 2011

"OPEC, source of more than a third of the world's oil, cut its forecast for global oil demand growth this year as a worsening economic outlook curbs consumption in developed economies. The revision from the Organisation of the Petroleum Exporting Countries in a report on Tuesday follows reductions by other forecasters, such as investment bank Barclays Capital, as slowing growth hits consumers and businesses....World oil demand will increase by 1.21 million barrels per day (bpd) in 2011, OPEC said, 150,000 bpd less than expected last month. Growth next year was lowered only marginally, by 20,000 bpd to 1.30 million bpd....According to secondary sources cited by the OPEC report, OPEC supply rose by 405,000 bpd in July to 30.07 million bpd. That is the same total as a Reuters estimate published on July 28. There is no sign, yet, that Saudi Arabia is rethinking its supply policy. The kingdom has left supply to Asian and European customers unchanged in September despite the fall in prices, industry sources said on Tuesday. An OPEC delegate told Reuters earlier this week that while the economic picture and slide in oil prices was a worry, there was no plan for the group to hold an emergency meeting. Despite the reduced demand forecast and higher production, OPEC's economists still forecast a gap between supply and demand in the second half of the year. Tuesday's report implied the supply gap had narrowed to 810,000 bpd in the second half from 1.25 million bpd in July. It expects demand for OPEC crude to rise next year to 30.2 million bpd - 100,000 bpd less than expected last month - from 30 million bpd in 2011. Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas, said it was significant OPEC was still pumping less than its own economists forecast the world will need, and demand outside the OECD remained largely on track. 'OPEC has reduced its demand forecasts but the estimate of the 'call' on its crude oil in the third quarter still remains above the cartel's current production,' he said."
OPEC cuts oil demand amid economic gloom
Reuters, 9 August 2011

"Failing to locate any oil in the first of four wells to be drilled off Greenland this year saw shares in Cairn Energy fall by 5pc yesterday....Cairn has placed all its hopes on finding oil off Greenland, after selling most of its Indian assets to Vedanta for $9bn (£5.5bn). It will return some money to shareholders and use the rest to fund its drilling programme. The company has found oil in previous Greenland wells but not enough to make them worth developing. In this well it has only found 'oil-prone rocks'."
Cairn Energy falls on dry Greenland well
Telegraph, 6 August 2011

"A sharp slowdown in economic growth, particularly in the United States, is hitting oil consumers and companies, forcing analysts to slash estimates for global oil demand. In a report to be published in the next few days, Barclays Capital has cut its estimates of world oil demand growth for this year and 2012 to reflect the dramatic economic slowdown. The investment bank, which had been one of the most bullish forecasters of oil prices this year, now sees global oil demand increasing by 1.1 million barrels per day (bpd) this year to 88.68 million bpd. Barclays Capital previously forecast a rise in oil demand this year of 1.56 million bpd and two months ago expected the increase to be as much as 1.7 million. The sharp reduction would take it from one of the most bullish on growth to one of the most bearish, according to a Reuters poll two months ago."
Exclusive: Oil demand outlook dims as economies sputter
Reuters, 4 August 2011

"A cap on Chinese energy consumption is expected to be the highlight of a comprehensive low-carbon plan to be issued later this year, but it might not be as tough as expected, experts say. Capping energy use will form the cornerstone of China's efforts to curb surging greenhouse gas emissions, the world's highest and making up a quarter of the global total. China is using the fight against climate change to make its economy more efficient and kick-start emissions trading schemes over the next five years."
China set to cap energy use in national low-carbon plan
Guardian, 4 August 2011

"Political disarray over Japan's energy policy will make it tough for Tokyo to avert a total nuclear shutdown next summer and presents a long-term threat to the world's third-largest economy. The March 11 earthquake and tsunami triggered a meltdown at the Fukushima power plant that shattered the public's confidence in the safety of the country's nuclear fleet. Scandals over the government's cozy relationship with the power industry have exacerbated the concern. Japan sacked three officials over the scandals on Thursday, but it was unclear if this was enough to help repair public confidence in Tokyo's ability to govern the industry. The disasters look to have dealt a definitive blow to the future of nuclear energy in Japan. Prime Minister Naoto Kan has called for gradually weaning Japan off its dependence on nuclear power, a U-turn on the 2010 energy policy that sought to boost nuclear capacity to supply 50 percent of Japan's energy needs by 2030. In that plan, nuclear was seen as a cheaper and cleaner alternative to fossil fuels."
Analysis: Energy policy chaos threatens Japan's economy
Reuters, 4 August 2011

"Lost in the furor over the debt crisis last week came the news that the U.S. economy expanded at an annual rate of only 0.4 percent in the first quarter and 1.3 percent in the second. As these numbers were well below what economists were expecting, the revelation that the US was not coming out of the 'great recession' was quite a shock for those who have not been paying attention.... Precedent suggests that when the next revision to the GDP numbers is issued in the summer of 2012, it will show that the 1.3 annual growth rate being claimed for the second quarter of 2011 is likely to be overstated as badly as previous preliminary estimates. What is most interesting in the commentary surrounding the precipitous drop in GDP growth is that a few in the main stream media are beginning to look at high gasoline prices as one of the primary factors restraining economic growth. The U.S. burns about 19 million barrels or 800 million gallons of oil in the form of gasoline, diesel, jet fuel, propane, fuel oil, etc. each day. About half of this is in the form of gasoline that goes into our 250 million cars and light trucks. Twenty years ago we were paying about $1.20 a gallon for our gasoline and somewhat less for other grades of fuel. Ten years ago this price of gasoline still averaged only $1.44 a gallon. Then things started happening. In 2004 gasoline prices climbed to an average of $1.98. Four years later the average for 2008 was $3.31 with a brief high in June and July well above $4 a gallon followed by a collapse that took the average price of a gallon all the way down to $1.83 by January of 2009..... The collapse in prices was short lived for by the end of 2009 we were back up to $2.67 with the average for the year coming in at $2.40 - nearly a dollar a gallon less than the average for 2008. If we burn 800 million gallons of oil a day, then a dollar increase or decrease in the price amounts to about $800 million more or less money going to fill our gas tanks. Multiply this by 365 and you can see that about $300 billion per year in consumer spending power is either taken away by the gas pump or can be used for other expenditures. Now consumption of fuel does drop as prices go up. U.S. oil consumption actually peaked back in August of 2005 at 671 million barrels for the month. When gasoline was at an all-time high in the summer of 2008, and selling for nearly double the 2005 price, and the economy was contracting rapidly, consumption fell to 597 million barrels during August -- the peak of the driving season. This was about an 11 percent drop from three years earlier. The important point is that between the $1.44 a gallon gasoline of 2002 and the $4.20 a gallon gasoline of July 2008, the cost of filling our collective fuel tanks, rose by some $2.2 billion a day. With half of this money leaving the country to pay for oil imports, it is not difficult to figure out why the economy has not been doing too well of late. Conversely, when gasoline fell from $4.20 a gallon in July to $1.84 in December of 2008, $1.8 billion a day reappeared in our collective pockets and the economy started to revive. The situation we are facing today is similar to that of 2008, yet is different in that the price spike of 2008 was of relatively short duration. At the end of February 2008 gasoline was averaging $3.18 and 19 weeks later in early July it was at $4.16, a dollar increase. The fall from the peak was even more spectacular, for in 12 weeks gasoline prices had declined by one dollar and six weeks later another dollar. This drop put money back into consumers' pockets at the rate of $600 billion a year - nearly the same amount as the federal stimulus provided and a lot quicker. This year's gasoline price run-up started in early December 2010 with gasoline at $3.01 a gallon. Twenty five weeks later in early May prices peaked the requisite dollar higher at $4.01. It is now 12 weeks since the May 2011 peak. Prices have fallen about 25 cents a gallon and at the minute do not seem to be showing signs of falling much further. London's Brent crude, which is now the real benchmark for world oil prices, rose from $80 a barrel last summer to $125 in May and has been trading above $115 ever since. The massive increase in money coming out of consumers' pockets to pay for fuels is still going on. It is sucking the life out of our economy and yet few notice."
The Peak Oil Crisis: Parsing the GDP
Falls Church News-Press, 3 August 2011

"Libyan oil production will take years, not months, to return to full capacity once a political solution to the conflict is found, according to Barclays Capital. 'The reincorporation of Libyan oil into the world market increasingly seems a distant possibility' according to the study, which warns of a lasting political vacuum after the potential fall of the Gaddafi regime..."
Libya years away from oil recovery
Financial Times, 2 August 2011

"Most European major oil companies posted a surge in quarterly profits last week, but their results were overshadowed by a trend that continues to trouble Wall Street and corporate boardrooms: Nearly every major oil company reported year-to-year oil-and-gas output declines, often in the double-digits. Big Oil is throwing huge resources at the problem with more open embrace of unconventional petroleum developments, high-risk exploration in frontier areas and corporate restructuring. But even if these strategies work in some cases, there is little doubt that anemic petroleum output signals a long-term challenge confronting the sector."
Europe's Big Oil Sees Output Fall
Wall St Journal, 1 August 2011

"BP has been accused of taking a 'stranglehold' on the Iraqi economy after the Baghdad government agreed to pay the British firm even when oil is not being produced by the Rumaila field, confidential documents reveal. The original deal for operating Iraq's largest field – half as big as the entire North Sea – has been rewritten so that BP will be immediately compensated for civil disruption or government decisions to cut production. This potentially could influence the policy decisions made by Iraq in relation to the Opec oil cartel, and is a major step away from the original terms of an auction deal signed in the summer of 2009, critics claim."
BP 'has gained stranglehold over Iraq' after oilfield deal is rewritten
Guardian, 31 July 2011

"President Obama announced new automobile fuel-efficiency standards on Friday that require an average 54.5 miles per gallon by 2025. But even if the auto industry manages to meet the new standards, it is unlikely car buyers will see many fuel-economy stickers with such high mileage. Instead, the average new vehicle in 2025 will probably be closer to 43 miles per gallon, based on the typical 20-percent discount applied by federal officials when rating a car or truck in real-world driving conditions. That’s one example of how new corporate average fuel economy rules, known as CAFE, will require considerable interpretation for the industry and consumers alike. Administration officials said Friday that the new fuel rules also contained an intricate set of “credits” for auto companies to achieve the new target of 54.5 miles per gallon for their fleets in 14 years. The system of credits has been devised to encourage new technology and better penetration of current fuel-saving equipment into the market. Sales of vehicles that run on electric batteries or fuel cells, for example, will be given more weight in the fleet average than normal gas-powered vehicles, even those with particularly efficient engines."
Obama Reveals Details of Gas Mileage Rules
New York Times, 29 July 2011

"UK crude oil production fell 10.9% month-on-month in May to 1 million b/d, the UK's Department of Energy and Climate Change said Thursday. The output figure was also down 20.2% on May 2010, the data showed, due to maintenance-related outages at North Sea crude oil fields. "This is the second consecutive month of record decreases in production and the first time that over 20% has been lost on the corresponding period of the previous year. As last month, the decrease stems from maintenance related work on a number of fields," the DECC said. UK crude production has averaged 1.1 million b/d in the first five months of the year, the lowest figure recorded since data began to be compiled in 1995. UK oil production has fallen steadily since reaching a peak in 1999."
UK crude oil output fell 11% in May on month to 1 million b/d
Platts, 28 July 2011

"Arkansas regulators are expected Tuesday to order the closure of some underground storage facilities that natural-gas drillers use to dispose of contaminated water because of concerns they are causing earthquakes. The ban would only affect part of the state and wouldn't stop drilling in the Fayetteville Shale gas field there. But it highlights how water issues—including the disposal of waste tied to the controversial hydraulic fracturing process—have emerged as a major challenge for the oil and gas industry across the U.S."
Quakes Push Arkansas to Limit Gas-Waste Wells
Wall St Journal, 28 July 2011

"High crude prices have dented global oil demand in the second quarter, oil majors said this week, in a trend likely to be repeated in the second half of the year if prices stay high. Oil majors BP , Royal Dutch Shell (RDSa.L) and ConocoPhillips all said they witnessed signs of demand rationing in the second quarter, which saw Brent oil prices LCOc1 spiking to $127 per barrel, close to their all-time high of $147. Many analysts and fund managers say demand erosion will ultimately help bring oil prices down if producing nations cannot pump more to help support fragile world economic growth.... Shell said oil products sales volumes decreased by 8 percent compared with the same period a year ago while, excluding the impact of divestment, sales volumes were 4 percent lower than in the second quarter of 2010.   On Tuesday, BP's head of refining and fuel marketing Iain Conn said the firm's marketing volumes were down about 2 percent in the second quarter year-on-year. 'This is a reaction to high prices. This is something we are going to continue to see in Europe and the U.S.. East of the Rockies retail volumes are down about 6 percent year on year... Everywhere else were are seeing diminishment of demand,' he said..... European oil consumption is set to fall to its lowest since 1995 this year as high prices cut sharply into fuel use in debt-laden peripheral eurozone nations. Efficiency gains have reduced European oil demand over the past five years. Crude price changes do not normally have as much impact on retail demand as in the United States because tax in Europe makes up a much larger share of total fuel costs. Some funds, including Investec, say the risks of demand destruction in the United States are underestimated as gasoline prices hover around a critical level of a tenth of personal disposable income, after which demand destruction begins."
Shell says OPEC capacity worry to fuel oil price
Reuters, 28 July 2011

"The Iranian Shana news agency reports that senior oil officials from Iran, Iraq and Syria have signed a trilateral deal on gas trade in Iran on Monday. The deal, reportedly worth 10 billion dollars [12 trillion Iraqi dinars] involves the construction of a 5,000-kilometer (3,100-mile) pipeline to transfer Iran’s gas from the South Pars gas field to Europe via Iraq, Syria, Lebanon and the Mediterranean region. The pipeline will take three to five years to build. The deal was signed by Iran’s acting minister of petroleum Mohammad Aliabadi, Iraq oil minister Abdolkarim Luaibi [Elaibi], and Syrian oil Minister Sufian Allaw, who visited some South Pars gas field phases following the signing ceremony. The managing director of the National Iranian Gas Company (NIGC), Javad Oji, said an international consultant would be chosen to determine the appropriate route, as well as a financier. Oji said the South Pars gas field is a reliable source of gas in comparison to the Nabucco pipeline, adding the field holds 16 trillion cubic meters of recoverable gas reserves and has the potential to provide gas up to 80 years at current levels of production.... Referring to getting permissions from transit countries, NIGC’ chief said: Up to now more than 20 expertise sessions have been held with Turkey, Iraq and Syria on gas exports via their territories and fortunately all of them have given written permissions on the issue. Switzerland would be the first country in Europe to receive Iran’s gas....Referring to getting permissions from transit countries, NIGC’ chief said: Up to now more than 20 expertise sessions have been held with Turkey, Iraq and Syria on gas exports via their territories and fortunately all of them have given written permissions on the issue. Switzerland would be the first country in Europe to receive Iran’s gas."
Iraq, Iran, Syria Sign $10 billion Gas Deal
Iraq Business News, 25 July 2011

"There are signs that peak oil may have already arrived. The International Energy Agency (IEA) recently increased its forecast for average global oil consumption in 2011 to 89.5 million barrels per day (bpd), an increase of 1.2 million bpd over last year. For 2012, the IEA is expecting another increase of 1.5 million bpd for a total global oil consumption of 91million bpd, leaving analysts such as Whipple to question how production will be able to keep up with increasing consumption. Whipple's analysis matches IEA data which shows world oil production levels have been relatively flat for six years. 'This is getting very close to the figure that some observers believe is the highest the world will ever produce,' Whipple wrote of the IEA estimate in the July 14 issue of Peak Oil Review. He told Al Jazeera that peak oil could be reached at some point in the next month, or at the latest, within 'a few years'."
The scourge of 'peak oil'
Al Jazeera, 25 July 2011

"The OECD's IEA now foresees average global consumption in 2011 at 89.5 million b/d which is 1.34 million above Washington's EIA projections and 1.32 million above OPEC's projection. For 2012, the IEA sees demand increasing to 91 million b/d while OPEC sees demand at a more sedate 89.5 million."
Peak oil review - July 25
ASPO-USA, 25 July 2011

"In a section of its website responding to questions sent in by elementary school children, Chubu Electric Power Co. informs us that nuclear power 'is the cheapest.' The media, including the Mainichi, have often cited the information provided to us by power companies. However, Kenichi Oshima, a professor of environmental economics and policy at Ritsumeikan University, has done some calculations and has reached a completely difference conclusion. Oshima says that the cost for a kilowatt-hour of electrical power between fiscal 1970 and fiscal 2007 was 10.68 yen for nuclear, 3.98 yen for hydroelectric, and 9.9 yen for thermal generation, with nuclear-generated power coming out as the most expensive. These calculations were even presented at a meeting of the government's Atomic Energy Commission last September. So how does one explain these two different conclusions? First of all, there is a huge gap between estimates given by power companies and figures derived from actual records....The figure '5.3 yen per kilowatt-hour of power' as the cost of nuclear power generation is an estimate submitted in 2003 by the Federation of Electric Power Companies of Japan (FEPC) to a subcommittee of the Committee for Natural Resources and Energy, an advisory body to the Minister of Economy, Trade and Industry. The estimate presupposed a power plant that began operations in the 2002 fiscal year and would run 40 years with a utilization rate of 80 percent. Construction costs were calculated based on an actual power plant that had recently begun operations, and foreign exchange rates and fuel prices needed to calculate the cost of importing fuel were derived from economic indices at the time. It's a government-endorsed figure that has continued to give nuclear-power generation the 'low cost' seal of approval. Oshima's calculations, meanwhile, have been based on actual performance figures found in utilities' corporate financial reports."
Contrary to power company figures, cost of nuclear power generation highest: research
The Mainichi Daily News (Japan), 23 July 2011

"Extra safety measures and two deadly accidents have delayed EDF's flagship French nuclear plant by another two years, raising fears about the delivery of its first two stations in Britain. The UK is relying on EDF to build the first nuclear power stations for a generation in Suffolk and Somerset by 2018. However, suspicions are growing that EDF is preparing to delay Britain's new plants substantially, having said it will issue a "revised timetable" for the UK in the autumn. It is understood that British officials are now working on the assumption that new nuclear will not arrive in the UK until after 2020. Costs in France have already doubled and construction is severely delayed at EDF's flagship plant in Flamanville, which will be its first new plant in more than 15 years."
Problems at EDF's French nuclear site raise fears of UK energy delays
Telegraph, 21 July 2011

"Saudi oil exports are set to fall sharply in the long term as domestic consumption claims an increasing share of the output, Jadwa Investment said in a report. The Saudi investment firm said the kingdom could face a serious revenue crisis within the current decade as it cut exports to meet rising demand. Saudi Arabia is still dependent on oil revenues to fund its entire state apparatus, welfare system and defense machinery. Efforts to achieve economic diversification have yet to produce substantial results. Jadwa pointed out the kingdom's oil exports had declined from around 7.5 million barrels per day in 2005 to 5.8 million bpd in 2010 and could drop further by 2015. An expected high growth in domestic consumption could prompt the government to reduce exports to around 6 million bpd in 2020 and only 4.9 million bpd in 2030, said the report."
Saudi oil exports set to fall in long term
UPI, 20 July 2011

"Saudi Arabia, the world’s largest oil producer and exporter, which last month pumped 9.7m barrels a day, the second highest level in three decades, could soon become one of the top oil consumers. The emergence of Saudi Arabia as an important consumer sets a critical new trend that could have profound implications for oil prices over the next few years. As the kingdom’s oil demand surges, the exportable surplus narrows, tightening global oil markets..."
Surge in Saudi oil burn adds new demand twist
Financial Times, 19 July 2011

"Venezuela’s proven oil reserves have surpassed Saudi Arabia’s for the first time, making it the most oil-rich nation in the world, according to the Organization of Petroleum Exporting Countries. In its 2010-2011 Annual Statistical Bulletin, OPEC said Venezuela’s proven oil reserves spiked 40 percent in 2010 to reach 297 billion barrels. Saudi Arabia, the long-time leader in the category, had 265 billion barrels of proven reserves, according to the online report, which will be published in November..... The new reserves are being fueled by finds in the existing fields of Barcelona, Maracaibo and Barinas, as well as off-shore projects and in the Orinoco, Venezuela’s Ministry of Communication and Information said in a release Tuesday. But the figures are also a matter of debate. About one-third of Venezuela’s reserves are extra heavy crude, which is difficult to extract and only economically feasible to recover when the long-term price of oil is above about $70 a barrel, said Jorge Piñon, a research fellow at Florida International University and the former President of Amoco Latin America. The cash-strapped PDVSA may have trouble raising the funds to tap that oil, he said. 'You can be sitting on the largest reserves in the world but if you do not have capital and technology to recover them…they are worthless,' he said."
Venezuela tops world oil reserves
Miami Herald, 19 July 2011

"Demand for biofuels in the US is driving this year's high food prices, a report has said. It predicts that food prices are unlikely to fall back down for another two years. The report, produced by Purdue University economists for the Farm Foundation policy organisation, said US government support for ethanol, including subsidies, had fuelled strong demand for corn over the last five years. A dramatic rise in Chinese imports of soybeans was also putting pressure on prices and supply, the report said. Since 2005, a growing number of US farmers have switched to corn and soybeans from other crops. Farmers in other countries have also switched to corn but, the report said, the demand kept growing. 'In 2005, we were using about 16m acres [6.4m hectares] to supply all of the ethanol in the United States and Chinese soybean imports,' Wallace Tyner, one of the authors said. It took 18.6m hectares (46.5m acres) last year, just to satisfy that demand. The US department of agriculture reported earlier this month that US ethanol refiners were for the first time consuming more corn than livestock and poultry farmers. It took 27% of last year's corn crop to meet the demand for corn ethanol. Only about 10% went to make ethanol in 2005, Tyner said. The Centre for Agricultural and Rural Development at Iowa State University has estimated that 40% of the US corn crop now goes to make ethanol. But Tyner said the cobs and husks of corn used to make ethanol would go on to be used for animal feed. The other driver of rising food prices was China, which has been building up its soybean reserves since the last big global food price rises of 2008. But the report focused strongly on a US government mandate for ethanol production and $6bn (£3.7bn) in annual subsidies for ethanol refineries."
Biofuel demand in US driving higher food prices, says report
Guardian, 19 July 2011

"Afghanistan and Central Asia are abundant with natural resources worth billions. So far, they are largely untapped but the battle is raging for who will be able to exploit them in the 21st century. In the 19th century, it was the Russians and the British who wrestled for influence in Afghanistan and Central Asia in a highly-explosive endeavor known as the Great Game. Today, Afghanistan's natural resources are estimated to be worth billions of dollars. The resources in the neighboring Central Asian states are thought to be worth even more - the cake is huge and as yet largely untouched. While the US and China want an especially large slice of it, neighboring states Iran, Pakistan, India and Russia all have their eyes on it as well. Most experts agree that a battle for natural resources is underway, alongside the war against terrorism. Not enough has been done to define who has access to the natural resources, says Thomas Greven, a political scientist who teaches at Berlin's Free University. 'If conflict arises, in the worst-case scenario, it will not be sufficient to have contracts on exploiting natural resources. The access has to be secured via military bases, as well as political and security cooperation,' says Greven. The US and China have been competing for the world's natural resources for at least a decade now. Both countries know that direct access to energy resources will determine who can maintain their wealth. Greven points out that the new Great Game in Central Asia will thus decide whether the 21st century ends up being Chinese or American. ..... The Chinese government has been conducting an offensive 'shopping spree' in Afghanistan and other Central Asian states for some time now. To Washington's displeasure, Beijing was able to secure the exploitation rights for the region's biggest copper mine, by shelling out three billion dollars. Now, fully-laden trucks head from the mine in eastern Afghanistan to China on roads built by the Americans. Officially, Beijing insists it does not have any great ambitions in Afghanistan and the region. But many observers think China at least wants to set the tone....Until now, China has deliberately avoided direct confrontation with the US. The emerging superpower feels threatened by the 100,000 US soldiers in its direct vicinity. Stetten says Beijing is also concerned about the US' plans to maintain a presence in Afghanistan after 2014. 'Obviously China has no interest in being surrounded by US military bases,' he says, adding however, that the situation does not look likely to change in the immediate future. This is why he thinks China is looking more at cooperating closely with Pakistan."
A new Great Game is evolving in Afghanistan
Deutsche Welle, 15 July 2011

"More than a fifth of all households in the UK were affected by fuel poverty in 2009, government figures have shown. Higher fuel bills meant the number of homes affected rose by one million, or 22%, to 5.5 million, the Department of Energy and Climate Change said. A household is described as being in fuel poverty when it has to spend more than 10% of its income keeping warm. DECC predicts that the numbers for 2010 and 2011 will have increased because of further rises in the price of energy. 'Between 2004 and 2009, energy prices increased: domestic electricity prices increased by over 75%, while gas prices increased by over 122% over the same period,' DECC said. 'This led to the rise in fuel poverty seen over this period,' it added."
Fuel poverty affects one in five households
BBC Online, 14 July 2011

"Drilling for oil and gas in British waters fell sharply in the second quarter of this year, according to industry figures. Exploration for new reserves was down by more than 50% when compared with April to June of last year. It reached the lowest level in that quarter for nine years. That was despite a buoyant oil price encouraging more drilling activity in Norwegian waters and consistent levels off the coast of the Netherlands. Industry analysts said it was too early to blame the shock increase in oil industry taxation, which was announced in the Budget in March, but it had added to uncertainty to investment in UK drilling."
UK oil and gas drilling falls 52% in second quarter
BBC Online, 14 July 2011

"Saudi Arabia is delivering on its promise to unilaterally boost oil production in response to OPEC's failure to agree to a collective output increase last month, according to the International Energy Agency. The IEA said the kingdom's oil production had increased substantially last month, up 700,000 barrels a day to 9.7 million barrels a day—the highest monthly level since February 2006. The agency, which advises industrialized nations on energy policy, said July production might rise to as much as 10 million barrels a day."
Saudis Deliver on More Output
Wall St Journal, 14 July 2011

"U.S. ethanol refiners are consuming more domestic corn than livestock and poultry farmers for the first time, underscoring how a government-supported biofuels industry has contributed to surging grain demand. The U.S. Department of Agriculture estimated that in the year to August 31 ethanol producers will have consumed 5.05 billion bushels of corn, or more than 40% of last year’s harvest. Animal feed and residual demand accounted for 5 billion bushels.”
US ethanol refiners use more corn than farmers
Financial Times, 13 July 2011

"A Chinese buying spree for U.S. corn is putting on display the ability of Beijing to reshape grain markets as well as the cost of food globally. China this past week bought 540,000 metric tons of U.S. corn for delivery after August, according to the U.S. Department of Agriculture, more than the 500,000 tons the agency forecast that nation would buy in an entire year. The news drove corn prices higher on Thursday and Friday, to settle at about $6.75 a bushel, giving new life to the market after a three-week slump."
China's Hunger for Corn Turns Market on Ear
Wall St Journal, 9 July 2011

"Household electricity bills will soar by 30 per cent to pay for 'green' measures being announced this week by Chris Huhne, the Energy Secretary, according to experts. Costly new incentives to encourage energy companies to invest in renewable power sources such as wind farms will put an extra £160 a year on the average household bill over the next 20 years. The huge rise is on top of drastic increases in bills being faced already by consumers. Last Friday British Gas, which posted profits of £742million last year, announced gas price rises of 18 per cent, which followed Scottish Power saying it would increase rises of 10 to 15 per cent. Mr Huhne is expected to announce on Tuesday that energy companies, such as Centrica and EDF, will get a fixed price for electricity generated from nuclear power and wind farms, which will be higher than the market price. The financial incentives will be funded by consumers, who will see their electricity bills rise by 30 per cent over the next 20 years from an average of £493 per year to £655 per year. Experts predicted that single pensioners will be the hardest hit by the changes, because power bills represent a higher proportion of their income than for any other group."
Power bills to soar by 30% in 'green’ reforms
Telegraph, 9 July 2011

"Petrol sales have collapsed this year in the face of escalating prices at the pumps and millions of families feeling squeezed and being forced to cut back on driving, figures have shown. Motorists bought one billion fewer litres of petrol and diesel in the first three months of this year compared with the pre-credit crunch January to March 2008 period, the AA has calculated. The sharp fall confirms anecdotal evidence from supermarkets and garages that drivers have cut back on their driving to save money, as they juggled higher food bills, the jump in VAT and – in most cases – a freeze in wages. Service stations sold 835 million fewer litres of petrol and 247 million fewer litres of diesel in January to March 2011, compared with in the same period three years earlier. This equated to a 15.2 per cent slump in petrol sales and a 6 per cent fall in diesel sales. The AA said more fuel efficient cars had 'next to nothing' to do with the trend. Instead, the record fuel prices, which saw petrol increase by 7.94p a litre and diesel go up by 10.51p a litre in the first three months of this year, were to blame. It added that the drop in sales deprived the Treasury of more than £637 million in tax during the first three months of 2011. A number of family cars now cost more than £100 to fill up a tank, and garages have reported many people can only afford to fill up a half or even a quarter tank at a time. Green Flag, the car recovery company, said it has seen a significant jump in the number of call outs because people had accidentally let their tanks run dry. Edmund King, the president of the AA, said: 'The full impact of higher VAT, unbridled stock market speculation and a weaker pound on fuel prices and drivers' ability to afford them have been laid bare. 'The first three months of this year saw the equivalent of 13.5 days of UK petrol sales wiped out – good for the environment but appalling for families, business, rural communities and the Treasury.' He went on: "Our study shows the real impact of record pump prices. Petrol and diesel prices continued to set new records up until the second week of May, adding a further 4.3p a litre to the cost of petrol and 3.3p to diesel."
Petrol sales collapse in face of high pump prices
Daily Telegraph, 8 July 2011

"Oil supply will be 'critically tight' in 2012 and prices are likely to surpass their recent highs as spare production capacity and inventories are 'effectively exhausted,' analysts at Goldman Sachs said in a research note Thursday.  Goldman also reiterated a recommendation that its clients buy some forward oil contracts now, before prices move higher later. This advice underlines the influential bank's skepticism at the ability of the Organization of Petroleum Exporting Countries to meet rising demand. It also sets it at odds with the view of other important players in the oil market, notably the International Energy Agency. Goldman said it expects the expanding global economy to drive oil demand growth that outstrips production growth, meaning, 'the oil market continues to draw on inventories and OPEC spare capacity in order to balance.' 'It is only a matter of time before inventories and OPEC spare capacity become effectively exhausted, requiring higher oil prices,' Goldman said. 'We recommend opening a long position in the ICE Brent December 2012 contract, as we expect that the market will continue to tighten to critical levels by 2012.' Goldman's estimate of the amount of oil production that OPEC holds in reserve--its spare capacity--is smaller than that of many other analysts, mainly because of differing views over the ability of the group's kingpin Saudi Arabia to increase output. The International Energy Agency, which represents major energy consuming countries, estimates that Saudi Arabia is capable of producing up to 12 million barrels of oil a day, compared with actual production in May of 9 million barrels a day. This would give the Saudis plenty of headroom, even after they increase production to 10 million barrels a day as they promised last month. Goldman, by extrapolating from the previous Saudi production peak in 2008, believes this figure is significantly lower at between 10.5 million and 11.0 million barrels a day."
Critically Tight 2012 Oil Supply To Push Up Prices-Goldman
Dow Jones Newswires, 7 July 2011

"Global banking and securities firm Goldman Sachs said Thursday it was expecting considerable oil price upside in the next 6-12 months as rising demand fueled by improved global economic growth cut into OPEC spare capacity. 'With world economic growth continuing to drive oil demand growth well in excess of non-OPEC production growth, the oil market continues to draw on inventories and OPEC spare capacity in order to balance,' Goldman Sachs said in its Commodity Watch report. 'In our view, it is only a matter of time before inventories and OPEC spare capacity become effectively exhausted, requiring higher oil prices to restrain demand, keeping it in line with available supply.' As such, Goldman Sachs has now forecast a WTI crude price of $111.00/b in three months, $115.00/b in six months and $126.50/b in 12 months, this compares with $108.00/b, $114.50/b and $126.50/b forecasts from its May 24 Commodity Watch report. For Brent crude, Goldman Sachs said its three, six and 12-month forecasts were now to $117.00/b, $120.00/b and $130.00/b. In its May 24 report Goldman had forecast prices of $115.00/b, $120.00/b and $130.00/b, respectively. 'We continue to expect that oil demand growth fueled by moderate economic growth expectations will be sufficient to draw down crude oil inventories and OPEC spare capacity by early next year, leading to considerable oil price upside on a 6- to 12-month horizon,' Goldman said....Goldman also said the impact of the recent International Energy Agency agreement to release 60 million barrels of oil onto the market to compensate for lost production out of Libya would only be short-lived. 'As details of the release have begun to be made available, it is now clear that only about two-thirds of the release of 60 million barrels will be through a sale from government-controlled inventories that would otherwise be unavailable to the market. Further, the impact of the release is likely to be substantially more muted as time goes on,' Goldman said."
Oil to climb on growing demand, reduced spare capacity: Goldman
Platts, 7 July 2011

"China is well within its rights, legally and morally, to limit rare earth exports, argued an article in Chinese state media on Thursday, days after the World Trade Organization ruled against China on its curbs of raw materials exports. The People's Daily, the mouthpiece of China's ruling Communist Party, said claims by countries that China's export curbs on the minerals threatened their economic and national security were 'groundless'.   'It's not that other countries don't have their own supplies, it is just that they have hidden them away,' it said. 'China's handling [of rare earths] does not violate international rules and is not contrary to its WTO accession promises,' the paper said. The WTO ruled on Tuesday that China had violated its rules when it curbed exports of coveted raw materials such as bauxite, coke and magnesium used in the production of steel, electronics and medicines. That ruling, initiated by complaints filed by the United States, the European Union and Mexico in 2009, was seen as a possible precedent for a future case on China's rare earth export quotas."
Paper says China has legal, moral right to curb rare earth exports
Reuters, 7 July 2011

"Global investment in renewable energy sources grew by 32% during 2010 to reach a record level of US$211bn (£132bn), a UN study has reported. The main growth drivers were backing for wind farms in China and rooftop solar panels in Europe, it said. It also found that developing nations invested more in green power than rich nations for the first time last year. The Global Trends in Renewable Energy Investment 2011 report was prepared for the UN by Bloomberg New Energy Finance."
Green energy investment hits record global high
BBC Online, 7 July 2011

"A report completed in 2008 by USGS argued that almost one-quarter of the undiscovered, technically recoverable, hydrocarbons in the world may be contained in an area north of the Arctic Circle. This – in numerical terms – amounts to 90bn barrels of undiscovered, technically recoverable oil, 1,670 trillion cubic feet of technically recoverable natural gas, and 44bn barrels of technically recoverable natural gas liquids in 25 geologically defined areas thought to have potential for petroleum. That would mean the Arctic accounts for around 13% of the undiscovered oil, 30% of the undiscovered natural gas, and 20% of the undiscovered natural gas liquids in the world. About 84% of the estimated resources are expected to occur offshore, says the USGS in figures which the Russians argue hugely underestimate the contribution from their continental shelf. Extracting these hydrocarbons would be hugely expensive using conventional means, but oil companies such as Shell are now building floating liquefied natural gas production systems which would reduce costs. But even high extraction costs can be economically viable because of the soaring value of fuel. The price of crude has risen – from below $10 per barrel barely a decade ago to a current level of around $110 with predictions it could double again in the coming years, making exploration a highly attractive business. Despite concerns about climate change, there is still rising demand for petrol and acrimonious debate about future fuel shortages and whether the world has already reached 'peak oil' (the point at which oil production peaks before going into terminal decline). All of this makes oil deposits that are more difficult to reach financially viable. 'The low-lying fruit has been picked,' is how Fadel Gheit, the veteran oil analyst at Oppenheimer & Co brokerage in New York, puts it. The oil found in massive quantities just below the desert sands of Saudi Arabia or in the relatively calm waters of the North Sea has been used up or shut off by politics to Western oil companies. This leaves oil companies to push the physical boundaries out into deep water, or the technical boundaries out into "unconventionals" such as the carbon-intensive tar sands, and environmentally sensitive areas such as the Arctic. The pressures have increased for the Western oil companies because of resource nationalism, which has seen developing countries seeking to restrict developments for their own national oil companies. A report written by the Norwegian green group Bellona said it was particularly concerned about Russian operations in the Barents, Pechora and Kara seas because much of the hydrocarbon equipment there is old and inefficient, environmental regulation lax and too little is known about the marine ecosystems in the region."
Exhausted global oil supplies make Arctic the new hydrocarbon frontier
Guardian, 5 July 2011

"The US ambassador in Baghdad said on Saturday that the State Department has asked for a $6.2 billion budget for Iraq in 2012, underscoring that its oil and gas reserves were critical for the world's future energy needs. 'This country is on a glide path to increase its oil exports,' James Jeffrey told reporters at the sprawling US embassy in Baghdad, the world's largest. The embassy plans to double in size next year to 16,000 personnel, when it takes over many military tasks after US troops pull out of Iraq at the end of this year, including military sales and training of Iraqi security forces. Nearly 50,000 American troops still remain, down from a high of 170,000 after the 2003 US-led invasion. 'Right now they are at about 2.2 million barrels (of oil) per day. They could go as high as four to six million within four or five years,' he said, noting that energy-related facilities remained vulnerable to insurgent attacks. 'There's no other source of millions of new barrels in the pipeline anywhere in the world,' Jeffrey said. 'The implications on the price per barrel are dramatic.' Saudi Arabia, the only producer inside the Organisation of Petroleum Exporting Countries with an extra production capacity of about 1 million barrels per day (bpd), is able to control global prices, Jeffrey noted. He said that Iraq was also critical to Europe's future gas needs. 'The only source of enough gas for Europe to become somewhat more diversified in energy sources -- or gas sources -- is Iraq,' he said. 'Azeri gas is not sufficient, Turkmen gas is many years off.'... 'Given the criticality of Iraq, given the investment we've made in it... the effort that we need to make and the amount of money required to make it is absolutely -- absolutely -- justified,' Jeffrey said."
US envoy says Iraq critical to global energy needs
AFP, 2 July 2011

"Though not even yet in its official pilot phase, IEI’s shale extraction process aims to produce 40 billion barrels of oil in its currently licensed jurisdiction, which covers 16 percent of Israel’s oil shale stores, according to Kadmiel. To create oil from shale – which is dark sedimentary rock containing hydrocarbons – workers must drill as far as 400 meters down through an impermeable layer to reach the shale, Kadmiel explained. Surrounding the production pipeline, the company must also drill a ring of heating wells, which gradually heat the rock to 300º C and thereby transform it into lightweight oil in situ. In this pre-pilot phase, rather than using heaters, the company is removing pieces of shale for analysis in Ben- Gurion University laboratories.... To make a profit, IEI needs to produce 50,000 barrels per day of oil, which costs $40 per barrel to produce, as long as oil prices remain above $80 per barrel, Kadmiel said.... Even in the smoothest of scenarios, however, Vinegar said that no oil is likely to start flowing until 2018-2020. And IEI is facing a plethora of environmental objectors, who say that natural resources will be destroyed and that increased production of fossil fuels is unnecessary."
'Oil shale can bring energy security and independence'
Jerusalem Post, 1 July 2011

"It was an open secret that Britain's decision to back nuclear power in 2006 was pushed through government by a cosy group of industrialists and others close to Tony Blair, and that a full debate about the full costs, safety and potential impact on future generations was suppressed. But the release of 80 emails showing that in the days after the Fukushima accident not one but two government departments were working with nuclear companies to spin one of the biggest industrial catastrophes of the last 50 years, even as people were dying and a vast area was being made uninhabitable, is shocking. What the emails shows is a weak government, captured by a powerful industry colluding to at least misinform and very probably lie to the public and the media. When the emails were sent, no one, least of all the industry and its friends in and out of government, had any idea how serious the situation at Fukushima was or might become. For the business department to then argue that 'we really need to show the safety of nuclear' and that 'it's not as bad as it looks', is shameless. But to argue that the radiation was being released deliberately and was 'all part of the safety systems to control and manage a situation" is Orwellian. An ignorant government that relies for its information on companies it is planning to reward with contracts for billions of pounds smacks of corruption. These guys were not just cosy. They were naked, in bed and consenting. Their closeness now raises questions such as what influence could the industry have had on the chief nuclear inspector's report on Fukushima, and whether speeches by David Cameron, Chris Huhne and other ministers were informed or even written by the industry. Can we ever trust government to tell us the truth on nuclear power, or should we just accept that the industry and government are now as one."
Fukushima spin was Orwellian
Guardian, Comment Is Free, 1 July 2011

"An 8700-kilometre natural gas pipeline linking Turkmenistan with southern China has begun operations, helping to boost supplies to the country's booming industrial region, the Xinhua News Agency reports. The 142.2 billion yuan ($A20.6 billion) pipeline, which started operating on Thursday, passes through 15 of China's provinces to reach the Pearl River Delta region near Hong Kong, Xinhua says. The gas pipeline will provide up to 30 million cubic meters of natural gas a year, helping to reduce China's reliance on heavily polluting coal."
World's longest gas pipeline operating
Associated Press, 1 July 2011

"China’s largest oil company has begun operations at Al-Ahdab oil field in Iraq, making the field the first major new area to start production in Iraq in 20 years, according to an official news report on Tuesday. Operations began June 21, and the field is expected to produce three million tons of crude oil per year, reported China Daily, an official English-language newspaper. The oil field was discovered in 1979 and is believed to contain a billion barrels of crude. The Chinese company, the China National Petroleum Corporation, a state-owned enterprise, secured rights to the field under a technical services contract signed with the Iraqi government in November 2008. Under the contract, the company has development rights for 23 years, China Daily reported. It is investing $3 billion. The contract, the renegotiation of a deal first signed in 1996 with the government of Saddam Hussein, was postponed after the United Nations imposed economic sanctions on Iraq and the American military toppled Mr. Hussein in 2003. Analysts say the Ahdab operation is China National Petroleum’s largest in the Middle East. The contract stipulates that the company receive a fee for every barrel of oil produced, rather than an equity interest in the oil field, as it would have under the original agreement with Mr. Hussein’s government. A Chinese oil executive said in 2009 that the company would make a profit of less than one percent, but that the contract was a way to 'get a foot in the door' of the Iraqi oil industry, which has much larger fields than Ahdab."
China Opens Oil Field in Iraq
New York Times, 28 June 2011

"In 2008, the stocks of many natural gas companies were sinking because of the financial meltdown, recession fears and falling gas prices. But they began to rebound after a sweeping rule change by the Securities and Exchange Commission, intended to modernize how energy companies report their gas reserves....The rule change was especially helpful to shale gas companies because it approved the use of new technology and modeling techniques that these companies rely on more heavily than traditional oil and gas companies. Shale gas producers also especially benefited from the relaxed restrictions on how large an area companies could predict would be productive without drilling to test first....  in internal e-mails and documents, many industry executives and federal officials have questioned whether some companies are overstating, perhaps intentionally, the amount of gas they can economically produce in a given period. This practice, known as overbooking, is illegal because it misleads investors trying to assess a company’s strength and banks that use reserves as collateral for loans. 'There is now plenty of production data available from the states to show that these wells are nowhere near what these guys are touting,' an official with a Texas oil and gas company who formerly worked at Enron wrote on Nov. 7, 2009, comparing the practices of shale companies to Enron’s. 'I have discussed this numerous times with analysts that are friends of mine — they agree with me and then just shrug their shoulders.'... Some industry experts say they think they are seeing a replay of events from last decade. In 2004, the oil and gas industry faced one of its most embarrassing scandals. After whistle-blowers reported concerns about the size of Royal Dutch/Shell’s reserves, the company surprised investors by slashing reserve estimates. 'I am becoming sick and tired about lying,' Walter van de Vijver, a senior executive at Royal Dutch/Shell, wrote in a November 2003 e-mail made public shortly after his company’s problems came to light....Companies could not apply the new rule until they submitted their 2009 federal filings to the S.E.C. in the early part of 2010. However, companies began describing to investors the coming increases in reserves shortly before the rule change was officially adopted in late 2008. John E. Olson, an energy market analyst at Houston Energy Partners, says he believes shale companies have been aggressively booking their reserve estimates and playing down costs to make themselves appear more profitable. Mr. Olson, who is famous for having been fired from Merrill Lynch in 1998 for refusing to recommend Enron stocks, compared the accounting practices of shale gas companies and the hype surrounding the industry to what he saw at Enron. Of the S.E.C. rule change, Mr. Olson said: 'Welcome back to Alice in Wonderland.'"
S.E.C. Shift Leads to Worries of Overestimation of Reserves
New York Times, 27 June 2011

"Brussels risks triggering a fresh fuel crisis if a new directive imposes 'unfair' carbon reduction targets on the world’s third biggest energy resource. The EU fuel quality directive, which is due later this year, is expected to classify Canadian oil sands as high polluters and demand stringent carbon reduction targets. This would reduce the likelihood of European suppliers importing the fuel. The Canadian province of Alberta, in which the oil sands are located, is protesting, and Britain wants all sources of fuel treated equally. Jeff Sundquist, managing director of Alberta’s London office, said: 'This is unfair discriminatory treatment which threatens energy security and could easily see prices rise.' Oil sands, also called tar sands, hold a third of the world’s oil reserves and could be key to Europe if Middle Eastern supplies were disrupted further. Global oil supplies have already been hit by falling output from Libya, forcing the International Energy Agency to tap into its reserves last week to stop crude oil prices rising further."
Express, 26 June 2011

"In its annual forecasting reports, the United States Energy Information Administration, a division of the Energy Department, has steadily increased its estimates of domestic supplies of natural gas, and investors and the oil and gas industry have repeated them widely to make their case about a prosperous future. But not everyone in the Energy Information Administration agrees. In scores of internal e-mails and documents, officials within the Energy Information Administration, or E.I.A., voice skepticism about the shale gas industry. One official says the shale industry may be ' set up for failure.' 'It is quite likely that many of these companies will go bankrupt,' a senior adviser to the Energy Information Administration administrator predicts. Several officials echo concerns raised during previous bubbles, in housing and in technology stocks, for example, that ended in a bust. Energy Information Administration employees also explain in e-mails and documents, copies of which were obtained by The New York Times, that industry estimates might overstate the amount of gas that companies can affordably get out of the ground. They discuss the uncertainties about how long the wells will be productive as well as the high prices some companies paid during the land rush to lease mineral rights. They also raise concerns about the unpredictability of shale gas drilling. One senior Energy Information Administration official describes an 'irrational exuberance' around shale gas. An internal Energy Information Administration document says companies have exaggerated 'the appearance of shale gas well profitability,' are highlighting the performance of only their best wells and may be using overly optimistic models for projecting the wells’ productivity over the next several decades. While there are environmental and economic benefits to natural gas compared with other fossil fuels, its widespread popularity as an energy source is relatively new. As a result, it has not received the same level of scrutiny, according to some environmentalists and energy economists. The Energy Information Administration e-mails indicate that some of these difficult questions are being raised. 'Am I just totally crazy, or does it seem like everyone and their mothers are endorsing shale gas without getting a really good understanding of the economics at the business level?' an energy analyst at the Energy Information Administration wrote in an April 27 e-mail to a colleague. Another e-mail expresses similar doubts. 'I agree with your concerns regarding the euphoria for shale gas and oil,' wrote a senior officialin the forecasting division of the Energy Information Administration in an April 13 e-mail to a colleague at the administration. 'We might be in a ‘gold rush’ wherein a few folks have developed ‘monster’ wells,' he wrote, 'so everyone assumes that all the wells will be ‘monsters.’”
Behind Veneer, Doubt on Future of Natural Gas
New York Times, 26 June 2011

"The National Iranian Oil Company (NIOC) has discovered another large deposit of crude oil and natural gas in the South Pars field in the Persian Gulf. The NIOC director for exploration, Mahmoud Mohaddes, said on Friday that the seismologic data from drilling the first exploration well in the east of the gas-rich Assalouyeh region in the southern province of Hormuzgan have indicated that the volume of crude reserves of the field exceeds initial estimates, the Mehr news agency reported. The official noted that the exact volume of the new deposit will be announced in the near future, adding that NIOC experts have estimated that the discovery will increase Iran's crude and gas condensate reserves by one billion barrels. He went on to say that the discovery of the Khayyam field in the Persian Gulf coastal areas east of Assalouyeh revealed that in addition to about 260 billion cubic meters of gas reserves, there are also some crude reserves in the region. According to NIOC, the value of the natural gas and gas condensates in the Khayyam field is over $50 billion. Iran has 137.6 billion barrels of proven oil reserves, and 29.61 trillion cubic meters of proven gas reserves. It has the world's third largest oil reserves and second largest gas reserves."
Iran discovers major oil, gas reserves
Press TV (Iran), 25 June 2011

"Natural gas companies have been placing enormous bets on the wells they are drilling, saying they will deliver big profits and provide a vast new source of energy for the United States. But the gas may not be as easy and cheap to extract from shale formations deep underground as the companies are saying, according to hundreds of industry e-mails and internal documents and an analysis of data from thousands of wells. In the e-mails, energy executives, industry lawyers, state geologists and market analysts voice skepticism about lofty forecasts and question whether companies are intentionally, and even illegally, overstating the productivity of their wells and the size of their reserves. Many of these e-mails also suggest a view that is in stark contrast to more bullish public comments made by the industry, in much the same way that insiders have raised doubts about previous financial bubbles. 'Money is pouring in' from investors even though shale gas is 'inherently unprofitable,' an analyst from PNC Wealth Management, an investment company, wrote to a contractor in a February e-mail. 'Reminds you of dot-coms.' 'The word in the world of independents is that the shale plays are just giant Ponzi schemes and the economics just do not work,' an analyst from IHS Drilling Data, an energy research company, wrote in an e-mail on Aug. 28, 2009. .... There is undoubtedly a vast amount of gas in the formations. The question remains how affordably it can be extracted. The data show that while there are some very active wells, they are often surrounded by vast zones of less-productive wells that in some cases cost more to drill and operate than the gas they produce is worth. Also, the amount of gas produced by many of the successful wells is falling much faster than initially predicted by energy companies, making it more difficult for them to turn a profit over the long run. If the industry does not live up to expectations, the impact will be felt widely. Federal and state lawmakers are considering drastically increasing subsidies for the natural gas business in the hope that it will provide low-cost energy for decades to come....The e-mails were obtained through open-records requests or provided to The New York Times by industry consultants and analysts who say they believe that the public perception of shale gas does not match reality... 'I think we have a big problem.' Deborah Rogers, a member of the advisory committee of the Federal Reserve Bank of Dallas, recalled saying that in a May 2010 conversation with a senior economist at the Reserve, Mine K. Yucel. 'We need to take a close look at this right away,' she added. A former stockbroker with Merrill Lynch, Ms. Rogers said she started studying well data from shale companies in October 2009 after attending a speech by the chief executive of Chesapeake, Aubrey K. McClendon. The math was not adding up, Ms. Rogers said. Her research showed that wells were petering out faster than expected. 'These wells are depleting so quickly that the operators are in an expensive game of ‘catch-up,’ ' Ms. Rogers wrote in an e-mail on Nov. 17, 2009, to a petroleum geologist in Houston, who wrote back that he agreed.... A former Enron executive wrote in 2009 while working at an energy company: 'I wonder when they will start telling people these wells are just not what they thought they were going to be?' He added that the behavior of shale gas companies reminded him of what he saw when he worked at Enron. Production data, provided by companies to state regulators and reviewed by The Times, show that many wells are not performing as the industry expected. In three major shale formations — the Barnett in Texas, the Haynesville in East Texas and Louisiana and the Fayetteville, across Arkansas — less than 20 percent of the area heralded by companies as productive is emerging as likely to be profitable under current market conditions, according to the data and industry analysts. Richard K. Stoneburner, president and chief operating officer of Petrohawk Energy, said that looking at entire shale formations was misleading because some companies drilled only in the best areas or had lower costs. 'Outside those areas, you can drill a lot of wells that will never live up to expectations,' he added. .... Gas production data reviewed by The Times suggest that many wells in shale gas fields do not level off the way many companies predict but instead decline steadily. 'This kind of data is making it harder and harder to deny that the shale gas revolution is being oversold,' said Art Berman, a Houston-based geologist who worked for two decades at Amoco and has been one of the most vocal skeptics of shale gas economics. The Barnett shale, which has the longest production history, provides the most reliable case study for predicting future shale gas potential. The data suggest that if the wells’ production continues to decline in the current manner, many will become financially unviable within 10 to 15 years. A review of more than 9,000 wells, using data from 2003 to 2009, shows that — based on widely used industry assumptions about the market price of gas and the cost of drilling and operating a well — less than 10 percent of the wells had recouped their estimated costs by the time they were seven years old. "
Insiders Sound an Alarm Amid a Natural Gas Rush
New York Times, 25 June 2011

"In the wake of the nuclear meltdown at the Fukushima Daiichi power plant in Japan in March, several countries have announced plans to reject nuclear power. Japan will not build any more reactors. Germany plans to phase out its nuclear power plants, Switzerland will not replace its reactors, and last week Italy voted against starting a nuclear programme. The International Atomic Energy Agency is running an emergency conference this week to identify the key lessons from Fukushima (see 'Agency report praises Fukushima staff, slams TEPCO'). So does this mean a decade-long revival of interest in nuclear power is grinding to a halt? IAEA figures suggest not. They list 65 reactors under construction, and those figures are just the tip of the iceberg because they do not include reactors that are contracted to be built, or those being planned. Neither do they acknowledge the significance of the United Arab Emirates being on course to become the first country to go nuclear since China in 1985: the UAE has signed a deal with a consortium led by the Korea Electric Power Corporation to build four reactors. Saudi Arabia is following suit, having announced earlier this month that it will build 16 reactors by 2030. Turkey plans to build two new plants. Dozens more countries have registered an interest in the nuclear option with the IAEA, though few are likely to follow through, according to Jessica Jewell at the Central European University in Budapest, Hungary. Jewell gathered data on countries with established programmes to work out what it takes to go nuclear. When they started building nuclear power stations, these countries had robust electricity grids, stable, effective governments and big economies that could swallow the upfront costs. Of 52 countries that have recently asked the IAEA to help them start a nuclear programme only 10 meet all of these criteria, Jewell says. Another 10 had the motivation and resources but were politically unstable (Energy Policy, DOI: 10.1016/j.enpol.2010.10.041). That second group includes Egypt, which Jewell reckons is the most likely to gain nuclear power of the five north African countries with stated intentions. Continuing political uncertainty in Egypt makes nuclear an unlikely option there in the near term, however. Meanwhile, the plants already under construction in established nuclear countries are feeling the ripples of Fukushima. Just under half of the reactors listed as under construction by the IAEA are in China - but following events in Japan, the Chinese government has suspended approvals for new plants while it reviews their safety."
Dozens of countries queue up to go nuclear
New Scientist, 24 June 2011

"In a surprise U-turn, members of the United States Senate voted 73-27 last week to abolish a 45-cents-a-gallon subsidy for ethanol from corn (ie, maize) that is used for blending with petrol. They also voted to kill the 54-cents-a-gallon import duty on ethanol from abroad. This is the first time in over three decades that the Senate has challenged the sacrosanct $6 billion-a-year tax break for American corn-growers and ethanol producers. The federal government started subsidising corn-based ethanol back in the late 1970s—in a bid to wean the country off imported oil. As recently as last December, lawmakers voted to extend the ethanol subsidy for yet another year. Since then, two things have happened to make the politicians change their minds. First, a broad consensus has now thrown its weight behind the environmentalists’ view that using home-grown ethanol—as a replacement for imported oil—squanders far too much energy and water in the process, and is not a particularly good way or reducing greenhouse gases anyway. Indeed, given the intensive use of energy in agribusiness, it is debatable whether replacing petrol with ethanol breaks even in terms of the 'wells-to-wheels' energy consumed, or even produces a net reduction in carbon emission. Besides, even if America’s entire corn crop were to be devoted to ethanol production, it would still only supply 4% of the country’s oil consumption. So much for the argument that home-grown ethanol offers an answer to America’s dependence on foreign oil. Second, the food industry has gone noisily public about the way the federal government’s corn subsidies—which have encouraged American farmers to devote more and more of their corn crops to ethanol production—have driven up food prices. Last year, 40% of the corn grown in the United States (some five billion bushels) was used for making ethanol. This summer, corn supplies for animal feed are heading for a 15-year low. As a consequence, corn futures have soared to almost $8 a bushel—twice their price a year ago. Consumers counting the cost at the supermarket checkout now know who to blame....A gallon of pure ethanol contains two-thirds the energy of a gallon of petrol. If a flex-fuel vehicle achieves 30mpg on petrol, switching to ethanol would give it 20mpg. In other words, 50% more fuel is needed to travel the same distance. In having some petrol blended in it, the consumption penalty falls to 25% to 30% when a car is fuelled with E85. On a cost-per-mile basis, ethanol fuels like E85—even with their hefty subsidies—are typically 20% more expensive than petrol. Something similar goes for E10, though the penalty is much less.... But the victory for energy, environment, food supply and fiscal commonsense remains incomplete. Last week’s vote in the Senate to scrap ethanol subsidies is unlikely to become law. The underlying tax bill to which the amendment was attached does not have a hope of being passed. But the broad bipartisan action by Congress generally to put a stop to wasteful ethanol subsidies suggests they are most unlikely to be extended when they come up for renewal in December."
The Difference Engine: The beef about corn
The Economist (Blog), 24 June 2011

"There is a significant sticking point to the promotion of thorium as the 'great green hope' of clean energy production: it remains unproven on a commercial scale. While it has been around since the 1950s (and an experimental 10MW LFTR did run for five years during the 1960s at Oak Ridge National Laboratory in the US, though using uranium and plutonium as fuel) it is still a next generation nuclear technology – theoretical. China did announce this year that it intended to develop a thorium MSR, but nuclear radiologist Peter Karamoskos, of the International Campaign to Abolish Nuclear Weapons (ICAN), says the world shouldn't hold its breath. 'Without exception, [thorium reactors] have never been commercially viable, nor do any of the intended new designs even remotely seem to be viable. Like all nuclear power production they rely on extensive taxpayer subsidies; the only difference is that with thorium and other breeder reactors these are of an order of magnitude greater, which is why no government has ever continued their funding.' China's development will persist until it experiences the ongoing major technical hurdles the rest of the nuclear club have discovered, he says.... the nuclear industry itself is also sceptical, with none of the big players backing what should be – in PR terms and in a post-Fukushima world – its radioactive holy grail: safe reactors producing more energy for less and cheaper fuel. In fact, a 2010 National Nuclear Laboratory (NNL) report (PDF)concluded the thorium fuel cycle 'does not currently have a role to play in the UK context [and] is likely to have only a limited role internationally for some years ahead' – in short, it concluded, the claims for thorium were 'overstated'. Proponents counter that the NNL paper fails to address the question of MSR technology, evidence of its bias towards an industry wedded to PWRs. Reliant on diverse uranium/plutonium revenue streams – fuel packages and fuel reprocessing, for example – the nuclear energy giants will never give thorium a fair hearing, they say. But even were its commercial viability established, given 2010's soaring greenhouse gas levels, thorium is one magic bullet that is years off target. Those who support renewables say they will have come so far in cost and efficiency terms by the time the technology is perfected and upscaled that thorium reactors will already be uneconomic. Indeed, if renewables had a fraction of nuclear's current subsidies they could already be light years ahead. All other issues aside, thorium is still nuclear energy, say environmentalists, its reactors disgorging the same toxic byproducts and fissile waste with the same millennial half-lives. Oliver Tickell, author of Kyoto2, says the fission materials produced from thorium are of a different spectrum to those from uranium-235, but 'include many dangerous-to-health alpha and beta emitters'. Tickell says thorium reactors would not reduce the volume of waste from uranium reactors. 'It will create a whole new volume of radioactive waste from previously radio-inert thorium, on top of the waste from uranium reactors. Looked at in these terms, it's a way of multiplying the volume of radioactive waste humanity can create several times over.' Putative waste benefits – such as the impressive claims made by former Nasa scientist Kirk Sorensen, one of thorium's staunchest advocates – have the potential to be outweighed by a proliferating number of MSRs. There are already 442 traditional reactors already in operation globally, according to the International Atomic Energy Agency. The by-products of thousands of smaller, ostensibly less wasteful reactors would soon add up. Anti-nuclear campaigner Peter Karamoskos goes further, dismissing a 'dishonest fantasy' perpetuated by the pro-nuclear lobby. Thorium cannot in itself power a reactor; unlike natural uranium, it does not contain enough fissile material to initiate a nuclear chain reaction. As a result it must first be bombarded with neutrons to produce the highly radioactive isotope uranium-233 – 'so these are really U-233 reactors,' says Karamoskos. This isotope is more hazardous than the U-235 used in conventional reactors, he adds, because it produces U-232 as a side effect (half life: 160,000 years), on top of familiar fission by-products such as technetium-99 (half life: up to 300,000 years) and iodine-129 (half life: 15.7 million years).Add in actinides such as protactinium-231 (half life: 33,000 years) and it soon becomes apparent that thorium's superficial cleanliness will still depend on digging some pretty deep holes to bury the highly radioactive waste."
Don't believe the spin on thorium being a greener nuclear option
Ecologist, 23 June 2011

"The House of Representatives passed legislation on Wednesday that would speed up approvals for drilling in the Arctic by removing regulatory hurdles that have stymied development of the area's vast oil and gas resources. The Republican-controlled House voted 253 to 166 in favor of the bill, which would require the Environmental Protection Agency to approve or deny applications to drill on the outer continental shelf within six months. 'Current impediments have delayed development of the Beaufort and Chukchi sea for over five years,' the bill's sponsor, Republican congressman Cory Gardner, said in a speech on the House floor. 'These are areas that have already been approved for drilling; the revenues for the leases have already been collected by the federal government,' he said. The bill, which faces a tougher road to passage in the Democrat-controlled Senate, would also eliminate the authority of EPA's Environmental Appeals Board to weigh in on the Arctic exploration permits. That appeals board scuttled Royal Dutch Shell's plans to drill in the Beaufort Sea this year, when it revoked a key air permit."
House OKs speed-up of Arctic oil/gas permitting
Reuters, 22 June 2011

"Oil rose in New York, reversing yesterday’s plunge, on concerns that stockpile releases by consuming nations may limit the ability to respond to supply disruptions in future. Crude climbed as much as 1.5 percent after sliding 4.6 percent yesterday. The International Energy Agency agreed to release 60 million barrels to buyers starting next week. Oil stockpiles among the 28 member-countries of the IEA declined by 340,000 barrels a day during the first quarter of this year, the Agency said in its monthly Oil Market Report on June 16.  'People are concerned that if we use that last bullet then what’s going to happen as we go through the year and things get tighter?' said Anthony Nunan, assistant general manager for risk management at Mitsubishi Corp. in Tokyo. 'That’s going to be bullish in the long run. We’re rebounding because you get this knee-jerk reaction and then cooler heads prevail.'.... The IEA announced the release of 2 million barrels a day for 30 days to make up for supplies choked off by an armed rebellion in Libya. The U.S. Strategic Petroleum Reserve will provide 30 million barrels, European members will supply about 20 million and Asian nations the remainder. 'The more stocks you use now, the less of a buffer you have for any supply shock in the future,' said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. The decision comes after the Organization of Petroleum Exporting Countries failed to reach an accord on production increases at a meeting in Vienna on June 8. The group said two days later that it will need to pump 30.9 million barrels a day in the third quarter, or 1.9 million barrels more than it supplied in May.... Brent crude won’t fall below $90 a barrel because OPEC“will start talking about cutting production” near that price, according to Societe Generale SA. Saudi Arabia, the world’s biggest oil exporter, needs prices at $90 to $100 to balance its budget, analysts at the bank said in a report e-mailed today..... The U.S. Energy Department yesterday requested bids for 30 million barrels of oil from the Strategic Reserve. The department offered 10 million barrels of sweet, or low-sulfur, crude from storage sites in Bryan Mound and Big Hill, Texas, and West Hackberry, Louisiana. Bids are due by 1 p.m. Central time on June 29, the department said. Japan will release 7.9 million barrels of oil products from its stockpiles as part of the IEA’s plan, mostly to the domestic market, Trade Minister Banri Kaieda told reporters today in Tokyo. South Korea will release 3.467 million barrels of oil, according to the Ministry of Knowledge Economy. The nation has 173 million barrels of reserves, the ministry said in an e-mailed statement yesterday. Germany will open up 4.2 million barrels of its reserves, while the U.K.’s share will be 3 million, the agency said. Australia isn’t contributing to the IEA’s plan, according to Joel Grant, spokesman for the office of the Minister of Resources and Energy, by phone from Melbourne today. It’s the third time the IEA has coordinated the use of emergency stockpiles since the agency was founded in 1974. The first was during the 1991 Persian Gulf War and the second was after Hurricane Katrina in 2005. The Paris-based IEA is an energy policy adviser to 28 industrialized nations including the U.S., Japan and Germany."
Oil Rises on Concern IEA Emergency Crude Release May Limit Future Supplies
Bloomberg, 24 June 2011

"International Energy Agency (IEA) Executive Director Nobuo Tanaka announced today that the 28 IEA member countries have agreed to release 60 million barrels of oil in the coming month in response to the ongoing disruption of oil supplies from Libya. This supply disruption has been underway for some time and its effect has become more pronounced as it has continued. The normal seasonal increase in refiner demand expected for this summer will exacerbate the shortfall further. Greater tightness in the oil market threatens to undermine the fragile global economic recovery. In deciding to take this collective action, IEA member countries agreed to make 2 million barrels of oil per day available from their emergency stocks over an initial period of 30 days. Leading up to this decision, the IEA has been in close consultation with major producing countries, as well as with key non-IEA importing countries.... 'Today, for the third time in the history of the International Energy Agency, our member countries have decided to release stocks.' Mr. Tanaka said. 'I expect this action will contribute to well-supplied markets and to ensuring a soft landing for the world economy.' Total oil stocks in IEA member countries amount to over 4.1 billion barrels, and nearly 1.6 billion barrels of this are public stocks held exclusively for emergency purposes. IEA net oil-importing countries have a legal obligation to hold emergency oil reserves equivalent to at least 90 days of net oil imports. These countries are holding stock levels well above this minimum amount, currently at 146 days of net imports."
IEA makes 60 million barrels of oil available to market to offset Libyan disruption
International Energy Agency, 23 June 2011

"Federal regulators have been working closely with the nuclear power industry to keep the nation's aging reactors operating within safety standards by repeatedly weakening those standards, or simply failing to enforce them, an investigation by The Associated Press has found. Time after time, officials at the U.S. Nuclear Regulatory Commission have decided that original regulations were too strict, arguing that safety margins could be eased without peril, according to records and interviews. The result? Rising fears that these accommodations by the NRC are significantly undermining safety — and inching the reactors closer to an accident that could harm the public and jeopardize the future of nuclear power in the United States. Examples abound. When valves leaked, more leakage was allowed — up to 20 times the original limit. When rampant cracking caused radioactive leaks from steam generator tubing, an easier test of the tubes was devised, so plants could meet standards. Failed cables. Busted seals. Broken nozzles, clogged screens, cracked concrete, dented containers, corroded metals and rusty underground pipes — all of these and thousands of other problems linked to aging were uncovered in the AP's yearlong investigation. And all of them could escalate dangers in the event of an accident. Yet despite the many problems linked to aging, not a single official body in government or industry has studied the overall frequency and potential impact on safety of such breakdowns in recent years, even as the NRC has extended the licenses of dozens of reactors. Industry and government officials defend their actions, and insist that no chances are being taken. But the AP investigation found that with billions of dollars and 19 percent of America's electricity supply at stake, a cozy relationship prevails between the industry and its regulator, the NRC. Records show a recurring pattern: Reactor parts or systems fall out of compliance with the rules. Studies are conducted by the industry and government, and all agree that existing standards are 'unnecessarily conservative.' Regulations are loosened, and the reactors are back in compliance. 'That's what they say for everything, whether that's the case or not,' said Demetrios Basdekas, an engineer retired from the NRC. 'Every time you turn around, they say 'We have all this built-in conservatism.' 'The ongoing crisis at the stricken, decades-old Fukushima Dai-ichi nuclear facility in Japan has focused attention on the safety of plants elsewhere in the world; it prompted the NRC to look at U.S. reactors, and a report is due in July. But the factor of aging goes far beyond the issues posed by the disaster at Fukushima. Commercial nuclear reactors in the United States were designed and licensed for 40 years. When the first ones were being built in the 1960s and 1970s, it was expected that they would be replaced with improved models long before those licenses expired. But that never happened. The 1979 accident at Three Mile Island, massive cost overruns, crushing debt and high interest rates ended new construction proposals for several decades. Instead, 66 of the 104 operating units have been relicensed for 20 more years, mostly with scant public attention. Renewal applications are under review for 16 other reactors. By the standards in place when they were built, these reactors are old and getting older. As of today, 82 reactors are more than 25 years old. The AP found proof that aging reactors have been allowed to run less safely to prolong operations. As equipment has approached or violated safety limits, regulators and reactor operators have loosened or bent the rules."
Safety rules loosened for aging nuclear reactors
Associated Press, 20 June 2011

"Prices of some rare earth metals have doubled in just three weeks amid heavy stockpiling in China that has raised fears over global supplies. China produces more than 90 per cent of the world’s rare earths, 17 elements used in hybrid cars, fluorescent lights and many high-tech applications."
Rare earth prices soar as China stocks up
Financial Times, 20 Jun 2011

"Pressure valves are working overtime. Immense stress is on crude producers, urging, pleading, demanding and even threatening them — to open the taps further — and — further. There is a growing murmur all around. Informed sources believe Washington is considering, rather seriously, releasing crude from its Strategic Petroleum Reserves (SPR), possibly as soon as this week if indeed nothing significant takes place. Reports from Washington, quoting diplomatic sources, indicate that signals were sent to Riyadh — seeking reassurance that Saudi Arabia would not offset the SPR barrels by reducing its own supply. Some also claim in the run-up to the Vienna June 8 fracas, Washington evaluated surprising crude markets with an unprecedented move — exchanging the urgently-needed high-quality crude oil stored in the US emergency reserve for heavier, low-quality oil from Saudi Arabia. The swap idea as per the emerging reports, involved shipping some of the light low-sulfur, or 'sweet,' crude out of the US Strategic Petroleum Reserve to European refiners, who needed it after the war in Libya cut off shipments of its premium crude varieties. In return, Saudi Arabia was exhorted to sell its heavier high-sulfur or 'sour' crude at a discount back to the US to top up the caverns holding America’s emergency stocks. And it did not make past the drawing board, four sources familiar with the talks were quoted as saying. There were hints that the pricing of the available, sour crude turned out to be a big impediment. Washington reportedly insisted on discounted pricing for the sour crude. And that was reportedly not palatable to the producers. Indeed Riyadh has been clear on the issue — it cannot and will not tamper with the pricing of the crude. That is for the markets to decide — Petroleum and Mineral Resources Minister Ali Al-Naimi has been forthright in saying this in Vienna too. And IEA, the OECD energy watchdog in the meantime, could also be seen stepping up the pressure, urging OPEC not only to steeply raise output, but also warning it was ready to order a release from stocks — at any time. Executive Director Nobuo Tanaka said Thursday the IEA was waiting to see how fast Saudi Arabia and other OPEC producers would deliver more oil to prevent what he called a 'hard landing' for the global economy and that he stood ready to order a release from stocks at any time. And at the same time, the issue of weak fundamentals appears back on the center stage. A tightening supply-demand balance on the oil market meant the bull run since late 2010 was largely justified by fundamentals, the IEA now says, underlining that the levels of speculative activity were lower now than in 2008. At this moment, however, ‘there was no indication of excessive speculative activity on oil markets, David Fyfe the IEA’s head of Oil Industry and Markets says."
Oil scene: Strategic petroleum reserves fuel debate
Arab News, 19 June 2011

"Director of oil consumers' organisation makes bold invitation to major producer in bid to settle dispute over responsibility for high fuel prices. Energy consumer organisation the International Energy Agency (IEA) has invited Russia and the Opec oil producers to join it, in a desperate bid to broker a peace between buyers and sellers over soaring crude prices. The olive branch was extended today by the IEA's executive director, Nobuo Tanaka, to Russia's deputy prime minister, Igor Sechin, but has already run into powerful opposition from the country's state-owned gas group, Gazprom. In an exclusive interview with the Observer, Tanaka said it was time that producers and consumers realised they were on the same side. 'We all really have a common interest. You cannot take oil in isolation from gas security, energy efficiency and electricity from renewables. 'The issues of energy security and climate change need to be tackled collectively and we think Russia and other key producers can learn a lot from [the IEA's] experience.' Producers and consumers have been at war with each other over who is responsible for high oil and gas prices. The IEA has repeatedly called on Opec to increase production, while producers blame western banks and other speculators for the volatility. Russia has recently called for the establishment of a gas cartel to match the oil cartel of Opec, something the IEA wants to avoid. The initiative from Tanaka comes as the spike in oil and gas prices continues to make life miserable for already struggling UK households, whose living standards are being eroded by inflation. On Friday the AA said it had written to the European Union's competition commissioner asking him to investigate price volatility at the pumps, as drivers were being 'ripped off'. In the last month the oil price has fallen back from $126 a barrel to $110, but the AA says this change has not been reflected in retail prices. Supermarkets Sainsbury's and Tesco warned last week that higher petrol prices were having a serious impact on consumer spending, with Sainsbury's saying that its cheapest Basics brand was its fastest-growing range, signalling a move by customers to keep their costs down....The agency has warned that the recently announced phasing-out of nuclear plants in Japan, Germany and Italy is likely to have a dramatic impact on pollution. Tanaka now believes that CO2 emissions could rise 30% if – as looks likely – those nations and others scrap or scale back plans to build new atomic plants. The IEA originally believed 14% of all electricity would be generated by nuclear plants by 2035. Now it believes the figure will be just 10%."
Head of IEA pleads with Russia: join us to help solve energy price crisis
Observer, 19 June 2011

"The biofuels industry is being blamed for record food prices and high price volatility. Earlier this month a report from the World Trade Organization and other international agencies recommended that governments cut support for biofuels to ease that volatility. On the heels of that report, the U.S. Department of Agriculture issued its corn forecast; it suggested that corn supplies will be very tight this year because bad weather has limited planting and because the share of corn going to ethanol is increasing. After the report, corn prices shot to record highs, reaching $8 a bushel. Then on Friday, the Organization for Economic Cooperation and Development released a report predicting that food prices will remain high for the next decade. Many experts say the unprecedented prices are at least partially driven by government subsidies and mandates that have led to fourfold increases in production of ethanol biofuel and tenfold increases in production of biodiesel between 2000 and 2009 worldwide. In the United States, multiple bills and amendments have been introduced to scale back subsidies as a way of trimming the federal budget, and on Thursday the Senate voted to end tax credits for ethanol that amounted to nearly $6 billion. (The program won't be killed unless the House passes its own law ending it.) The WTO report cited many reasons for the high prices and volatility, including changes in demand for food, bad weather, low stock, and the recent high cost of oil. Oil prices directly affect the production costs of food by raising the price of tractor fuel and fertilizers. If oil is expensive enough, it can also increase demand for biofuels, which drives up the price of crops such as corn and sugarcane. The WTO report also cited government biofuel mandates as a significant problem. Not only do these requirements drive up demand for crops such as corn, increasing prices, but they limit the ability of markets to respond to price changes, increasing volatility. 'We've lost a lot of our ability for our agricultural system to be buffered from price shocks from weather and other things that affect production,' says Jason Hill, a professor of bioproducts and biosystems engineering at the University of Minnesota. Worldwide, 8 percent of corn produced is used for biofuels. In the United States, according to the new USDA report, 35 percent of corn in the growing season ending in 2010 went to the production of biofuels; this growing season it is predicted to be 37 percent; it is expected to be 38 percent in 2012. Representatives for the ethanol industry say that the share of corn used for ethanol is typically overstated. After processing in an ethanol plant, one-third of the corn used, by weight, can still be used as feed, decreasing the amount of feed that ethanol displaces, according to the Biotechnology Industry Organization."
Record Food Prices Linked to Biofuels
Technology Review (MIT), 17 June 2011

"After taking a step back in the wake of Japan’s nuclear disaster this year, energy-hungry China is moving cautiously ahead with its ambitious nuclear energy program. That is the message that Chinese officials have been giving to visiting environmental experts and local news media."
After Inspections, China Moves Ahead With Nuclear Plans
New York Times, 16 June 2011

"How to remove $5 billion from the federal deficit in one fell swoop? Eliminate the $5 billion-a-year subsidy given to oil refiners for blending ethanol into gasoline. The Senate voted Thursday to do just that, and even though the amendment is attached to a bill that probably won’t pass, the 73-27 vote sends a message that many Democrats and Republicans are behind an idea supported by an odd coalition that ranges from Tea Partyers to the Sierra Club. Thirty-three Republicans joined 40 Democrats in voting to eliminate the subsidy. Provided in the form of tax credits, the subsidy gives 45 cents a gallon to refiners who use ethanol, a renewable fuel additive that comes mainly from corn in the U.S. These tax breaks long have been supported as a way to reduce oil imports by politicians in both parties — emphatically so for many who run for president and look to woo the farm vote. But a new emphasis on deficit reduction, particularly among Republicans aligned with Tea Party activists, has contributed to a shift in the political landscape. Environmental groups like the Sierra Club argue that corn-based ethanol isn't any cleaner than gasoline because of all the fossil fuel used to farm corn. They instead want to see more renewable energy like solar and wind. The measure will now be added to a bill renewing a federal economic development program. The prospects for the overall bill are uncertain, but Thursday's vote clearly endangers the ethanol tax credit, which would expire at the end of the year anyway, unless Congress renews it. The measure passed Thursday would end the tax credit immediately."
$5 billion-a-year ethanol subsidy nearing its end?
MSNBC, 16 June 2011

"It was to be a swap felt around the world - a plan privately discussed by the world's largest oil exporter and the globe's biggest consumer to take the heat out of $120-plus oil prices. In the weeks leading up to the failed June OPEC meeting, US and Saudi officials met to discuss surprising the market with an unprecedented arrangement: exchanging urgently-needed high-quality crude oil stored in the US emergency reserve for heavier, low-quality oil from Saudi Arabia, according to people familiar with the plan. The idea involved shipping some of the light low-sulphur, or 'sweet', crude out of the US Strategic Petroleum Reserve to European refiners, who needed it after the war in Libya cut off shipments of its premium crude varieties coveted for making gasoline and diesel. In return Saudi Arabia would sell its heavier high-sulphur or 'sour' crude at a discount back to the United States to top up the caverns that hold America's emergency stocks. It was a striking suggestion, one that would have demonstrated Washington's readiness to put the SPR to extraordinary use and Riyadh's willingness to work creatively with consumers to quell high prices. But it did not make it past the drawing board, four sources familiar with the talks confirmed. The sources disagree on which country proposed the plan. Two said it fell apart because Riyadh was not willing to subsidize European or US customers by discounting its crude prices below market value."
Saudi, US mulled secret oil reserve swap
Reuters, 15 June 2011

"The government was warned by its own civil servants two years ago that there could be 'significant negative economic consequences' to the UK posed by near-term 'peak oil' energy shortages. Ministers were told it was impossible to know exactly when production might fail to meet supply but when it did there could be global consequences, including 'civil unrest'. Yet ministers consistently played down the threat with the contemporaneous Wicks review into energy security (PDF) effectively dismissing peak oil as alarmist and irrelevant. The report on the risks and impacts of a potential future decline in oil production has just been published – but only after the Department of Energy and Climate Change (Decc) was repeatedly threatened under the Freedom of Information (FoI) Act with forced disclosure. The information is revealed at a critical time when oil prices have soared to historic highs of around $115 (£71) a barrel hitting motorists through higher petrol costs and helping to drive up household gas bills. The price of oil and gas tend to be linked due under the terms of many wholesale gas contracts. This report admits it is not possible to predict with any accuracy when crude production will peak and go into steady but final decline. But it goes on to say that 'if peak oil happened before 2015, this would have significant negative economic consequences for some of the main importers of UK goods and services resulting in a negative impact on the UK economy in the longer term.' Civil servants from Decc argued that while global oil reserves were still plentiful, it is 'clear' that existing fields are maturing and new production is being slowed by bottlenecks. Yet it concludes that 'alternative technologies to oil will take a long time to develop and deploy at scale.'... The Decc report has been finally been published alongside other documents on peak oil as the government finally goes through a major rethink on the subject. The department's chief scientist, David MacKay, recently called for information and views on peak oil amid rising pressure from industrialists to take it more seriously."
UK ministers ignored 'peak oil' warnings, report shows
Guardian, 15 June 2011

"Poland is being hailed as Europe's new Qatar. Located deep beneath its rolling landscape are 5300 billion cubic metres (bcm) of recoverable shale gas, more than enough to meet the country’s needs (currently 14 billion bcm per year) for centuries to come. This has captured the imagination of a country that sees its dependency on Russian gas as a threat to national sovereignty. But Poland already seems to have sold its resources to American oil companies – and they might find it more lucrative to sell into the Russian-controlled pipeline network. As one analyst puts it, ‘Poland is not on course to become a second Norway, more a second kind of Turkmenistan.’ "
Shale gas doesn't make Poland the new Norway yet
European Energy Review, 14 June 2011

"A Senate effort to take away ethanol subsidies came up short Tuesday but exposed weakened support for a $6 billion tax break, suggesting that the incentive could be eliminated. The Senate didn't reach the 60 votes needed to proceed to a vote, undermined by Democratic leaders frustrated at the procedural maneuver used to bring the measure to the floor. But in the process of reaching the 40-59 vote, a coalition of conservatives and environmentalists challenged the legitimacy of the subsidies as their peers became entangled in a larger debate over tax breaks in an age of deficits. 'Even though I've supported this tax credit, for all of the years that I have served in both the House and Senate, I think the time has come,' said Sen. Saxby Chambliss (R, Ga.), in a sign of the changing political climate. 'I do not intend to support an extension of that tax credit beginning from the expiration at the end of this year.' The domestic industry is protected by a tariff of 54 cents a gallon on imported ethanol. A separate tax credit gives refiners a 45-cent-a-gallon tax credit for blending ethanol into gasoline."
Senate Rejects Effort to Cut Ethanol Subsidy
Wall St Journal, 14 June 2011

"Nabucco has been plagued by one delay after another, however, largely because the consortium of energy companies behind it has no firm supply contracts lined up. That makes it more difficult to secure financing. Reinhard Mitschek, the managing director of Nabucco Gas Pipeline International, said last month that gas should start flowing in 2017, three years later than was originally planned. But he did not announce any firm deal with a supplier. Talks with the Azeri government to obtain gas from the Shah Deniz II field in Azerbaijan, for example, have so far not yielded a solid commitment. In fact, Russia has long held influence in the Caspian region and wants to tap natural gas there, too. Iraq also could choose to export its gas in liquefied form to world markets rather than sending it through pipelines to Europe. South Stream is already serving to 'sow doubts among central Asian countries about the viability of Nabucco,' said Mr. Egenhofer, the energy expert. South Stream’s backers say that Europe needs to reinforce its access to Russian gas at a time when Europe’s domestic production, in areas like the North Sea, is falling and unrest in the Arab world is raising questions about reliability from sources there. Countries like Germany also may end up driving demand for gas higher by shuttering nuclear power plants in the wake of the nuclear disaster at the Fukushima Daiichi plant in Japan, countering suggestions of possible oversupply. 'There are several reasons to think the market will tighten again,' said Paolo Scaroni, the chief executive of Eni, the joint-venture partner with Gazprom in South Stream, speaking last month in Brussels at a promotional event for South Stream."
European Natural Gas Pipelines Plagued by Uncertainties
New York Times, 13 June 2011

"The anti-nuclear movement won a crushing victory in Italy on Monday when well over 90% of voters rejected Silvio Berlusconi's plans for a return to nuclear power generation. The result represented an overwhelming setback for the prime minister, who had tried to thwart the outcome by discouraging Italians from taking part. The referendum needed a turnout of at least 50% to be binding. Interior ministry figures projections indicated that more than 57% of the electorate had taken part. Greenpeace called it a historic result. Quorums were also reached in three other referendums held simultaneously – the first time in 16 years that a quorum had been achieved in any referendum in Italy."
Berlusconi's nuclear power plans crushed
Guardian, 13 June 2011

"Nuclear power has become a hard sell in many parts of the world since the disaster at the Fukushima nuclear plant in Japan – with gas continuing to benefit. Last week, Bank of America Merrill Lynch said that it thought the global gas glut was set to disappear quickly as liquefied natural gas (LNG) consumption soared. In fact, it saw demand rising so fast it expects the market to start tightening in the second half of next year. The comments followed news of the closure of another nuclear reactor in Japan because of safety fears. A lawsuit seeking the permanent closure of Hamaoka nuclear plant had been filed by people living close to the plant near Tokyo, which is close to the junction of two tectonic plates. 'Following the shutdown of another nuclear plant, we expect Japan’s LNG imports in 2011 to increase by up to 8.5m tonnes from 70m tonnes last year,' Merrill Lynch said. Of course, the LNG market is currently well supplied – but things are changing. 'The increased Japanese demand is accelerating a progressive market tightening that had already been ongoing for a while due to the strength in LNG demand growth,' Merrill said. 'With little liquefaction capacity growth on the horizon until 2015, when Australia is expanding its Pluto project, the global LNG market could tighten rapidly in the face of huge expansions in regasification capacity and imports in emerging markets' By the second half of next year, Merrill envisages a global LNG market that is tight enough to drive up spot Asian LNG prices. Emerging market customers are already moving to secure long-term LNG contracts. On Friday, Russian gas behemoth Gazprom inked an agreement with three Indian energy companies to supply up to 7.5m tonnes of LNG over 25 years .... in March, global imports of LNG increased by 12pc on a year-on-year basis. At 23m tonnes, this was the second strongest level on record 'On a percentage basis, the strongest growth is coming from Latin America, especially Argentina and Brazil but also Chile,' Merrill noted. 'Argentina is just commissioning its second floating regasification facility built in a record nine months.' Also, as clean energy laws tighten, gas becomes more attractive because it is one of the cleaner fossil fuels and new uses are found. This means the use of LNG in vehicles is on the rise. Volvo has already started marketing a long haul truck that is powered by up to 75pc gas.”
LNG demand rises as nuclear power is shunned
Telegraph, 11 June 2011

"Millions of households were warned last night that they face 'unacceptable' rises in their energy bills after one of the biggest power firms announced average increases of nearly £200 a year. Scottish Power became the first of the six major suppliers to disclose a new round of price rises. It told five million customers that gas and electricity bills would go up by 19 per cent and 10 per cent respectively. The increase, which will take effect on Aug 1, will push households’ average annual bills to almost £1,400, the highest level ever. Other energy suppliers are expected to follow suit and increase their prices within weeks."
Millions of households face record high energy bills
Telegraph, 11 June 2011

"Russia's Gazprom Neft, the oil arm of state-controlled energy giant Gazprom, wants to start oil production at the Junin-6 block in the oil-rich Orinoco River belt in Venezuela in 2013, CEO Alexander Dyukov said on Thursday. 'We are discussing a possible launch of early production in 2013 with the Venezuelans,' Dyukov told an annual shareholders meeting, adding that Gazprom Neft planned to make exploratory drillings at the deposit in 2011."
Gazprom Neft wants to start oil production in Venezuela in 2013
RIA Novosti, 9 June 2011

"China ... has enjoyed phenomenal economic growth in recent decades and continues to expand at 9 or 10 percent a year. Although the numbers still look good for another year of rapid economic growth, just below the surface are some serious troubles. The aquifers that supply water to 440 million people living in the north China plain are about to run dry. Beijing is rushing to bring water from the Yangtze basin to the north in an effort that has been likened to diverting the Mississippi River to New York and New England. At the minute parts of China seem to be simultaneously beset by the worst drought in 100 years and the worst floods in 200. When the serious environmental problems are coupled with the current power crisis, a case can be made that the years of rapid growth in China are nearing an end. The concern for the rest of the world is that Beijing with trillions in foreign currency reserves may begin importing food, oil, and minerals in such quantities that there won't be much left for the rest of us."
The Peak Oil Crisis: The Gathering Storm
Falls Church News-Press, 8 June 2011

"Ministers were facing growing pressure last night to investigate the safety and environmental impacts of drilling for shale gas after fears that it could have triggered two small earthquakes in Lancashire. Critics say the released gas can contaminate local water supplies and that seismic activity could be linked with the technique. They also argue that prospecting for shale gas – which is banned in France, as well as New York and Pennsylvania states – leaves a far worse carbon footprint than conventional gas drilling. Chris Huhne, the Energy and Climate Change Secretary, has given the controversial technique, known as 'fracking', a clean bill of health and insisted it is already subject to 'robust' controls. The Commons Energy Select Committee has also backed the procedure, arguing that Britain could have considerable reserves of shale gas that should be exploited to reduce the country's reliance on energy imports."
MPs call for inquiry into shale gas drilling after earthquakes
Independent, 8 June 2011

"Energy consumption worldwide advanced at the fastest pace since 1973, driving greenhouse-gas emissions to a record and increasing the threat of climate change, BP Plc (BP/)said in an annual report. Use of energy rose 5.6 percent in 2010, rebounding from the recession’s drag on demand, according to the BP Statistical Review of World Energy report for 2011, released today. Increases in fossil-fuel consumption, which included a 10 percent jump in use of coal by China to a record 1.7 billion metric tons of oil equivalent, pushed emissions growth to its biggest jump since 1969, BP said. Global carbon emissions from electricity generation climbed to a record last year as growth accelerated in emerging economies, the International Energy Agency said May 31. Use of fossil fuels may drive temperatures beyond a 2 degrees Celsius (3.6 Fahrenheit) limit sought in United Nations-overseen climate-protection talks, the agency said."
Global Energy Use Advances at Fastest Pace Since 1973 on Coal, BP Says
Bloomberg, 8 June 2011

"Hopes that Opec would bring relief to motorists and wider western economies from soaring energy prices were today dashed when a crunch meeting of the oil cartel broke up in disarray without the expected agreement to increase crude output. Political turbulence in North Africa and the Middle East undermined the usual consensus at the meeting in Vienna and led to speculation that new internal rivalries could split the group, leading to even more market chaos. Saudi Arabia, the world's largest oil producer and influential Opec dove, was outmanoeuvred by Iran, Venezuela, Libya and others, later describing the summit as 'one of the worst meetings we have ever had'. The price of Brent crude soared a further $1.65 to $118.43 a barrel as an expected Opec agreement to raise its production quotas by about 1.5 million barrels a day failed to materialise. Petrol in Britain averages 136p a litre – 18p more than a year ago – and Edmund King, president of the AA, said the prospect of a new rise on the back of the failed Opec meeting was a 'slap in the face' for the consumer. 'With so many indicators pointing to the pain of high oil prices and the detrimental effect they are having on family budgets and economic recovery, Opec's decision simply deepens the gloom,' he added. The four west-leaning Gulf Arab states had proposed increasing daily output to more than 30m barrels but they were outvoted by seven countries including Venezuela and Algeria who wanted them left unchanged. Saudi Arabia made clear it was not happy. Ali al-Naimi, oil minister for a country which has close ties with America and Britain, said: 'We were unable to reach an agreement – this is one of the worst meetings we have ever had.' Market analysts said there were genuine differences inside Opec about whether the bout of very high oil prices could last and undermine the global economy or naturally fall back.... The atmosphere had been poisoned by Qatar backing Libyan rebels fighting the government of Muammar Gaddafi, while Saudi Arabia has angered Shi'ite Iran by using force to help the Sunni-led Bahrain suppress a Shi'ite rebellion. But, this time, those in Opec politically opposed to the United States – led by Iran and Venezuela – found enough support to block Saudi Arabia whose views normally hold sway. Katherine Spector at CIBC World Markets said: 'Saudi is the cartel member most interested in earning political 'points' with consuming countries, and maintaining its image as a reliable supplier of last resort.' But several Opec members also argued they needed to keep tax revenues high to protect their citizens against the rocketing cost of other commodities such as food, and could not to let the oil price decline. Opec is not due to meet again for another three months and some analysts said the angry divergence of views could mark the beginning of the end for the cartel. 'A new world order beckons, doubtless preceded by disorder,' said Marc Ostwald, strategist at Monument Securities. He predicted that non-Opec members such as Russia and Kazakhstan could be the main beneficiaries if the cartel's power waned...However, Julian Jessop, chief international economist at Capital Economics, said the weakening outlook for the global economy should bring oil prices down later this year . 'We continue to expect the price of Brent crude to drop back below $90 per barrel by the end of the year, as global demand continues to disappoint, the Middle East risk premium fades, and the dollar rebounds.'"
Oil price rises sharply after Opec meeting collapses in disarray
Guardian, 8 June 2011

"If you ever wonder why seemingly obscure countries like Yemen, Qatar and Bahrain get so much attention, just look at these two narrow straits, and know that nearly 50% of the world's seaborne oil passes through them daily. Then think about the global economic meltdown that would result if the straits were disrupted. So when unrest in Yemen sends its injured (and U.S.-friendly) despot packing, or when Iran helps foster Shiite unrest in Bahrain, or when Saudi Arabia struggles with its own leadership transition... you need know what's really going on and how it could end up affecting you."
Middle East: Strait Shooting
Stratfor, 8 June 2011

"The increasing abundance of cheap natural gas, coupled with rising demand for the fuel from China and the fall-out from the Fukushima nuclear disaster in Japan, may have set the stage for a 'golden age of gas,' the International Energy Agency said Monday. Under a scenario set out by the IEA, global consumption of natural gas could rise by more than 50% over the next 25 years, with it accounting for more than a quarter of global energy demand by 2035, up from 21% now."
Natural Gas Entering 'Golden Age'
Wall St Journal, 7 June 2011

"That back-of-the-cabin pilgrimage to Ibiza or Miami this summer will be a little less cramped than usual, according to the airline industry's leading trade body, as economy class passengers balk at higher fares due to rising fuel costs and aviation taxes. The International Air Transport Association said leisure travel fell 3.5% worldwide between last November and March this year, with Europe suffering the most as recession-hit passengers declined to accept ticket prices driven higher by the increasing cost of oil. IATA's chief economist, Brian Pearce, said carriers have had no choice but to hike fares because the cost of jet fuel has risen by more than 50% over the past 12 months. With no sign of a significant decline in an oil price that is staying stubbornly above $100 a barrel, airlines are fighting to stay profitable and have pushed up ticket prices in order to recoup costs, with an inevitable consequence for discretionary spenders, said Pearce."
Airlines lose economy passengers as soaring fuel bills force up ticket prices
Guardian, 7 June 2011

"The Internet has long promised a more efficient and greener world. We save on paper and mailing by sending an email. We can telecommute instead of driving to work. We can have a meeting by teleconference instead of flying to another city. Ironically, despite the web's green promise, this explosion of data has turned the Internet into one of the planet's fastest-growing sources of carbon emissions. The Internet now consumes two to three per cent of the world's electricity. If the Internet was a country, it would be the planet's fifth-biggest consumer of power, ahead of India and Germany. The Internet's power needs now rival those of the aviation industry and are expected to nearly double by 2020. 'The Internet pollutes, but people don't understand why it pollutes. It's very, very power-hungry, and we have to reduce its carbon footprint,' said Mohamed Cheriet, a green IT expert and professor in the engineering and automation department at Montreal's Ecole de Technologie Superieure (ETS). The bulk of all this energy is gobbled up by a fast-growing network of huge 'server farms' or data centres that form the backbone of the Internet. They are hush-hush facilities, some the size of five Wal-Marts, packed from floor to ceiling with tens of thousands of computers. These are the computers that make the Internet run — routing traffic and storing much of those ever-expanding heaps of data. Say you do a Google search. Your query kicks into action about 1,000 servers at various Google data centres. Those computers scan billions of web pages already in Google's archives and spit out an answer. Total time elapsed: 0.2 seconds on average. Meanwhile, Google's data centres are also constantly combing the Internet to update their archives of web pages. All those computers have a voracious appetite for energy, especially for cooling equipment to prevent overheating."
Could the Net be killing the planet one web search at a time?
Vancouver Sun, 3 June 2011

"Claims that biofuels have lower greenhouse gas emissions than fossil fuels are 'complete nonsense' and EU-wide targets to increase their use should be scrapped says letter to transport minister.A global 'land grab' and increased loss of forests and other natural ecosystems is being driven by European targets for more transport fuel to come from biofuels, say a group of prominent UK scientists. The EU has a target for 10 per cent of total transport fuel to be derived from renewable sources by 2020. Observers estimate the vast majority of these targets will be met by biofuels, mainly sourced from food crops, such as oil seeds, palm oil, sugar cane, beet and wheat. The UK is currently aiming to reach 5 per cent of fuel from renewable sources by 2013 and admits that 90 per cent or more of the increase to 10 per cent by 2020 will be met by crop-based biofuels. The biofuels target was originally designed to help reduce greenhouse gas emissions but in a letter sent to the transport minister Philip Hammond, and seen by the Ecologist, 19 prominent scientists from across the UK say crop-based biofuels will actually 'substantially increase emissions'. According to the scientists, in a rush to promote biofues both the UK and EU had failed to take account of two factors - the high-use of nitrogen fertilisers and land-use change brought about by the increasing demand for land to grow biofuel crops instead of food. 'The additional demand for grains, oilseeds and sugars brought about by increased biofuel production will indirectly bring about the conversion of land currently under forest or other natural ecosystem into agricultural land, with the concomitant release into the atmosphere of carbon stored in trees and soil,' says the letter. Professor Keith Smith, of University of Edinburgh, one of the letter's co-authors, says the release of carbon dioxide would be 'huge' compared to the savings from the crops taking in CO2 from the atmosphere to grow. He says another factor, emissions related to fertiliser-use, was also being ignored.  'There has been a naivety that biofuels are carbon neutral but when we count the fossil fuel energy going into biofuels from fertiliser use and then also the nitrous oxide emissions from using nitrogen fertilisers, the emissions are even higher,' says Professor Smith."
UK scientists launch scathing criticism of EU biofuel targets
Ecologist, 2 June 2011

"Britain is at 'high risk' of energy price shocks in the short term, with a dependence on imports making it just as vulnerable as Uganda, according to new research. Maplecroft, the risk-analysis firm, has found that the UK is one of the most exposed developed nations and is more likely to suffer supply disruption than France, Germany or the US. Only Italy, Spain, Greece and Japan are at greater risk than Britain in the short-term among developed countries. China also faces an uphill struggle to meet its energy demand. 'Although energy infrastructure is well maintained in the UK, high fuel prices at the pump and relatively high imports of both fossil fuels and electricity leave the UK vulnerable to disruption of their energy supply,' Maplecroft found. 'The UK became a net importer of natural gas and oil in 2004 and 2005 respectively. And the UK lags behind other European countries in its adoption of renewables as an energy source.' More than 100 countries are rated 'high risk', emphasising the problems faced across the world in meeting energy needs over the next decade....Surprisingly, some oil and gas producing countries in the Middle East and North Africa, including Egypt, Iran, Iraq, Kuwait and Qatar, are also rated 'high risk' in the long-term because the countries are 'energy intensive' and may not be able to meet internal demand in future."
Britain as vulnerable to energy price shocks as Uganda
Telegraph, 2 June 2011

"Britain is facing a shortage of UK-sourced diesel and may need to triple imports over the next decade, the UK Petroleum Industry Association has warned. In a submission to MPs, the industry group cautions that a greater reliance on imports could lead to 'reduced security of supply as imported products may be less immediately available in times of emergency or crisis'. This would expose motorists to the possibility of further price shocks. Analysts from Deloitte estimate that a three-week supply disruption of diesel from the key Rotterdam trading hub would increase prices by 15pc overnight. Challenging conditions for the UK refining industry mean that it is becoming less economical to convert crude oil into diesel, petrol and other finished fuel products in this country. However, demand for diesel vehicles has never been greater, with the price of the fuel hitting new highs above 140p per litre this year. The biggest cause of the domestic shortfall of diesel is this rising demand – up 38pc over the past 15 years – coupled with falling refining capacity. Currently, four out of the UK's eight refineries are in a sale process and all are under pressure from high-volume, cheaper rivals in Asia, which are not subject to the same £1bn green taxes on the industry. A new Deloitte report for the Government says imports will need to rise from 3m tons to 7m tons over the next decade from places such as the Netherlands, Russia and Sweden. However, potential closures and lost refining capacity may mean an extra 11m barrels of diesel is needed, according to the UK Petroleum Industry Association. 'The refining sector faces a growing imbalance in petrol and diesel supply and demand,' it said. 'Addressing this imbalance is a growing challenge for UK refineries.' Existing UK refineries will need around £500m of investment to make them fit for purpose to produce more diesel and refine heavier grades of crude, as Britain's light, sweet supplies from the North Sea slowly deplete. The UK Petroleum Industry Association says many existing refinery owners are unwilling to invest given the burdens of British environmental legislation and the requirement to build up strategic stocks. It says much new investment may be 'delayed or permanently shelved, as importing products rather than building new processing equipment may be a more attractive option'."
UK diesel shortage 'may put energy security at risk'
Telegraph, 1 June 2011

"Russia and Qatar are under growing pressure from Europe’s biggest utilities to scrap a 40-year-old system that links natural-gas prices to oil after Brent crude’s 23 percent surge this year. As delegates from countries that hold two-thirds of the world’s reserves gather in Cairo tomorrow for a one-day meeting of the Gas Exporting Countries Forum, customers from France’s GDF Suez SA to EON AG of Germany are urging producers to link prices to spot markets instead of insisting on long-term contracts that shadow the fluctuations of oil. Contract prices will rise about 15 percent in the next quarter alone, according to Wood Mackenzie Ltd., an Edinburgh-based energy consultant. 'The European contract price of gas is going up,' said Thierry Bros, a senior analyst at Societe Generale SA in Paris. 'Utilities won’t sign new oil-linked contracts.' Europe’s dependency on gas is rising as the region seeks to minimize carbon emissions and nations such as Germany turn away from nuclear power after Japan’s radiation crisis. About two-thirds of continental Europe’s gas is priced under long-term contracts that lag movements in Brent by about six months, making it more expensive than spot markets, where prices more closely reflect supply and demand."
Russia, Qatar Face Pressure to Scrap Gas Link to Oil Prices as Crude Jumps
Bloomberg, 1 June 2011

"The controversial new drilling operation for natural shale gas in Lancashire has been suspended following a second earthquake in the area that may have been triggered by the process. The earthquake last Friday near Blackpool occurred at the same time that the energy company Cuadrilla Resources was injecting fluids under high pressure deep underground to deliberately blast apart the gas-bearing rock – a process known as 'fracking', brought to Britain from the US, where it has been highly contentious.... Bans on commercial fracking are already in place in France as well as in New York and Pennsylvania states, where people living close to fracking sites have been filmed setting fire to tap water contaminated with methane gas."
Small earthquake in Blackpool, major shock for UK's energy policy
Independent, 1 June 2011

"With little fanfare, a press release appeared last week on the website of the UK Industry Taskforce on Peak Oil and Energy Security (ITPOES). The release said that during a meeting between Chris Huhne, the UK's Secretary of State for Energy and Climate Change, and representatives of ITPOES, an agreement had been reached that Her Majesty's Department for Energy and Climate will collaborate with ITPOES on a joint examination of concerns that global oil supply will begin to fall behind demand within as little as five years. This collaboration is seen by the British government as the first step in the development of a national peak oil contingency plan. There are many implications buried in this seemingly innocuous announcement. First, American readers should note that the British government recognizes that energy policy and climate change are inextricably linked so that you cannot formulate policies for one without the other. The major step forward, however, is the official and semi-public recognition by a major government that global oil supplies will fall behind demand in as little as five years. After years of official denial this is indeed a breakthrough worthy of note. Gone is the rhetoric about the billions of barrels of oil remaining that will last for so many decades that nobody alive today needs to worry. Official recognition has been given to the concept that the remaining oil will be so expensive to extract or will be locked into the earth by intractable political disputes, so that it simply will not be available in the unlimited quantities or at the prices we have known for the last 100 years. Also implicit in the announcement is that ever-rising real energy costs will destabilize nearly all of the world's economies and that economic growth in the form we have come to know it will no longer be possible. Now, announcing that you are going to study something is a long ways from having a plan to deal in a realistic manner with a problem of this magnitude, but it is clearly a step forward and positions the British months or more likely years ahead of their American cousins in thinking about the problem. It will be interesting to follow whatever is made public about the discussions and just what a British plan to deal with peak oil and climate change will look like. It is also interesting that the announcement that the world-as-we-know-it will come to an end shortly was announced on an obscure website with minimal attention.... This raises the key issue of the next few decades - What will be the role of government in holding society together during the transition to the post carbon age? A corollary issue will be how well current systems of finance, industrial organization and capital formation will function during what is likely to be a prolonged period of economic decline as fossil fuels and then many other resources become scarcer and much more expensive. As people naturally prefer to stay with accustomed life styles and ways of doing things as long as possible, there will inevitably be a period of political controversy between those who have come to recognize that major changes in our civilization must take place if society is to survive in a recognizable fashion and those who will cling to the familiar until overcome by events. Indeed, the opening rounds of this debate have likely started already in the controversies over global warming, jobs, taxes, deficits, and sovereign debts. In the United States a great political debate is taking place on 20th century terms with discussion focused on reviving economic growth, cutting federal deficits, and stimulating spending. In the 21st century, an era of depleting resources, much of this debate is no longer relevant..... There will be many other issues besides the creation of jobs, and supplying goods and services in the coming transition. Some of these issues are not yet apparent and some will not be recognized for years. What is obvious, however, is the faster people and their governments recognize the real nature of the problem and start working on real solutions the better off we and succeeding generations will be. For now we can only thank Her Majesty's government for taking some sort of a lead and hope that others will follow soon."
The Peak Oil Crisis: An Announcement
Falls Church News-Press, 1 June 2011

"In a Guardian interview 10 days ago, the business secretary Vince Cable said the public was unaware of just how bad the structural problems of the economy were, and he's quite right about that. One of these structural problems is Britain's growing reliance on imported energy. North Sea oil has been a great comfort blanket for politicians of all stripes since it was first pumped ashore in the mid-1970s: it has plugged the gap in the balance of payments caused by the relative decline of manufacturing as a share of the economy, and it has paid for Conservative tax cuts and Labour spending increases. Had Britain salted away the oil revenues, as Norway did, it would now have a whopping sovereign wealth fund that could be used to re-tool and rebalance the economy in the way that all politicians say is long overdue. But the money was spent long ago, and since 2005 Britain has imported more energy than it has exported. This dependency could hardly have come at a worse time. Unravelling the reason for higher oil prices is tricky, but whether it has been stronger demand from the fast-growing emerging economies, the long-anticipated arrival of peak oil, speculation from hedge funds or a combination of all three, the era of easily available cheap crude is over for good. Hence the attempts to get oil out of dangerous deepwater fields or from the Canadian tar sands. In the long term, however, countries will have to find ways of making fossil fuels cleaner, going nuclear, or investing heavily in renewables. All are expensive and potentially controversial, as Germany will find with its decision to abandon nuclear altogether. But at least Berlin has been prepared to face up to issues which in Britain have been ducked."
The triple crunch won't be pretty. But will it banish our economic torpor?
Guardian, 31 May 2011

"British firms have acquired more land in Africa for controversial biofuel plantations than companies from any other country, a Guardian investigation has revealed. Half of the 3.2m hectares (ha) of biofuel land identified – in countries from Mozambique to Senegal – is linked to 11 British companies, more than any other country. Liquid fuels made from plants – such as bioethanol – are hailed by some as environmentally-friendly replacements for fossil fuels. Because they compete for land with crop plants, biofuels have also been linked to record food prices and rising hunger. There are also fears they can increase greenhouse gas emissions. A market has been created by British and EU laws requiring the blending of rising amounts of biofuels into petrol and diesel, but the rules were condemned as unethical and 'backfiring badly' in April by a Nuffield Council on Bioethics commission. In the UK, only 31% of biofuels used meet voluntary environmental standards intended to protect water supplies, soil quality and carbon stocks in the source country."
Biofuels boom in Africa as British firms lead rush on land for plantations
Guardian, 31 May 2011

"It has been facetiously dubbed 'the phaseout of the phaseout of the phaseout.' But after weeks of heated discussion, the German government has made it clear that it is serious with its U-turn on nuclear energy. Following talks that went into the early hours of Monday morning, Environment Minister Norbert Röttgen announced the details of the government's new approach to phasing out nuclear power. The new plan foresees all of Germany's nuclear plants going offline by 2021 -- with one possible exception: If the transition to renewable energy does not go as quickly as planned, three of the plants will be allowed to continue operating until 2022, as a kind of safety buffer against electricity shortfalls.... Under the new plan, Germany's seven oldest reactors, which are already offline under a nuclear moratorium announced by Chancellor Angela Merkel in mid-March after the Fukushima disaster, will not resume operation. The Krümmel nuclear plant in the state of Schleswig-Holstein, which has been offline following an accident in 2009, will also be permanently shut down. One plant, possibly Philippsburg I in the state of Baden-Württemberg or Biblis B in Hesse, will, however, be kept in "standby" mode as a reserve should extra energy be needed. It would be used to produce energy if there appeared to be a risk of power shortages, for example on cold, gray winter days when there is little solar energy available and when neighboring countries have little energy available for export, due to their own needs."
Germany to Phase Out Nuclear Power by 2022
Der Spiegel, 30 May 2011

"Chancellor Angela Merkel said Germany could serve as a global trailblazer with its decision Monday to phase out nuclear power by 2022 but France, Europe's biggest producer, said it will not follow suit. Merkel said the "fundamental" rethink of energy policy in the world's number four economy, prompted by the disaster in March at Japan's Fukushima plant, opened new opportunities for business and climate protection. 'We believe we as a country can be a trailblazer for a new age of renewable energy sources,' she told reporters. 'We can be the first major industrialised country that achieves the transition to renewable energy with all the opportunities -- for exports, development, technology, jobs -- it carries with it.' Yet neighbour France, while saying it 'respected' the German position, insisted it was not ready to give up nuclear energy which Prime Minister Francois Fillon described as a 'solution for the future'. 'We think that for some decades at least we will not be able to do without nuclear energy,' added Foreign Minister Alain Juppe."
German nuclear shutdown sets global example: Merkel
Agence France Presse, 30 May 2011

"A gas field in Turkmenistan has been crowned the second largest deposit ever discovered, potentially transforming the desert nation into a Caspian Qatar. A new report from Gaffney Cline, the British oil field auditing company, to be released officially next month, has confirmed claims from the former Soviet Republic that many had dismissed as overly optimistic. 'It appears that the South Yolotan field is now easily the world's second largest gas field in terms of gas in place – second only to the North Field and South Pars,' Peter Holding, Gaffney Cline's director for Central Asia, said at a conference in the Caspian resort of Awaza. The report is expected to say that the field could hold 20 trillion cubic metres, enough to supply the UK for more than 350 years, and Europe for more than 50. The compares with the top-level estimate of 14 trillion cubic metres it gave in its 2008 audit, which ranked the field only sixth worldwide. The development of the giant North Field has made Qatar the world's richest country in terms of per capita income. The field, which is shared with Iran, holds more than 50 trillion cubic metres. Mr Holding pointed out that the South Yolotan field could now easily support gas deliveries to Europe, as well as to Russia and China.... Turkmenistan's autocratic President Gurbanguly Berdimukhamedov has broken Russia's long stranglehold over the country's gas exports, building new pipelines to China and Iran. But European energy companies have so far struggled to strike a similar deal to buy Turkmen gas, a crucial element of the European Union's strategy to reduce its dependence on Russia for supplies."
Second largest gas field found in Turkmenistan
Telegraph, 25 May 2011

"Europe's nuclear power faultlines in the wake of the Fukushima disaster were exposed on Wednesday as Switzerland moved to phase out its nuclear power plants and the extent of British and French lobbying to water down nuclear safety checks was revealed. The UK, with the backing of France and the Czech Republic, managed to have terror attacks excluded from a series of new nuclear safety tests ordered after the Japanese tsunami led to radiation leaks from Fukushima nuclear reactors in March. The Swiss cabinet called for the decommissioning of the country's five nuclear power reactors and new energy sources to replace them. The recommendation will be debated in the country's parliament, with a decision expected in June that could see the reactors go offline between 2019 and 2034. European regulators struck a deal on 'stress tests' of how the EU's 143 nuclear power plants would withstand natural disasters, but terror attacks were reportedly excluded because of the UK argument that they lie within the purview of national security authorities and not the European commission or national nuclear regulators."
Europe divided over nuclear power after Fukushima disaster
Guardian, 25 May 2011

"The Arabian Peninsula has fueled the global economy with oil for five decades. How long it can continue to do so hinges on projects like one unfolding here in the desert sands along the Saudi Arabia-Kuwait border. Saudi Arabia became the world's top oil producer by tapping its vast reserves of easy-to-drill, high-quality light oil. But as demand for energy grows and fields of 'easy oil' around the world start to dry up, the Saudis are turning to a much tougher source: the billions of barrels of heavy oil trapped beneath the desert. Heavy oil, which can be as thick as molasses, is harder to get out of the ground than light oil and costs more to refine into gasoline. Nevertheless, Saudi Arabia and Kuwait have embarked on an ambitious experiment to coax it out of the Wafra oil field, located in a sparsely populated expanse of desert shared by the two nations. That the Saudis are even considering such a project shows how difficult and costly it is becoming to slake the world's thirst for oil. It also suggests that even the Saudis may not be able to boost production quickly in the future if demand rises unexpectedly. Neither issue bodes well for the return of cheap oil over the long term. 'The easy oil is coming to an end,' says Alex Munton, a Middle East analyst for the Scottish energy consulting firm Wood Mackenzie. The major oil fields in the Gulf region, he says, have pumped more than half their oil—the point at which production traditionally begins to decline.... To get to Wafra's thick oil, workers are injecting steam into the ground to heat the oil and make it less viscous, allowing it to flow to the surface. The technique is tricky, expensive and unproven in the type of rock that holds Wafra's oil. For their half of the project, the Saudis have enlisted the help of Chevron Corp., which has decades of experience extracting heavy oil from fields in California and Thailand. It is a rare chance for a Western oil company to get a piece of the world's biggest oil reserves.... But it is also a gamble. The project, much more complex that what Chevron has done before, will cost billions of dollars and take decades to complete. And it will be Chevron, not the Saudis, putting up the capital needed to make the project work—and taking the risk that it won't.... Global oil consumption, buoyed by skyrocketing demand in China and India, jumped by 2.3 million barrels a day last year, a 2.8% increase, according to U.S. government figures, the second biggest increase in 30 years. Oil production in the Western world, meanwhile, is barely growing. That means the world is increasingly dependent on production from countries in the OPEC cartel, and particularly Saudi Arabia, its dominant member. 'All the countries in the Middle East are going to have to start grappling with these [heavy-oil] reserves,' says Andrew Gould, chairman and chief executive of oil-field services giant Schlumberger Ltd., which has worked on several heavy-oil projects in the region. 'They've never had to think about it before.'.... In the 1930s, 1940s and 1950s, Western oil companies, including predecessors of Chevron, Exxon Mobil Corp., BP PLC and most of the other big international producers, helped discover many of the world's greatest oil fields: Ghawar in Saudi Arabia, Burgan in Kuwait and Rumaila in Iraq. Those fields were so easily tapped, however, that by the 1970s most governments in the region had decided they no longer needed the help of Western companies and nationalized their oil fields. Big Oil found itself virtually shut out of the region.... Using steam to extract oil isn't a new idea. Chevron has been using the method to recover heavy oil at its Kern River field in Bakersfield, Calif., since the 1960s. That field yielded less than 10% of its oil using traditional methods. Using steam injection, Chevron is now on its way to pumping as much as 80% of the crude. The Wafra project, however, is far more of a challenge than traditional steam projects. As in most of the Middle East, the oil at Wafra is trapped in a thick layer of limestone that also contains minerals that can build up inside pipes and corrode equipment. An even bigger challenge is getting the two crucial elements for generating steam: water and a source of energy to boil it. Most successful steam projects are in places with easy access to relatively pure water and a cheap fuel source, usually natural gas. Saudi Arabia and Kuwait have little of either. With no fresh-water sources in the Arabian desert, Chevron has been forced to use salt water found in the same underground reservoirs as the oil. That water is full of contaminants that must be removed before it can be boiled and injected into the ground. Finding the energy to boil the water will be even tougher. Chevron could use oil instead of natural gas—literally burning oil to produce oil—but that would burn profits, too. So the company likely will be forced to import natural gas from overseas, an expensive process that involves chilling it to turn it into a liquid, then shipping it thousands of miles. Some experts are shaking their heads. 'They're in trouble,' says Robert Toronyi, a retired Chevron engineer who now serves as chief operating officer for Quantum Reservoir Impact, a Houston-based consulting firm. He says the project is so challenging that it will be hard for Chevron to turn much of a profit. Chevron says the project will be profitable as long as oil prices stay above $60 or $70 per barrel, well below Monday's level of $97.70. Bill Higgs, Chevron's top operations manager in Saudi Arabia, likens the project to a 'chemistry experiment' and says the company is still figuring out whether it is worth the massive investment that would be required to take the project from the pilot stage into full-scale development. Still, the project has an advantage over deep-water exploration. 'You know where the oil is,' Mr. Higgs says. 'There's no doubt about that. So the question is: How do I economically produce it?'."
Facing Up to End of 'Easy Oil'
Wall St Journal, 24 May 2011

"Energy and Climate Change Secretary Chris Huhne yesterday agreed to develop an 'Oil Shock Response Plan', following a meeting with the UK Industry Taskforce on Peak Oil and Energy Security (ITPOES). The group, which was formed by Arup, B&Q, Buro Happold, Solarcentury, SSE, Stagecoach and Virgin, and campaigns for greater awareness of the economic threat presented by dwindling oil supplies, said that the meeting had proved 'constructive' and had helped to advance the energy security dialogue. Specifically, Huhne agreed that DECC and ITPOES would work together on peak oil threat assessment and contingency planning. Details on the collaboration are yet to be agreed, but the group is expected to be tasked with modeling some of the impacts that could result if, as growing number of experts fear, global oil supplies peak within the next five years. Members of the taskforce said they would also explore steps that would need to be taken now to protect the UK economy 'if we knew that the oil price would soar to $250 in 2014'. Oil prices have remained above $100 a barrel for much of the past few months, driven by rising demand and supply fears related to continuing unrest in Libya and the Middle East. The elevated prices yesterday prompted the International Energy Agency to take the unusual step of calling on the OPEC cartel to increase production in an effort to bring down prices and protect the fragile global economic recovery. However, there are growing numbers of experts in and outside the oil industry who have voiced fears that there is insufficient spare capacity for oil producers to respond easily to growing demand, with even figures such as IEA chief economist Fatih Birol suggesting that global oil supplies could peak in the near future. The taskforce members also revealed that Huhne had called on them to present their concerns to the Chancellor and Treasury - a meeting that the group is now seeking."
Exclusive: Government to develop Oil Shock Response Plan
Business Green, 20 May 2011

"The West's energy watchdog urged oil producers to boost supply to cut fuel costs, to protect economic recovery, and appeared to suggest its members could release emergency stockpiles if OPEC does not act. 'The governing board urges action from producers that will help avoid the negative global economic consequences which a further sharp market tightening could cause, and welcomes commitments to increase supply,' the International Energy Agency (IEA) said after a governing board meeting on Thursday. The statement comes just weeks ahead of OPEC's June 8 meeting and a day after price hawk Iran said its hardline President Mahmoud Ahmadinejad would represent Tehran at OPEC as Iran's caretaker oil minister.... The IEA normally does not comment on oil producers' policies. 'It is quite rare that the IEA goes out directly to give suggestions to OPEC,' said Christin Tuxen at Danske Markets. 'It suggests the IEA is worried that we haven't seen OPEC increasing supply... Libyan production has basically come to a halt and Saudi Arabia has been very slow to increase supply,' she added. As global demand for oil increases seasonally from May to August, IEA members said there was a clear and urgent need for additional supplies to be made to refiners on a 'more competitive basis.' Oil prices have rallied sharply since the beginning of the year on unrest in North Africa and the Middle East, reaching near $130 per barrel. They corrected sharply in early May and Brent crude is now valued at $112 a barrel with signs that high prices are rationing demand in the West. However many analysts, including from big banks like Goldman Sachs, Barclays Capital and Deutsche Bank, said they expected prices to return to or exceed recent highs at the end of 2011 due to tightening supplies. OPEC has held its official output targets steady even as prices surged, saying supply was sufficient. Its biggest producer Saudi Arabia lifted output earlier in the year but has since cut back again, citing poor demand."
West's oil agency urges OPEC: pump more, or else
Reuters, 19 May 2011

"Despite the recent drop in oil prices, the outlook for the remainder of the year is not good. If the IEA numbers are correct the world is probably burning more oil each day than is coming out of the ground, with the difference being made up from the 2.6 billion barrel stockpiles held by the OECD countries. Every day brings new stories of coal, electric power and oil product shortages in some corner of the world. The climate too is not cooperating with significant crop failures imminent in many parts of the world and the water levels at numerous hydro dams, particularly in Asia, falling rapidly. Behind much of oil's recent price drop is the concern among oil traders that economic growth was not going as well in the U.S. and China as had been hoped. In the case of the US this is probably not a bad concern as much of the so-called recovery that is supposed to be taking place is based on hype and selective interpretation of suspect economic statistics. In reality, there has been very little improvement in the US economy this year other than the lingering effects of 2009's $800 billion stimulus package....Turmoil in the Middle East, lower OPEC production, droughts, electricity shortages, robust economic growth in China, the Japanese nuclear crisis and oil export bans all say higher oil prices are on the way. A few percentage points drop in U.S. gasoline consumption no longer compensates for what is going on in the rest of the world."
The Peak Oil Crisis: The Summer Ahead
Falls Church News-Press, 18 May 2011

"Poland reaffirmed its commitment to developing its shale gas reserves on Wednesday despite French plans to ban drilling, but officials and industry experts said tough regulatory and environmental challenges lie ahead. The U.S.-based Energy Information Administration (EIA) said last month Poland's technically recoverable reserves of shale gas are the biggest in Europe at an estimated 5.3 trillion cubic meters, though some experts are skeptical about the figure. The U.S. and Polish geology agencies are due to present their own initial estimate of Poland's reserves in September."
Poland to develop shale gas despite environment risk
Reuters, 18 May 2011

"Oil giants BP PLC and ConocoPhillips have abandoned plans to build a $35 billion pipeline to carry natural gas from Alaska to the lower 48 states because of weak customer demand. The decision, though not a complete surprise, was nonetheless a blow to Alaska's long-delayed hopes of exporting more of its gas. A rival proposal, backed by Exxon Mobil Corp. and Canadian pipeline company TransCanada Corp., remains in the works. But the announcement by the BP-Conoco coalition, known as Denali, further calls into question the viability of a pipeline project amid a U.S. gas glut."
Alaska Pipeline Scrapped
Wall St Journal, 18 May 2011

"Berlin wants to see one million electric automobiles rolling quietly down German roads by 2020 and is revving up research and development to achieve that goal, even though some experts warn subsidies can lead to market distortion. The federal government plans to double its electric vehicle research and development aid, pouring an additional 1 billion euros ($1.4 billion) into the R&D budget by 2013 in a bid to make Germany a leader in the sector. Right now, only about 2,300 of the 42 million cars registered in Germany run on electricity. According to a report released on Monday by the National Electric Mobility Platform - a government-sponsored council made up of auto industry representatives, transportation associations and unions - even the most optimistic projections predict that only 450,000 electric cars would be put on German roads by 2020 without a government program to promote them. Strategies to achieve the one-million goal include tax rebates, dedicated parking lots, special traffic lanes for e-cars, and increased government use of emission-free vehicles."
Berlin plans powerful spark for electric car sector
Deutsche Welle, 17 May 2011

"Of the 251,287 WikiLeaks documents McClatchy obtained, 23,927 of them — nearly one in 10 — reference oil. Gazprom alone is mentioned in 1,789. In the cables, U.S. diplomats can be found plotting ways to prevent state entities such as Gazprom from taking control of key petroleum facilities, pressing oil companies to adjust their policies to match U.S. foreign policy goals, helping U.S.-based oil companies arrange deals on favorable terms and pressing foreign governments to assist companies that are willing to do the U.S.'s bidding."
WikiLeaks cables show that it was all about the oil
McClatchy Newspapers, 16 May 2011

"Saudi Aramco, the world’s largest state-owned oil company, plans to double its power-generating capacity to 4,000 megawatts by 2015 to supply all the electricity it expects to need to produce crude and natural gas. The company is expanding power plants at existing oil and gas sites and aims to build generators for refineries and other facilities that are under development, Ziyad Al Shiha, the executive director of Aramco Power Systems, told reporters today at a conference in Dhahran, Saudi Arabia. Saudi Arabia and other Persian Gulf oil producers are boosting power supplies to meet the demands of growing economies and populations. They are also looking for ways to use less of their valuable crude and gas as fuel for power stations. Saudi Arabia may need to burn as much as 3 million barrels of oil a day by 2020 to generate power if it doesn’t improve efficiency, Al Shiha said. This would far exceed the 800,000 barrels of oil equivalent that the Ministry of Petroleum and Mineral Resources estimates the kingdom’s power plants use now."
Saudi Aramco Plans to Double Power Supply, Conserve Energy to Save Crude
Bloomberg, 15 May 2011

"Hydropower, a renewable energy source often overshadowed by excitement about wind and solar power, is enjoying something of a global resurgence. Huge, controversial dam projects have recently made headlines in Brazil, Chile and Laos. Many developing countries, hungry for energy to supply their growing economies over the long term, are determined to keep building more modest-sized dams too. Record amounts of hydropower capacity came online in 2008 and 2009, the most recent years for which data are available, according to Richard Taylor, executive director of the International Hydropower Association in London. 'There has been, over the last decade, a dramatic increase in the deployment of new hydropower capacity,' Mr. Taylor said..... But the renewed attention to hydropower, which accounts for about 16 percent of the global electricity mix, comes with environmental red flags. More attention than ever focuses on people who face displacement, as well as the effects of new dams on land and fish.... An additional environmental issue — one that has caused mounting concern in recent years — is climate change. Changes in rain or snowfall patterns can drastically affect the amount of power a dam produces and also the amount of sediment flowing through the river. Prolonged droughts are already taking their toll. Brazil, which gets about 80 percent of its electricity from hydropower, experienced a bad drought about a decade ago, and Chile has struggled with drought, too, according to Deborah Lynn Bleviss, a professor in the energy, resources and environment program at Johns Hopkins University’s School of Advanced International Studies in Washington."
Hydropower’s Resurgence and the Controversy Around It
New York Times, 15 May 2011

"Saudi Arabia needs to invest SR330bn ($88bn) over the next 10 years as demand for electricity continues to grow 7-8 percent annually, the kingdom's water and electricity minister said. Abdullah Al Husayen told an industry conference on Saturday that the water and power sector would need investments of SR500bn in the next ten years, and that demand for water was growing by more than 7 percent annually.... Although sitting on the world's biggest oil and fifth gas reserves, Saudi Arabia is struggling to keep pace with rapidly rising power demand, as petrodollars have fuelled a region-wide economic boom as well as rapid population growth. Asked about solar power, Husayen said: "It may not be [of use] in the short term... but maybe nuclear energy will be more than solar energy in the future."
Saudi says must invest $88bn in power over 10 years
Reuters, 15 May 2011

"The US government has signalled a new determination to assert its role in Arctic oil and gas exploration by sending secretary of state Hillary Clinton and other ministers to a summit of the region's powers for the first time. Clinton and the US secretary of the interior, Ken Salazar, were both at the biennial meeting in the Greenland capital of Nuuk amid fears by environmentalists of a 'carve up' of Arctic resources that could savage a pristine environment. The political manoeuvres came as Britain's Cairn Energy prepares to drill for oil off Greenland while Shell applies to explore for oil off Alaska and BP has done a deal to explore the Russian Arctic. They also came as cables were released by WikiLeaks showing American diplomats talking about the need to assert US influence over political and economic competitors such as China."
Battle for Arctic oil intensifies as US sends Clinton to polar summit
Guardian, 12 May 2011

"High oil prices are curbing demand growth, particularly in the U.S., but prolonged supply disruptions mean the market will remain tight in the second half of this year and the "bull run" in prices may continue, the International Energy Agency said in its monthly report Thursday. The report once again sets the IEA, which represents the interests of the major energy-consuming countries, at odds with the Organization of Petroleum Exporting Countries over whether the group needs to increase its production ceiling at its June meeting."
IEA: Oil's Bull Run May Continue
Wall St Journal, 12 May 2011

"When the famed Trans Alaska Pipeline carried two million barrels of oil a day, the naturally warm crude surged 800 miles to the Port of Valdez in three days and arrived at a temperature of about 100 degrees. Now, dwindling oil production along Alaska’s northern edge means the pipeline carries less than one-third the volume it once did—and the crude takes five times as long to get to its destination. That leisurely flow means the oil is above ground longer and more exposed to Alaska’s frigid weather; the crude sometimes arrives chilled to 40 degrees. As the flow and temperature continue to drop, experts say the risks of a clog or corrosion increase, as do the odds of ruptures and spills. Unless a technological solution can be found, the arcane physics of crude flow may force the multibillion dollar, 48-inch-wide steel pipeline to shut down—and determine the fate of the largest oil field ever found in the U.S. There’s one other, seemingly simple fix: Add more oil. 'If I could ask for one thing, it is to figure out how to get more oil into this pipe,' says Tom Barrett, president of the pipeline’s owner, Alyeska Pipeline Service Co. But production from Alaska’s giant oil fields has been falling for years. Turning that around would require drilling in new areas, some of them environmentally sensitive and most controlled by the federal government."
Shrinking Oil Supplies Put Alaskan Pipeline at Risk
Wall St Journal, 11 May 2011

"Energy players sparred Wednesday over whether the global boom in shale drilling is heading for a bust. While one consultant compared the shale gas market to the fever of the 19th-century California gold rush, a technology manager for Halliburton dismissed the skeptical outlook. Speakers presented the competing views at the Energy Summit, an initiative by The Houston Club downtown for its oil and gas membership. The summit, which the club plans to make an annual event, continues today with scheduled speakers including former Alaska Gov. Steve Cowper. Wednesday’s topics ranged from securing federal offshore drilling permits to the burdens this year’s natural disasters have put on insurance companies. But it was the outlook for shale drilling that took center stage, with one speaker suggesting that the growing market could be heading for a correction. Not everyone was convinced. 'They’ve been speaking to that correction for a few years now,' said Stephen Ingram, technology manager for oil field services giant Halliburton. He laid out the company’s plans for technological advancements he said will dramatically improve the efficiency of the extraction process called hydraulic fracturing and better meet the demand for expansion of shale gas drilling. 'We’re pretty bullish on the market. That’s why we’re investing $3 billion this year,' Ingram said. But Neal Anderson, global head of consulting for the research firm Wood Mackenzie, said the market for shale gas, in particular, has 'gotten a little overheated.' He noted that booming merger and acquisition activity has been out of sync with falling natural gas prices, and said equity analysts until recently focused erroneously on the volume of gas production, rather than the value. 'They’re starting to wake up that a lot of companies are just simply churning cash here. And the real winners in this are the service companies,' Anderson said. 'I’ll remind you of that old adage from the California gold rush: The guys that really made the money were the guys selling the shovels. It looks a little bit like that.' Anderson said shale gas production will moderate as the focus moves toward its low value, which will ultimately help natural gas prices rebound. Hill Vaden, a Wood Mackenzie upstream analyst, said another challenge is that providers of hydraulic fracturing haven’t kept up with the rate of drilling, so many wells drilled in 2010 aren’t producing. While that has led some operators to focus on oil drilling, he said, others have begun doing their own hydraulic fracturing rather than relying on service companies."
Energy players debate shale drilling's prospects
Houston Chronicle, 11 May 2011

"Japan is to abandon plans to expand its nuclear power industry and make renewables a key part of its energy policy, the prime minister, Naoto Kan, said as the country marked two months since the tsunami disaster. As workers continued efforts to stabilise the Fukushima Daiichi nuclear power plant, Kan said he would 'start from scratch' a policy that initially envisaged nuclear making up more than 50% of Japan's energy needs by 2030. Japan, whose 54 nuclear reactors provide 30% of its electricity, had planned to build at least 14 new reactors over the next 20 years, but policymakers accept that will be impossible in light of the Fukushima crisis. Kan said that renewables, which make up 20% of overall supply, would have a bigger role to play in meeting the country's energy needs. 'I think it is necessary to move in the direction of promoting natural energy and renewable energy such as wind, solar and biomass,' he said."
Japan nuclear power expansion plans abandoned
Guardian, 11 May 2011

"A draft report from Germany's ethics commission on nuclear power says the country could and should close down all its nuclear power stations by 2021. And it says this date could even be moved forward by some time.The 22-strong ethics commission set up by Chancellor Angela Merkel to debate the pros and cons of nuclear energy in Germany seems likely to recommend that all nuclear power stations in the country be taken from the grid within the next decade - at the latest."
Nuclear commission pinpoints 2021 for German atomic shutdown
Deutsche Welle, 11 May 2011

"Prime Minister Naoto Kan said Tuesday that Japan would abandon plans to build more nuclear reactors, saying his country needed to 'start from scratch' in creating a new energy policy. Mr. Kan’s announcement came as Japan allowed residents of evacuated areas around the stricken Fukushima Daiichi nuclear plant to briefly revisit their homes for the first time since the devastating earthquake and tsunami in March caused the nuclear accident at the plant. Tuesday’s decision will mean the abandonment of a plan that the Kan government released last year to build 14 nuclear reactors by 2030 and increase the share of nuclear power in Japan’s electricity supply to 50 percent. Japan currently has 54 reactors that before the earthquake produced 30 percent of its electricity. The cancellation of the planned nuclear plants is the second time that Mr. Kan has suddenly announced big changes in Japanese nuclear policy without the usual endless committee meetings and media leaks that characterize the country’s consensus-driven decision-making process. Mr. Kan appears to be seeking a stronger leadership role after criticism of his government’s sometimes slow and indecisive handling of the Fukushima accident. Last week, Mr. Kan asked a utility company to suspend operations at the Hamaoka nuclear plant, which sits atop an active earthquake fault line, about 120 miles southwest of Tokyo. After three days of delays, the utility, the Chubu Electric Power Company, finally agreed Monday to shut down the plant until a wave wall could be built and other measures taken to strengthen its defenses against earthquakes and tsunamis. The announcement Tuesday came just days after Mr. Kan said Japan remained committed to nuclear power. His apparent pull- back may be driven partly by public opinion, which has significantly soured on nuclear power since the Fukushima accident. Even before the announcement, the disaster had damped the nuclear industry’s hopes for a worldwide revival of reactor building. With demand for electricity and concerns about global warming both growing, the industry had projected rapid expansion, but Japan’s nuclear crisis had already caused several countries to become skittish about nuclear power. Germany, for instance, declared a temporary moratorium on building new plants. Still, several experts and nuclear industry representatives said Tuesday that they expected demand in two important markets — China and India — to remain strong even though those counties had said they would proceed more cautiously. Both nations have rapidly growing demand for electricity, and neither has nearly enough domestic fuel to meet its needs."
Japan to Cancel Plan to Build More Nuclear Plants
New York Times, 10 May 2011

"A controversial natural gas production technique is contaminating drinking water in tens of thousands of homes, according to a study. Scientists collected 68 drinking water samples from near gas drilling sites in Pennsylvania and New York. They found potentially harmful levels of methane in the water due to its proximity to the process of hydraulic-fracturing, or fracking. The report, released by the National Academy Of Sciences, said: 'In aquifers overlying the Marcellus and Utica shale formations of north-eastern Pennsylvania and upstate New York, we document systematic evidence for methane contamination of drinking water associated with shale gas extraction.' Fracking involves releasing natural gas trapped in shale formations by blasting a mix of water, sand and chemicals into the rock. It has unlocked reserves that could supply the U.S. for 100 years, although environmentalists say that fracking can contaminate water supplies. Methane concentrations were detected in 51 of 60 drinking water wells across the region, regardless of gas industry operations, but concentrations were much higher closer to natural-gas wells, the report said. Levels were 17 times higher on average in shallow wells from active drilling areas than in wells from non-active areas, the report said. The researchers concluded that 'greater stewardship, data, and possibly regulation are needed to ensure the sustainable future of shale gas extraction and to improve public confidence in its use'."
Drinking water in thousands of homes 'contaminated with harmful levels of methane'
Mail, 10 May 2001

"Centrica's warning yesterday could not have been much clearer. Unless we see a dramatic fall in prices on the wholesale energy markets in the next few weeks – unlikely – households will see a round of bill increases before the end of the year. That's the bad news. And here's the really bad news: irrespective of what happens to wholesale energy prices over the years ahead, your bills are going to get even more expensive as Britain strives to meet its climate-change targets. So much so that the Committee on Climate Change, the independent governmental advisory panel, now thinks Britain should be rethinking the current plan for changing its energy mix over the next two decades. In particular, the panel said yesterday, Britain needs to scale back expensive investments in offshore wind and build more nuclear reactors instead – the latter being a cheaper route to low-carbon energy. The economics of that recommendation make sense, but there are a couple of problems. First, nuclear power is not a renewable source of energy, which will force the Government to work even harder not to break Britain's promise to derive 15 per cent of energy for power, heat and transport from renewables by 2020. Second – and potentially even more problematic – it is not at all clear that the few companies in the business of building nuclear power plants are yet persuaded they want to invest the sums required for our existing programme of expansion, let alone an even more ambitious schedule of works. That was true even before the awful disaster that struck Japan this year. But post-Fukushima, the challenges are more demanding still. In Britain, our top inspector has been asked to review the safety of nuclear technology – at the least, the inquiry adds to the uncertainties confronting those considering huge investments. In Germany, home to RWE and EON, two of the would-be builders of Britain's plants, Green politicians have such power that the country's nuclear industry looks set to grind to a halt. Britain is not alone in facing these problems, but it is unique in having to manage the transition to low-carbon technologies at the same time as a whole generation of ageing power plants comes to the end of their shelf life. The danger is that we fall between two stools: that in 2020 we discover in trying tobalance both these demands, we have neither hit our renewables target nor replaced enough power-generation capacity to meet the country's needs. If not nuclear, then what? Well, assuming we can find other ways to hit the 15 per cent quota, gas – back to Centrica, then – is the easiest way to make up the shortfall. Still, let's hope we can still afford it by then. With Germany getting away from nuclear and Asia buying up more supplies from Europe, the price is only going to head in one direction in the years ahead. Three years ago, when home-energy bills hit a record high, one in five households in Britain was deemed to be living in fuel poverty – unable to afford energy bills. That's a shocking statistic for a wealthy nation, but it is a high that may be quickly surpassed in the years ahead."
David Prosser: The soaring cost of making sure the lights don't go out
Independent, 10 May 2011

"The uprisings in the Middle East mean the immediate prospects of lifting distortive fuel subsidies in the Gulf states are remote, even as increasing government spending drives up the region’s runaway energy consumption, analysts say. Khalid al-Falih, the head of Saudi Aramco, the kingdom’s state-owned oil group, said last year that domestic energy demand was expected to rise from 3.4m barrels a day of oil equivalent last year to about 8.3m b/d of oil equivalent by 2028."
Domestic oil usage to vie with exports
Financial Times, 10 May 2011

"Methane leaks are contaminating drinking water near shale gas drilling sites in the northeastern United States, scientists said Tuesday, placing a further question mark over this fast-growing energy source. Scientists tested water samples taken from 68 private wells in five counties in Pennsylvania and New York to explore accusations that 'hydro-fracking' -- a contested technique to extract shale gas -- has contaminated groundwater. Methane was found in 85 percent of the samples, and at sites within a kilometer (0.6 mile) of active hydraulic-fracturing operations, levels were 17 times higher than in wells far from such operations, said the study by researchers at Duke University in North Carolina."
Methane in water near US shale gas drillers: study
AFP, 10 May 2011

"Nuclear power will remain the cheapest way for the UK to grow its low-carbon energy supply for at least a decade, according to government advisers. But renewables should provide 30-45% of the nation's energy by 2030, says the Committee on Climate Change (CCC). Its new report suggests ministers may want to temper ambitions for offshore wind, which is still fairly expensive. The coalition asked the CCC to advise on options for a low-carbon future shortly after taking office a year ago."
Nuclear 'cheapest low-carbon option' for UK energy
BBC Online, 9 May 2011

"Renewable energy could account for almost 80% of the world's energy supply within four decades - but only if governments pursue the policies needed to promote green power, according to a landmark report published on Monday. The Intergovernmental Panel on Climate Change, the body of the world's leading climate scientists convened by the United Nations, said that if the full range of renewable technologies were deployed, the world could keep greenhouse gas concentrations to less than 450 parts per million, the level scientists have predicted will be the limit of safety beyond which climate change becomes catastrophic and irreversible. Investing in renewables to the extent needed would cost only about 1% of global GDP annually, said Rajendra Pachauri, chairman of the IPCC."
Renewable energy can power the world, says landmark IPCC study
Guardian, 9 May 2011

"The European Union’s plans to start construction on the Nabucco pipeline, which is intended to reduce dependence on Russia for natural gas, have been delayed for another year, until 2013, because the consortium has no gas supply contracts lined up. Analysts said the latest delay will further undermine confidence in the viability of Nabucco, which is already facing soaring costs well beyond the initial €7.9 billion, or $11 billion, estimate, while potential investors are holding back because of competing pipelines and the lack of signed supply contracts. Reinhard Mitschek, managing director of Nabucco Gas Pipeline International, said last weekend that 'as soon as there are firm indications that gas supply commitments are in place,' gas should start flowing through the pipeline in 2017. That is three years later than originally planned. He did not name any potential suppliers. Russia currently provides 41 percent of Europe’s gas imports. For months, Nabucco and the European Commission, the executive arm of the E.U., has been negotiating to obtain gas from Azerbaijan’s big Shah Deniz II field. But the Azeri government has so far not decided if will sell gas to Nabucco or to some other pipeline operator. The delays mean that Nabucco’s costs could increase even further. An internal study by the British oil company BP estimated it may cost €14 billion to finish the 3,300-kilometer-long, or 2,050-mile-long, pipeline as commodity prices, especially steel, continue to rise. Once completed, Nabucco would carry 31 billion cubic meters, or 1.1 trillion cubic feet, of natural gas a year from the Middle East and the Caspian region to markets in Europe. The pipeline would be run through Bulgaria, Romania and Hungary, to a hub just outside Vienna. From there, the gas would be distributed to customers throughout the European Union."
Europe's Nabucco Pipeline Delayed Again
New York Times, 9 May 2011

"IRAQ is preparing to halve its official production target, forcing oil companies including BP and Shell to renegotiate their contracts. The Times has learnt that the country's Oil Ministry, with backing from the Prime Minister Nouri al-Maliki, will set a new target to produce between 6.5 million and seven million barrels per day by 2017, down from original plans to pump 12m barrels, according to industry insiders. Iraq, which is a member of the Opec cartel that pumps 40 per cent of the world's oil, produces about 2.68m barrels per day, barely higher than under Saddam Hussein. It had been hoped that with a huge injection of foreign investment, it would be able to challenge Saudi Arabia as the world's biggest oil exporter this decade. Confirmation that it has scrapped the old target will add to fears that global supply will be unable to keep pace with demand in coming years. It is understood that government negotiations to change the long-term service agreements signed by companies in the past two years based on the old production target will begin soon. Analysts said that companies would seek improved terms to compensate them for losing out on revenue, which at present is earned for each barrel of oil produced above a base target. Baghdad believes that it would not be in its interests to try to achieve the 12m target by 2017 because boosting global supply would depress prices. Ministers also argue that there is not sufficient demand for the extra oil, despite soaring prices. Last month, Saudi Arabia cut its output by 800,000 barrels per day after pumping more in response to the political crisis in North Africa, complaining that the extra crude was sitting in tankers with no customers. High oil prices, which have doubled since the 12m target was set two years ago, will also compensate Iraq for the lower production. Ministers also recognise that creaky pipelines and storage facilities could not cope with such an increase in production. The International Energy Agency estimates that investment of more than $US160bn ($150bn) would be needed to meet the target."
Iraq halves oil output as reality replaces ambition
The Australian/London Times, 5 May 2011

"Oil plunged nearly 9 percent to settle below $100 per barrel. Investors who had ridden a months-long rally fled the market Thursday because of concerns about weakening demand for fuel in the U.S. The decline of $9.44 per barrel, or 8.6 percent, brings the week's loss for oil to $14.13, or 12.4 percent. Other commodities like silver and cotton have plunged as well.Oil rose 35 percent from mid-February through the end of April. As it climbed above $100, economists warned that high fuel prices were taking a toll on the U.S. economy. Gasoline demand starting falling in March as motorists paid more at the pump; that trend was reinforced by industry and government studies released this week. On Thursday, worries about the job market ahead of Friday's key employment report added to concerns about fuel demand.... Expensive fuel bills can crimp customers' spending habits. Earlier in the week, reports from MasterCard SpendingPulse and the Energy Department showed that Americans bought less gas in the final week of April. On Thursday, some retailers warned that soaring gasoline prices are starting to cut into the spending power of lower-income customers who were already on tight budgets. Also, the government said that the number of people applying for unemployment benefits reached an eight-month high. Distress in the job market depresses gasoline demand, analysts say, because large numbers of Americans drive to work. 'Commuters are the bedrock of gasoline demand,' Cameron Hanover analyst Peter Beutel said. When people lose jobs, 'you're killing the best part of that demand — the part that will always be there as long as someone has a job.' Companies feel the squeeze of high oil prices as well. Four of the nation's top airlines combined to lose $1 billion in the first quarter, largely because of the high price of jet fuel."
Oil drops below $100 on worry of weaker US demand
Associated Press, 5 May 2011

"The European Commission's director-general for transport and mobility policy has warned at a conference on peak oil that it would be a 'fatal mistake' for the EU to postpone measures to reduce oil dependency.... 'If action is delayed, in the not-too-distant future we may be forced to drastically reduce all our mobility and import technological solutions from other part of the world,' Marjeta Jager told a Green Party conference in the European Parliament. The European Commission's Transport White Paper famously said that 'curbing social mobility is not an option'. Peak oil is the point at which half of the world's original oil reserves have been used up and production enters a period of terminal decline, characterised by soaring prices and supply disruptions. Despite being initially laughed off by the oil industry, a consensus now holds that the world is reaching – or has just reached – peak oil. Last week, the chief economist of the International Energy Agency, Fatih Birol, said that peak oil production was actually reached in 2006. 'The existing [oil] fields are declining so sharply that in order to stay where we are in terms of production levels in the next 25 years, we have to find and develop four new Saudi Arabias,' he said. Birol expected oil prices to rise by almost a third in the next three years as a result."
Act now on peak oil or curtail mobility, says Commission
EurActive, 4 May 2011

"Peak oil is forcing its way to the top of the agenda with stark warnings from the International Energy Agency and others repeated on ABC radio and television this week, after an investigation by the Catalyst program. Following up a similar program she made in 2005, journalist Jonica Newby gained a rare interview with the IEA chief economist, Fatih Birol, who said crude oil production peaked in 2006 and, in veiled terms, added governments should have started working seriously on the problem a decade ago and warned of the threat of more oil wars. Whereas five years ago the agency expected total production - including oil from deep-sea drilling and unconventional sources such as tar sands - could rise to 120 million barrels a day by 2030, the agency now expects production will reach only 96 million barrels. And Birol reckons there are no guarantees it can be brought out of the ground in a timely fashion. 'Existing fields are declining so sharply that in order to stay where we are in terms of production levels, in the next 25 years we have to find and develop four new Saudi Arabias. That is a huge challenge.'... Ian Dunlop, a former Shell executive and deputy convenor of the Association for the Study of Peak Oil and Gas... says the manifestations of peak oil were temporarily masked by the financial crisis - itself partly triggered by high oil prices which hurt struggling homeowners in the subprime mortgage belts of the US - but are now confronting us as the developed world increases consumption. The world faces a 20-30 per cent reduction in oil availability by 2020, he says. ''It's a massive problem [that's] been pooh-poohed for a couple of decades.' The problem with future oil production, Dunlop says, is the amount of energy you get out for the energy you expend - your return on investment - is dropping. 'Cheap oil is disappearing,' he says. 'A lot of major exporting countries in the Middle East are now finding they need more for domestic markets, and there's not as much available for export.'"
Peak oil: it's closer than you think
The Age (Australia), 30 April 2011

"The age of cheap oil is now over – and that’s official. For the first time, the International Energy Agency has conceded that global crude oil production has already peaked and that the commodity will become more and more expensive. In the Catalyst programme broadcast last night on Australia’s ABC1 television, the agency’s chief economist, Fatih Birol, said 'peak oil' was reached in 2006. He said that he expected oil prices to rise by 30 per cent over the next three years. 'The existing [oil] fields are declining so sharply that in order to stay where we are in terms of production levels in the next 25 years, we have to find and develop four new Saudi Arabias,' Dr Birol said. 'It is a huge, huge challenge that we continue to underline.' Only five years ago, the agency – an independent, inter-governmental agency formed in the wake of the 1973 oil crisis – was confidently forecasting that crude oil production would increase to 120 million barrels a day by 2030. Dr Birol said one of the conclusions the agency had come to was that the age of cheap oil was over. Yesterday, light crude was trading at $113 per barrel and forecast to rise to $130 per barrel. At the height of the global financial crisis in 2008, oil spiked to $148 per barrel. Global instability in oil-rich regions meant that crude oil would only get more expensive, according to Dr Birol. 'The amount of increase in the oil input bill in Europe is equal to the government budget deficit of Greece plus Portugal put together,' he said. 'If it increases further . . . we believe it will increase at least 20, 30 per cent higher in the next few years to come and this would mean additional pressure on the financing of many governments who are the oil importers.' More expensive oil will make it more difficult for countries to break out of recession. Dr Birol said more oil reserves 'might be there', but access was not."
Oil prices to keep rising as peak production reached in 2006
Irish Times, 29 April 2011

"The fallout from Japan’s nuclear crisis will hit global demand for uranium, but it will also negatively affect future supply of the mineral, and the uranium market will remain in deficit from 2011 until 2020. That’s according to RBC Capital Markets analysts Adam Schatzker and H Fraser Phillips who in a recently published research report predicted that uranium prices would start to recover in the second half of 2011. They said: 'Based on our forecast of available uranium supplies (mine sourced and non-mine sourced) we do not think that there is sufficient uranium to cover the needs of 2018 to 2020, and certainly not beyond that time frame. 'As a result we expect that, at some point in the next 12 to 18 months, utilities will begin to see an increasingly tight long-term contract market to the point where there is all but no supply availability. This, in our view, will be the stimulus that will cause the uranium price to recover.' The bulk of the world’s uranium supply is purchased by power utilities on long-term contracts, and not on the spot market...The analysts said they had reduced their forecast on total uranium demand between 2011 and 2020 by about 125Mlbs from their previous estimate published on 9 March. But they had also dropped their forecast on total supply over this period by 49Mlbs, and predicted the deficit between uranium demand and supply would be more than 80Mlbs by 2020."
Japan’s nuclear crisis will hit global demand for uranium
ESI-AFRICA.COM, 29 April 2011

"A 14% cut in the final 2011 fiscal year budget from the year earlier will force the Energy Information Administration to cut back some energy data and analysis, EIA Administrator Richard Newell said Thursday. Widely followed weekly reports on oil and natural gas inventories aren't affected. The budget provides $95.4 million for the EIA, the independent, analytical and statistical wing of the Department of Energy, a drop of $15.2 million from the fiscal year 2010 level."
EIA budget cuts to curb some energy data gathering
MarketWatch, 28 April 2011

"Global biofuel use could increase more than 13-fold by 2050 and meet more than a quarter of demand for transportation fuel, without jeopardising food and environmental security, the International Energy Agency (IEA) has said. In a biofuel roadmap released on Wednesday, the IEA says worldwide biofuel consumption could rise from 55 million tonnes of oil equivalent (Mtoe) today, to 750Mtoe by 2050 – provided the right policies and technology developments are in place. The IEA puts the cost of meeting the roadmap targets at between $11 trillion and $13 trillion from 2010 through 2050, 'depending on production costs'. However, it argues: 'The marginal savings or additional costs compared to use of gasoline/diesel are in the range of only +/-1% of total costs for all transport fuels.' By 2050, biofuel could power 27% of the transportation sector, up from 2% today, displacing conventional fuels such as diesel and jet fuel and avoiding around 2.1 billion tonnes of carbon dioxide emissions annually, the report says. To meet this goal without compromising food security and biodiversity, the IEA argues the conversion efficiency and cost of biofuel technologies must be improved while advanced biofuel technology must be more rapidly deployed. In addition, governments must enact stable, long-term policies that incentivise biofuel development and consider food, agricultural and social concerns."
IEA: Biofuels Could Meet a Quarter of Transportation Fuel Demand By 2050
Environmental Finance, 28 April 2011

"Russia decided on Thursday to halt premium petrol exports and switch the flow to the home market to fight shortages and a price rise that is coinciding with growing voter discontent. The sudden announcement from the world's biggest oil producer came after Prime Minister Vladimir Putin ordered his government to tackle an issue that has been gaining increasing attention ahead of upcoming parliamentary polls. Government official said the ban would apply for the month of May alone and only cover high octane petrol (gasoline) sold at the highest prices. But Putin also ordered an immediate boost in export duties and a cut in local excise taxes aimed at keeping most future petrol sales of all types within Russia. 'Prepare proposal and drafts that will raise export tariffs on oil products starting in May,' news agencies quoted Putin as telling his ministers. The flurry of decisions came after two dozen Russian regions reported shortages that were causing prices at the pump to jump by as much as 30 percent since the weekend. Russia officially exported three million tonnes of petrol last year but energy companies are reporting higher foreign deliveries in the first quarter because of surging global energy prices. Deputy Energy Ministry Sergei Kudryashov said companies had already matched last year's export total by the end of March."
Russia bans petrol exports amid shortages
AFP, 28 April 2011

"The price of oil isn’t the only hydrocarbon going through the roof. Check out thermal coal prices to see how dependent economic growth has become on burning increasing amounts of fossil fuels. Prices of Newcastle coal, the Asian coal price benchmark, are poised to rise by as much as 30 per cent this year, approaching the peak levels seen in 2008. It is no surprise the countries driving global coal demand through the roof are the same countries pushing global crude demand. Find the fastest growing economies, and you will find where demand for oil and coal are the strongest. China’s coal consumption is expected to rise by another 10 per cent this year, propelled by strong economic growth, the soaring prices of diesel fuel and the fact water levels at most of the country’s hydroelectric sites are well below normal due to the severe drought this winter. Demand in India, where power blackouts are still the norm and where 40 per cent of the country’s 1.2 billion people still haven’t been hooked up to a grid, is expected to grow by more than 20 per cent this year. China’s coal industry already accounts for more than 40 per cent of world production with less than 15 per cent of the planet’s coal reserves. This is a rate of resource extraction that U.S. coal companies can only dream about. Even so, domestic mine production in China lags runaway demand growth, forcing the world’s largest coal burner to turn to more foreign suppliers such as Australia. Last year, the Chinese economy burnt a staggering 3.2 billion metric tonnes of the stuff. This is already a huge challenge to China’s railway system that is clogged with hauling billions of tonnes of coal from increasingly distant mines in the remote western regions of the country to the industrial heartland in the east. But the Chinese economy faces an even more daunting challenge to its coal consumption than transportation logistics. Domestic coal production is rapidly approaching what even the Chinese government acknowledges to be a national production peak. At the current extraction rate, China could hit that production peak as early as 2015. Once there, most estimates show a sharp drop off in the country’s coal production beginning around 2020. This is why Beijing is considering capping domestic coal production, fearing the country is depleting its remaining coal reserves far too quickly to sustain future economic growth. This policy shift has sent Chinese coal companies scouring the world looking for new coal reserves. They have already spent $21-billion on overseas coal acquisitions. As the largest coal producing country starts thinking about conserving its remaining coal reserves, you wonder just how far off we are from a world of peak coal?"
Jeff Rubin - Is peak coal coming?
Globe And Mail (Canada), 27 April 2011

"As China’s economy continues to soar, its energy use and greenhouse gas emissions will keep on soaring as well—or so goes the conventional wisdom. A new analysis by researchers at Lawrence Berkeley National Laboratory (Berkeley Lab) now is challenging that notion, one widely held in both the United States and China. Well before mid-century, according to a new study by Berkeley Lab’s China Energy Group, that nation’s energy use will level off, even as its population edges past 1.4 billion. 'I think this is very good news,' says Mark Levine, co-author of the report, 'China’s Energy and Carbon Emissions Outlook to 2050,' and director of the group. 'There’s been a perception that China’s rising prosperity means runaway growth in energy consumption. Our study shows this won’t be the case.' Along with China’s rise as a world economic power have come a rapid climb in energy use and a related boost in man-made carbon dioxide emissions. In fact, China overtook the United States in 2007 as the world’s leading emitter of greenhouse gases. Yet according to this new forecast, the steeply rising curve of energy demand in China will begin to moderate between 2030 and 2035 and flatten thereafter. There will come a time—within the next two decades—when the number of people in China acquiring cars, larger homes, and other accouterments of industrialized societies will peak. It’s a phenomenon known as saturation. 'Once nearly every household owns a refrigerator, a washing machine, air conditioners and other appliances, and once housing area per capita has stabilized, per household electricity growth will slow,' Levine explains. Similarly, China will reach saturation in road and rail construction before the 2030-2035 time frame, resulting in very large decreases in iron and steel demand. Additionally, other energy-intensive industries will see demand for their products flatten."
A Surprise: China’s Energy Consumption Will Stabilize
Lawrence Berkeley National Laboratory, 27 April 2011

"A subsidiary of U.S.-firm IDT Energy (IDT.N) is leading a push in Israel to tap into the country's vast deposits of oil shale. The company, Israel Energy Initiatives (IEI), has already invested "tens of millions of dollars" in preparing a pilot project it hopes to launch by the end of 2011, CEO Relik Shafir told Reuters. 'If successful, in a few years IEI could start producing 50,000 barrels of oil a day, or 20 percent of Israel's consumption, for 30 years,' Shafir said.... Israel's oil shale deposits have been known about for decades. A 2005 U.S. Geological Survey report listed Israel among 14 countries with serious oil shale potential but they only became commercially viable since the price of oil skyrocketed. U.S. crude CLc1 is currently above $110 a barrel. Israel's Infrastructure Ministry says subsurface oil shale covers 15 percent of the country, and the amount in the area of IEI's licence alone is comparable to the oil in Saudi Arabia. Relik said his company could produce high-quality oil on a large scale at a cost of $35-$40 a barrel....There is strong government support to pursue oil shale, which together with newly discovered off-shore natural gas fields, would move Israel closer to energy independence. But there are also some major obstacles. IEI's exploration licence covers an area near the biblical Ellah valley just outside Jerusalem where it is believed David fought Goliath. Residents and powerful environmental groups oppose even the small pilot project. Further complicating the progress, a small oil shale mine in the southern Negev desert run by Israel Chemicals (ICL.TA) caught fire earlier this year. It took weeks to extinguish the blaze, causing environmental damage and fueling opposition. Since then, the company said it might close the mine.'"
Oil shale could help Israel energy independence
Reuters, 27 April 2010

"Aramco is considering building three new joint venture refineries in Asia as part of plans to boost its global refining capacity by 50 percent to over 6 million barrels per day (bpd), Falih said. Asia is Aramco's largest and fastest growing oil market. Two out of every three barrels that Saudi Aramco exports go to Asia, Falih said. The state oil giant is expanding its presence in the refineries in the region that process its oil, locking in market share and long-term demand. Aramco is considering building new joint-venture refining projects in China,Vietnam and Indonesia, as well as another plant at home in Jizan, Falih said."
Saudi uneasy with high oil price, worried about economy
Reuters, 26 April 2011

"Europe will start receiving Russian natural gas via the Nord Stream pipeline being constructed under the Baltic in October or November, Russian Prime Minister Vladimir Putin said Tuesday. 'The maritime part will be finished on May 15th. Thankfully there were no problems,' Putin told a press conference during a visit to Denmark. 'In July the gas will be put into the pipeline and in October-November our European customers will get gas,' he assured.... According to the fixed schedule the first gas should reach Europe in October, with a second pipeline due to start pumping by the end of 2012. The eventual planned capacity is 55 billion cubic metres of natural gas per year through the twin pipeline."
Europe will get first Nord Stream gas in Oct-Nov: Putin
AFP, 26 April 2011

"Soaring gasoline prices are biting into household incomes and nibbling at Americans’ fuel consumption — and support for President Obama, according to a Washington Post-ABC News poll. About six in 10 respondents said they had cut back on driving because of rising fuel prices, and seven in 10 said that high pump prices are causing financial hardship.... The Energy Information Administration said Monday that gas prices climbed last week to $3.88 a gallon, up 81 cents since the start of the year. That is the highest pump price since August 2008, before the financial meltdown. Evidence of motorists’ hardships is littering the roads. AAA says the number of motorists running out of gas has been surging. John Townsend, a spokesman for the automobile association, said that cash-strapped members 'are pushing the envelope' and that emergency gas deliveries to stranded members jumped nationwide, including by 40 percent in the District.... Although gasoline prices are just a quarter of a dollar short of their all-time record of $4.11 for a gallon of regular set in July 2008, the Energy Information Administration forecast this month that gas consumption would average about 9.3 million barrels a day over the peak summer driving season, a 0.5 percent increase over last summer. 'Population growth and a recovering economy contribute to gasoline consumption growth,' the EIA said, adding that high gas prices and better fuel efficiency standards would dampen demand. Consumption of diesel fuel is expected to climb 2.3 percent because of higher industrial output and trade."
High gas prices cut into driving habits — and Obama’s approval rating
Washington Post, 26 April 2011

"Thousands of people marched in Tokyo on Sunday to demand an end to nuclear power in Japan and a switch to alternative energy after the crisis at an atomic plant hit by the March 11 earthquake and tsunami. Brandishing placards bearing the slogan: 'Bye Bye Genpatsu' (Goodbye Nuclear Power), demonstrators -- including many young people and families -- walked along a route from Yoyogi Park in the centre of the capital. Organisers estimated 5,000 took part."
Thousands march against nuclear power in Japan
AFP, 24 April 2011

"We think that the crude oil production has already peaked in 2006, but we expect oil to come from the natural gas liquids, the type of liquid we have through the production of gas, and also a bit from the oil sands. But in any case it will be very challenging to see an increase in the production to meet the growth in the demand, and as a result of that one of the major conclusions we have from our recent work in the energy outlook is that the age of cheap oil is over. We all have to prepare ourselves, as governments, as industry, or as a private car driver, for higher oil prices.... I think governments in general are not well prepared for the difficulties we are going to face in the oil markets, because the bulk of the growth is coming from the transportation sector, and if we have to find the solution to the oil problems, we have to find a way to change our mobility habits. The only way I see, and it is well documented in our book, is that to move from an oil-based to an electricity-based mobility system we should lower the oil demand growth and therefore comfort the oil markets. But it will be too optimistic to say that any of the governments, yours or mine, or many of the OECD governments are ready to face this challenge..... Today we have about $90, which is still a significant amount of money we are paying. For example, in Europe we are facing this financial crisis. The amount of increase in the oil import bill in Europe, it is only the increase in the oil import bill in Europe, is equal to the government budget deficit of Greece plus Portugal put together. So only the increase where we have $90. If it increases further, which we believe it will, at least 20%, 30% higher than now in the next few years to come, and this would mean additional pressure on the financing of many governments who are the oil importers.... If the economic recovery starts to happen sooner rather than later we can see difficulties in markets in two, three years time, and this in turn may mean strangling the economic recovery efforts because higher oil prices means putting your pressure on the trade balance, and through the economic recovery efforts it can be well strangled. So this is a big challenge.....we have seen that the decline rate, the decline in the existing fields, are very, very deep. And since four or five years we are underlining one message, namely the existing fields are declining so sharply that in order to stay where we are in terms of production levels, in the next 25 years we have to find and develop four new Saudi Arabias. It is a huge, huge challenge that we continue to underline. And on top of that, this would mean that the world's reliance in terms of oil supply would be on a very few number of countries in the Middle East. So you have both the financial aspect, you have the geological aspect, and you have the geopolitical aspect of the growing reliance on oil....I am afraid that there will be more and more intersection between oil and geopolitics. This is the first worry. The second worry is the sudden increase in the oil prices. This is not good news for anybody. I myself, I never bought a car, and I will never buy a car, but it is for different reasons because I thought if you want to give recommendations of a sustainable way of life, we should first do ourselves what we believe is the truth. I will not be affected that way directly but there will be other ways which will affect my personal life through perhaps some implications on economic growth, the way of life, and others. Yes, I am personally worried about those developments."
Fatih Birol, Chief Economist International Energy Agency
Peak oil: just around the corner
ABC (Australia), 23 April 2011

"China’s trade with Africa has increased tenfold in the past decade and is set to rise further amid a surge in investment, according to new research....China has become Africa’s biggest trading partner, with imports and exports totalling $129 billion by 2010. The explosive growth has been fuelled by billions of dollars of Chinese loans that are being ploughed into new infrastructure projects such as roads, railways and mineral extraction facilities.... Charles Robertson, chief economist of Renaissance Capital, said: 'China’s cheap financing is giving it a dominant position in Africa, which will force developed and other emerging-market economies to fight harder for access to African resources and markets.' Dirk Willem te Velde of the Overseas Development Institute, an international development think-tank, said that some African countries were too reliant on selling raw materials to China, and that they needed to diversify into areas such as manufacturing. Oil accounted for 60 per cent of Africa’s exports to China in 2009."
Africa tightens its trading bond with China, but at what cost?
London Times, 22 April 2011, P54

"China has begun trials of a controversial drilling technique to exploit the world's largest reserves of shale gas, as it attempts to cope with the increasing energy demands of a fast-growing economy while reducing its dependence on coal. In the past two weeks, engineers have completed the country's first horizontal shale gas well in Sichuan and government officials have begun drafting a national strategy to identify a trillion cubic metres of exploitable resources by 2020. Supporters say China has the potential to emulate the United States, where extraction of shale gas has tripled the lifespan of US gas reserves and offered a lower-carbon alternative to coal. 'Shale gas is a game-changer for the US and should do the same for China,' said Ming Sung, Asia representative of the Boston-based Clean Air Task Force and an advocate of closer energy links between the two nations. 'This should be one of the centre-pieces for China's energy strategy. As with any new technology development, we must balance benefits versus potential environmental impacts. The experiences of the US are valuable here.' The extraction method itself is costly, controversial and challenging. Hydraulic fracturing or 'fracking' involves the injection of chemically treated water at high pressure through seams of rock, forcing the gas inside to seep out to where it can be captured. Environmentalists warn that this wastes and contaminates millions of tons of water. For fuel-hungry, drought-plagued China, this poses a conundrum. The energy potential is enormous. The ministry of land and resources calculates the size of shale gas reserves at 26tn cubic metres – more than 10 times the country's known holdings of conventional natural gas. This is a tempting alternative for a country that is eager to improve its energy security in the face of rising oil and coal imports. A global shale gas study released this month by the US Energy Information Administration said China's technically recoverable shale gas reserves were almost 50% higher than those of the number two nation, the US. But tapping them will be expensive and difficult for a country that is desperately short of water and – until recently – lacking experience in the key technologies..... experts and industry executives downplayed the prospect of China exploiting shale gas reserves as quickly as the United States because the geology of the two nations is different. They said China's shale is older and, tonne for tonne, produces less than half the gas of shale in the US. Water shortages will add to the costs. One of China's two biggest deposits in the country – the Turpan Basin in Xinjiang – is a desert. In the short term, Liang said the costs were likely to curtail China's shale gas ambitions."
China takes step towards tapping shale gas potential with first well
Guardian, 21 April 2011

"Senior executives in the fossil fuel industry have launched an all-out assault on renewable energy, lobbying governments and business groups to reject wind and solar power in favour of gas, in a move that could choke the fledgling green energy industry. Multinational companies including Shell, GDF Suez and Statoil are promoting gas as an alternative 'green' fuel. These companies are among dozens around the world investing in new technologies to exploit shale gas, a controversial form of the fuel that has rejuvenated the gas industry because it is plentiful in supply and newly accessible due to technical advances in gas extraction known as 'fracking'. The expansion of shale gas holds out the promise of a glut in gas that is driving down prices and creating a bonanza for the fossil fuel industry. Burning gas in power stations releases about half the carbon emissions of coal, allowing gas companies to claim it is a "green" source of fuel. Central to the lobbying effort is a report claiming that the EU could meet its 2050 carbon targets €900bn more cheaply by using gas than by investing in renewables. But the Guardian has established that the analysis is based on a previous report that came to the opposite conclusion – that renewables should play a much larger role. The report being pushed by the fossil fuel industry has been disowned by its original authors who referred to it as 'biased' in favour of gas. For the last two months, company lobbyists have been besieging government officials in Europe, the US and elsewhere to push the report. Their efforts are being boosted through alliances with energy-intensive industries, which are joining in the pressure on government in the hope of securing cheap energy. As the problems with the Fukushima plant in Japan have cast a pall over nuclear power, gas companies sense the chance to brand themselves as the main 'green' source of energy. James Smith, outgoing UK chairman of Royal Dutch Shell, one of the leaders in the lobbying effort, said switching to gas would offer the world 'a breathing space' in the battle against climate change. This view was challenged by Prof David Mackay, chief scientific adviser to the UK's Department of Energy and Climate Change. He told the Guardian: 'You can't reach the [climate] targets like this - there is no way that switching to gas would solve the problem. I don't think it's really credible that gas is the only future.'"
Fossil fuel firms use 'biased' study in massive gas lobbying push
Guardian, 20 April 2011

"On 6 April the French prime minister, François Fillon, extended a moratorium on gas shale activity by two months until the middle of June. Work permits already issued have been suspended. To cap it all, the former ecology minister Jean-Louis Borloo, who originally signed the permits, is now recognising this was a mistake and is proposing a law to reverse the whole scheme (mind you there are presidential elections in the offing). The final denouement has just played out in the French Parliament with an announcement last week which makes specific reference to resistance in the South that all existing shale gas permits and authorisations have been annulled."
The villages of southern France take on Sarkozy over shale gas
Guardian, 20 April 2011

"U.S. oil company Toreador Resources Corp. has bet big on pumping millions of barrels of oil locked away in deep shale rock formations in northeastern France. But it could be some time before this oil sees the light of day. Amid growing concern over the environmental impact of drilling for shale gas and oil, the French government is considering banning exploration in the country—a first in Europe."
France Mulls Banning Shale Exploration
Wall St Journal, 19 April 2011

"Chinese oil giant Sinopec has stopped exporting oil products to maintain domestic supplies amid disruption concerns caused by Middle East unrest and Japan's earthquake, a report said Wednesday. The state-run Xinhua news agency did not say how long the suspension would last but it reported that the firm had said it also would take steps to step up output "to maintain domestic market supplies of refined oil products".
China's Sinopec cuts off oil exports: state media
AFP, 20 April 2011

"Plans to exploit Iraq's oil reserves were discussed by government ministers and the world's largest oil companies the year before Britain took a leading role in invading Iraq, government documents show. The papers, revealed here for the first time, raise new questions over Britain's involvement in the war, which had divided Tony Blair's cabinet and was voted through only after his claims that Saddam Hussein had weapons of mass destruction. The minutes of a series of meetings between ministers and senior oil executives are at odds with the public denials of self-interest from oil companies and Western governments at the time. The documents were not offered as evidence in the ongoing Chilcot Inquiry into the UK's involvement in the Iraq war. In March 2003, just before Britain went to war, Shell denounced reports that it had held talks with Downing Street about Iraqi oil as 'highly inaccurate'. BP denied that it had any 'strategic interest' in Iraq, while Tony Blair described 'the oil conspiracy theory' as 'the most absurd'. But documents from October and November the previous year paint a very different picture. Five months before the March 2003 invasion, Baroness Symons, then the Trade Minister, told BP that the Government believed British energy firms should be given a share of Iraq's enormous oil and gas reserves as a reward for Tony Blair's military commitment to US plans for regime change. The papers show that Lady Symons agreed to lobby the Bush administration on BP's behalf because the oil giant feared it was being 'locked out' of deals that Washington was quietly striking with US, French and Russian governments and their energy firms. Minutes of a meeting with BP, Shell and BG (formerly British Gas) on 31 October 2002 read: 'Baroness Symons agreed that it would be difficult to justify British companies losing out in Iraq in that way if the UK had itself been a conspicuous supporter of the US government throughout the crisis.' The minister then promised to 'report back to the companies before Christmas' on her lobbying efforts. The Foreign Office invited BP in on 6 November 2002 to talk about opportunities in Iraq 'post regime change'. Its minutes state: 'Iraq is the big oil prospect. BP is desperate to get in there and anxious that political deals should not deny them the opportunity.'  After another meeting, this one in October 2002, the Foreign Office's Middle East director at the time, Edward Chaplin, noted: 'Shell and BP could not afford not to have a stake in [Iraq] for the sake of their long-term future... We were determined to get a fair slice of the action for UK companies in a post-Saddam Iraq.' Whereas BP was insisting in public that it had 'no strategic interest' in Iraq, in private it told the Foreign Office that Iraq was 'more important than anything we've seen for a long time'.   BP was concerned that if Washington allowed TotalFinaElf's existing contact with Saddam Hussein to stand after the invasion it would make the French conglomerate the world's leading oil company. BP told the Government it was willing to take 'big risks' to get a share of the Iraqi reserves, the second largest in the world.  Over 1,000 documents were obtained under Freedom of Information over five years by the oil campaigner Greg Muttitt. They reveal that at least five meetings were held between civil servants, ministers and BP and Shell in late 2002. The 20-year contracts signed in the wake of the invasion were the largest in the history of the oil industry. They covered half of Iraq's reserves – 60 billion barrels of oil, bought up by companies such as BP and CNPC (China National Petroleum Company), whose joint consortium alone stands to make £403m ($658m) profit per year from the Rumaila field in southern Iraq.' Mr Muttitt, whose book Fuel on Fire is published next week, said: 'Before the war, the Government went to great lengths to insist it had no interest in Iraq's oil. These documents provide the evidence that give the lie to those claims. We see that oil was in fact one of the Government's most important strategic considerations, and it secretly colluded with oil companies to give them access to that huge prize.' Lady Symons, 59, later took up an advisory post with a UK merchant bank that cashed in on post-war Iraq reconstruction contracts. Last month she severed links as an unpaid adviser to Libya's National Economic Development Board after Colonel Gaddafi started firing on protesters. Last night, BP and Shell declined to comment."
Secret memos expose link between oil firms and invasion of Iraq
Independent, 19 April 2011

"Central China's Hubei province has joined a growing list of regions facing coal shortages, with a warning on Monday that it is very likely to start rationing power this month if coal supplies remain tight and low water stocks continue to curb hydropower generation. China has warned that power shortages this summer could be the worst for years, with power generation and transmission systems unable to cope with rising demand. The east, north and south of China are likely to be hit the hardest. Some central and southwestern Chinese provinces, however, have also begun feeling the pinch because their hydropower plants are wilting after a lack of rainfall. Coal inventories in thermal power plants in regions with little of their own coal are dwindling due to pricing and transportation issues. Chinese thermal coal prices hit a three month high last week as power producers scrambled for summer supplies."
China regions face power shortage even before summer peak
Reuters, 18 April 2011

"Until last week, the mainstream media held that the Saudis and a couple of their smaller Gulf allies had raised oil production by enough in March to offset the1.3 million b/d taken off global markets by the Libyan uprising. For weeks now Saudi spokesmen have reiterated that the kingdom is ready and able to produce 12.5 million barrels of crude per day if needed by the markets. Recently these assertions have been accompanied by background briefings holding that skeptics' claims that the Saudis would never be able to pump more than 9.5 million b/d were simply untrue. Thus it came as a surprise last Tuesday when the IEA stated that the Saudis' response to the Libyan export crisis was far less than had been popularly thought; and in fact the Saudis were producing less than 9 million b/d. Given that Libyan production was down by at least a million b/d, the IEA said that OPEC’s production in March was down by 890,000 b/d. It is now thought that while the Saudis did increase their output by an average of 310,000 b/d in the first quarter, it seems to have dropped when the tsunami drastically cut Japanese demand as roughly one third of Japan’s refining capacity was out of service for a time. Whether or not the Saudis could supply the necessary grades of sweet light crude to European refineries that had been coming from Libya was also an issue affecting Saudi production. The sudden drop of roughly 270,000 b/d in Japanese demand, coupled with inability to ship the quality oil demanded by Europe apparently was enough to cause a reduction in Saudi production during March. Japanese demand for oil is expected to increase markedly in the second quarter as refineries get back into operation, reconstruction gets underway and oil/ LNG is imported to make up for lost nuclear generating capacity. Some observers are beginning to question whether there is a political dimension to lack of a meaningful Saudi response to the recent price spikes which now has crude selling some $40 a barrel above the Saudi’s 'target price' set last year. Given the Western support for regime change in Tunisia, Egypt, Libya and likely other Middle Eastern countries, the Saudi royal family’s priority of not allowing the global economy to succumb to high oil prices becomes saving themselves at all costs from what someday may become uprisings in the kingdom itself. If this has indeed happened, then the Saudis' first interest is in raising as much money as possible as quickly as possible to buy-off potential domestic opponents and bolster its defenses against domestic unrest. For the Saudis, higher oil prices in the short term to save the regime may be trumping long-term global stability."
Peak oil review
ASPO USA, 18 April 2011

"The planet is running out of oil and heading toward a future that could trap Canada in a violent spiral of decline in the economy and the environment, a special research unit within the Canadian military is predicting. This 'global quagmire' is one of four possible future scenarios advanced by the six members of the team who are developing a plan for the army of tomorrow based on existing scientific research and analysis. In a best-case scenario, they predict that Canada could be at the forefront of a prosperous green economy, in which clean energy and environmental protection are priorities and living standards improve around the world. Two other scenarios fall in between, but all four alternatives conclude that energy security and global environmental change are the most serious and unpredictable factors that could radically alter society as well as the role of Canada's army.... The team has also noted that the world is now consuming oil faster than it's being discovered. 'Globally, we find more (oil) all the time, but we haven't actually found as much as we've used in a given year since 1985,' said Maj. John Sheahan, another member of the research team. 'From the long (term) view, it's guaranteed that something else will take over (as an energy source), we just don't know what or when. . . . Nobody has yet come up with the solution (so) that we can (continue to) do the things we do now and have done for decades. So it is possible that the time line is against us.'... members of the team said that energy security and environmental change are factors with the highest potential impacts and the greatest uncertainty. The findings are similar to recent studies by oil giant Royal Dutch Shell as well as research from other countries such as the United Kingdom that warn excessive energy use can be an 'Achilles heel.' 'There is growing recognition that we need to factor this into our thinking,' said Rear Admiral Neil Morisetti, the U.K.'s climate and energy security envoy from the Ministry of Defence and Foreign and Commonwealth Office. 'We need to try and treat it like any other threat we face. We need to understand more about it and how it's going to impact our national interests, how we can act to reduce the risks and the threats. We're not going to have 100 per cent certainty, but then we're not going to have 100 per cent certainty on the battlefield.'''
Oil shortages and environmental decline could create 'global quagmire': military report
Vancouver Sun, 17 April 2011

"Saudi Arabia's oil minister said on Sunday the kingdom had slashed output by 800,000 barrels per day in March due to oversupply, sending the strongest signal yet that OPEC will not act to quell soaring prices. Consumers have urged the exporters' group to pump more crude to put a cap on oil, which surged to more than $127 a barrel this month, its highest level in 2 1/2 years amid unrest in North Africa and the Middle East. Oil Ministers from Kuwait and the United Arab Emirates echoed Saudi Arabia's Ali al-Naimi's concerns about oversupply and said rocketing crude prices were out of the hands of OPEC, which next meets in June. 'The market is overbalanced ... Our production in February was 9.125 million barrels per day (bpd), in March it was 8.292 million bpd. In April we don't know yet, probably a little higher than March. The reason I gave you these numbers is to show you that the market is oversupplied,' Naimi told reporters. Two Saudi-based industry sources told Reuters last week the kingdom had cut output due to poor demand, prompting selling by traders who saw it as a sign of a well-supplied market. But crude rebounded later in the week on optimism about the state of the U.S. economy. Naimi's words are the clearest indication yet that OPEC is unconvinced there is a need for more oil despite the civil war that has slashed Libyan output and expectations Japanese demand will rise as it scrambles to rebuild its earthquake-shattered electricity grid. 'These statements underscore the breadth of the security premium currently in (oil) prices. Overall supplies are sufficient,' said John Kilduff of energy hedge fund Again Capital. 'As we've seen in the past, however, a well-supplied market is not always a barrier to very high prices.'"
Saudi slashes oil output, says market oversupplied
Reuters, 17 April 2011

"When Angela Merkel declared a moratorium on nuclear energy after the recent disaster in Japan, critics accused her of playing politics. Now she appears to be serious. A national summit in Berlin has laid out a six-point plan to move Germany away from nuclear power. The pledge came quickly. Just days after the earthquake and tsunami decimated Japan's northeastern coast on March 11 -- and triggered the ongoing nuclear catastrophe at the Fukushima power plant -- German Chancellor Angela Merkel promised to bring an end to nuclear power in Germany and accelerate the switch to renewables. Now, Merkel is taking initial steps toward that goal. On Friday, Merkel met with governors of Germany's 16 states and two other cabinet ministers in Berlin. 'I think we all want to move away from nuclear energy as quickly as possible and switch to renewables,' she told the summit. She laid out a six-point plan and said one of the country's most important efforts over the next decade would be heavy investment in more efficient energy grids. Germany currently relies on nuclear plants to cover 23 percent of its energy demand. Merkel's predecessor, Chancellor Gerhard Schröder, passed a law in 2002 to shutter these plants gradually, with the country to be nuclear free by 2022. But Merkel -- controversially -- reversed this phase-out last autumn. Now, she is scrambling to reverse the reversal. She would like to see all nuclear plants in Germany shut down within 10 years. 'Nuclear energy has no future in Germany,' David McAllister, Merkel's party ally and the governor of the state of Lower Saxony, told the Süddeutsche Zeitung. 'It's clear we need to implement the exit if we don't want to lose people's confidence.'"
Merkel Takes First Steps toward a Future of Renewables
Der Spiegel, 15 April 2011

"Gasoline prices are soaring toward $4 a gallon, a threshold that some analysts say will damage the fragile economic recovery and crimp consumer spending just as families are planning their summer vacations.... Higher prices saddle businesses with higher transportation costs, causing them to either swallow them or pass them along to already strapped customers. As gasoline costs go up, consumers are left with less money to spend elsewhere. And there is evidence that the hike at the pump is beginning to push drivers off the road. Gasoline prices, which are approaching record levels, 'are going to have a very profound effect on the economy,' said Peter Morici, an economist at the University of Maryland. D.C. resident Amber Sutton, who drives 25 miles each way to her job in Woodbridge, said rising gasoline prices have caused her to cut back on restaurants and other entertainment. 'I already was spending a ton on gas,' she said. 'But now it’s absolutely ridiculous.' The average price for a gallon of regular gasoline Monday was $3.79 — up more than a dime from the previous week and 93 cents from a year earlier, according the Energy Information Administration. In California, the average is now $4.16, and prices are above $4 a gallon at some stations in the District and elsewhere... Gasoline prices peaked in July 2008, when a gallon of regular sold for an average of $4.11 nationally. Some analysts fear prices could again approach that level in the near future, since demand for gasoline generally rises in the warm-weather months.... Already, motorists are cutting back on driving because of the increasing prices. 'We are seeing some deterioration in U.S. motor gasoline demand .. as pump prices near $3.75 a gallon,' which is when demand got soft in 2008, said David Greely, an analyst at Goldman Sachs. 'As the market moves to higher prices, the likelihood that you’re going to weaken demand increases.' Bill Simon, chief executive of Wal-Mart U.S., said recently that the retailer sees fewer customers when gas prices begin to rise, because its mammoth stores are typically farther away than local grocery and convenience stores. But as the spike continues, customers begin consolidating shopping trips and are more likely to visit just Wal-Mart instead of a handful of smaller retailers, Simon said. 'We know that gas prices are going to continue to challenge people.'.... Oil prices above $100 will hurt the recovery, the IEA report said. 'Economic impacts from high prices are never instantaneous, and often take months to materialize, but preliminary data for early 2011 already show signs of oil demand slowdown,' the IEA report said. 'Unfortunately, the surest remedy for high prices may ultimately prove to be high prices themselves.'”
$4-a-gallon gas fueling fears for recovery
Washington Post, 12 April 2011

"Oil gained for a third day in New York, after a Saudi Arabia-based economist said the holder of the world’s biggest crude reserves cut production this month, signaling supply may shrink. Futures climbed as much as 0.6 percent today, paring the week’s decline to 3.7 percent, after John Sfakianakis, chief economist at Riyadh-based Banque Saudi Fransi, said the kingdom reduced output by 300,000 barrels a day. Barclays Plc said the country may be lowering production of its lighter oil blends introduced in response to the slump from Libya. Prices also advanced yesterday after the U.S. dollar fell, increasing the appeal of raw materials. 'Reduced production of the country’s lighter blends in response to Libyan outages suggests supply may tighten,' Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note today. 'On the other hand, it could imply that demand is weak for Saudi light crude blends. The weaker U.S. dollar helped' prices, he said.... Saudi Arabia, the biggest oil producer in the Organization of Petroleum Exporting Countries, pumped 9 million barrels of crude a day in March, the highest level since October 2008, according to data compiled by Bloomberg News. Falling Libyan crude output increased prices for comparable low-density, low-sulfur grades. Saudi Arabia developed two blends to offset the shortfall."
Oil Gains a Third Day After Reports Saudi Arabia Cut Production This Month
Bloomberg, 15 April 2011

"The World Bank has called for the relaxation of laws requiring crops to be blended into petrol, saying that they are contributing to the global food price crisis. Robert Zoellick, the President of the Bank, said that a 'toxic brew' of higher food and fuel costs was heightening popular unrest in regions such as the Middle East and North Africa and condemning millions more people to poverty. Among the many causes of high food prices are rules in countries, such as the United States, that require a certain percentage of petrol to come from corn-based ethanol. Some 31 per cent of the corn produced in the US in 2008 was turned into ethanol, and government forecasts show that this will hit 40 per cent this year. Biofuels have been a cornerstone of American attempts to reduce its dependency on imports of oil from the Middle East and elsewhere."
Relax biofuel laws to help ease the food crisis, World Bank says
London Times/The Australian, 15 April 2011

"As war-ravaged Iraq ramps up crude oil production to reach an ambitious goal of a nearly five-fold increase by 2017, it is scrambling to face the parallel challenge of protecting oil facilities. The Oil Police, with the wide responsibility of guarding every aspect from fields and personnel to refineries and petrol stations, is struggling with shortages of equipment and funds, as well as the manpower specified in the goverment’s five-year plan. 'We are short of about 12,000 police officers,' complained General Hamid Ibrahim, the head of the police force. He currently commands a force of 30,000 men, 8,000 of them low-paid contracted workers without the higher wages and benefits of tenured employees. 'We are forced to hire contract workers because the finance ministry has not provided the funding to hire tenured employees,' he told AFP..... Iraq’s declared oil reserves of 143 billion barrels are among the world’s largest, and crude generates 90 percent of revenues. The government plans to boost the current modest production of 2.6 million barrels-per-day to six million bpd in 2014 and 12 million bpd by 2017. But an International Monetary Fund report last month expressed doubts over Iraq’s ability to reach that goal, saying production was more likely to reach about five million bpd by 2017."
Oil police struggle to protect Iraq’s ‘black gold’
AFP, 14 April 2011

"EU biofuels targets are unethical, according to a report by the Nuffield Council on Bioethics. Its authors recommend the targets should be lifted temporarily until new safeguards are put in place for biofuels grown in Europe or imported....The Council is an independent body that was set up 20 years ago to ponder ethical issues raised by developments in biology and medicine. It has been studying biofuels for 18 months - specifically relating to the EU Renewable Energy Directive target that biofuels should account for 10% of transport fuel by 2020, a much-criticised mandate originally designed as part of Europe's strategy to combat climate change."
Biofuels targets are 'unethical', says Nuffield report
BBC News, 13 April 2011

"Despite some Gulf OPEC members increasing crude oil production last month, the output is struggling to cover the dramatic slump in Libyan production as a result of ongoing violence in the North African country, according to a new report. The 12-member Organisation of the Petroleum Exporting Countries’ (OPEC) production of crude oil declined around two percent in March to an average of 29.17 million barrels per day (b/d), according to new survey data from energy analysts at Platts in London. While some Gulf countries, such as Saudi Arabia, the UAE and Kuwait, increased output, it was not enough to cover the loss of 930,000 b/d of Libyan supply, the survey found. Ongoing unrest in Libya between rebel forces and those still loyal to Muammar Gaddafi has impacted production and output in March slumped by two thirds to an average of around 460,000 b/d, compared to 1.39 million b/d in February and 1.58 million b/d in January. 'Even the simple counting of barrels shows how difficult it will be for the market to recover from the loss of so much Libyan crude,' said John Kingston, Platts global director of news. 'Beyond that, the quality of the crude coming out of Libya is one of the highest in the world, with very good yields on the transportation fuels, particularly diesel, which the world needs. So one barrel of crude from another OPEC country doesn’t neatly replace one barrel of Libyan crude.' While Saudi Arabia increased output by 300,000 b/d to an average of nine million b/d, the UAE increased production by 100,000 b/d to an estimated 2.5 million b/d and Kuwait boosted output by 70,000 b/d to 2.4 million b/d, Kingston said this was still not enough to cover the shortfall. 'The market will need to see a decline in demand to balance, and we are seeing signs of that reaction to higher prices ongoing,' he said. Among the other members states, Angola increased production to 1.7 million b/d, while Nigerian and Venezuelan production dropped and Iranian output remained steady. On Tuesday, OPEC said it expects oil demand to grow by 1.4 million b/d this year."
OPEC struggles to cover slump in Libyan output
Arabian Business, 13 April 2011

"China could decide to stop approving 'second-generation' nuclear reactors as it reassesses its long-term plans for the sector, an official with one of the country's biggest nuclear firms said on Wednesday. 'It is probable that China will stop approving new second-generation units, and it will be difficult to build (reactors) on a large scale until third-generation technology is fully mature,' said Li Xiaoxue, general manager of new project development at the state-owned China Guangdong Nuclear Power Corp.... The country eventually aims to build its own brand of third-generation nuclear reactors after agreeing to a substantial technology transfer agreement with Westinghouse, owned by Toshiba , in 2007. But China has already given the go-ahead to dozens of second-generation plants, and these will not be affected by any future ban. Li told a conference that the 'psychological impact' of the Fukushima nuclear accident was far bigger than the crisis itself, and the government was likely to respond by slowing down construction, especially in China's interior."
China could ban second-generation nuke projects -official
Reuters, 13 April 2011

"The highest oil prices in 2½ years have begun to trigger some deterioration in demand, oil producers and consumers said, a surprising fallout from the disruption in oil production that has resulted from unrest in the Middle East. The Organization of the Petroleum Exporting Countries Tuesday slightly downgraded its annual forecast for global oil consumption growth for the first time this year, as it emerged that kingpin Saudi Arabia had cut back production on lackluster demand for extra barrels."
Surging Oil Prices Bite Demand
Wall St Journal, 13 April 2011

"China, the world’s biggest polluter, may start producing shale gas within five years to meet rising demand for cleaner-burning fuels. Production of gas in shale rock may begin before the end of 2015, Che Changbo, deputy director of the Ministry of Land and Resources’s oil and gas strategy center, said in an interview after a conference in Beijing. The country has drilled more than 10 wells and signed several cooperation agreements with foreign companies to develop the resource, according to Che. China wants to triple the use of natural gas to about 10 percent of its energy consumption by 2020 as it cuts reliance on more polluting coal. China has brought in foreign partners including Royal Dutch Shell Plc (RDSA) and Chevron Corp. (CVX) to assess its shale potential and acquired overseas shale-gas assets to gain expertise in producing the hard-to-extract resource.... China may have 26 trillion cubic meters, or about 920 trillion cubic feet, of potential shale-gas resources, according to Che. Deposits of shale gas in China are 12 times more than conventional gas reserves in the nation, the U.S. Energy Department said in a report on April 5. Chinese shale-gas reserves that are 'technically recoverable' stood at 1,275 trillion cubic feet compared with 107 trillion in proven gas deposits in 2009, according to the report. That’s more than 862 trillion cubic feet of reserves in the U.S. and 19 percent of the world’s 6,622 trillion cubic feet. 'Once we start large-scale production, shale gas won’t be an unconventional fuel for China anymore and it will play an important role to supply China’s energy needs,' Che said."
China May Start Shale-Gas Production by 2015 to Meet Cleaner Fuel Demand
Bloomberg, 14 April 2011

"This year's oil price spike has dragged the IMF kicking and screaming into the world of overstressed energy markets. The International Monetary Fund said Monday that it expects the global oil price to average $107 a barrel this year and $108 next. That's 20% above its previous forecast, thanks to stronger-than-expected global petroleum growth in 2010 and a less than enthusiastic supply response. Global oil demand rose 3.4% last year, the IMF said in the latest release of chapters from its semiannual World Economic Outlook report. That's the fastest pace since 2004 and double the rate IMF forecasters projected at the start of 2010. Meanwhile, the supply of crude oil 'is responding sluggishly to the ongoing pickup in demand, largely reflecting the policy stance of OPEC,' the IMF said. The IMF said it believes the high prices, if sustained at current levels, should have only a 'mild effect' on global economic growth. But it conceded that 'the key downside risk to growth relates to the potential for oil prices to surprise further on the upside because of supply disruptions.' We have seen a few of those in recent months, to the IMF's apparent surprise. The agency predicted last fall that the oil price would average $78 this year. After an early year spike spurred by the political meltdown in Egypt, it raised that forecast to $89 in January. But now, oil is trading at $112 in New York and $126 in London, even as Middle East anxiety recedes -- along with U.S. gasoline demand. And the IMF is warning that another supply shock-driven surge in prices could undo a fragile global recovery. To that end, the IMF ran a stress test on the global economy to determine how it might deal with oil at $150 a barrel. The summer spike to $147 in 2008 is widely seen as having dealt a blow to economic activity, though it's hard to say for sure how big a hit that was since the financial system was coming undone at the same time. The IMF said a surge to that level in 2011, with prices falling back next year, could wipe 0.75 percentage point off its forecast for economic growth in advanced economies, which it currently sees expanding 2.5% this year. The impact would be varied elsewhere, with Asia and Latin America slowing but the Middle East gaining as oil export revenue rose. That is sort of a best-case worst-case scenario, however. 'Global output losses would be much larger in the event of a permanent shock to oil supply,' the IMF warns. The IMF hints at one possible source of such a disruption – the prospect that the rest of the world is overestimating the capacity of OPEC nations led by Saudi Arabia to boost production to meet growing global demand. If OPEC's spare production cushion is thinner than we think, prices are going to be much more apt to surge any time we see a flare-up in an oil-producing country. 'The acceleration in OPEC crude oil production in December 2010 and January 2011 — when oil prices were closing in on the $100 a barrel threshold — suggests that OPEC members remain concerned about accelerated price increases,' the IMF writes. 'Nevertheless, the absence of an elastic production response when prices moved beyond the $70–$80 range has led to some uncertainty in markets about OPEC producers' implicit price targets. To say there's some uncertainty over OPEC's intentions, let alone its capabilities, is something of an understatement."
IMF hikes oil price forecast by 20%
Fortune, 11 April 2011
"Cornell University professors will soon publish research that concludes natural gas produced with a drilling method called 'hydraulic fracturing' contributes to global warming as much as coal, or even more. The conclusion is explosive because natural gas enjoys broad political support – including White House backing – due to its domestic abundance and lower carbon dioxide emissions when burned than other fossil fuels. Cornell Prof. Robert Howarth, however, argues that development of gas from shale rock formations produced through hydraulic fracturing – dubbed 'fracking' – brings far more methane emissions than conventional gas production. Enough, he argues, to negate the carbon advantage that gas has over coal and oil when they’re burned for energy, because methane is such a potent greenhouse gas. 'The [greenhouse gas] footprint for shale gas is greater than that for conventional gas or oil when viewed on any time horizon, but particularly so over 20 years. Compared to coal, the footprint of shale gas is at least 20% greater and perhaps more than twice as great on the 20-year horizon and is comparable when compared over 100 years,' states the upcoming study from Howarth, who is a professor of ecology and environmental biology, and other Cornell researchers. The Hill obtained a pre-publication version of the study, which is slated to run in the journal Climatic Change. It is drawing immediate pushback from industry-aligned experts, who question key assumptions. The environmental effects of producing gas from shale rock formations – in states including Pennsylvania, Texas and Arkansas – is drawing careful scrutiny as development booms. The Energy Information Administration – which is the Energy Department’s statistical arm – estimates that shale gas will account for 45 percent of total U.S. gas supply in 2035, up from 14 percent in 2009. The study concludes that shale gas developed through fracking carries a higher greenhouse gas footprint because the 'fugitive' methane emissions at the fracking sites are greater than releases from conventional gas wells. Fugitive methane from other steps in the development process – transport, storage and so forth – are comparable to conventionally produced gas, the study states. In essence, the Cornell study argues that methane emissions from these shale gas projects mean that shale gas ultimately brings climate consequences comparable to coal over a century, and worse than coal over two decades. That’s because the potent methane emissions in the production process more than compensate for the fact that burning natural gas for power brings far fewer carbon dioxide emissions that burning coal. The study also notes that, depending on the estimates used, conventionally produced gas may add more to climate change than coal over the 20-year horizon. But experts from the energy consulting firm M.J. Bradley & Associates are questioning the study. 'It needs to be understood as a study that has several key assumptions that are highly uncertain or based on limited data points,' said Christopher Van Atten, a senior vice president with the firm. M.J. Bradley’s client base includes gas industry clients. Among Van Atten’s criticisms, the study is overstating methane’s potency as a greenhouse gas, he argues. Van Atten, in an email, notes that the paper assigns a higher global warming potential to methane than the United Nation’s Intergovernmental Panel on Climate Change. He also questions the report’s emphasis on the climatic effects of methane over a 20-year horizon. 'They focus some of their results on a 20 year period which is not particularly relevant in terms of climate change. Methane only lasts in the atmosphere for about a decade, co2 remains in the atmosphere for about a century. By focusing on the shorter timeframe, they show a greater impact from the shorter lived chemical,' he said. But the study notes that “the 20-year horizon is critical, given the need to reduce global warming in coming decades.”
Study: Gas from ‘fracking’ worse than coal on climate
The Hill, 10 April 2011

"A surge in global food prices has prompted fresh criticism of US subsidies for ethanol, which diverts massive amounts of corn from global food supplies for energy. Producers of ethanol argue that the biofuel helps blunt the impact of high imported petroleum prices, but critics say the US policy giving tax breaks for ethanol used in motor fuel ends up being bad for food, energy and the environment. The issue has created unusual political alliances, with environmental groups and some lawmakers from both parties clashing with farm interests and legislators from the corn-producing midwest states. Senators Tom Coburn, a Republican from Oklahoma, and Ben Cardin, a Maryland Democrat, introduced a measure last month to scrap the tax credit of 45 cents per gallon for ethanol in gasoline. 'The ethanol tax credit is bad economic policy, bad energy policy and bad environmental policy. The $6 billion we waste every year on corporate welfare should instead stay in taxpayers' pockets where it can be used to spur innovation, stimulate growth and create jobs,' said Coburn. The lawmakers cited a Government Accountability Office report describing the tax credit as 'largely unneeded today to ensure demand for domestic ethanol production.' C. Ford Runge, a University of Minnesota professor of applied economics and law, argues that ethanol from crops has many 'hidden costs' that should dissuade the government from subsidies. Runge, who raised concerns about ethanol policy as early as 2007, says his research suggests some 30 percent of food price increases come from diversion of US corn for ethanol. 'If you're taking 40 percent of the US corn crop, the largest of any country on earth, and putting it to one use... you don't have to have a Ph.D in economics to know that's going to put upward pressure on prices,' he told AFP. In an essay written for Yale University's Environment 360 online magazine, Runge cites 'strong evidence that growing corn, soybeans, and other food crops to produce ethanol takes a heavy toll on the environment and is hurting the world's poor through higher food prices.' The UN's Food and Agriculture Organization has warned that rising food prices are driving unrest around the world, including recent uprisings in the Middle East and North Africa. Runge said high food prices -- including corn at record highs -- are a factor in the unrest, saying 'these countries have been subjected to the pressures in their household costs,' adding to the political pressures. Economist Ed Yardeni at Yardeni Research said diversion of crops to fuel is important because the US provides more than half of global corn exports and over 40 percent of soybean exports."
Surging food prices fuel ethanol critics
AFP, 10 April 2011

"Top oil exporter Saudi Arabia would have 'no problems' producing at its claimed 12.5 million barrels per day (bpd) capacity if the market needed the oil, a senior Gulf source said on Sunday. The official dismissed doubts raised by some analysts over the kingdom's stated spare capacity as the work of speculators trying to manipulate oil prices as fighting in Libya has disrupted production in the North African OPEC nation. 'First traders used the peak oil theory to drive the market up and since that didn't work now they are saying that Saudi can't use its full capacity, which is completely not true,' the senior Gulf source said.  OPEC's spare capacity, which is mainly held by Saudi Arabia, has returned to the forefront of oil traders' minds with the unrest in Libya. Although the consensus is that the remaining idle OPEC oil fields can pump more than 3 million bpd, another significant output disruption would leave a razor-thin margin between world oil demand and production capacity. Oil posted its biggest rise in three weeks on Friday, gaining $3.98 to settle on Friday at $126.88 a barrel, its highest since July 2008. Oil consumers warned last week that their economies were being harmed by soaring energy costs.... State oil monopoly Saudi Aramco's reported plans to boost the number of rigs drilling wells in the kingdom to 118 from around 92 at present has further stoked speculation about Saudi Arabia's oil output capacity. Aramco discussed increasing the number rigs during meetings with leading oil services companies including Halliburton Co , Simmons & Co analyst Bill Herbert said in a research note released last month last month. 'The rigs are for maintaining capacity and other activities like gas exploration, but its not at all a sign that we can't produce 12.5 million barrels a day,' the Gulf source said.  Saudi Arabia has claimed a sustainable production capacity of 12.5 million bpd since Aramco completed several expansion projects in 2009. Riyadh has traditionally maintained the bulk of OPEC's spare capacity as part of its oil policy."
Saudi ready to pump 12.5 mn bpd oil if needed: Reports
Reuters, 10 April 2011

"Soaring petrol prices are hitting sales at out-of-town shopping centres as cash-strapped consumers think twice about making long journeys to retail destinations such as Cribbs Causeway in Bristol and the Metrocentre in Gateshead. As the price of oil breached $124 a barrel for the first time in two and a half years – and is now at a record in sterling terms, as a result of the weaker pound – John Lewis revealed big sales declines at its shops in key out-of-town malls, including Bluewater in Kent and Cribbs Causeway. Takings at the retailer's Bluewater department store are down more than 9% since the end of January, with the decline accelerating to more than 12% in the most recent week. At the John Lewis store in Cribbs Causeway mall sales have tumbled more than 11% so far this year and were down more than 14% last week. City retail analyst Freddie George, at brokers Seymour Pierce, said: 'With the petrol price so high, we knew this was coming and these John Lewis figures provide the first significant evidence.' The dismal sales at John Lewis's out-of-town centres are in sharp contrast to its more traditional city centre branches and internet site. Retail research group Synovate, which monitors the number of shoppers visiting retail centres nationwide, said it had also detected a move for shoppers to stay local. The number of shoppers going through the doors of out-of-town centres fell nearly 12% in March, compared with last year, and compared with a 7% decline across all shops."
Out-of-town shopping malls suffer as fuel price deters shoppers
Guardian, 8 April 2011

"After receiving the 'black award' at a green award ceremony held by Israel’s top environmental organizations two weeks ago, Israel Energy Initiatives says that criticisms of its oil shale drilling project were inaccurate, and that it is adhering to all relevant environmental protocol. On March 22, a series of Green Globe awards were distributed by Israel’s umbrella organization for environmental groups – Life and Environment – to the organizations and people a team of judges had chosen as the best and worst contributors to the environment in the past year. The 'black award' was given to the oil shale project in the Adullam region of Israel’s Judea Coastal Plain – a project of Israel Energy Initiatives (IEI), chaired by philanthropist Michael Steinhardt. 'There were around 10 options and [the judges] selected this as one of the most potentially hazardous to environmental health and nature these days in Israel,' Naor Yerushalmi, executive director of Life and Environment, told The Jerusalem Post just before the awards. 'This would be another regular environment campaign, but the twist here is that one of the [backers] is Michael Steinhardt, a real Zionist, a real lover of Israel, a supporter of the environment.' A week prior to the ceremony, Yerushalmi sent a letter to Steinhardt about the dangers of oil shale drilling, which was co-signed by Amit Bracha, executive director of Israel Union for Environmental Defense, and Kosha Pakman, executive director and CEO of SPNI. The letter itself was actually drafted by an IUED attorney, Keren Halperin, who is the director of the organization’s environment and community project."
A black and green battle over oil shale
Jerusalem Post, 8 April 2011

"American sources say that by 2015 production of shale oil in the country will reach 2 million barrels per day and exceed production of oil in the Gulf of Mexico. By 2020, thanks to shale oil overall oil production in the U.S. will increase by 20% and oil imports will drop by 60%. With the relative cheapness of drilling operations ($7-8 million per well), the profitability of shale oil is $50 a barrel, and its production becomes effective at a price corridor in $70-80 a barrel."
U.S. to reduce oil imports by 60% by 2020
Azerbaijan Business Center, 8 April 2011

"One of Australia's richest men claims the technology exists to dramatically reduce the country's vulnerability to international oil price shocks and even become an exporter of transport fuel. Mining magnate Peter Bond says Australia could be self-sufficient in diesel and jet fuel if state and federal governments permit the commercialisation of underground coal gasification (UCG). 'We can be the Wal-Mart of energy. This could actually put peak oil for this country off for two generations,' he said. 'It's definitely one of the fuels of the future.' But there are fears from farmers that the process could have harmful environmental and health impacts. UCG, a Soviet-developed process, involves burning deep unmineable coals on site at a temperature of 1,200 degrees Celsius. Gas produced by the burn can then be converted into synthetic fuels. There are billions of tonnes of stranded coals in Queensland. 'The fact that you're coal rich and oil poor means that you can isolate and insulate your economy from having to pay out a fortune for Middle East oil,' Mr Bond said. For nearly seven years Mr Bond's company Linc has been piloting the UCG process at its $70 million demonstration plant at Chinchilla, west of Brisbane. 'We gasify coal really cost effectively from stranded coal 100 to 150 metres under the ground,' Mr Bond said. 'We can produce a barrel for $30.' Linc says it is the only company in the world to combine UCG and gas-to-liquids (GTL) processes in one site. 'I get a buzz from standing here knowing that the coal is being gasified under our feet and going across to the GTL plant, and several minutes later is turned into diesel,' Mr Bond said. 'I love the concept of being able to unlock billions of tonnes of energy of stranded coal. I used to be a coal miner and it just makes sense.' The Queensland Government has approved three pilot UCG projects but last year two of them, Cougar Energy based at Kingaroy and Carbon Energy near Dalby, had contamination scares. Cougar was shut down and Carbon Energy has just been allowed to reopen with stricter controls. The highly publicised contamination events seriously damaged the fledgling industry. 'There is no doubt in the case of Kingaroy that they made a mess of it,' said Ian MacFarlane, the Federal Opposition's energy and resources spokesman. 'It was either a mistake or a complete PR disaster, one of the two. People have lost confidence in it.' Mr Bond says the scare 'certainly doesn't help' the industry. While the Queensland Government is yet to allow UCG to move beyond the pilot phase, Queensland's farmers are calling for caution. Unnerved by the Kingaroy scare, rural lobby group AgForce say it is worried about UCG's impact on underground water aquifers as well as the possibility of land subsidence. 'It is all happening underground. Everything that goes on, from the lighting of the fire to the extraction of the gas and the inter-aquifer relationships, is all well hidden away out of sight,' spokesman Drew Wagner said. 'We don't know what the impacts will be. What we are reacting to is pretty scary.'"
Australia urged to develop 'fuel of the future'
ABC News, 8 April 2011

"Corn stockpiles in the U.S., the world’s largest grower, are plunging to a 15-year low and may be smaller than the government forecast last month as rising demand from makers of feed and ethanol drive prices higher.... About 40 percent of the crop is used to make ethanol as the government subsidizes the fuel additive and retail gasoline nears $4 a gallon. Corn futures have more than doubled in the past year to the highest since July 2008, as rising pork and beef prices encouraged demand from livestock producers and as U.S. export-sales expanded at the fastest pace in three years....Costlier food contributed to riots across northern Africa and the Middle East that toppled leaders in Egypt and Tunisia and is driving up inflation, spurring central banks to consider higher interest rates that may slow growth. In the U.S., food costs were 7.8 percent higher in the first quarter than a year earlier, the American Farm Bureau Federation said April 5. Goldman analysts Damien Courvalin and Jeffrey Currie said corn would rise to $8.60 in three months, compared with a previous forecast of $6.20, according to a report to clients April 1. The bank also raised its six-month outlook to $7.80 from $6 and its 12-month estimate to $7 from $5.80. Goldman advised consumers and investors to buy futures for December delivery traded in Chicago....The U.S. is the world’s largest exporter of corn, soybeans and wheat. Corn is the biggest U.S. crop, valued at $66.7 billion in 2010, government figures show. Soybeans were second, valued at $38.9 billion, and wheat ranked fourth at $13 billion, behind hay."
Corn Stockpiles Dropping in U.S. as Meat, Ethanol Demand Widens
Bloomberg, 8 April 2011

"Independent oil and gas companies are placing big bets on a new shale field on the hopes of tapping into vast supplies of oil, but some fear they could be pumping large amounts of cash into a region whose potential is still far from proven. Niobrara shale, which is spread across Colorado, Western Nebraska, Wyoming, parts of Montana and North and South Dakota, has been in the limelight ever since some independents planned to spend more in the area amid high oil prices. U.S. crude rose to a new peak of $111.68 on Friday, the highest since September 2008, prompting producers to seek out supplies once thought difficult to reach. Niobrara shale, whose prospects are often compared with the highly successful oil-rich Bakken shale, is thus seen as a beneficiary. 'This is a known petroleum system and is very regional. I think it is probably one of the most important plays going on in North America, other than Bakken,' said Stephen Sonnenberg, a geologist and a professor at the Colorado School of Mines. However, Niobrara's potential is still under scrutiny, as it has not been completely proven as a repeatable source of energy, and analysts say the companies' ventures there could well not live up to the hype. 'In my view, companies are probably getting ahead of themselves in terms of magnitude as they talk up the prolific nature of Niobrara,' MKM Partners analyst Curtis Trimble said. The analyst added that although the region had promising well results, currently available data indicated its potential may not match Bakken's. And some companies are already showing signs of a rethink. Recently, Mark Papa, CEO of EOG Resources (EOG.N), one of the first entrants and largest holders in the shale with about 300,000 net acres, told investors he was 'cautiously optimistic' about early results from the emerging Niobrara shale field in Wyoming, but said more data was needed. This is a marked difference from what Papa said in the last quarterly conference call in February that the company was encouraged by the results in its Niobrara fields in northern Colorado and southern Wyoming. EOG's smaller peer Rex Energy (REXX.O), which according to Trimble owns about 45,000 net acres in the play, said in March that two of its wells in Wyoming did not turn up enough hydrocarbon to be 'commercially viable'. Analysts say such uncertainty is what is preventing the integrated majors from getting in and trying out deals, as they still wait for more substantial production and well results. 'We do not see oil majors like ExxonMobil (XOM.N) and Royal Dutch Shell (RDSa.L) entering before the independents crack the code there. Maybe after that we will be seeing more joint ventures here,' Pritchard Capital analyst Anuj Sharma said."
Analysis: Independent oil cos risk big money on unproven shale
Reuters, 8 April 2011

"The International Monetary Fund on Thursday warned that the global economy was entering a period of scarcer oil that could drive prices up rapidly. In new analysis by the Washington-based global financial institution, the IMF said market tensions were increasing between growing demand for oil from fast-growing emerging market economies, like China, and production constraints due to maturing oil fields. 'There is a risk that the tensions between demand and supply trends could intensify again and prices could rise rapidly,' said Thomas Helbling, an advisor to the IMF's Research Department and author of the report. With no end in sight to unrest in the oil-producing Middle East, oil prices climbed above $120 a barrel this week for the first time since 2008. Brent crude LCOc1, a global benchmark oil contract, rose almost $8 a barrel over the past five days to $122.30 on Wednesday. The IMF's research comes as a new Reuters poll of 32 major oil traders predicted on Wednesday that oil prices will soar above $130 a barrel by late 2011. Such an increase is likely to make policymakers worried about inflation just as the global economy is clawing its way back from recession. The IMF said if tensions between demand and supply factors intensified there could be price spikes rivaling the 2008 run-up that drove oil to nearly $150 a barrel. 'The increases in the trend component of oil prices suggest that the global oil market has entered a period of increased scarcity,' the IMF said in initial chapters of its World Economic Outlook report, which will be released in full on Monday. The IMF said IMF research showed that if increases in oil scarcity are gradual and moderate -- which is the most likely scenario -- the impact on global economic growth could be small over the medium term. A large decline in oil supply trend growth of 1 percentage point -- from 1.8 percent to 0.8 percent -- would slow annual global growth by less than 1/4 percent in the medium and long term, IMF analysis found. Current IMF estimates put annual average world gross domestic product growth at about 4.6 percent between 2011 to 2015. The IMF ranks China as the largest energy consumer in the world, and the rise in global oil consumption depends on whether the Asian giant maintains its current growth rate. But the IMF said persistent oil supply shocks were likely to widen current account distortions between oil exporters and importers. Helbling said the threat to oil supplies meant governments around the world should review whether their current policies will help their economies adjust. He said oil subsidies could become unsustainable when oil prices climb. The answer was to increase investment in alternative sources of energy."
IMF warns oil becoming scarcer and pricier
Reuters, 7 April 2011

"Despite shifting into higher gear within the consumer's green conscience, hybrid vehicles are still tethered to the gas pump via a fuel-thirsty 100-year-old invention: the internal combustion engine. However, researchers at Michigan State University have built a prototype gasoline engine that requires no transmission, crankshaft, pistons, valves, fuel compression, cooling systems or fluids. Their so-called Wave Disk Generator could greatly improve the efficiency of gas-electric hybrid automobiles and potentially decrease auto emissions up to 90 percent when compared with conventional combustion engines. The engine has a rotor that's equipped with wave-like channels that trap and mix oxygen and fuel as the rotor spins. These central inlets are blocked off, building pressure within the chamber, causing a shock wave that ignites the compressed air and fuel to transmit energy. The Wave Disk Generator uses 60 percent of its fuel for propulsion; standard car engines use just 15 percent. As a result, the generator is 3.5 times more fuel efficient than typical combustion engines. Researchers estimate the new model could shave almost 1,000 pounds off a car's weight currently taken up by conventional engine systems. Last week, the prototype was presented to the energy division of the Advanced Research Projects Agency, which is backing the Michigan State University Engine Research Laboratory with $2.5 million in funding. Michigan State's team of engineers hope to have a car-sized 25-kilowatt version of the prototype ready by the end of the year."
New Car Engine Sends Shock Waves Through Auto Industry
Discovery News, 6 April 2011

"OPEC can do little to control prices driven by speculators betting on 'worst case scenarios' and has already supplied the market with the oil it needs, members of the producer group said on Wednesday. Oil on Wednesday traded above $122 a barrel for Brent crude, near two half-and-a-half year highs set this week. 'There is little we can do in terms of price control,' UAE Oil Minister Mohammed bin Dhaen al-Hamli told an oil conference in Paris. Already, he said, the Organization of the Petroleum Exporting Countries had increased output in response to the disruption of supply from OPEC member Libya. The group, which pumps around a third of the world's oil, has resisted calls for an emergency meeting before its next scheduled conference in June in Vienna. 'International markets are choosing to ignore market fundamentals and bet on the worse case scenarios,' Hamli said, adding the market was well-supplied. Iraq's Deputy Prime Minister for Energy Affairs Hussain al-Shahristani, a former oil minister, agreed OPEC had done all it could to calm the current rally.... So far he said there was no sign prices had damaged economic growth and he did not anticipate the current rally would be followed by a crash as happened in 2008. Then prices reached an all-time high of nearly $150 a barrel in July before collapsing to less than $40 in December as a financial crisis sparked in the U.S. housing market led to recession. 'We have not seen any slowdown in growth,' Shahristani told reporters. Didier Houssin, head of energy markets and security at the International Energy Agency that represents consumer countries, also said the market was very different from 2008. During 2008's record rally, OPEC spare capacity had slipped to less than 2 million barrels per day (bpd). Now it has around 4 million bpd, Houssin said, which could be added to the market if necessary, and inventories were comfortable although stocks were higher in the United States than in other developed consumer countries....The loss of most of Libya's output, which reached 1.6 million bpd before violence erupted earlier this year, had been mitigated by the refinery maintenance season, which has cut refinery demand, but that will soon end. 'Tightness for supplies, especially sweet crudes may more difficulty to manage in the coming months,' Houssin told the conference. Disrupted Libyan output is low-density, low-sulphur crude which is easy to refine. OPEC Secretary General Abdullah al-Badri had also been expected to attend the Paris oil conference, but sent a letter of apology saying current events had detained him at the OPEC secretariat in Vienna. 'Ongoing events in the Middle East and North Africa are such that I judge it inappropriate for me to absent myself from the organization's headquarters in Vienna at this time,' he said."
OPEC says can do no more to control $120 oil
Reuters, 6 April 2011

"Higher global demand for biofuels, driven mainly by policies in industrialized countries with the stated purpose of enhancing energy independence and retarding climate change, has contributed to rising global food prices. As a consequence, more people in developing countries suffer from both chronic hunger and absolute poverty. Hunger and poverty are major contributors to death and disease in poorer countries. Results derived fromWorld Bank and World Health Organization (WHO) studies suggest that for every million people living in absolute poverty in developing countries, there are annually at least 5,270 deaths and 183,000 Disability-Adjusted Life Years (DALYs) lost to disease. Combining these estimates with estimates of the increase in poverty owing to growth in biofuels production over 2004 levels leads to the conclusion that additional biofuel production may have resulted in at least 192,000 excess deaths and 6.7 million additional lost DALYs in 2010. These exceed WHO’s estimated annual toll of 141,000 deaths and 5.4 million lost DALYs attributable to global warming. Thus, policies intended to mitigate global warming may actually have increased death and disease indeveloping countries... These estimates are conservative. First, they exclude consideration of a number of health risks that are, in fact, directly related to poverty (e.g., indoor smoke from burning coal, wood and dung indoors; and iron deficiency). Second, the analysis only considered the poverty effects of biofuel production over and above the 2004 level; therefore, it does not provide a full estimate of the effect of all biofuel production. Despite the underestimations, these estimates exceed the WHO’s estimates of the toll of death and disease for globalwarming.Thus, policies to stimulate biofuel production, in part to reduce the alleged impacts of global warming on public health, particularly in developing countries, may actually have increased death and disease globally."
Could Biofuel Policies Increase Death and Disease in Developing Countries?
Journal of American Physicians and Surgeons Volume 16 Number 1 Spring 2011

"98 percent of cassava chips exported from Thailand, the world’s largest cassava exporter, went to just one place and almost all for one purpose: to China to make biofuel. Driven by new demand, Thai exports of cassava chips have increased nearly fourfold since 2008, and the price of cassava has roughly doubled. Each year, an ever larger portion of the world’s crops — cassava and corn, sugar and palm oil — is being diverted for biofuels as developed countries pass laws mandating greater use of nonfossil fuels and as emerging powerhouses like China seek new sources of energy to keep their cars and industries running. Cassava is a relatively new entrant in the biofuel stream. But with food prices rising sharply in recent months, many experts are calling on countries to scale back their headlong rush into green fuel development, arguing that the combination of ambitious biofuel targets and mediocre harvests of some crucial crops is contributing to high prices, hunger and political instability. This year, the United Nations Food and Agriculture Organization reported that its index of food prices was the highest in its more than 20 years of existence. Prices rose 15 percent from October to January alone, potentially 'throwing an additional 44 million people in low- and middle-income countries into poverty,' the World Bank said. Soaring food prices have caused riots or contributed to political turmoil in a host of poor countries in recent months, including Algeria, Egypt and Bangladesh, where palm oil, a common biofuel ingredient, provides crucial nutrition to a desperately poor populace. During the second half of 2010, the price of corn rose steeply — 73 percent in the United States — an increase that the United Nations World Food Program attributed in part to the greater use of American corn for bioethanol. 'The fact that cassava is being used for biofuel in China, rapeseed is being used in Europe, and sugar cane elsewhere is definitely creating a shift in demand curves,' said Timothy D. Searchinger, a research scholar at Princeton University who studies the topic. 'Biofuels are contributing to higher prices and tighter markets.' In the United States, Congress has mandated that biofuel use must reach 36 billion gallons annually by 2022. The European Union stipulates that 10 percent of transportation fuel must come from renewable sources like biofuel or wind power by 2020. Countries like China, India, Indonesia and Thailand have adopted biofuel targets as well. To be sure, many factors help drive up the price of food, including bad weather that ruins crop yields and high oil prices that make transportation costly. Last year, for example, unusually severe weather destroyed wheat harvests in Russia, Australia and China, and an infestation of the mealy bug reduced Thailand’s cassava output. Olivier Dubois, a bioenergy expert at the Food and Agriculture Organization in Rome, said it was hard to quantify the extent to which the diversions for biofuels had driven up food prices. 'The problem is complex, so it is hard to come up with sweeping statements like biofuels are good or bad,' he said. 'But what is certain is that biofuels are playing a role. Is it 20 or 30 or 40 percent? That depends on your modeling.' While no one is suggesting that countries abandon biofuels, Mr. Dubois and other food experts suggest that they should revise their policies so that rigid fuel mandates can be suspended when food stocks get low or prices become too high.  'The policy really has to be food first,' said Hans Timmer, director of the Development Prospects Group of the World Bank. 'The problems occur when you set targets for biofuels irrespective of the prices of other commodities.' Mr. Timmer said that the recent rise in oil prices was likely to increase the demand for biofuels."
Rush to Use Crops as Fuel Raises Food Prices and Hunger Fears
New York Times, 6 April 2011

"Extract resources says it could decide by June if it will press ahead with its $US1.7 billion ($1.6 billion) Husab uranium project in Namibia after releasing a study showing the development was economically viable. The Perth company said a definitive feasibility study (DFS) on zones 1 and 2 at Husab could allow the development of an open pit, capable of delivering 15 million pounds of uranium oxide every year. That would make the development one of the three largest uranium mines in the world behind Cameco's McArthur River and its Cigar Lake mine."
Namibia study clears way for world's third largest mine
Sydney Morning Herald, 6 April 2011

"Wind farms are much less efficient than claimed, producing below 10% of capacity for more than a third of the time, according to a new report. The analysis also suggested output was low during the times of highest demand. The report, supported by conservation charity the John Muir Trust, concluded turbines 'cannot be relied upon' to produce significant levels of power generation. However, industry representatives said they had 'no confidence' in the data. The research, carried out by Stuart Young Consulting, analysed electricity generated from UK wind farms between November 2008 to December 2010. Statements made by the wind industry and government agencies commonly assert that wind turbines will generate on average 30% of their rated capacity over a year, it said. But the research found wind generation was below 20% of capacity more than half the time and below 10% of capacity over one third of the time. It also challenged industry claims that periods of widespread low wind were 'infrequent'. The average frequency and duration of a 'low wind event' was once every 6.38 days for 4.93 hours, it suggested. The report noted: 'Very low wind events are not confined to periods of high pressure in winter. They can occur at any time of the year.' During each of the four highest peak demands of 2010, wind output reached just 4.72%, 5.51%, 2.59% and 2.51% of capacity, according to the analysis. It concluded wind behaves in a 'quite different manner' from that suggested by average output figures or wind speed records."
Wind farm efficiency queried by John Muir Trust study
BBC Online, 6 April 2011

"In 2009 we reached peak production of petroleum. The production can now only decline, while even though the growth of the global economy has rebounded to 4.5%."
French Prime Minister Francois Fillon
French National Assembly, 5 April 2011

"Oil prices hit a two-and-a-half-year high yesterday amid warnings that the soaring cost of raw materials will put the brakes on Britain's manufacturing boom. Brent crude pushed above $120 a barrel after traders voiced concern that continued fighting in Libya and the prospect of a resurgent US economy would put pressure on supplies. Unrest in Yemen and imminent elections in Nigeria, one of the world's biggest producers, also added to nervousness on oil markets in London and Chicago. A survey of UK manufacturers found that rising costs, especially oil, and a deterioration in cashflows hampered growth in the first three months of the year, with most firms reporting they expected turnover and profit growth to slow. The British Chambers of Commerce, which surveyed 6,000 companies, described its findings as 'worrying' and warned that the results 'highlight the fragility of the recovery'. It said the outlook for manufacturers was becoming increasingly difficult and that confidence had fallen to levels last seen in the depths of the recession."
Soaring oil prices 'could put the brakes on UK's manufacturing boom'
Guardian, 5 April 2011

"The World Bank is planning to restrict the money it gives to coal-fired power stations, bowing to pressure from green campaigners to radically revise its funding rules. The new proposals would not mean an end to funding for fossil fuels, but would represent a departure from previous regulations. Under these rules, the bank has provided sizeable financial support for coal-fired power stations in the developing world in spite of protests from governments and green groups. Under the proposed new rules, only the very poorest countries would be eligible to receive grants or loans for building new coal-fired power stations, and then only if they could prove they were necessary and that alternatives – such as renewable energy– were not feasible. An entirely new energy strategy is being written by the development bank, in part because of concerns that its current funding practices favour fossil fuel power. The new draft proposals, seen by the Guardian, emphasise the potential of renewable sources of energy."
World Bank to limit funding for coal-fired power stations
Guardian, 4 April 2011

"Huge demand for energy resources in China and India has pushed the price of thermal coal to an all time high, reinforcing fears about spiralling inflation. Thermal coal is the largest source of energy for the generation of electricity worldwide and demand could rise still further if nuclear power programmes suffer a setback following the crisis at the Fukushima reactors in Japan....China and India last year imported 197m tonnes of coal, around nine times more than in 2003, and there are signs the trend will continue for the foreseeable future. The price of coal has been buoyed by flooding in Australia's coal-rich state of Queensland, which interrupted supplies from the world's top thermal coal exporter."
Coal price reaches new heights as demand from Asia soars
Guardian, 1 April 2011

"On Wednesday, President Obama announced a new goal for the US of reducing imports of foreign oil by one-third by 2025 and said that the US must increase domestic oil production considerably. The government plans to speed up the issuance of drilling permits and offer incentives for federal leaseholders to begin producing oil and gas as quickly as possible. The plan also calls for securing access to diverse and reliable sources of energy, including increasing natural gas supplies, replacing oil with natural gas in power generation, and increasing sustainable bioenergy production. The administration proposes to set new fuel economy standards for trucks, vans and buses built in 2014-2018 and higher standards for passenger vehicles from 2017-2025 to be announced in September. Federal agencies will be required by 2015 to purchase alternative fuel vehicles, including hybrid and electric vehicles. The administration proposes increased funding for cellulosic and advanced biofuels technology as well as innovation in advanced battery technology."
Peak Oil Notes
ASPO-USA 31 March 2011

"President Barack Obama has vowed to reduce US oil imports by one-third in little more than a decade. He said in a speech in Washington that America had to 'get serious' about a secure and affordable energy future. Higher oil prices are threatening to hamper US economic recovery and there is growing dissatisfaction among car drivers with pump prices. Mr Obama said the US must move towards getting 80% of its electricity from clean energy sources by 2035. 'We cannot keep going from shock to trance on the issue of energy security, rushing to propose action when gas prices rise, then hitting the snooze button when they fall again,' he said during a speech at Georgetown University. Mr Obama said that presidents and politicians had for years promised energy independence through finding cleaner and more renewable sources. Petrol prices in the US have shot up 50 cents a gallon this year, reaching a national average of $3.58 a gallon last week."
Obama sets out energy future for less dependency on oil
BBC Online, 30 March 2011

"The former British chief scientific adviser says the UK should press on even faster with new nuclear power stations; the German voters say Germany should dump them altogether – and it looks as though the Berlin government will agree. It is not quite as stark as that, but it is hard to underestimate the significance of what is happening in Germany over nuclear power. We may or may not build a few new stations, most probably only on the sites of existing ones. Sir David King's argument is that if we build the plants quickly we can use the spent fuel from existing plants to power them. But whatever you think of that argument, what the UK does or does not do will not materially affect the future of nuclear power in the rest of the developed world, let alone the emerging countries. What Germany does, however, will. It is a much larger industry and the country's reputation in nuclear power generation is less chequered than our own. What happened at the weekend in Germany was a rejection of nuclear power. The defeat of the coalition of Christian Democrats and Free Democrats in Baden-Württemberg elections were stunning because the region is one of the most successful, not just of Germany, but of the world. Its GDP per head is among the highest in Europe, its unemployment rate is less than 3 per cent. It has also been run by the Christian Democrats for nearly 60 years. So why this result? Well, doubtless, the prospective bail-out of Portugal did not help and there are local issues. But nearly 70 per cent of the voters cited nuclear power as the main concern and saw Chancellor Angela Merkel's sudden promise of a moratorium on new stations as a political device. Since the vote, there have been reports of Germany extending the moratorium and coming up with an entirely new energy strategy. We will have to wait and see, but it seems a reasonable assumption that nuclear power will not play a significant role in any increase in Germany's power generation mix. More likely, it will go into gradual decline."
Hamish McRae: The Fukushima effect, globally, will be colossal
Independent, 30 March 2011

"Energy secretary Chris Huhne will meet oil and gas firms on Thursday over the government's North Sea tax hike. It comes after two more companies joined Norway's Statoil in considering shelving North Sea investment projects. Industry heads are angry at the surprise windfall tax on North Sea profits announced by Chancellor George Osborne in the Budget last week. The move had 'severely damaged investor confidence', according to Malcolm Webb, head of industry body Oil & Gas UK. He said the industry considered the tax change was 'ill-informed' and 'constructed hurriedly and without proper thought of the potential impacts on investment, production and hence on energy supply and employment'.... Norwegian company Statoil said on Tuesday that it had halted investments in two new oil and gas fields worth up to $10bn (£6.2bn)."
Chris Huhne to meet oil firms over North Sea tax hike
BBC News, 30 March 2011

"Top oil exporter Saudi Arabia has unexpectedly called on oilfield service firms to expand the kingdom's oil rig count by nearly 30 percent, according to Simmons & Co, to ensure spare production capacity remains ample as supply uncertainty grows. Saudi state-run oil giant Saudi Aramco met with leading oil service companies including Halliburton over the weekend, unveiling plans to boost the country's rig count this year and next to 118, from around 92 now, Simmons & Co analyst Bill Herbert said on Monday. 'Saudi Arabia has been expected to tread water on its production capacity, so this is unexpected,' Herbert said from Houston in a phone interview. 'The risk premium in the Middle East has risen. Also, with Libyan production falling, Saudi Arabia may feel it has to be ready for higher production capacity.' Plans to boost the rig count constitute the most overt evidence that Saudi Arabia, holder of the world's biggest oil reserves, is stepping up investment in the face of crude prices of over $100 a barrel, though it is unclear whether this will expand the kingdom's spare capacity beyond the current total of as much as 3.5 million bpd, or merely prevent it from falling. 'It's definitely not for expanding capacity,' said Siamak Adibi, senior consultant at FACTS Global Energy in Singapore. 'For this year, the majority of new wells to be drilled is just for maintaining existing capacity' of 12.5 million barrels per day, Adibi added, including the neutral zone. Saudi oil-minister Ali al-Naimi has outlined plans to boost the kingdom's crude oil production capacity to 15 million bpd, including mention of specific fields, saying such an expansion would only proceed if warranted by demand. But Simmons & Co founder Matthew R. Simmons, until his death in August 2010, repeatedly questioned the kingdom's ability to boost and sustain production at high levels in the long term, citing geological constraints. More than any other country, Saudi Arabia defines its international role by the ability to rapidly increase oil production to meet growing demand or cover disruptions elsewhere, such as the recent collapse in shipments from war-torn Libya. The kingdom has responded by pumping 500,000 to 750,000 barrels a day more in recent weeks, analysts said. 'This is Saudi Arabia's raison d'etre. It must ensure that spare capacity is sufficient or else its importance in the world will be diminished,' said oil analyst Peter Beutel of Cameron Hanover in Connecticut. Analysts said a recent Saudi output boost to around nine million barrels a day may have made Aramco apprehensive about its ability to prime the pumps further if the world calls for much greater volumes. 'At the start of the year they were producing around 8.5 mln bpd of oil and were sitting on around 3.5 mln bpd of spare capacity. They've had to increase production by between 500,000 and 750,000 bpd after Libya went out of the market so their spare capacity is already way down,' said Roger Read, managing director at Morgan Keegan in Houston. A New York-based oil analyst, who tracks Saudi production and requested anonymity, said: 'You could see this in one of two ways. Either they realize that 3 million barrels of spare capacity isn't enough, or they realize their capacity isn't actually that high.' Saudi Arabia hasn't publicly discussed plans to expand its overall crude capacity since completing a $100bn project to raise it by three million bpd to a 'sustainable' 12 million bpd last year, excluding the neutral zone, leading some analysts to conclude that the increase in rig counts responds to decline at older fields. 'The decline rate in some large OPEC producers like Iran and Saudi Arabia is not new. It's a challenging issue for these countries, so they just want to drill more wells to keep the same production capacity,' Adibi said. Saudi Arabia wants the rig count to rise quickly in the second half of 2011 and the first half of next year, and may use some of them for a $16bn Moneefa project, Herbert said. Aramco is undertaking the Moneefa project to compensate for declines at other fields rather than to boost capacity, with a planned start-up by June 2013 at 500,000 bpd and a ramp-up to 900,000 bpd by 2024. 'There will be some new rigs for Moneefa, but they won't go ahead to drill all wells in one year,' Adibi from FACTS said. 'It will gradually increase production over ten years and it will be offsetting decline from other fields. It's not additional capacity.'"
Saudi Arabia calls for 28% increase in oil rigs in kingdom
Reuters, 29 March 2011

"An attempt to classify tar sands oil as more environmentally-damaging than conventional oil would effectively ban its sale within European Member States. The European Union is moving to prevent tar sands oil from entering the European market due to the greenhouse gas emissions (GHG) associated with its production. Oil from the tar sands industry is set to be classified as having greater GHG emissions than conventional oil in a review of the European Union’s Fuel Quality Directive. Recognising the greater environmental impact of tar sands oil will effectively ban its use in EU states, where fuel providers are legally bound to aim for 6 per cent reductions in GHG emissions by 2020. Tar sands are deposits of oil-rich bitumen mixed with clay and sand embedded in rocks often buried beneath the surface. Two tonnes of topsoil have to be removed to produce each barrel of bitumen, creating vast open mines. Extracting the deposits is estimated to be three times more carbon-intensive than conventional oil sources. It also causes the loss of natural habitats with vast areas of boreal forest cleared in order to mine the sandy bitumen – and pollution of local waterways with toxic chemicals. The largest reserves of tar sands in the world are held in Canada, which plans to increase production from 1.5 million to 7 million barrels a day by 2020. Both Shell and BP are major investors in tar sands with BP having acquired a 50 per cent stake in the Sunrise Project, a tar sands extraction site near Alberta. The EU had previously dropped the attempt to classify tar sands oil as more environmentally-damaging than conventional oil after strong lobbying by the Canadian government and the oil industry. However, following a year-long campaign by a coalition of environmental groups led by the Co-operative and including WWF, Greenpeace, Friends of the Earth and Transport & Environment, it is now being reconsidered. Campaigners hope changing tar sand’s status in the Fuel Quality Directive will halt the tar sands expansion. Canada had argued the move would create a trade barrier, however, European politicians believe by changing tar sand’s status the EU is putting the onus on fuel suppliers to reduce their emissions. 'Nothing that we do will stop people importing tar sands, it will simply label tar sands accurately, so people who are under a legal obligation to reduce their carbon footprint are more likely to chose cleaner fuels,’ said Linda McAvan, Labour MEP, who helped bring this issue to the European Commission’s attention."
Europe moves to ban imports of tar sands oil from Canada
The Ecologist, 29 March 2011

"The Deputy Prime Minister cast doubt on the future for nuclear power by predicting that a review into existing plants – ordered after the explosion at the Fukushima power station — would recommend higher and more costly safety standards. The Liberal Democrat leader insisted that no extra government money would be found to meet additional costs and suggested that energy firms would struggle to raise investment from the private sector as a result of the Japanese near-meltdown. His remarks, made in a briefing to journalists on a visit to Mexico, throw into doubt the future of Britain’s energy supply. The Government has given provisional approval to the building of at least 10 new nuclear reactors, costing around £50 billion each, at eight sites as part of the pledge to cut carbon emissions by 80 per cent in coming decades. Experts have cast doubt on the capacity of the oil, gas and coal sectors to fill the energy gap if the 19 existing reactors are not replaced as they age over the next decade."
Nick Clegg: Britain's proposed nuclear plants may not be built
Telegraph, 29 March 2011

"As oil prices edge ever higher, more people are expressing concern about what this phenomenon is doing or could do to economic recovery. The conventional wisdom used to be that, in the U.S., whenever total national spending on oil products exceeded four percent of GDP the country went into recession. Elaborate charts have been produced showing how this happened in four of the recessions over the last 40 years. In 1974, 1981, 1991, and 2008 oil prices rose to levels anywhere from 4.5 to 9 percent of GDP just prior to the U.S. economy going into recession. Only the recession caused by the bubble of 2001 did not involve unusually high oil prices. Three of the price spikes --1974, 1981, and 1991-- came as the result of disruptions to the oil supply from the Middle East, while the 2008 spike is now thought to have been caused by the demand for oil getting ahead of available supply. Each of these price spikes and subsequent recessions was followed by a drop in U.S. demand for oil. During the 1974, 1991, and 2001 recessions, oil demand dropped by about a million barrels a day (b/d). The 2008 recession cut U.S. demand by roughly two million b/d and the recessions of the early 80's cut demand by four million b/d. So where do we stand in in the early spring of 2011? First, demand in the U.S. has bounced back about half way towards the 2007 high of over 21 million b/d from the winter of 2008-2009 low of about 18.5 million b/d. For the world as a whole however, consumption has recovered all the way back to a new high of 89 million b/d in February. This rebound has been so rapid that there again are concerns about demand outrunning supply."
The Peak Oil Crisis: Edging Towards Recession
Falls Church News-Press, 29 March 2011

"Cars will be banned from London and all other cities across Europe under a draconian EU masterplan to cut CO2 emissions by 60 per cent over the next 40 years. The European Commission on Monday unveiled a 'single European transport area' aimed at enforcing 'a profound shift in transport patterns for passengers' by 2050. The plan also envisages an end to cheap holiday flights from Britain to southern Europe with a target that over 50 per cent of all journeys above 186 miles should be by rail. Top of the EU's list to cut climate change emissions is a target of 'zero' for the number of petrol and diesel-driven cars and lorries in the EU's future cities. Siim Kallas, the EU transport commission, insisted that Brussels directives and new taxation of fuel would be used to force people out of their cars and onto 'alternative' means of transport. 'That means no more conventionally fuelled cars in our city centres,' he said. 'Action will follow, legislation, real action to change behaviour.'"
EU to ban cars from cities by 2050
Telegraph, 28 March 2011

"A prominent energy scientist blames record-high gas prices on the approach of peak oil — a point when the world’s oil fields will pump out their maximum amount of oil, then gradually decline. 'There's no question that's what's causing it,'says David Hughes, a recently retired geoscientist, who worked with the Geological Survey of Canada for 32 years. His view defies conventional wisdom that turmoil in Libya is to blame. Production in that country's oil fields, which represent two per cent of the world's supply, has been shut down. That, say some experts, has led to a spike in gasoline prices. 'If we were not close to peak oil, (Libya) should not have made any difference,' Hughes said. 'There should have been enough spare capacity in Saudi Arabia to easily offset what's happening in Libya. That tells you something about how tight oil production is.' He also notes worrisome information coming out of the International Energy Agency (IEA) lately. 'The age of cheap oil is over. The high prices will come,' warned the Paris-based agency's chief economist, Fatih Birol, in a February 2011 video on its website. Governments in Canada, the U.S. and other countries rely on the IEA for accurate information on global oil supplies."
Record gas prices blamed on peak oil
CBC News (Canada), 28 March 2011

"Global production of phosphorus fertilizer could peak and decline later this century, causing shortages and price spikes that jeopardize world food production, five major scientific societies warned today. The crisis will come at a time when Earth’s population may surge past 9 billion. Rice, corn, wheat and other staple food crops require phosphorus, which along with nitrogen and potassium, is one of the three key fertilizer substances that sustain world food supply. Projections indicate that world population will rise from 6.8 billion today to 8.9 billion in 2050. Chemistry for a Sustainable Global Society warns not only about 'peak phosphorus' — an echo of the more familiar concerns about 'peak oil' — but raises red flags about the supply of other natural resources where monopolies or political instability could cut off supplies or inflate prices. They include rare earth elements (REEs) and precious metals like lithium, platinum and palladium that are needed to produce computers, mobile phones, rechargeable batteries, solar cells, fuel cells, medications, pollution control devices for cars and other key products.... 'It is a national security concern for many nations that a small group of countries control the remaining stocks of many precious and vital resources,' the white paper states. 'Politically motivated national policies restricting export of certain minerals are already being put into practice. Limited availability and high prices of scarce natural resources will quickly start to affect industries across many different sectors.' The report results from a four-day summit sponsored by the Chinese Chemical Society, the German Chemical Society, the Chemical Society of Japan, the Royal Society of Chemistry, and the American Chemical Society. Thirty international experts on materials science participated in the event, which is part of an ongoing series of summits being held by the societies to seek solutions to some of the world’s most daunting challenges.... Shortages of phosphorus in the soil are especially acute in Australia, the world’s seventh largest wheat producer, and in sub-Sahara Africa, where phosphorous content in the soil limits crop growth and millions of people already face malnutrition and periodic famine. The report cites the likelihood that resources of phosphate rock, mined to produce fertilizer, will be depleted within the next 30-100 years. At present, no substitute exists for that natural source of phosphorous fertilizer. Two-thirds of the world’s phosphorus resources are in China, Morocco and the Western Sahara. Demand for phosphorus is already soaring, with the price of diammonium phosphate fertilizer (which also contains nitrogen) doubling in recent years. Chemistry for a Sustainable Global Society calls for technological breakthroughs to guarantee supplies of phosphorus for future generations. It expresses optimism that chemistry can develop new materials that allow humanity to tap vast new sources of phosphorus, including substances in rivers, oceans and soil, and also to develop technology to extract phosphate from water. The report also points out that shortages of other elements essential for modern technology, from computers to hybrid cars, will occur unless similar efforts are made to find replacements or improve the efficiency of extracting and using existing materials. These materials include lithium, a component of batteries and an ingredient in some pharmaceuticals, as well as platinum, used in fuel cells and as catalysts — substances that improve the efficiency of large-scale chemical manufacturing processes. Other elements in short supply include REEs — a collection of elements that are essential for the production of computers, hybrid-electric cars, military weapons and other high-tech products."
Global Crunch in Supplies of Key Fertilizer Could Threaten Food Supply and Raise Prices
American Chemcial Society, 27 March 2011

"BP's controversial alliance with the Kremlin-controlled oil company Rosneft is in tatters after a tribunal backed the company's Russian partners in blocking the deal. The London tribunal, called to settle the dispute between BP and its Russian oligarch partners AAR over the proposed deal, ruled that the temporary high court injunction preventing it from being consummated should remain in place. The deal involved BP and Rosneft swapping $16bn (£10bn) of shares and forming a joint venture to explore the Arctic for oil. BP issued a statement on Thursday night saying it was 'disappointed' that the deal could not go ahead as proposed and that it would try to proceed with the share swap without forming the Arctic venture."
BP's Russian deal with Rosneft blocked by court
Guardian, 24 March 2011

"Soaring food inflation is the result of 'immoral' policies in the US which divert crops for use in the production of biofuels instead of food, according to the chairman of one of the world's largest food companies. Peter Brabeck-Letmathe, the chairman of Nestlé, lashed out at the Obama administration for promoting the use of ethanol made from corn, at the expense of hundreds of millions of people struggling to afford everyday basics made from the crop. Mr Brabeck-Letmathe weighed in to the increasingly acrimonious debate over food price inflation to condemn politicians around the world who seem determined to blame financial speculators instead of tackling underlying imbalances in supply and demand. And he reserved especially pointed remarks for US agriculture secretary Tom Vilsack, who he said was making 'absolutely flabbergasting' claims for the country's ability to cope with rising domestic and global demand for corn. 'Today, 35 per cent of US corn goes into biofuel,' the Nestlé chairman told an audience at the Council on Foreign Relations (CFR) in New York yesterday. From an environmental point of view this is a nonsense, but more so when we are running out of food in the rest of the world. 'It is absolutely immoral to push hundreds of millions of people into hunger and into extreme poverty because of such a policy, so I think – I insist – no food for fuel.' Corn prices almost doubled in the year to February, though they have fallen from their peak in the past few weeks. Anger at rising food prices contributed to protests across the Middle East, and rising commodities costs were among the factors pushing UK inflation to 4.4 per cent in February, according to figures out yesterday. US exports account for about 60 per cent of the world's corn supply. Demand has surged as more people join the middle classes in emerging economies such as China and India, not just because these new consumers demand more food made from corn, but also because demand for meat has increased and livestock farmers need to buy more feed. Nestlé, the company behind Shredded Wheat, Nescafé and Aero chocolate bars, has been lobbying European regulators and governments around the world against setting high targets for biofuel use, even though many countries see the production of ethanol as a means of meeting obligations to cut carbon fuel emissions. The lobbying has fallen on deaf ears in the US, however. Ethanol production from corn is heavily subsidised, with output running at more than 13.5 billion gallons annually. Policies to promote its production are 'absurd', Mr Brabeck-Letmathe claimed yesterday, and meeting a mooted global target of having 20 per cent of fuel demand with biofuels would involve increasing production by one third. 'What is the result? Prices are going up. It's not very complicated,' he said. 'This question is now the number one priority for the G20 meeting in Nice, and the main thing we are going to do is fight against speculation. We are concentrating on the irrelevant.'"
Biofuel policy is causing starvation, says Nestlé boss
Independent, 23 March 2011

"State oil giant Saudi Aramco said rising oil demand from its largest crude buyer, China, will offset declining consumption elsewhere. 'I believe increased Chinese demand offsets declining consumption in the OECD nations,' Khalid Al Falih, chief executive officer of Aramco said in a speech posted on the firm's website. '[It] is essential to encouraging necessary investment in exploration as well as oil production, refining and transportation capacity, which ultimately benefits all petroleum consumers,' Falih said. China, the world's No. 2 oil user, is surpassing the US as Riyadh's largest crude oil buyer with volumes poised to touch an average of 1 million barrels per day this year, or roughly one-fifth of China's total crude imports."
China's oil demand offsets drop in OECD, Aramco says
Reuters, 22 March 2011

"Britain may scale back its plans to build a new generation of nuclear plants in the wake of the Japanese disaster, the Energy Secretary indicated on Sunday. Chris Huhne said that the meltdown at Japan's Fukushima nuclear plant had 'undoubtedly' cast a 'shadow over the renaissance of the nuclear industry'. The Government has ordered an urgent review of the safety of Britain's nuclear power plants, to be conducted by the chief nuclear officer. The review will report in May. In an interview on Sunday, Mr Huhne appeared to raise the spectre of scaling down or even abandoning the country's new nuclear programme. Despite being opposed to nuclear power before entering the Government he has recently been a cheerleader for the need for new plants."
Chris Huhne: Britain may scale back nuclear plans after Japan disaster
Telegraph, 20 March 2011

"Western oil companies operating in Libya have privately warned that their operations in the country may be nationalised if Colonel Muammer Gaddafi’s regime prevails. Executives, speaking on condition of anonymity because of the rapidly moving situation, believe their companies could be targeted, especially if their home countries are taking part in air strikes against Mr Gaddafi. Allied forces from France, the UK and the US on Saturday unleashed a series of strikes against military targets in Libya. Most of the world’s large international oil companies have producing assets in Libya, including Spain’s Repsol, France’s Total, and Italy’s Eni, which is the largest single investor there. Germany’s Winstershall – a unit of BASF – and OMV of Austria are also present. The country is the world’s 12th largest oil exporter, and the escalating violence there has triggered a jump in prices to nearly $120 a barrel. More than half of Libya’s oil was exported to Italy, Germany and France last year.... Shokri Ghanem, the chairman of the Libya’s state-run National Oil Corporation, warned on Saturday that western companies, which have repatriated their staff due to the crisis, should send their employees back to work or risk seeing new oil and gas concessions awarded directly to rivals from China, India and Brazil. The three countries have all stayed neutral throughout the conflict and abstained from Thursday’s United Nations Security Council resolution 1973. Mr Ghanem said Libya had no intention of breaking its existing commitments with foreign oil companies already operating in the country but warned that 'we do hope they in turn will honour their agreements with us'. 'If they do not then we are forced to talk to others,' he added. Libyan production has fallen 75 per cent to 400,000 barrels a day since the withdrawal of employees by western companies and 'could reach a halt', he warned. The UN has widened its economic sanctions against the regime of Mr Gaddafi, including for the first time the oil sector. In addition to the no-fly zone and threat of air strikes, UN resolution 1973 also stipulates freezing the assets of the National Oil Corporation. While Libya’s state-owned National Oil Company controls the majority of the country’s oil production, international oil companies are key for sustaining output through joint ventures. The National Oil Company is also in full control of at least two of its subsidiaries, its wholly owned Sirte Oil, a joint venture with US-based Occidental Petroleum, and Waha Oil, a joint venture with American oil companies ConocoPhillips, Marathon and Hess."
Oil companies fear nationalisation in Libya
Financial Times, 20 March 2011

"A few weeks before the tsunami struck Fukushima’s uranium reactors and shattered public faith in nuclear power, China revealed that it was launching a rival technology to build a safer, cleaner, and ultimately cheaper network of reactors based on thorium. This passed unnoticed –except by a small of band of thorium enthusiasts – but it may mark the passage of strategic leadership in energy policy from an inert and status-quo West to a rising technological power willing to break the mould. If China’s dash for thorium power succeeds, it will vastly alter the global energy landscape and may avert a calamitous conflict over resources as Asia’s industrial revolutions clash head-on with the West’s entrenched consumption. China’s Academy of Sciences said it had chosen a 'thorium-based molten salt reactor system'. The liquid fuel idea was pioneered by US physicists at Oak Ridge National Lab in the 1960s, but the US has long since dropped the ball. Further evidence of Barack `Obama’s 'Sputnik moment', you could say. Chinese scientists claim that hazardous waste will be a thousand times less than with uranium. The system is inherently less prone to disaster. 'The reactor has an amazing safety feature,' said Kirk Sorensen, a former NASA engineer at Teledyne Brown and a thorium expert. 'If it begins to overheat, a little plug melts and the salts drain into a pan. There is no need for computers, or the sort of electrical pumps that were crippled by the tsunami. The reactor saves itself,' he said. 'They operate at atmospheric pressure so you don’t have the sort of hydrogen explosions we’ve seen in Japan. One of these reactors would have come through the tsunami just fine. There would have been no radiation release.'  Thorium is a silvery metal named after the Norse god of thunder. The metal has its own 'issues' but no thorium reactor could easily spin out of control in the manner of Three Mile Island, Chernobyl, or now Fukushima....The earth’s crust holds 80 years of uranium at expected usage rates, he said. Thorium is as common as lead. America has buried tons as a by-product of rare earth metals mining. Norway has so much that Oslo is planning a post-oil era where thorium might drive the country’s next great phase of wealth. Even Britain has seams in Wales and in the granite cliffs of Cornwall. Almost all the mineral is usable as fuel, compared to 0.7pc of uranium. There is enough to power civilization for thousands of years.... the Chinese will soon lead on this thorium technology as well as molten-salts. Good luck to them. They are doing Mankind a favour. We may get through the century without tearing each other apart over scarce energy and wrecking the planet."
Safe nuclear does exist, and China is leading the way with thorium
Telegraph, 21 March 2011

"The existential crisis for the world's nuclear industry could hardly have come at a worse moment. The epicentre of the world's oil supply is disturbingly close to its own systemic crisis as the Gulf erupts in conflict. Libya's civil war has cut global crude supply by 1.1m barrels per day (bpd), eroding Opec's spare capacity to a wafer-thin margin of 2m bpd, if Goldman Sachs is correct. Now events in the Gulf have turned dangerous after Saudi Arabia sent troops into Bahrain to help the Sunni monarchy crush largely Shi'ite dissent, risking a showdown with Iran. Russia's finance minister Alexei Kudrin warned on Wednesday that the confluence of events in Japan and the Mid-East could push oil to $200 a barrel in a "short-lived" spike, which would snuff out global recovery. While there has been no loss of oil output in the Gulf so far, the violent crackdown in Manama on Wednesday left four people dead and risks inflaming the volatile geopolitics of the region. The rout of protesters encamped at the Pearl roundabout had echoes of China's Tiananmen massacre. The risk group Exclusive Analysis said such heavy-handed methods may provoke Iran to launch a proxy war by arming insurgents. This could rapidly cross the border, fuelling Shia irredentism in Saudi Arabia's Eastern Province. Any threat to Saudi control over the 5m bpd Ghawar oil field nearby would be a global 'game-changer'. 'Much worse headlines can easily be imagined,' said Raza Agha from RBS. Oil prices have fallen over recent days but it may not be long before the deepening nuclear crisis in Japan and Germany's decision to shut down seven of its oldest reactors starts to spill over into oil and gas markets. The shutdown of 11 reactors in Japan has cut 10 gigawatts (GW) of power, forcing the country to import other fuels to keep its economy going. 'We think they will need an extra 200,000 bpd of fuel oil and light crude, as well liquefied natural gas,' said Eduardo Lopez from the International Energy Agency. The Fukushima reactors are write-offs. Japan's local authorities are unlikely to permit other reactors to reopen for a long time. The closure of seven German pre-1980 reactors will cut energy supply by a further 6.2 GW, according to Daniel Brebner at Deutsche Bank. 'Nuclear power has suddenly gone from being part of the solution for future green energy to a dangerous relic of the cold-war era,' he said. Germany will have to cover the shortfall by importing more gas and thermal coal, playing havoc with CO2 greenhouse targets. Even if the world navigates today's crisis without an energy shock, a more intractable long-term crisis is brewing. Several countries are already turning their backs on the 'nuclear renaissance' and shelving plans for fresh reactors. This implies a need for substitutes that will further strain fossil fuel supplies and bring forward the long-feared energy crunch."
World energy crunch as nuclear and oil both go wrong
Telegraph, 20 March 2011

"Penn State researchers have developed an environmentally friendlier method of separating oil from tar sands. This method, which utilizes ionic liquids to separate the heavy viscous oil from sand, is also capable of cleaning oil spills from beaches and separating oil from drill cuttings, the solid particles that must be removed from drilling fluids in oil and gas wells. Tar sands, also known as bituminous sands or oil sands, represent approximately two-thirds of the world's estimated oil reserves. The Penn State separation method uses very little energy and water, and all solvents are recycled and reused. Paul Painter, professor of polymer science in the Department of Materials Science and Engineering at Penn State, and his group have spent the past 18 months developing a technique that uses ionic liquids (salt in a liquid state) to facilitate separation. The separation takes place at room temperature without the generation of waste process water. 'Essentially, all of the bitumen is recovered in a very clean form, without any contamination from the ionic liquids,' Painter explained. Because the bitumen, solvents and sand/clay mixture separate into three distinct phases, each can be removed separately and the solvent can be reused."
Eco-friendly method of separating oil from tar sands developed
ANI, 20 March 2011

"The US plans to push forward with plans for a new generation of nuclear reactors, a top government official said, even as Japan struggles to contain a potential nuclear meltdown in the aftermath of Friday's earthquake. 'I think we will, no matter what happens, try to take the lessons of Fukushima and apply them to our existing fleet and any future reactors we will be building,' Steven Chu, US energy secretary, told Congress. The crisis at the power plant in Fukushima in north east Japan comes at a delicate moment for atomic energy in the US. Nuclear energy has been handed a big role in meeting a pledge from President Barack Obama that the country will generate 80pc of its electricity from clean energy sources by 2035. America hasn't built a new nuclear reactor since a partial meltdown at the Three Mile Island plant in Pennsylvania in 1979 derailed expansion plans. The concern since the disaster in Japan has focused on existing reactors in parts of the country vulnerable to earthquakes, including California and New Mexico."
Barack Obama to press ahead with plans to build new nuclear power stations
Telegraph, 19 March 2011

"Nearly one million people around the world died from exposure to radiation released by the 1986 nuclear disaster at the Chernobyl reactor, finds a new book from the New York Academy of Sciences published today on the 24th anniversary of the meltdown at the Soviet facility. The book, 'Chernobyl: Consequences of the Catastrophe for People and the Environment,' was compiled by authors Alexey Yablokov of the Center for Russian Environmental Policy in Moscow, and Vassily Nesterenko and Alexey Nesterenko of the Institute of Radiation Safety, in Minsk, Belarus. The authors examined more than 5,000 published articles and studies, most written in Slavic languages and never before available in English. The authors said, 'For the past 23 years, it has been clear that there is a danger greater than nuclear weapons concealed within nuclear power. Emissions from this one reactor exceeded a hundred-fold the radioactive contamination of the bombs dropped on Hiroshima and Nagasaki.' 'No citizen of any country can be assured that he or she can be protected from radioactive contamination. One nuclear reactor can pollute half the globe,' they said. 'Chernobyl fallout covers the entire Northern Hemisphere.' Their findings are in contrast to estimates by the World Health Organization and the International Atomic Energy Agency that initially said only 31 people had died among the 'liquidators,' those approximately 830,000 people who were in charge of extinguishing the fire at the Chernobyl reactor and deactivation and cleanup of the site. The book finds that by 2005, between 112,000 and 125,000 liquidators had died. 'On this 24th anniversary of the Chernobyl disaster, we now realize that the consequences were far worse than many researchers had believed,' says Janette Sherman, MD, the physician and toxicologist who edited the book. Drawing upon extensive data, the authors estimate the number of deaths worldwide due to Chernobyl fallout from 1986 through 2004 was 985,000, a number that has since increased. By contrast, WHO and the IAEA estimated 9,000 deaths and some 200,000 people sickened in 2005.... Yablokov and his co-authors find that radioactive emissions from the stricken reactor, once believed to be 50 million curies, may have been as great as 10 billion curies, or 200 times greater than the initial estimate, and hundreds of times larger than the fallout from the atomic bombs dropped on Hiroshima and Nagasaki. Nations outside the former Soviet Union received high doses of radioactive fallout, most notably Norway, Sweden, Finland, Yugoslavia, Bulgaria, Austria, Romania, Greece, and parts of the United Kingdom and Germany. About 550 million Europeans, and 150 to 230 million others in the Northern Hemisphere received notable contamination. Fallout reached the United States and Canada nine days after the disaster. The proportion of children considered healthy born to irradiated parents in Belarus, the Ukraine, and European Russia considered healthy fell from about 80 percent to less than 20 percent since 1986. Numerous reports reviewed for this book document elevated disease rates in the Chernobyl area. These include increased fetal and infant deaths, birth defects, and diseases of the respiratory, digestive, musculoskeletal, nervous, endocrine, reproductive, hematological, urological, cardiovascular, genetic, immune, and other systems, as well as cancers and non-cancerous tumors.... The authors of the study say not enough attention has been paid to Eastern European research studies on the effects of Chernobyl at a time when corporations in several nations, including the United States, are attempting to build more nuclear reactors and to extend the years of operation of aging reactors. The authors said in a statement, 'Official discussions from the International Atomic Energy Agency and associated United Nations’ agencies (e.g. the Chernobyl Forum reports) have largely downplayed or ignored many of the findings reported in the Eastern European scientific literature and consequently have erred by not including these assessments.
Harmless? Chernobyl Radiation Killed Nearly One Million People
ENS Newswire, 17 March 2011

"The chaos at the Fukushima Daiichi nuclear plant — explosions, fires, ruptures — has not shaken the bipartisan support in partisan Washington for the U.S.'s so-called nuclear renaissance. Republicans have dismissed Japan's crisis as a once-in-a-lifetime fluke. President Obama has defended atomic energy as a carbon-free source of power, resisting calls to halt the renaissance and freeze construction of the U.S.'s first new reactors in over three decades. But there is no renaissance. Even before the earthquake-tsunami one-two punch, the endlessly hyped U.S. nuclear revival was stumbling, pummeled by skyrocketing costs, stagnant demand and skittish investors, not to mention the defeat of restrictions on carbon that could have mitigated nuclear energy's economic insanity. Obama has offered unprecedented aid to an industry that already enjoyed cradle-to-grave subsidies, and the antispending GOP has clamored for even more largesse. But Wall Street hates nukes as much as K Street loves them, which is why there's no new reactor construction to freeze. Once hailed as 'too cheap to meter,' nuclear fission turns out to be an outlandishly expensive method of generating juice for our Xboxes. (See pictures of an aging nuclear plant.) Since 2008, proposed reactors have been quietly scrapped or suspended in at least nine states — not by safety concerns or hippie sit-ins but by financial realities. Other projects have been delayed as cost estimates have tripled toward $10 billion a reactor, and ratings agencies have downgraded utilities with atomic ambitions. Nuclear Energy Institute vice president Richard Myers notes that the 'unrealistic' renaissance hype has come from the industry's friends, not the industry itself. 'Even before this happened, short-term market conditions were bleak,' he tells TIME. Around the world, governments (led by China, with Russia a distant second) are financing 65 new reactors through more explicit nuclear socialism. But private capital still considers atomic energy radioactive, gravitating instead toward natural gas and renewables, whose costs are dropping fast. Nuclear power is expanding only in places where taxpayers and ratepayers can be compelled to foot the bill. (See pictures of the worst nuclear disasters.) In fact, the economic and safety problems associated with nuclear energy are not unrelated. Trying to avoid flukes like Fukushima Daiichi is remarkably costly. And trying to avoid those costs can lead to flukes....New nukes would still make sense if they were truly needed to save the planet. But as a Brattle Group paper noted last month, additional reactors "cannot be expected to contribute significantly to U.S. carbon emission reduction goals prior to 2030." By contrast, investments in more-efficient buildings and factories can reduce demand now, at a tenth the cost of new nuclear supply. Replacing carbon-belching coal with cleaner gas, emissions-free wind and even utility-scale solar will also be cheaper and faster than new nukes. It's true that major infusions of intermittent wind and solar power would stress the grid, but that's a reason to upgrade the grid, not to waste time and money on reactors. Anyway, there aren't many utilities that can carry a nuclear project on their balance sheets, which is why Obama's Energy Department, a year after awarding its first $8 billion loan guarantee in Georgia, is still sitting on an additional $10 billion. A Maryland project evaporated before closing, and a Texas project fell apart when costs spiraled and a local utility withdrew. The deal was supposed to be salvaged with financing from a foreign utility, but that now seems unlikely. (See how fundraising helped shape obama's green agenda.) The utility was Tokyo Electric."
The Real Cost of Nuclear Power
TIME, 17 March 2011

"German Chancellor Angela Merkel has announced a 'measured exit' from nuclear power in response to the crisis affecting four reactors in Japan. Defending the temporary closure of Germany's seven oldest reactors, she said the Japanese disaster meant it could no longer be 'business as usual'. Mrs Merkel told parliament that the goal was 'to reach the age of renewable energy as soon as possible'. She urged Germans to show the Japanese people they were not alone. She said the two countries had 150 years of diplomatic relations and called on Germans to donate money. 'This is help between friends,' she said. Although she stressed that Germany's nuclear plants were among the world's safest, she said that 'when, in Japan, the apparently impossible becomes possible and the absolutely unlikely reality, then the situation changes'."
Japan crisis: Germany to speed up nuclear energy exit
BBC Online, 17 March 2011

"China has suspended approval for new nuclear power stations following the accident at Japan's Fukushima Daiichi plant. It will also carry out checks at existing reactors and those under construction. China is currently building 27 new reactors - about 40% of the total number being built around the world. The news comes as China grows increasingly worried about the nuclear accident in Japan. The decision to temporarily halt approval for nuclear plants came at a meeting of China's State Council, or Cabinet, chaired by Premier Wen Jiabao. 'We will temporarily suspend approval for nuclear power projects, including those that have already begun preliminary work, before nuclear safety regulations are approved,' read a statement from the State Council. 'Safety is our top priority in developing nuclear power plants.' It went on to say that China's medium and long-term nuclear plans would be 'adjusted and improved'. China currently gets only about 2% of its electricity from nuclear power from 13 reactors, but it has launched an ambitious project to drastically increase those figures. It is currently building more reactors than any other country in the world. According to the World Nuclear Association, China wants to build a total of 110 nuclear reactors over the next few years. This is part of a plan to develop other energy sources - such as wind and solar power - to reduce the country's dependence on coal, which currently supplies about three-quarters of its energy needs. China also recently announced that it had developed its own technology to reprocess spent nuclear fuel, which could be used to run these new power plants."
China suspends nuclear building plans
BBC Online, 17 March 2011

"Generating energy from wind turbines at sea would be cheaper than building new atomic power plants, Europe's climate chief has said, in the latest challenge to the crisis-stricken nuclear industry. Connie Hedegaard, the EU climate change commissioner, said: 'Some people tend to believe that nuclear is very, very cheap, but offshore wind is cheaper than nuclear. People should believe that this is very, very cheap.' Offshore wind energy has long been seen as an expensive way of generating power, costing about two to three times more than erecting turbines on land, but the expense is likely to come down, while the costs of nuclear energy are opaque, according to analysis by the European commission. The nuclear crisis in Japan has led the UK, France and other countries to tell their nationals to consider leaving Tokyo, in response to fears of spreading nuclear contamination. The crisis also prompted the EU's energy commissioner, Günther Oettinger, to say: 'There is talk of an apocalypse, and I think the word is particularly well chosen.' Hedegaard told the European Wind Energy Association's annual conference in Brussels that the problems facing nuclear power put renewable sources of energy, such as wind and solar power, back in the spotlight. 'There are 143 nuclear power plants in Europe and they are not going to disappear,' she said. 'But when it comes to new energy capacity that discussion is likely to be very much influenced by what is happening in Japan.' She suggested that the Japanese nuclear incidents, which have not yet been brought under control, would 'automatically' turn attention to renewable power."
Wind power cheaper than nuclear, says EU climate chief
Guardian, 17 March 2011

"Some energy investors celebrate crude at $100 a barrel because it means higher profits, but the downside is it might push up costs at oilfields in North America as companies compete for staff and equipment. Inflation gauges around the world are creeping higher, partly fuelled by rising food and raw material prices. So far, the rise in exploration costs has been tame, but analysts and companies are nervously eyeing the oil spike, wondering if there will be a return to 2008, when some giant infrastructure projects became too costly.... In Canada's oilsands, where inflation raged in 2007 and 2008, signs of a tighter labour market are starting to show as a host of projects move forward, Bruce March, the chief executive of Imperial Oil Ltd., told the CERAWeek conference....There has been a widening gap between U.S. crude oil and natural gas prices as massive supplies depress prices for the cleaner-burning fuel. That disparity has companies speeding efforts to drill for oil and liquids rich natural gas in shale formations such as the Bakken Shale in North Dakota. The increased competition for the equipment needed to drill in shale have been followed by higher prices. 'From a cost standpoint, we are seeing tighter markets for some of the services,' said Andrew Coleman, a Houston-based analyst at Madison Williams, who follows exploration and production companies. 'Remember that 70 per cent of your well cost is (hydraulic fracturing).' By contrast, service costs in areas where companies are drilling for dry gas are not rising. 'There is bifurcation in the way things are being priced,' Deloitte's Chakravarthy said. 'The rig count is going down for dry gas and going up for in the oil shale. 'We are starting to see some effects on the oil side.' Still, others say companies will take steps such as using new technology to keep output rising in an inflationary environment. For example, service companies are inventing ways to lower costs by making hydraulic fracturing more efficient, analysts said."
Oil price may push up oilfield costs
Calgary Herald, 14 March 2011

"New data suggests Israel may not only have much larger gas resources than believed, but also the 3rd largest deposit of oil shale in the world. Libyan oil accounts for less than 2 percent of world oil production, yet the revolt against Muammar Gaddafi has managed to shoot up the price of oil to more than $100 per barrel in the last month. No one knows how long the internal instability in the Middle East will last, but according to the US Department of Energy, its share of the world’s total oil supply is expected to actually increase in the years ahead. Simply, the world is using up the reserves of non- Middle East oil more quickly. Moreover, of the trillion barrels of proven reserves still left, according to the CIA roughly 800 billion barrels are to be found in the Middle East and North Africa, especially in Saudi Arabia, Iran and Iraq. The implications for Israel of the West’s growing dependence on Middle Eastern oil are troubling, for obvious reasons. Yet there are two new developments in our energy sector that could well offset these trends and eventually alter our standing in the world, especially with respect to Europe. First, the gas discoveries in the Eastern Mediterranean, which began to produce commercial quantities of natural gas in 2004, are generally well-known. The Tamar field, which should begin production in 2013, is expected to supply all of Israel’s domestic requirements for at least 20 years. The Economist suggested in November 2010 that the recently discovered Leviathan field, which has twice the gas of Tamar, could be completely devoted to exports. All the undersea gas fields together have about 25 trillion cubic feet of gas, but the potential for further discoveries is considerably greater, given that the US Geological Survey estimates that there are 122 trillion cubic feet of gas in the whole Levant Basin, most of which is within Israel’s jurisdiction. After the Leviathan discovery these numbers could go up further. Perhaps for that reason, Greece has been talking to Israel about creating a transportation hub for distributing gas throughout Europe from the Eastern Mediterranean that will come from undersea pipelines. What is less well-known, but even more dramatic, is the work being done on this country’s oil shale. The British-based World Energy Council reported in November 2010 that Israel had oil shale from which it is possible to extract the equivalent of 4 billion barrels of oil. Yet these numbers are currently undergoing a major revision internationally. A new assessment was released late last year by Dr. Yuval Bartov, chief geologist for Israel Energy Initiatives, at the yearly symposium of the prestigious Colorado School of Mines. He presented data that our oil shale reserves are actually the equivalent of 250 billion barrels (that compares with 260 billion barrels in the proven reserves of Saudi Arabia). Independent oil industry analysts have been carefully looking at the shale, and have not refuted these findings. As a consequence of these new estimates, we may emerge as the third largest deposit of oil shale, after the US and China. Oil shale mining used to be a dirty business that used up tremendous amounts of water and energy. Yet new technologies, being developed for Israeli shale, seek to separate the oil from the shale rock 300 meters underground; these techniques actually produce water, rather than use it up. The technology will be tested in a pilot project followed by a demonstration stage. It will be critical to demonstrate that the underground separation of oil from shale is environmentally sound before going to full-scale production. The present goal is to produce commercial quantities of shale oil by the end of the decade. This particular project has global significance. For if Israel develops a unique method for separating oil from shale deep underground, that has none of the negative ecological side-effects of earlier oil shale efforts, that technology can be made available to the whole world, changing the entire global oil market. The effect of the spread of this technology would be to shift the center of gravity of world oil away from Iran, Saudi Arabia and the Persian Gulf to more stable states that have no history of backing terrorism or radical Islamic causes. (In the Arab world, Jordan and Morocco have the most significant oil shale deposits.) WHEN WILL the West begin to treat Israel as a powerful energy giant and not as a weak client state that must be pressured? In the case of the Saudis, when the US realized the true extent of their oil reserves, after America’s reserves in Texas and Oklahoma were depleted by World War II, it sought to upgrade its military and diplomatic ties with the Saudi kingdom even before its production capacity was fully exploited. The US-Saudi connection grew as massive infrastructure investments for moving Saudi oil to Western markets were made, like the Trans-Arabian Pipeline (TAPLINE)."
How Israel could revolutionize the global energy sector
Jerusalem Post, 11 March 2011

"The global oil industry is in a fix. It's still trying to persuade Washington to revive access to the Gulf of Mexico, one of the world's sole remaining dictator-free oil-rich zones, and it's locked out of Libya for the foreseeable future. Meanwhile, its greatest recent coup -- a technological breakthrough that has unlocked a bonanza of natural gas locked in shale in the United States -- is under threat by homeowners and activists across the country who question whether the method is environmentally safe. On top of all this, global oil demand is rising fast along with robust economic recovery, and the world will pour terrible scorn on the industry if, despite the hurdles, it fails to supply sufficient oil and natural gas to fuel everyone's cars, homes and factories. Such is the outlook of Christophe de Margerie, CEO of the French oil company Total, and by far Big Oil's most plain-spoken (and most distinctively mustachioed -- see above) representative. He delivered it to a packed house of about 1,500 of his peers, gathered in Houston for the opening session of CERAWeek, the Davos of the oil industry, a conference hosted by Dan Yergin, author of The Prize. De Margerie's somewhat counterintuitive prescription for the industry? In order: 1. Hunt aggressively for oil and gas; 2. When you find it, make sure to produce it in a way that non-oil industry folks can live with; 3. Meanwhile, get the world to use less oil and gas. Why should oil companies persuade the world to use less of its product? Because, asserted de Margerie, starting in just a few years, the industry will be incapable of producing as much as the world wants. In his reckoning, demand for oil will surpass the current 87.5 million barrels a day, but various hindrances will prevent the industry from producing much more -- it can increase supply by an additional 8 percent, to about 95 million barrels a day, but 'it's impossible to go higher'. De Margerie has spoken similarly for a few years, but never in the context we have today, in which doubt has been cast on the stability of the Middle East, the source of a third of the world's oil supply. He didn't spell out the local and geopolitical consequences if he's right, but he didn't need to -- his rivals at Shell have already done so in a separate report (a decade-long global economic slump, resource competition among nations, and compulsory fuel rationing for everyone not lucky enough to be living in a petrostate). With this mayhem possibly ahead of us, the world will not court oil companies respectfully as potential saviors, as the companies may feel would be justified -- they will have to produce oil and gas, and do so safely and cleanly, or the world will bar them from drilling, and then still foist 'the chain of responsibility on us' for failing, de Margerie said."
For Big Oil, Libya is just another fix it's in
Foreign Policy, 9 March 2011

"Petrol prices have risen to record levels and the UK government has hinted it may postpone a planned 1p fuel duty increase due next month. But how much have driving habits already changed in an effort to save fuel? In 2000, fuel protests sparked by rising petrol prices nearly brought parts of the country to a standstill. The price at the pump was about 80 pence a litre. Now, a little more than 10 years later, the price has broken the £1.30 ($2.10) mark, and people are responding in quite a different way. They are changing the way they drive. It's not surprising that motorists are getting savvy in trimming their fuel bill, with the tank of a family saloon costing nearly £70 ($113), at a time when rising living costs are squeezing household budgets in other ways....One key change appears to be that people are making fewer journeys, although how much is due to fuel consumption is difficult to say. Figures supplied by the Department of Transport suggest that congestion on motorways and trunk roads has been falling. In the year ending December 2010, the provisional figure for average vehicle delay on the slowest 10% of journeys was 3.55 minutes per 10 miles, a fall of 9% since March 2008. Adrian Tink of the RAC is in no doubt that motorists began cutting their driving towards the end of last year, as they felt the pinch. In a survey of 1,500 drivers last month, 75% said they had reduced car use. 'We're seeing record levels of people walking and biking. Evidence from the last couple of quarters is that sale of petrol is dropping. People are buying less fuel. A lot of people are combining journeys and making shorter ones. Instead of popping out twice they are popping out once. People are doing fewer longer journeys, because they are looking at alternatives like the train.' They are also driving more slowly, he says, with anecdotal evidence that average motorway speeds are down.... A rule of thumb often followed is that 50-55mph is the optimum speed, says Mr Bosdet, but it depends very much on the car. Driving at 80mph will cost you about 10% more in fuel than driving at 70mph, says a spokeswoman for the Department for Transport. This week, the use of speed limits as a tool to control fuel consumption was highlighted in Spain, where the speed limit was reduced from 120km/h (75mph) to 110km/h (68mph). Spain is heavily dependent on imported fuel and 13% of its oil usually comes from Libya."
How are motorists saving fuel?
BBC Online, 9 March 2011

"Oil and gas producer Algeria is sitting on huge undeveloped reserves of shale gas that the country now intends to develop with the help of international partners, the OPEC member's energy minister said on Wednesday. The African nation of Algeria, already a major exporter of oil and natural gas, could become an even bigger exporter in the coming years as it develops up to 1,000 trillion cubic feet of natural gas trapped in shale rock more than 1,000 meters (3,280 feet) below the surface. 'We are interested in growing unconventional gas reserves. Based on estimates, the reserves might be as high as 1,000 trillion cubic feet,' Youcef Yousfi, Algeria's minister of energy and mines, told the CERAWeek conference in Houston. Pilot tests will begin next year, he said."
Algeria eyes huge domestic shale gas reserves
Reuters, 9 March 2011

"Those exhorting OPEC to boost output should be careful what they wish for. The cartel card can be played once only, and it risks exposing the fragility of the global energy system if the Gulf powers are seen struggling to deliver. Goldman Sachs suspects that OPEC has been pumping far above its agreed quota since November and therefore cannot easily raise output much without cutting deep into global spare capacity. Jeff Currie, the bank's oil guru, said Saudi output had quietly crept up by 700,000 barrels a day (bpd) even before the Libyan supply shock. Assumptions that OPEC has added 1.9m bpd over the last two years are wishful thinking. These new fields have been 'largely offset' by attrition in old fields. 'We believe that OPEC spare capacity has already dropped below 2m bpd. The question therefore arises how much spare capacity is left to absorb potential supply disruptions in other countries,' he said. If this picture is broadly correct, spare capacity is already close to the wafer-thin levels that led to wild price moves in mid-2008. The flow of Libyan oil has so far fallen by 1m bpd. This may not sound much against global supply of 88m, but oil prices are determined by levels of spare capacity once supply tightens. Beyond a certain point, the price spiral can kick in with explosive force until the economic damage crushes demand. Libya's conflict has already cut spare capacity by a third. Hopes for a quick solution are fading as the country succumbs to civil war along ancient lines of tribal cleavage. A raft of new projects planned for the Sirte Basin by mid-decade will be mothballed. Chris Skrebowski, editor of Petroleum Review, said the long-denied oil crunch is starting to bite. 'We cling to the comfort blanket that spare capacity exists, but it is mostly fictional, or inoperable. If you take 2m bpd off the figure, the whole dynamic of global oil supply changes,' he said....The entire political order of the Middle East has effectively disintegrated, risking of years upheaval in a region that provides 36pc of global oil supply and holds 61pc of proven reserves. Mass protest by Bahrain's Shi'ite majority against the ruling Sunni dynasty has been a rude awakening for investors who thought oil wealth would shield the Gulf against turmoil. 'We in the West have been listening to the wrong people,' said Mr Skrebowski. 'We have not been talking to the young: we missed what was happening underneath.' Bahrain sits at the epicentre of the world's energy system. It is a hop to Saudi Arabia's Eastern Province, home to an equally aggrieved Shi'ite population and the kingdom's giant oil fields. Bahrain's Al Khalifa family has sought to defuse the island's crisis since the original crack-down, when seven people died. Yet protesters have refused to drift away, digging in at the financial hub and staging rallies outside the interior ministry. Sectarian violence between Sunni and Shia has been escalating. What happens on the tiny island is being watched with alarm across the Gulf. The 'demonstration effect' has already led to Shia protests in the Saudi oil region. Saudi police have released a Shia cleric arrested last week for demanding a constitutional monarchy. Yet the country's Wahabi clerics also warned against 'sedition' and violations of Islamic law, while the interior ministry said all rallies were banned and warned that police would use 'all measures to prevent any attempt to disrupt public order.' The threats aim to quash a 'Day or Rage' planned by cyber-protesters for Friday, allegedy swollen to 17,000. A similar event in Syria was nipped in the bud by secret police. The world's economic fate now hangs on the success of Wahabi repression. Any sign that the Saudis are losing their grip risks an oil shock large enough to derail the global recovery. Nobody knows where the 'inflexion point' is. Bank of America says we are already in the danger zone since energy costs as a share of global GDP have reached 8.5pc, near historic peaks. Deutsche Bank said the outcome differs depending on whether spikes are driven by booming demand or a supply crunch. It warns that a sudden jump to $150 will abort world recovery."
Oil markets brace for Saudi 'rage' as global spare capacity wears thin
Telegraph, 8 March 2011

"Could Saudi Arabia be telling porkies when it comes to its spare capacity capabilities? It’s something Goldman Sachs analysts are wondering on Tuesday. For example, they’ve deduced — from reverse-engineering the kingdom’s production levels — that Saudi may have raised output before the crisis in Libya ever broke out.... Now, this is potentially problematic because of the implications it has for Opec spare capacity all round..... it looks like Opec may have been producing some 0.5-1m barrels per day over its official quota since as long ago as November — a fact which leaves 2m barrels per day of spare capacity in the global system, not the 3m barrels per day or so some believe. Not that quota abuse in itself is so surprising. Opec countries have long had problems with compliance. The thing is, in normal circumstances, the additional production would head straight into global inventories — adjusting forward curves and creating a production buffer as it does so. This time round though, inventories don’t seem to have adjusted. If anything, Goldman says, they’ve continued to be drawn down at the same pace, indicating actual demand and consumption of those extra barrels — at least from the point of the Libyan crisis onwards. This, in their opinion, brings forward the drawdown of Opec spare capacity by at least six months. The good news is that if and when the unrest in Libya settles down, restoring production will be easy since Libyan fields are of the highest quality and very easy to operate. Worse quality fields on the other hand can suffer long-term production losses when shut down, because it’s so much harder to restore flows to their former glory when pressure is compromised. The bad news, however, is that if Saudi has indeed been over-pumping since at least November onwards, the grade mismatch may be more of an issue than originally thought — because there is already much more low quality crude in the system, making the loss of good quality barrels much more greatly felt.... When added to the Wikileaks cables — which already hinted that Saudi capacity was being misreported on purpose — all this draws serious question marks against any comments from Saudi Arabia trying to pacify production fears. In short, it looks more and more like Saudi Arabia may be bluffing about its ability to make up for lost production."
The Saudi capacity puzzle
FT Alphaville, 8 March 2011

"The increase in energy prices is beginning to resemble the rise in 2008. But this time, the American economy may be better prepared for higher fuel costs. Gasoline prices have risen by nearly a third in the last year, and oil costs more than $100 a barrel for the first time in more than two years, driven by fears of extended Middle East supply disruptions and increased demand from an improving global economy. While the latest surge in energy prices is likely to cause some pain and slow the recovery from the recession, economists say the spike is unlikely to derail the rebound unless prices rise a lot further. One big reason is that consumers and businesses have learned lessons from the last oil shock. Many drivers, for example, have given up their gas-guzzling sport utility vehicles. Automakers, which are selling more fuel-efficient cars than five years ago, reported higher sales in February even as gas prices rose. Industries like airlines and trucking, which are most severely affected by fuel prices, have passed on their higher costs almost immediately instead of waiting for the price increases to hammer profits. And much of the rest of the United States economy is far less dependent on oil than it used to be. Oil consumption has dropped more than 5 percent since 2005, while natural gas use has risen 10 percent. A glut of domestic natural gas has kept prices low, providing a lift to industries like chemicals and pharmaceuticals and tempering the price of electricity, much of which is generated from natural gas. Still, higher oil and gas prices matter. Daniel Yergin, the oil historian, said the recent increase 'forces people into really difficult choices.' He said, 'It becomes a thermometer, a register of fear and anxiety.' Nouriel Roubini, the New York University economist who became known for his pessimistic forecasts before the financial crisis, told reporters in Dubai on Tuesday that an increase in oil prices to $140 a barrel could even cause some advanced economies to dip back into recession. The rising price of gas — which averaged $3.57 a gallon nationwide on Monday, according to the government — is already prompting some people to change their habits.... Higher fuel costs reduce consumers’ discretionary income, which is often spent on such niceties as dining out or the latest electronic devices. Low- and middle-income families are typically hurt most by a higher price for energy because they spend a higher portion of their household budget on gas and heating bills. It is unclear how long energy prices will stay high. Most oil exports from Libya have stopped amid the fighting there. But Kuwait’s oil minister, Sheik Ahmad al-Abdullah al-Sabah, said that the Organization of the Petroleum Exporting Countries was discussing whether to hold an emergency meeting soon to increase oil production. Saudi Arabia has also said it would pump more oil to make up for the shortfall in Libyan exports. On Tuesday, oil prices fell slightly to settle at $105.02 a barrel in New York. Some economists say that the increase in oil prices over the last year, well before the wave of protests in the Middle East and mostly caused by higher demand, may already have cost the United States economy hundreds of thousands of jobs. One rule of thumb is that each $10 increase in the price of a barrel of oil knocks 0.2 to 0.3 percentage points off the growth rate of the economy. 'High oil prices always hurt our economy,' said Lawrence J. Goldstein, an economist at the Energy Policy Research Foundation. 'Sometimes they get masked from consumers, but you cannot hide their impact on the economy. What it is going to do is leave us with anemic and sporadic growth that to most Americans will still feel like a recession.'”
U.S. Economy Is Better Prepared for Rising Gas Costs
New York Times, 8 March 2011

"It is imperative that the policy makers maintain credibility in the face of the current oil price shock, Luca Ricci from Barcap's Strategy team said.  'One of the consequences of excessively loose fiscal and monetary policies is the limited room to expand in the face of new shocks,' Ricci said....While equity markets are watching the price of crude closely, there is a very real risk of further gains for oil hitting global growth, according to Ricci. 'If large oil exporters are seriously affected, there is the potential for further large rises in oil prices, and the peak levels seen in 2008 are not unthinkable. The global economic consequences in terms of growth and inflation could be significant,' he said. 'The effect of oil on economic growth can result from various factors. The main effect is on consumption via gasoline and energy prices. As consumption generally accounts for 60 percent of GDP, the effect is large,' he added."
Higher Oil Drives ECB and Fed Even Further Apart
CNBC, 7 March 2011

"The UK is one of the top performers in Europe on energy efficiency, according to a European commission report. Energy use fell by more than 5% from 2000 to 2008 in the UK – the only major European economy to see a drop. Germany's consumption held level, while France's rose 7%. Overall, energy use in the 27 EU countries increased by more than 4%. Britain also scores highly on energy intensity, a measure of how much power is used to generate every euro's worth of economic output. Only Denmark and Ireland used less energy per unit of GDP, according to the draft document, sections of which have been seen by the Guardian.The 'energy per GDP' measure is affected by the UK economy's reliance on the banking sector, which is light on carbon dioxide emissions. Overall, the EU cut its energy intensity by 10% over the eight years."
UK energy use fell by 5% in eight years
Guardian, 6 March 2011

"Safe havens are the rarest commodity in the energy patch. So oil and gas companies have been drawn to the hydraulic fracturing revolution in the United States by the perception of low political hazard. They’ve committed more than $70 billion to shale deals over the last two years, the consultancy IHS reckons. But an environmentalist backlash is gaining momentum. One disaster along the lines of BP’s Macondo spill in the Gulf of Mexico, and the whole investment thesis could crumble. Instead of stonewalling new regulations and calls for transparency, the industry — gathering this week in Houston for the annual conference of IHS’s Cambridge Energy Research Associates unit — may want to get out in front by voluntarily accepting some safeguards. The drumbeat of public opinion against so-called fracking, which involves cracking rocks and injecting chemicals to release oil or gas, is growing louder — even though the polemical 'Gasland' missed out on the Academy Award for best documentary last week. Footage of flammable faucets and pools of contaminated water have alarmed many."
Shale Gas Needs to Allay Environmental Doubts
Reuters, 6 March 2011

"Turkmenistan will not invite foreign oil companies to invest in the exploration or production of its prized onshore gas fields, its energy minister said on Friday. International energy firms will be restricted to offshore blocks in Turkmenistan's sector of the Caspian Sea and service contracts at onshore gas fields."
Turkmenistan won't allow foreign firms into onshore gas production sharing deals
Reuters, 4 March 2011

"If the oil prices remain above $100 a barrel -- and the peak levels of 2008 are no longer out of reach -- then there will be significant consequences for the global economy, analysts and bank economists warned Friday. Friday, West Texas Intermediate hit $104.20 per barrel, while that other key benchmark Brent remained above the $100 level at $116.05. Economists at Barclays Capital Friday cautioned that if large oil exporters are seriously affected by the unrest sweeping the Middle East and North Africa, there is the potential for further large rises in oil prices, and the peak levels seen in 2008 are not unthinkable. The Middle East political turmoil has also added to the uncertainty about the future path of monetary policy, they said, increasing not just the uncertainty about the timing of policies, but also their direction. They predicted that an oil price shock could further divide the European Central Bank and the Federal Reserve by making the Fed focus more on the unemployment consequences and the ECB more on the inflationary fallout. 'As a typical supply shock, the increase in energy prices would indeed raise inflation, and decrease employment and growth, creating a policy dilemma,' they said. 'Oil prices are rising rapidly - up 15% in just the past three weeks - and this follows a period of sustained energy and food price increases,' they wrote in a research note. 'The global economic consequences in terms of growth and inflation could be significant.' Bernard Baumohl, chief global economist for The Economic Outlook Group agreed, issuing his own warning that 'if the oil remains above $100 a barrel and gasoline stays in excess of $3.50 a gallon for the rest of the year, it will have a detrimental impact on the economy.' While it will not extinguish the economic recovery, Baumohl said, 'it will significantly squeeze household finances and erode corporate profit margins.' And in keeping with the theme of large spikes in oil price hurting economic growth, economists at Wells Fargo said that they continue to believe that 'a sustained increase to $115 a barrel or more would have a meaningful negative impact.' 'Higher energy prices of this magnitude will reduce incomes through higher gasoline prices and rising transportation costs, which will impact food prices both directly and indirectly,' they said in a research note examining the impact of higher oil prices. The Barclays Capital economists agreed that the main effect on economic growth from high oil will be on consumption via gasoline and energy prices. As consumption generally accounts for 60% of GDP, the effect is large, they noted. 'In our view, the oil price increase in 2008 significantly contributed to the recession and the financial crisis in the U.S., which then spread globally,' they wrote. 'By raising CPI inflation, it reduced real disposable incomes and, hence, the purchasing power of the average households, leading to a contraction in real consumer spending and lowering the ability to repay mortgages'"
Analysts: Signif Econ Consequences If Lrge Oil Rises Sustained
MNI, 4 March 2011

"Biofuels represent the only way to significantly reduce carbon emissions in road transport fuel and are likely to account for at least 12 percent of supply by 2030, an official with oil giant BP (BP.L) said on Wednesday. 'There is no other alternative that I can really subscribe to in terms of decarbonising road transport,' Olivier Mace, head of strategy, regulatory affairs and communications at BP unit BP Biofuels, told a conference organised by Agra Europe. Mace said that electricity may play a role 'one day' and biogas may also be in the mix, but 'to get into 10 percent, 20 percent of (global) consumption we believe there is only one game in town today and that is biofuels.' BP has forecast that about 12 percent of road transport fuel will come from biofuels by 2030, but Mace said that was a 'conservative view.' 'Personally I think it could be even higher than that,' he said, noting the forecast did not include much production in Asia. He said China and India are likely to be among the countries with the strongest demand growth for road transport fuel as a whole over the next 20 years. Mace acknowledged, however, that biofuels had become 'embattled in a big controversy, especially here in Europe.' Critics have suggested that biofuels, which are currently produced mainly from crops such as grains, sugar and vegetable oils, can increase carbon emissions, particularly if rainforests are chopped down to facilitate production. Mace said the debate needed to be centred on distinguishing between good and bad biofuels, not whether or not there should be biofuels at all."
Biofuels only major way to decarbonise road fuel - BP
Reuters, 3 March 2011

"Growing fears of an enduring oil crisis prompted huge volatility on investment markets yesterday – with shares in the world's biggest oil producer, Saudi Arabia, slumping to a 22-month low – as a top energy official warned that the 'age of cheap oil is over'. Concerns about the turmoil in Libya triggered sharp sell-offs in stock markets across the Gulf, with shares in Kuwait and Dubai sliding to six-year lows. Oil prices also remained volatile throughout yesterday, with Brent crude futures for April delivery breaching the $117 (£72) per barrel mark in late afternoon trading.... Last night's swings came as the chief economist of the International Energy Agency, Fatih Birol, warned that the world may have to face up to the prospect of high oil prices over the long term. 'The age of cheap oil is over, though policy action could bring lower international prices than would otherwise be the case,' he said. Mr Birol also struck a note of caution on Europe's recovery prospects as the continent deals with increased fuel costs. 'Europe is the weakest link in the chain of economic recovery,' he said. '75 per cent of gas prices [in Europe] are linked to oil prices. In a few months gas prices are going to increase.' On the other side of the Atlantic, the US Energy Secretary, Steven Chu, added his voice to the growing chorus of concern about rising oil prices. 'Today's spike in oil prices is causing great concern, great hardship [for] the American people,' he said while testifying before the US Congress. 'We have a very delicate recovery going on and an increase in prices will make that vulnerable.' Underscoring the impact of higher oil prices, the International Air Transport Association said rising costs will halve profits at global airlines."
Market turmoil as IEA warns 'age of cheap oil is over'
Independent, 3 March 2011

"Britain is facing a 1970s-style oil price shock that could cost the UK economy £45bn over two years, the climate and energy secretary, Chris Huhne, is expected to warn in his first intervention on the issue since the start of Middle East political crisis. In Thursday's keynote speech on the impact of the oil crisis, Huhne argued that an $100 (£61) a barrel price for oil transforms the economics of climate change in Britain. He disclosed the Department of Energy and Climate Change's (Decc) economists have warned that if the oil price rise turns into a 1970s-style shock the cumulative loss to the UK economy would be worth £45bn over two years. Decc's economists made the calculation on the basis of oil prices rising from $80 a barrel last year to $160, according to Huhne. At $102 a barrel, oil is at a two-and-a-half year high and there have been predictions that if the political turmoil spreads across the Gulf, the price will rise considerably more. Huhne will say: 'If the oil price doubled, as from $80 last year to $160 this year, it could lead to a cumulative loss of GDP of around £45bn over two years. This is not just far-off speculation: it is a threat here and now.' The speech is an attempt to galvanise public support for tough measures to create a green economy, after recent setbacks including attacks on the science of climate change and stalled international negotiations."
UK facing 1970s-style oil shock which could cost economy £45bn – Huhne
Guardian, 3 March 2011

"Electric cars and electric hybrid cars already make use of brake energy to power a generator that charges the batteries. However, according to Per Tunestål, a researcher in Combustion Engines at Lund University in Sweden, air hybrids, or pneumatic hybrids as they are also known, would be much cheaper to manufacture. 'The technology is fully realistic. I was recently contacted by a vehicle manufacturer in India which wanted to start making air hybrids,' he says. The technology is particularly attractive for jerky and slow driving, for example for buses in urban traffic. 'My simulations show that buses in cities could reduce their fuel consumption by 60%,' says Sasa Trajkovic, a doctoral student in Combustion Engines at Lund University who recently defended a thesis on the subject. Trajkovic also calculated that 48% of the brake energy, which is compressed and saved in a small air tank connected to the engine, could be reused later. This means that the degree of reuse for air hybrids could match that of today's electric hybrids. The engine does not require any expensive materials and is therefore cheap to manufacture. It also takes up much less space than an electric hybrid engine. The method works with petrol, natural gas and diesel."
'Air hybrid' cars would be cheaper than electric hybrids, claims researcher
Guardian, 2 March 2011

"The results of the first attempt to extract shale gas in the UK using a controversial technique known as hydraulic fracturing, or 'fracking', will be kept secret for four years, the Guardian has learned. Cuadrilla Resources, a US private equity backed firm, told MPs at the energy and climate change committee that it will begin this month to pump 1,200 cubic metres of highly pressurised water mixed with chemicals and sand nearly 3,000 metres underground into an onshore shale gas reservoir near Blackpool. The process is known as 'fracking' because it fractures rock to release gas. Industry estimates reckon that more than a tenth of the country's gas needs could be produced in this way by 2015. However, critics such as the Green party say that it is environmentally unsafe because the chemicals could contaminate aquifers used for drinking water and farming."
Results of controversial 'fracking' for shale gas in UK will be kept secret
Guardian, 1 March 2011

"Economics is not a science. There are no laws or cast iron relationships – as there are in 'pure sciences', such as physics or chemistry. Throughout recent history, though, there have been a handful of economic variables between which the links have been pretty solid. Ever since the early 1970s, every single time oil prices have spiked sharply (rising by 80pc or more), regular as clockwork the US has entered recession. Given America's massive influence on worldwide economic sentiment, the past five global recessions have all come in the wake of sharp jumps in the price of crude. Only 8 months ago, oil was trading close to $65 a barrel. Last Thursday, Brent crude momentarily skimmed $120, up 17pc in a week, before stabilising at $112. If oil climbs above $120 again, and stays there, it would be 80pc above where it was in June 2010. We'd then have a bona fide oil-price spike, the sixth since the early 1970s, which suggests a US recession would follow."
History tells us that a surge in fuel costs makes a US recession likely
Telegraph, 26 February 2011

"Electric cars may portray themselves as 'zero emissions' but the overall pollution they generate can be almost as great as a frugal conventional diesel car, consumer watchdogs said today. Electric cars are a lot more expensive to buy - though they are generally cheaper to run as they plug in for their power from the domestic mains, say experts at Which? The amount of carbon dioxide - the so-called 'greenhouse gas' blamed by scientists for global warming -  created to generate the electricity powering an electric car, can be just as great as that created by the internal combustion engine, they say. The main  difference is that  while a conventional car's emissions come out of the vehicle's exhaust pipe, those created by an electric car are generated at the power station which supplies the electricity. The findings come as  the first ever electric car to pass the European crash test was announced - the Mitsubishi i-MiEVsuper-mini - getting four stars out of a maximum five. Experts at Which? compared the carbon dioxide created by charging electric cars with that emitted by the most efficient diesel models and concluded: 'Sometimes there’s not a great deal of difference.' And the gap is narrowing as 'conventional' cars up their game to cut emissions. To test its theory, Which? looked at three of the first electric cars destined to hit the UK market and put them up against three 'efficient' conventional rivals. Experts  found, for example, that the electric Smart Fortwo, expected to cost around £21,000, creates an 'equivalent' of 84 grams of CO2 per kilometre driven, whereas the £9,540 diesel Smart Fortwo emits 103 grams. It also compared the Nissan Leaf, the £23,990 electric car, with Volkswagen's diesel Golf 1.6 TDi Bluemotion costing £16,830. The electric power generated  to drive the Leaf is equivalent to CO2 emissions of   81g/km.By contrast, the diesel Golf has CO2 emissions of 108g/km. Two 'super-minis' were also compared. Which? found that the power generated to power the  £24,045 Mitsubishi i-MiEV electric car was equivalent to 68g/km. Then similarly sized Suzuki Splash costing £10,410  with a 1.3litre diesel engine has CO2 emissions of 131g/km. However, electric cars are much 'greener' than diesel cars when it comes to localised emissions, as they don’t emit toxic chemicals that degrade air quality. This is especially significant in cities, where the uptake of electric cars is predicted to be highest, says Which? The consumer report concludes: 'While we don't agree with the car makers' 'zero emissions' claims, we can't knock their efforts to create greener cars.' Richard Headland, editor, Which? Car, said: 'We applaud car makers’ efforts to create greener cars – but we don’t agree with their ‘zero emissions’ claims. Until more electricity is produced from renewable sources in the UK, the carbon footprint of driving an electric car may not be as small as owners think.'"
Watchdog says electric cars 'are as dirty as diesel'
Mail, 26 February 2011

"China’s decision to reduce exports of rare earth metals shocked the world, but the crisis could be an opportunity for Russia. In a dramatic move that rattled its trading partners, China announced last year that it would further reduce exports of rare earth metals (REM) by 10pc in 2011. The decision sent shock waves across the industrialised world as manufacturers are heavily dependent on China for the metals, which are used in a range of sophisticated electronic goods, such as TVs and computer monitors. What compounded the worries was that China had a virtual monopoly, providing 97pc of the world’s supply. Beijing’s decision was strategic. Last July, the People’s Daily published an article by Li Bing, an international strategy expert of the Central Party School. He said poor China should no longer sell its valuable resources cheaply to capitalist countries and declared that REM exports 'must be gradually reduced and, ultimately, stopped.' By August, the Chinese authorities announced cuts in export quotas in the second half-year by 72pc; later, in the first round of export quota distribution for 2011, it cut them by another 11.4pc. In September, China halted exports to Japan; in October, there were supply shortages in Europe and the United States....Russia has the second largest explored reserves of REM in the world (about 30pc); and the world’s largest anticipated reserves....Rare earth metals include scandium, yttrium, lanthanum and another 12 lanthanides, cerium being the most widespread. They are found in ?nature in dispersed form and hundreds are in minerals. In metallurgy, REM are used in the production of cast iron, steel and non-ferrous alloys. They are used in laser manufacturing, and added to nuclear control rods and radiation protection coatings. REM have long been used to produce catalysts, primarily for the oil industry. Significant quantities, above all of samarium and neodymium, are used in manufacturing permanent magnets. One of the most promising areas involving REM is in electric and hybrid cars. The ?Toyota Prius is a classic example. The latest model includes more than 10kg of rare earths (mostly lanthanum and ?neodymium) in the batteries, catalysts and metal alloys. REM are also used in solar batteries."
Russia may cash in as China cuts rare earth metal exports
Rossiyskaya Gazeta, 26 February 2011

"Spain announced Friday a series of energy saving measures, including a lower speed limit and cuts to train ticket prices, in response to the rise in world oil prices due to unrest in the Middle East. 'The goal is to reduce the consumption of oil and gas to reduce our energy bill which has risen in recent days and which we do not forecast will drop,' Deputy Prime Minister Alfredo Perez Rubalcaba told a news conference. Spain is one of the European Union states most dependent on fossil fuels for its energy needs and the spike in oil prices has added to pressures on inflation and the country's trade deficit. Under the measures which will come into effect on March 7, the speed limit on Spain's highways will be reduced to 110 kilometres (68 miles) per hour from 120 kph. 'We are going to drive a bit slower and in exchange for that we are going to consume less gasoline (petrol) and therefore pay less money,' Rubalcaba said. The amount of bio-fuel which oil companies are required to include in all diesel and gasoline will be hiked to 7.0 from the current mandatory 5.8 percent. The government will also order state-owned rail network Renfe to slash ticket prices on commuter and medium-haul trains by five percent. 'We are going to wage a major campaign to promote public transport, this is always welcome but in this case it is absolutely necessary for us,' Rubalcaba said. The minister said the measures would be temporary but he did not say when they would end. They will be approved at a cabinet meeting next week. Each increase of 10 euros in the cost of a barrel of oil adds some six billion euros ($8.3 billion) to Spain's annual energy bill, Rubalcaba said. 'This is a very serious problem which greatly affects out economy,' he said."
Spain adopts energy saving measures to combat oil price hike
AFP, 25 February 2011

"Sheffield City Council has announced plans, in partnership with energy company E.ON, to become the UK’s first energy self-sufficient city. The plan was endorsed by Energy and Climate Change Secretary Chris Huhne yesterday during a visit to the city’s University and Sheffield College. The city plans to generate enough renewable energy to cover all its power needs within ten years and ultimately produce an excess, which could be sold back to the national grid. 'This partnership, which is the first of its kind in the UK, will deliver many benefits for local people. Not only will Sheffielders be leading the way in the fight against climate change, but they will see lower energy bills and extra local green jobs created,” says Leader of Sheffield City Council, Councillor Paul Scriven. Huhne said that the 'exciting plans' show how low-carbon technologies can be made to work for local communities."
Sheffield bids to become the UK’s first energy self-sufficient city
Energy Efficiency News, 25 February 2011

"The Bakken oil shale field in North Dakota has an estimated 4.65 billion barrels of crude, according to the U.S. Geological Service. The oil sands in Alberta, Canada make up the world's second-largest amount of proven oil reserves, behind Saudi Arabia. This oil is more difficult and costly to extract because it isn't in liquid form initially - it's locked up in rocks and sand. And even after drillers get the petroleum out of this solid material, the oil then requires extremely high amounts of refining to make it usable. When oil went above $100 a barrel for the first time in summer 2008, the economics of pulling oil from the ground changed dramatically, according to analysts. That made oil sands and oil shale economically viable for energy companies, so the industry shifted enormous resources into that technology. The Bakken oil shale field is now producing around 350,000 barrels a day, up from 93,000 barrels a day only four years ago, said Ron Ness, president of the North Dakota oil council. TThe cost to recover this oil was around $90-$95 a barrel three or four years ago. Now it costs about $60-$75 a barrel, thanks to advances in technology and an increase in production. 'Bakken has been a great resource for us, and as the technology has developed, we can now extract for a lot less than we used to,' Ness said. Analysts expect that oil will remain above $70 a barrel for the foreseeable future - about what it costs these companies to produce a barrel of oil. And the recent turmoil in Libya and the Middle East makes drilling for North American oil sands and oil shale even more attractive."
Who gets rich off of $100 oil?
CNN, 25 February 2011

"Oil is more global than it was during those previous crises. In the 1970s production was concentrated around the Persian Gulf. Since then a gusher of non-OPEC oil has hit markets from fields in Latin America, west Africa and beyond. Russia overtook Saudi Arabia as the world’s biggest crude supplier in 2009; OPEC’s share of production has gone from around 51% in the mid-1970s to just over 40% now. Yet the globalisation of oil supply has not diminished OPEC’s clout as the marginal supplier of crude. Markets are tight at the moment. Bumper inventories, built up during the downturn, are running down as the rich world recovers and Asia puts on a remarkable growth spurt. Demand rose by a blistering 2.7m b/d last year, according to the International Energy Agency, and is set to grow by another 1.7m b/d this year by Deutsche Bank’s reckoning. Many other producers are already running at full capacity; OPEC has its hands on the only spare oil (see chart). If Libya’s oil stopped flowing importers would look to Saudi Arabia to make up the shortfall. The oil could probably flow to fill the gap in Europe, Libya’s main market, in a matter of weeks. OPEC claims that it has 6m b/d on tap but that looks wishful. Analysts think the true number is nearer 4m-5m b/d, with 3m-3.5m b/d in Saudi hands. That is ample to plug a Libyan gap but would hasten the day when growing world demand sucks up all spare production capacity. Analysts at Nomura reckon that it would only take a halt of exports from Algeria as well to absorb all the slack and propel oil to a terrifying $220 a barrel. Despite saying it stands ready to produce more oil, Saudi Arabia has so far been reluctant to turn its stopcocks. OPEC claims that the world is amply supplied with oil and seems content with a price around $100 a barrel. Traders hope that Saudi Arabia will boost production stealthily or that OPEC will call a special meeting to raise quotas and calm markets. The worst-case scenario for oil prices would be some kind of disruption to Saudi supply itself. That concern has become livelier given the unrest in neighbouring Bahrain. The tiny island kingdom produces little oil but is of vital strategic importance in the Persian Gulf, a seaway that carries 18% of the world’s oil. America’s 5th Fleet uses the country as a base. The Saudis may also fear that protests by Bahrain’s Shia population could spill over their own borders. Saudi Arabia’s eastern provinces are home to both its oil industry and most of its Shias, who may also have cause for grievance with their Sunni rulers. The king this week announced $36 billion in benefits for his people. One crumb of comfort is that oil facilities across the region are generally located far from the population centres, where protests tend to be concentrated, and are well defended against anything but a concerted military assault. What might be the effects of a more general supply crisis in the Middle East and north Africa? The oil shocks of the 1970s spurred the world to build stockpiles, such as the 727m barrels of crude oil in America’s strategic petroleum reserve, to be drawn on in the event of upheaval in the Middle East and elsewhere. China is building up a strategic reserve of its own. America’s Energy Information Administration puts total rich-world stocks in the hands of governments and industry at 4.3 billion barrels, equivalent to nearly 50 days of global consumption at current rates.... As for the prospects of reducing the importance of the Middle East to global oil supplies, forget it. Strong Asian demand is likely to mean that OPEC’s share of oil production rises again as it pumps extra output eastward. A troubled region’s capacity to cause trouble will not diminish."
Oil pressure rising
Economist, 24 February 2011

"What’s easy to lose sight of in the chaos sweeping through the Middle East is where oil prices were trading before it began. The Brent futures contract, the world’s new benchmark oil price, had already broken $100 (U.S.) a barrel before protesters in Cairo started sweeping into Tahrir Square and demanding Hosni Mubarak’s head. And the price of West Texas Intermediate CL-FT, laden as it is with record inventories of Bakken oil and Canadian oil sands crude piling up in Cushing, Okla., was trading just shy of $90 per barrel. These are the kind of prices that one might expect to encounter at the end of an economic cycle, not at the beginning of one. But world oil demand once again grew at lot faster than the oil experts at the International Energy Agency were expecting – almost twice as fast, to be precise. The global economy had no sooner put in its first year of solid growth when world oil demand, like a jack in the box, sprang to a new record high. China alone added almost a million barrels a day to global demand, which ended the year at more than 87 million barrels a day. And demand shows no sign of abating this year. It was far from clear where the world was going to find another two million barrels a day of new supply to meet another year of demand growth. That would be in addition to the nearly four million barrels a day of new production that must be brought on simply to replace what is lost every year in depletion..... Then came the turmoil in North Africa and the Middle East. Now it’s even less clear where that oil will be flowing from. The region of the world that was expected to pump that additional oil supply, utilizing its supposedly ample spare capacity, is now falling into anarchy. In reality, that official spare capacity hasn’t existed for years. Confidential cables from the U.S. embassy in Riyadh recently released by Wikileaks confirm what skeptics like the late Matt Simmons long suspected. Saudi Arabia, OPEC’s biggest producer, and the country holding the world’s largest oil reserves, has little more to give. Transcripts of conversations between embassy personnel and Sadad al-Husseini, former executive vice-president in charge of exploration and production at Saudi Aramco, make it clear that neither the country’s oil reserves nor its production capacity can be believed. Instead of the 12 million to 12.5 million barrels a day of official capacity, Saudi Arabia is barely able to pump out between eight million and nine million. Production is still below where it was in the 1970s, and Saudi Arabia has ceded ground to Russia as the world’s largest oil producer. (Curiously, the IEA continues to forecast that the tapped-out Saudi oil sector will pump out 14.6 million barrels a day by 2035.) Dr. Husseini’s revealing assessment of the Saudi oil industry goes a long way in explaining why former president George W. Bush’s desperate pilgrimage to the kingdom in 2008, during the height of the last oil crisis, was able to elicit only a token 300,000-barrel-a-day increase in production. Other than a limited amount of heavy oil, which many of the world’s refineries aren’t equipped to process, Saudi Aramco has little more to offer today’s market. While the country still has the capacity to raise oil prices should it withhold supply, it no longer has the capacity it once did to prevent prices from rising, because it can no longer boost its production to meet increases in world demand."
Why Saudi Arabia can no longer temper oil prices
Globe and Mail, 23 February 2011

"Iraq’s goal of a fivefold surge in oil production capacity this decade to rival Saudi Arabia’s dominance in world markets will almost surely have to be revised, industry experts say, because of technical and skilled labor limitations and the country’s self-interest in defending high international crude prices. The government has signed 14 contracts with international oil companies since late 2008, to develop 12 fields as part of a plan to increase production capacity to 12.5 million barrels a day by 2017, up from 2.6 million now. That goal, however, is widely considered unrealistic in the industry. 'There’s hardly anybody who believes that target,' said Herman Franssen, senior associate with the Energy and National Security Program in the Center for Strategic and International Studies in Washington, and a former chief economist of the International Energy Agency. 'What people do believe in is that they could reach half of it by 2017. That would still be very ambitious, but at least more realistic.'... Iraq's expectation of reaching the milestone of four million barrels a day by 2013 contrasts with industry sentiment. Analysts at Bank of America Merrill Lynch estimated in a report in January that production would reach 4.4 million barrels a day by 2015. The Center for Global Energy Studies, which recently published a report on Iraq’s progress, expects four million barrels a day closer to 2018. The International Energy Agency last year was the most pessimistic, with an estimate of 4.8 million barrels a day by 2020 because the 'sheer scale of the required construction of infrastructure, coupled with political uncertainties, suggests that the expansion of capacity will be much slower.'.... the country’s export potential is likely to remain limited by a combination of rising internal demand, as economic reconstruction gathers pace, according to the Bank of America Merrill Lynch report, and internal infrastructure bottlenecks. Oil export facilities, for example, would be able to handle only half of Iraq’s intended production even after a planned threefold increase of current export capacity, to about 6.6 million barrels a day from the current two million barrels. Additionally, Iraq needs to upgrade and expand its pipeline infrastructure; build more storage and oil terminal facilities; increase its water desalination facilities to increase the recovery rate in wells; and increase its power generation — all prerequisites for realizing its crude production potential. At least 200 drilling rigs would have to be used to drill more than 1,000 wells a year, a significant challenge in itself."
Iraq Struggles With High-Flying Oil Goals
New York Times, 22 February 2011

"BP said on Tuesday that it will seek to sell its holdings in a 'number' of UK oil and gas fields, as part of an ongoing restructuring. 'BP announced today the intention of selling its interests in a number of operated oil and gas fields in the UK,' it said in a statement. 'The assets involved are the Wytch Farm onshore oilfield in Dorset and all of BP's operated gas fields in the Southern North Sea, including associated pipeline infrastructure and the Dimlington terminal. BP anticipates that the staff currently working on these assets will transfer employment to the new buyer when the divestments are completed. These divestments will allow BP to focus resources and investment on its diverse central North Sea, northern North Sea, West of Shetland and Norway assets and on successful delivery of its new major projects."
BP puts UK oil and gas field assets up for sale
AFP, 22 Feburary 2011

"Plans to build a gas pipeline to the heart of Europe to reduce dependence on Russian imports have been dealt a blow after estimated costs almost doubled. The proposed 2,000-mile (3,200km) Nabucco pipeline would transport gas from BP's $20bn (£12.3bn) new project in the Caspian Sea to Austria via Turkey and the Balkans. The consortium of European energy companies, which are competing against two smaller pipeline projects, currently estimates the cost at €7.9bn (£6.7bn). But the Guardian has learned that BP's own assessment puts the cost at around €14bn, partly because of soaring commodity prices. The price of iron ore, a key ingredient for steel, has increased by half in the past year. Doubts are already growing over Nabucco's viability because it aims to draw in gas from undeveloped fields in Turkmenistan and Iraq, as well as Azerbaijan. Only a third of Nabucco's capacity would be used initially when BP's Shah Deniz II project in Azerbaijan is due to come on stream in 2017. It could be many years before Iraq and Turkmenistan are ready to ship gas through the pipeline. Global gas supplies have also increased dramatically in the past three years, while demand in Europe has slumped following the recession. The two competing projects would use existing pipelines in Turkey rather than building a dedicated route. The IGTI 185-mile pipeline would pump gas to Greece and Italy, with a published cost of €2.5bn. The TAP consortium, which includes Statoil and E.ON, is proposing the shortest and cheapest pipeline, at €1.1bn, linking Greece and Italy, with the option of building more connections into the former Yugoslavia. Both would have about one third of Nabucco's capacity. The costs of these two projects are also likely to be affected by higher commodity prices. But because both would plan to start operations at fuller capacity, the higher costs would be less keenly felt. Building a new direct gas pipeline from Azerbaijan into Europe, via Turkey, has been dubbed by the industry the "fourth corridor" and will go a long way to ensuring the contintent's security of supply. Supplies were cut in the row between Russia and Ukraine in the winter of 2009 over export tariffs, leaving tens of thousands of homes and businesses in south eastern Europe without heating or power."
European gas pipeline costs double
Guardian, 20 February 2011

"Saudi Arabia is the world's largest exporter of oil. But as experts and WikiLeaks previously detailed--the country's oil supply may be fast dwindling and that has made renewable energy options, such as solar, that much more appealing. Just this week the country announced that construction of its largest solar power plant will be completed by September--and this just days after WikiLeaks reports about exaggerated oil quantities from the country hit the news. ... The concern over oil shortages is no longer limited to supplying foreign countries--the rate of domestic consumption in Saudi Arabia is set to triple in the next 20 years to 120 gigawatts, which means that Saudis could foreseeably consume all of their oil just for themselves. 'It's really a preservation decision using solar for domestic consumption and keeping your oil for more lucrative export markets,' said Vahid Fotuhi, Middle East director of BP Solar. 'Right now, out of the 8 million barrels per day they produce, over 3 million barrels per day are consumed domestically, mainly for power generation. That figure is growing 8 percent per annum,' said Fotuhi. Saudi Oil Minister Ali al-Naimi has already made it clear that he wants his country's level of solar output to match oil exports, though in terms of action the world is still left waiting. The country has more sun than oil, which means the desert nation could become the world's top exporter of power, just as it is the leader in oil."
Solar Power Comes to Saudi Arabia in a Big Way as Peak Oil Looms
Fast Company, 17 February 2011

"Energy Secretary Steven Chu came under fire from Democrats and Republicans on Wednesday for his department's plan to seek a sharp rise in funding for clean-energy projects while paring research on fossil fuels. Chu told a congressional committee that a nearly 12 percent increase in the Energy Department's new budget was necessary to make the United States competitive against other countries, create thousands of U.S. jobs and enhance national security. 'We must rev up the great American innovation machine to win the clean-energy race and secure our future prosperity,' Chu said at a Senate Energy and Natural Resources Committee hearing on the department's proposed $29.5 billion budget for the 2012 spending year that begins on October 1. But Republicans on the panel said while they also like clean-energy technology, it should not come at the expense of traditional energy sources such as oil, and the department must live within budget constraints facing the federal government."
Lawmakers blast Obama's energy budget
Reuters, 16 February 2011

"Exxon Mobil Corp., the world's largest publicly traded oil company, is struggling to find more oil. In its closely watched annual financial report released Tuesday, the company said that for every 100 barrels it has pumped out of the earth over the past decade, it has replaced only 95. It's a conundrum shared by most of the other large Western oil-producing companies, which are finding most accessible oil fields were tapped long ago, while promising new regions are proving technologically and politically challenging. Exxon said in the report that it more than made up for the shortfall in oil by stocking up on natural gas, mostly through its acquisition of XTO Energy Inc. last year.  But the shift toward gas is troubling some investors, because gas sells for less than the equivalent amount of oil. Many observers feel the move toward gas—a trend across the oil industry—is dictated more by shrinking access to oil fields than by a strong desire to emphasize gas production. 'The good old days are gone and not to be repeated,' says Fadel Gheit, an analyst with Oppenheimer and Co. Bringing additional reserves from gas 'is not going to give you the same punch' that oil would, he said. Finding the equivalent, in either oil or natural gas, of a barrel in the earth for every one the company produces—a 100% reserve replacement rate—has become extraordinarily tough. Exxon boasted this was the 17th consecutive year of hitting this mark, but analysts agree that without the XTO deal, Exxon would have fallen far short this year.... The shift toward gas—and troubles with finding oil—has emerged as a theme for the giant Western oil companies. Royal Dutch Shell PLC's chief executive said last month the European company will produce more gas than oil next year for the first time in its 104-year history....Big oil companies are having trouble cashing in on the strong prices for crude oil. They have limited ability to drill in many oil-prone regions, such as Russia and part of the Middle East, due to politics. And even in promising Iraq, where many Western companies have won contracts, much infrastructure must be rebuilt. Exxon and others have also flocked to the oil-rich sands of Northern Alberta, Canada, but digging out the oil across vast swathes of forest comes at relatively high cost and generates concerns about the environmental impact. One place where Western oil companies have found open doors is in deep-water exploration, because state-backed oil companies in Russia, China and the Middle East have little experience drilling these tricky wells....But deep-water projects take a long time to turn from a prospect that a geologist has identified into a producing asset. Chevron Corp.'s chief executive said last week that he expects to add new barrels of oil to its reserves from 'several major deep-water projects' in future years. In 2010, he warned that Chevron added only one new barrel for every four it produced. Given the difficulties these companies are facing, some investors have begun to wonder if Exxon bought XTO last year to 'mask the extent of their replacement problem,' said R. Blair Thomas, chief executive of EIG Global Energy Partners, an energy asset -management firm."
Exxon Struggles To Find New Oil
Wall St Journal, 16 February 2011

"When big-thinkers at companies with the most skin in the energy game are behind closed doors and they discuss how the world really looks going forward, do they say that there are bumps in the road but that things will be fine, just fine, as they suggest publicly? Three years ago, we got a glimpse into the room when Royal Dutch/Shell issued a scenario forecasting the world in 2020. Based on current economic and energy-use patterns around the world, Shell said that energy supplies will be so tight that they will tip the world into a full-blown crisis in which governments will force their populations to reduce driving, use less electricity, and pay an extremely steep increase for what they do consume. There will be a massive, decade-long economic slowdown, and geopolitical power will shift dramatically to energy-producing nations, the company said. Today, Shell returned with an update. The company said that the 2008 financial crisis interrupted the slide it predicted, but that the clock has begun ticking again. If the world does not change how it uses energy, its scenario will hold true. In recent weeks, we've heard almost identical energy-consumption projections from ExxonMobil (here is Exxon's neat slide show), BP and now Shell: The world will use about 40 percent more energy by 2030. The difference is that Exxon and BP more or less just toss out the numbers, while Shell suggests that one might consider running for the hills, oh, sometime around 2016 or 2017 before everyone else shows up. You all can plan to return home around 2030, Shell has said, when the world has come to its senses and adopted all the efficiency and price-signal mechanisms that some forward-thinkers are suggesting now. ... Shell's 2008 and 2011 reports actually contain two scenarios. The one described above, called 'Scramble,' is what it projects will happen if the world continues on its current course. A more optimistic version, called 'Blueprints,' includes a squeeze but far less despair because the world acts to reduce energy consumption and CO2 emissions. Shell's latest, 78-page report confirms its previous finding that in just four years, our usual sources of fuel are not going to meet growing global demand, so that there is going to be much switching to dirty coal, plus more use of agricultural-based biofuels. Specifically, Shell foresees total energy demand -- including fuel for transportation, manufacturing, electricity, heat, and so on -- rising to the equivalent of about 317 million barrels of oil a day, about 22 percent higher than the approximately 259 million barrels a day consumed last year. In 2030, the number rises another 12 percent, to 358 million barrels a day, in Shell's scenario. .... The new report suggests that all is not lost -- there are signs, if slow ones, of attention to climate change. Whatever the case, Shell sticks with its prediction that eventually -- after about a decade of misery -- people come around and decide to act..."
The coming misery that Big Oil discusses behind closed doors
Foreign Policy, 14 February 2011

"The energy system will struggle to match this surging demand for easily accessible energy. Supply, demand and environmental tensions will swell and spread. Political, industrial and individual choices will determine whether these tensions can be resolved and whether the solutions will be benign or harmful to us. .... Underlying global demand for energy by 2050 could triple from its 2000 level if emerging economies follow historical patterns of development. In broad-brush terms, natural innovation and competition could spur improvements in energy efficiency to moderate underlying demand by about 20% over this time. Ordinary rates of supply growth -- taking into account technological, geological, competitive, financial and political realities -- could naturally boost energy production by about 50%. But this still leaves a gap between businessas-usual supply and business-as-usual demand of around 400 EJ/a – the size of the whole industry in 2000. This gap – this Zone of Uncertainty – will have to be bridged by some combination of extraordinary demand moderation and extraordinary production acceleration. So, we must ask: Is this a Zone of Extraordinary Opportunity or Extraordinary Misery?..... Timescales are a key factor. Buildings, infrastructure and power stations last several decades. The stock of vehicles can last twenty years. New energy technologies must be demonstrated at commercial scale and require thirty years of sustained double-digit growth to build industrial capacity and grow sufficiently to feature at even 1-2% of the energy system. The policies in place in the next five years shape investment for the next ten years, which largely shape the global energy picture out to 2050. Speed and direction are significant. How fast will tensions rise? How fast can we make the right choices? And how quickly can positive developments happen? ... How quickly can new energy technologies feasibly be deployed? An article in Nature in 2009 7 identifies two common 'laws' of energy technology success in the past: 1. Establishment Phase: It takes 30 years to span the 1000-fold growth needed to get from pilot-plant scale up to 1-2% of the world’s total primary energy -- a sustained growth rate of 26% pa. 2. Growth Phase: After this, the deployment rises more linearly to its ultimate share in the energy mix, which depends on direct economic competitiveness at scale.... In the Scramble scenario, immediate pressures to achieve energy security trump demand management policies. National government attention falls to supply side levers resulting in a resource scramble waged by nations and between nations. Actions to address climate change become subordinated until major events – physical effects like floods and severe storms - drive responses. Action to tackle energy demand and promote efficiency comes only when supplies become tight and continued economic growth can only be achieved with better management of constrained resources. The energy system in Scramble is characterised by discontinuities as a result.... Many people hope development will be 'faster than Blueprints'. But, at this point, developments are generally proceeding 'slower than Blueprints', despite some achievements. Looking ahead, economic volatility and cyclicality threaten to depress the pace of change still further."
'Signals and Signposts'
Shell Energy Scenarios to 2050, February 2011

"China's coal imports hit a record 17.3mn metric tonnes in December, up 25pc from November on higher volumes from Vietnam, Australia and Indonesia. The strong finish brought China's coal imports to a record 166mn mt for all of 2010, a 32pc increase from a revised 125.8mn mt for 2009, according to data from the China Coal Transportation and Distribution Association (CCTD). The December imports were 5.8pc higher than a year prior when the previous monthly record was set. The data show state-mandated shutdowns of energy-intensive industries late in 2010 did not curb China's appetite for coal. Lower industrial demand was offset by a cold winter, drawing down stockpiles at coal-fired utilities. The China Electricity Council estimates the country's electricity consumption, 80pc of which is met by coal-fired plants, will grow 12pc in 2011, and that coal supply will remain tight in 2011. The month-to-month increases in December were primarily Indonesian and Australian imports, which rose by 1.3mn mt from each country. Imports from Vietnam were up 1.2mn mt, and Mongolia increased 595,799mt, while South African coal imports fell 75pc to 385,671mt. China's coal exports came to 1.4mn mt in December, down 29pc from a year prior, to finish at 19mn mt for the full year, down from 22.4mn mt in 2009. For the full-year 2010, Indonesia led all countries with 55mn mt of exports to China, followed by Australia at 37mn mt, Vietnam at 18mn mt, Mongolia at 16.6mn mt, Russia at 11.6mn, and South Africa at 7mn mt. The average price paid for all coals into China in December was $108.23/mt, and for the full year was $102.74/mt. Coking coal represented 28pc of the country's imports last year at 47.3mn mt. The average value for coking coal reported to CCTD was $145.27/mt. Australia was the top exporter of coking coal to China at 17.4mn mt, followed by Mongolia at 15mn mt, according to the association."
China’s coal imports set records in month, year
Argus Media, 14 February 2011

"A new drilling technique is opening up vast fields of previously out-of-reach oil in the western U.S., helping to reverse a two-decade decline in domestic production of crude. Companies are investing billions of dollars to get at oil deposits scattered across North Dakota, Colorado, Texas and California. By 2015, oil executives and analysts say, the new fields could yield as much as 2 million barrels of oil a day -- more than the entire Gulf of Mexico produces now. This new drilling is expected to raise U.S. production by at least 20% over the next five years. And within 10 years, it could help reduce oil imports by more than half, advancing a goal that has long eluded policymakers. '"That's a significant contribution to energy security,' says Ed Morse, head of commodities research at Credit Suisse. Oil engineers are applying what critics say is an environmentally questionable method developed in recent years to tap natural gas trapped in underground shale.... Petroleum engineers first used the method in 2007 to unlock oil from a 25,000-square-mile formation under North Dakota and Montana known as the Bakken. Production there rose 50% in just the past year, to 458,000 barrels a day, according to Bentek Energy, an energy analysis firm."
New techniques open up new fields
Associated Press, 13 February 2011

"U.S. gasoline prices have jumped to the highest levels ever for the middle of February. The national average hit $3.127 per gallon on Friday, about 50 cents above a year ago. The price is about 6 percent higher than on this date in 2008. The next day, pump prices began a string of 32 gains over 34 days. They rose 39 percent over five months, eventually hitting an all-time high of $4.11 per gallon in July. Although gas prices are expected to rise, most experts aren't expecting a reprise of 2008, when the price spike forced many drivers to join car pools and trade in gas-guzzling SUVs for fuel-efficient cars. 'It would be a mistake to think we're going to have that all over again,' said OPIS chief oil analyst Tom Kloza. He says oil demand will slide in the U.S. by May, as refineries slow fuel production while they switch to summer blends of gas. World oil consumption also may not rise as much as expected. And Kloza contends that oil traders are more cautious now, after getting burned when oil plunged to $33 per barrel in early 2009, just six months after hitting $147 per barrel. Even the most bullish traders no longer think they can chase commodity prices higher without risk, he says. Still, Kloza expects gas to reach $3.50 to $3.75 per gallon this spring because of the usual run-up in prices ahead of the summer driving season. That would mean an increase of 12 to 20 percent from the current level."
Gas pump prices highest ever for this time of year
Associated Press, 11 February 2011

"High oil prices are here to stay, the European Union's energy commissioner has warned. Guenther Oettinger said on Thursday that the lower prices of the past three years had been the result of the financial crisis and recession, and that companies should plan for higher prices. 'The oil price will not go back to $60 [a barrel],' as it did in 2008, Oettinger said. 'As a normal perspective, you have to accept the oil price will be near to $90 a barrel or some more.' But he suggested that the current price of around $100 a barrel could be problematic. 'No one, neither oil producers nor consumers, have an interest in a long-term price higher than $95,' he told reporters in London. 'All stakeholders have an interest in stabilising the oil price.' Current oil prices of around $100 a barrel could hurt the European economy if they persist for a long period, he said, adding that companies should adjust their planning accordingly, and try to become more energy efficient or turn to other sources of fuel. Needing less oil is the best way to keep the oil price down and avoid speculation driving prices higher, he said."
High oil prices 'here to stay' says EU energy commissioner
Guardian, 11 Februay 2011

"While the world remains transfixed by the Egyptian revolt, a crisis with equally profound global consequences is quietly brewing elsewhere in the Middle East: WikiLeaks this week released U.S. diplomatic cables suggesting that Saudi Arabia may have vastly overstated its oil reserves — if true, that could dramatically accelerate the arrival of the long-feared 'peak oil' moment, when oil production hits its final high before slowly declining, keeping prices rising for the foreseeable future and slowing global economic growth. But not all industry analysts are convinced by the claims in the cables.... 'The fact of the matter is we simply do not know,' says Paul Stevens, senior research fellow for energy at the think tank Chatham House in London. 'That is true of the reserves of most of the Opec countries.' Stevens points out that in 1987, when Opec members were negotiating among themselves what production quota each country should have, about five countries with small populations — including Saudi Arabia — dramatically changed the figures of their oil reserves. 'The way you do that is you creep along to the chief geologist's office and say, 'change the recoverable factor,' ' says Stevens. 'It led to a certain degree of skepticism.' And this week, WikiLeaks deepened those doubts."
Have Saudis Overstated How Much Oil Is Left?
TIME, 10 February 2011

"Ministers still do not know when wind power will pay for itself, the Government admitted tonight. Energy Minister Charles Hendry told MPs governments had spent £2.2 billion supporting wind power over eight years - and it was impossible to predict when the energy source would prove profitable without grants. He said: 'We expect that over time we will be able to reduce support for wind power and other renewable energy technologies as they become more economic, but it is not possible to put a specific timescale on this.'... In December last year dramatic plans to erect up to 20,000 wind turbines and put millions of electric cars on the roads were unveiled by the Government’s climate experts. Business guru Lord Turner, chairman of the Committee on Climate Change, said the UK had to slash greenhouse gas emissions by 60 per cent by 2030 to help tackle global warming. The costs of switching to green power and transport would be covered by new environmental taxes and higher fuel bills. Experts say the plans will cost around 1 per cent of the UK’s gross domestic product by 2030 – the equivalent of £30billion a year."
We still don’t know when wind power will break even, admits energy minister
Mail, 9 February 2011

"The Organization of Petroleum Exporting Countries raised estimates for the amount of crude it will need to produce this year, and said that prices at their highest in two years don’t signal any supply shortage. OPEC predicts it will have to provide 29.8 million barrels a day this year, about 400,000 a day more than it estimated last month. The revision is based on economic growth and a colder- than-normal winter. Still, oil’s surge through $100 a barrel in London this year for the first time since 2008 does not signal any global supply deficit, the organization said. 'World economic activity along with the effect of frigid winter temperatures' is driving the change, the group’s Vienna-based secretariat said in a report today. Global oil consumption will increase by 1.4 million barrels a day, or 1.6 percent, this year to 87.7 million barrels a day, according to OPEC. The International Energy Agency, which advises consuming nations, said in its monthly report today that demand will grow by 1.7 percent to 89.3 million barrels."
OPEC Raises Demand Forecast; Says Shortage Not Behind $100 Oil
Bloomberg, 11 February 2011

"The global recovery will drive oil prices dangerously higher this year, possibly to the level where they could push the economy into a marked slowdown, the IEA warned Thursday. The prospect of rising inflation, driven by oil and other higher commodity prices, coupled with political instability in the Middle East is an added concern, it said. The IEA, the energy policy and monitoring arm of the Organisation for Economic Cooperation and Development, said the global oil bill was likely equal to 4.1 percent of total output in 2010 and would rise to 4.7 percent this year. 'Under current assumptions for global GDP, oil price and oil demand, the global oil burden could rise to 4.7 percent in 2011, getting close to levels that have coincided in the past with a marked economic slowdown,' the International Energy Agency said in its latest monthly Oil Market Report. 'Indeed, the combination of higher prices ... emerging inflationary pressures and instability in the Middle East is not a healthy one,' it added. The forecast was based on oil at $90 a barrel but Brent crude has rocketed over $100 recently as unrest in Egypt stokes concerns of possible disruption to supplies via the Suez Canal and wider fears over the Middle East. The IEA had warned last month that sustained oil prices at $100 posed a real risk to the world economy and said Thursday that demand would still grow even if the pace of the global recovery eases overall. After taking into account the latest economic forecasts from the International Monetary Fund, the IEA said global oil product demand should reach 89.3 million barrels per day (mbd), an increase of 1.5 mbd from 2010. Separately, the OPEC oil cartel raised its 2011 global oil demand growth estimate to 1.62 percent from the previously estimated gain of 1.23 percent, to 87.74 mpd, citing bitter winter and continued economic expansion, especially in the United States and China. OPEC, led by oil kingpin Saudi Arabia, supplies 40 percent of the world's oil. The IEA noted that Chinese demand has continued to rise strongly, jumping 17.7 percent year-on-year in December to 10.4 mbd, another record. Efforts by the Chinese government to cool its runaway economy made forecasting difficult but the IEA said it expected Chinese oil demand to rise by 6.0 percent in 2011 to 9.96 mbd on average. The IEA raised its demand growth forecast for OECD countries by 90,000 barrels per day (bpd) to give a total 46 mbd in 2011, representing an overall decline of 0.2 percent as the developed countries cut down fossil fuel use. For the non-OECD countries, the forecast was increased by 60,000 bpd to give 43.2 mbd, representing an overall gain of 3.7 percent for the year. Global oil supply rose 0.5 mbd in January to 88.5 mbd, the IEA said, with OPEC supply alone hitting a two-year high at 29.85 mbd. Excluding Iraq, which is not subject to OPEC quotas, production rose to 27.2 mbd, against the agreed level of 24.845 mbd set in December 2008."
Energy Agency warns of danger from high oil prices
AFP, 10 February 2011

"A new drilling technique is opening up vast fields of previously out-of-reach oil in the western United States, helping reverse a two-decade decline in domestic production of crude. Companies are investing billions of dollars to get at oil deposits scattered across North Dakota, Colorado, Texas and California. By 2015, oil executives and analysts say, the new fields could yield as much as 2 million barrels of oil a day — more than the entire Gulf of Mexico produces now. This new drilling is expected to raise U.S. production by at least 20 percent over the next five years. And within 10 years, it could help reduce oil imports by more than half, advancing a goal that has long eluded policymakers. 'That's a significant contribution to energy security,' says Ed Morse, head of commodities research at Credit Suisse. Oil engineers are applying what critics say is an environmentally questionable method developed in recent years to tap natural gas trapped in underground shale. They drill down and horizontally into the rock, then pump water, sand and chemicals into the hole to crack the shale and allow gas to flow up. Because oil molecules are sticky and larger than gas molecules, engineers thought the process wouldn't work to squeeze oil out fast enough to make it economical. But drillers learned how to increase the number of cracks in the rock and use different chemicals to free up oil at low cost. 'We've completely transformed the natural gas industry, and I wouldn't be surprised if we transform the oil business in the next few years too,' says Aubrey McClendon, chief executive of Chesapeake Energy, which is using the technique. Petroleum engineers first used the method in 2007 to unlock oil from a 25,000-square-mile formation under North Dakota and Montana known as the Bakken. Production there rose 50 percent in just the past year, to 458,000 barrels a day, according to Bentek Energy, an energy analysis firm. It was first thought that the Bakken was unique. Then drillers tapped oil in a shale formation under South Texas called the Eagle Ford. Drilling permits in the region grew 11-fold last year. Now newer fields are showing promise, including the Niobrara, which stretches under Wyoming, Colorado, Nebraska and Kansas; the Leonard, in New Mexico and Texas; and the Monterey, in California. 'It's only been fleshed out over the last 12 months just how consequential this can be,' says Mark Papa, chief executive of EOG Resources, the company that first used horizontal drilling to tap shale oil. 'And there will be several additional plays that will come about in the next 12 to 18 months. We're not done yet.'... With oil prices high and natural-gas prices low, profit margins from producing oil from shale are much higher than for gas. Also, drilling for shale oil is not dependent on high oil prices. Papa says this oil is cheaper to tap than the oil in the deep waters of the Gulf of Mexico or in Canada's oil sands. The country's shale oil resources aren't nearly as big as the country's shale gas resources. Drillers have unlocked decades' worth of natural gas, an abundance of supply that may keep prices low for years. U.S. shale oil on the other hand will only supply one to two percent of world consumption by 2015, not nearly enough to affect prices..... Still, a surge in production last year from the Bakken helped U.S. oil production grow for the second year in a row, after 23 years of decline. This during a year when drilling in the Gulf of Mexico, the nation's biggest oil-producing region, was halted after the BP oil spill. U.S. oil production climbed steadily through most of the last century and reached a peak of 9.6 million barrels per day in 1970. The decline since was slowed by new production in Alaska in the 1980s and in the Gulf of Mexico more recently. But by 2008, production had fallen to 5 million barrels per day. Within five years, analysts and executives predict, the newly unlocked fields are expected to produce 1 million to 2 million barrels of oil per day, enough to boost U.S. production 20 percent to 40 percent. The U.S. Energy Information Administration estimates production will grow a more modest 500,000 barrels per day. By 2020, oil imports could be slashed by as much as 60 percent, according to Credit Suisse's Morse, who is counting on Gulf oil production to rise and on U.S. gasoline demand to fall."
New drilling method opens vast oil fields in US
Associated Press, 10 February 2011

"Europe is struggling to meet its own energy saving targets, as an aversion to upfront investment holds back a strategy that could create jobs, cut climate-warming emissions and save billions of euros. Energy Commissioner Guenther Oettinger will give European Union governments two years to get the strategy back on track before proposing legally binding targets, according to a draft EU document seen by Reuters on Wednesday. The EU's plan to reach 20 percent energy savings by 2020 is expected to create about two million jobs across the next decade, largely in building trades and engineering, and save consumers money they can then put back into the economy. About 40 percent of Europe's energy is consumed in buildings, so any efficiency measures could save a sizeable chunk of the 40 billion euros the EU's 27 member countries send abroad each year for gas. But with budgets already strained, nobody is prepared to make the upfront investment. Unlike the EU's successful strategies for car efficiency and renewable energy, this one is not legally binding. Next month, the European Commission, which initiates EU law, will try to tackle the strategy's shortcomings with a new "Energy Efficiency Action Plan" -- but it will not decide whether to make the plan mandatory until early 2012, according to the leaked draft. Environmentalists say that is too late. 'Waiting another year or two before deciding to introduce binding targets simply means more wasted energy and money... and greater risk of lock-in to inefficient technologies,' said Erica Hope of environmental group Climate Action Network Europe. Germany, Hungary and Poland are likely to fall short by more than a third, while France, Spain and Greece will fall short by about a quarter, provisional EU data shows. The EU as a whole will only achieve a saving of 8.9 percent -- less than halfway to the goal."
EU fails on energy savings, mandatory goals loom
Reuters, 9 February 2011

"The global energy industry faces a 'huge supply' challenge to bring online enough new gas to meet demand, according to BG Group’s chief executive. Frank Chapman said the industry would need $2,000bn (£1,240bn) of investment to find and develop gas supplies equal to 20 times the current production of Norway to 2020."
BG warns over demand for gas
Financial Times, 9 February 2011

"BG, the fast-growing oil and gas exploration company, dismissed predictions of a 'global gas glut' as the group raised its production targets, sending shares to an all time high. Chief executive Frank Chapman said that the International Energy Agency was 'on its own' in its 'conservative views' after it predicted in November that a surge in 'unconventional' gas production such as from shale this decade would lead to lower prices and unused pipeline and liquid gas transportation capacity. BG said that world gas demand would increase by a third over the next, with more than half this increase coming from non-OECD countries. The company said to meet demand in 2020, investment of $2tn (£1.2tn) would be needed in new production equivalent to 20 times the gas produced by Norway. 'I fail to see where this [glut] is going to come from. In order to meet growing demand … it's a heck of a challenge. There seems to be a view that the world is awash with gas and it's free. But shale gas is in a very tight rocks. These are complex wells. You need to balance this with the rhetoric that there is lots of it and it's free.' He also rejected the view that higher gas supplies – and the creation of a global market with liquefied natural gas tankers shipping around the world – would depress prices. Most gas prices would continue to be indexed to oil prices, he said, to reflect the higher costs of unconventional production such as shale gas. 'The idea that you can enjoy Henry Hub [the price set for gas futures contracts in New York] prices for gas going to Yokohama [a major LNG port in Japan] the time it get there it's oil indexed.'.... It also said that last year it had added 1.7bn barrels of oil and gas equivalent to its reserve base, which now totals 16.2bn. The growth figures dwarf those of oil majors that are struggling to find new reserves. BP last week scrapped its growth production target of 1-2%, and new chief executive Bob Dudley refused to set a new one, promising instead to deliver 'quality not quantity'."
BG raises gas production targets amid reports of 'glut'
Guardian, 8 February 2011

"The US fears that Saudi Arabia, the world's largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show. The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom's crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%. The revelation comes as the oil price has soared in recent weeks to more than $100 a barrel on global demand and tensions in the Middle East. Many analysts expect that the Saudis and their Opec cartel partners would pump more oil if rising prices threatened to choke off demand. However, Sadad al-Husseini, a geologist and former head of exploration at the Saudi oil monopoly Aramco, met the US consul general in Riyadh in November 2007 and told the US diplomat that Aramco's 12.5m barrel-a-day capacity needed to keep a lid on prices could not be reached.... According to the cables, which date between 2007-09, Husseini said Saudi Arabia might reach an output of 12m barrels a day in 10 years but before then – possibly as early as 2012 – global oil production would have hit its highest point. This crunch point is known as 'peak oil'. Husseini said that at that point Aramco would not be able to stop the rise of global oil prices because the Saudi energy industry had overstated its recoverable reserves to spur foreign investment. He argued that Aramco had badly underestimated the time needed to bring new oil on tap. One cable said: 'According to al-Husseini, the crux of the issue is twofold. First, it is possible that Saudi reserves are not as bountiful as sometimes described, and the timeline for their production not as unrestrained as Aramco and energy optimists would like to portray.' It went on: 'In a presentation, Abdallah al-Saif, current Aramco senior vice-president for exploration, reported that Aramco has 716bn barrels of total reserves, of which 51% are recoverable, and that in 20 years Aramco will have 900bn barrels of reserves. Al-Husseini disagrees with this analysis, believing Aramco's reserves are overstated by as much as 300bn barrels. In his view once 50% of original proven reserves has been reached … a steady output in decline will ensue and no amount of effort will be able to stop it. He believes that what will result is a plateau in total output that will last approximately 15 years followed by decreasing output.' The US consul then told Washington: 'While al-Husseini fundamentally contradicts the Aramco company line, he is no doomsday theorist. His pedigree, experience and outlook demand that his predictions be thoughtfully considered.' Seven months later, the US embassy in Riyadh went further in two more cables. 'Our mission now questions how much the Saudis can now substantively influence the crude markets over the long term. Clearly they can drive prices up, but we question whether they any longer have the power to drive prices down for a prolonged period.'"
WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on prices
Guardian, 8 February 2011

"Speaking at the Objective Capital Americas' Resources Investment Conference in London yesterday, Ian Hiscock from market analysis group CRU Strategies painted a very positive picture for the global uranium sector moving ahead. Hiscock commented that the uranium price, like that of a number of other metal and mineral commodities, was becoming very much a China story - with that country consuming 17,000 tonnes in 2010 and with a huge nuclear power development programme ahead. 2010 appears to have been a key year with some supply disruptions - notably a big shortfall from Rio Tinto's ERA in Australia where production was some 1,000 tonnes below target, and the shaft accident at BHP's Olympic Dam also affecting supplies - leading to a change from a small global surplus to a massive supply deficit, with spot prices rising around 50% during the year. According to Hiscock supply will remain in deficit in 2011 - although a smaller one - but there will be a fundamental shortage of supply for at least the next 10 years - with the supply/demand gap widening as the decade continues and the big planned increase in nuclear power generation plants comes about.  He does not see production from new projects as being in any way sufficient to meet likely demand. And from the start of the next decade, CRU sees the demand gap widening to some 65,000 tonnes of uranium a year and possibly increasing further - exacerbated by a falling away in secondary supply....Following Hiscock, Walt Coles, CEO of Virginia Energy, which is trying to gain permitting and permissions to develop a major uranium deposit in Virginia (where there is currently a moratorium on uranium mining in the State), reckoned that the CRU projections on the global supply shortfalls into the next decade were actually conservative and that their own analysis pointed to an even wider supply/demand gap developing."
Massive uranium supply/demand gap developing
Mineweb, 2 February 2011

"Kazakhstan's annual uranium production has doubled since 2008, according to preliminary uranium production results released by national atomic company Kazatomprom. The 17,803 tU produced by Kazakhstan in 2010 was nearly 30% up on the 14,020 tU produced in 2009 and double the amount produced in 2008. Uranium sales for the company, excluding subsidiaries and joint ventures, amounted to 9000 tU for the year, and revenue from uranium was also up by 30% on 2009 figures, Kazatomprom said.... Kazakhstan became the world's foremost uranium producer in 2009, when it was responsible for almost 28% of world uranium production."
Record year for Kazakh uranium
World Nuclear News, 1 February 2011

"The country's greenhouse gas emissions are falling dramatically as belt-tightening Britons use less power in the wake of the recession, figures showed today. Carbon Dioxide emissions fell by almost a tenth in 2009 according to the Department of Energy and Climate Change, a trend that will be welcomed by environmental groups. But the fall has mainly been caused by falling demand for energy from homes and businesses - and illustrates the severity of the economic downturn. Industry alone emitted a third less greenhouse gas, suggesting  a rapid drop in demand for raw materials such as those used in the construction industry. Energy Secretary Chris Huhne warned the figures were not a cause for celebration. He said: 'Yes, emissions were down in 2009 but so was the economy so this is no time for back-slapping.' The country's total greenhouse gas emissions fell by 8.7 per cent in 2009 and Carbon Dioxide emissions, the most common greenhouse gas, fell 9.8 per cent. The falls were far higher than the previous year, when both CO2 and greenhouse gases as a whole dropped by around 2 per cent - but emissions from households rose by 3 per cent. In 2009, greenhouse gas emissions fell across all areas, with an 11 per cent reduction in the energy supply sector, an 11.8 per cent fall among businesses, a 36.5 per cent reduction in emissions from industrial processes, 4.2 per cent from transport and 5.8 per cent from homes. An increase in the use of nuclear power, instead of coal and natural gas, for electricity generation also led to a reduction in emissions."
Greenhouse gas emissions plummet by 9% in a year as struggling Britons use less fuel and energy
Mail, 1 February 2011

"First came the revolution in natural gas production - the shift to shale gas which, by bringing huge new stores of natural gas into the market drove prices down and made it necessary to fundamentally restructure Canada´s gas-prone petroleum sector. Now comes the revolution in the oilfield. Ironically, the same technologies that made shale gas possible are enabling the industry to begin the restructuring that the shift to shale gas made necessary. 'Oil doesn´t flow as well as gas,' Legacy Oil + Gas president and chief executive officer Trent Yanko reminds us. 'So in the oilfields of Alberta, especially, is a tremendous opportunity to recover unproduced oil. Original oil in place was in the billions of barrels, so if you can add only one, two, three per cent to recovery there is quite an opportunity. You don´t have to be a wildcatter out in the jungle somewhere. All you have to do is better exploit what we already know is there.' The technologies that made the shale gas revolution possible are beginning to have a similar impact in the light and conventional oil sector, which can now develop reservoirs that could not be exploited until energy prices and new technologies made production economic. For small companies in particular, this is presenting exceptional opportunities. From start-ups to mid-caps, companies like TriAxon Oil and PetroBakken Energy are creating profitable enterprises from oilfields discovered 50 years ago. Already successful in similar enterprises, Legacy is taking on the big kahuna - the century-old field that put Canada´s petroleum headquarters on the map.... Since it became commonplace in the late 1980s, horizontal drilling has been enhanced by increased drilling efficiency. Much longer horizontal legs are now possible: many are two and three kilometres in length. This is possible because of improvements in bit design, the increasingly effective use of coil tubing and better down-hole motors. Other contributors include geosteering and increasingly effective measurement-while-drilling tools and techniques. Most important of all is multi-stage fracturing. The industry can now isolate many completion zones along lengthy horizontal wellbores: a two-kilometre horizontal leg can host up to 20 hydraulic fractures. These technologies are making formations like the Bakken viable. Increasingly, the technologies that created the shale gas revolution - long horizontal wells and multi-stage fracturing - are being applied to aging light oil reservoirs in North America. This production phenomenon has also involved largely unacknowledged regulatory responses by provincial governments within western Canada. These factors and other technologies are opening up important new opportunities for production from largely depleted reservoirs. For example, Gary Leach - executive director of the Small Explorers and Producers Association of Canada (SEPAC) - notes that 'microseismic for the more precise design of frac jobs is a particularly important new technology.'... The opportunities come with a cost, of course. Saponja cautions that those technologies present unique challenges because they are so capital-intensive. 'Fifteen years ago, in the heyday of conventional oil exploration and production, you would put $150,000 to maybe $500,000 into the ground to get 200,000 barrels of oil,' he says. 'Now you have to put maybe $4 million in the ground to get 200,000 barrels of oil, and you have a 50 per cent to 80 per cent initial rate of decline. To get these multi-stage frac wells to work, you have to drill a lot of wells in these lower quality reservoirs.' This leads to what he calls the treadmill. 'To offset decline, you have to be continually drilling, because the decline rate is so high. The main point of the equation is that these horizontal wells are very capital-intensive. Initially, you get a very high rate of oil production, but [the wells] will decline quite quickly. The economics are actually fairly marginal on a well-to-well basis, so you have to drill a lot of wells to benefit from scale. Except in the Bakken.' he says, 'Most of these multi-stage frac wells really struggle if oil prices are below $60 or $70. For these wells to be really profitable, oil has to be over $80 a barrel.'"
Revolution repeated
Oilweek (Canada), February 2011

"Construction of new wind farms slowed in Europe by about one tenth last year, while coal power construction gathered pace, the European Wind Energy Association (EWEA) said on Monday. Newly installed wind power capacity was 9.3 gigawatts in 2010, compared to 10.5 gigawatts in 2009, the industry body said in a statement. 'For only the second time since 1998, the EU installed more coal power capacity than it decommissioned in 2010,' it added. It also said a 10-percent decrease in the construction of new onshore wind farms last year was partly offset by a 51 percent increase in new wind farms at sea. 'These figures are a warning that we cannot take for granted the continued financing of renewable energy,' said EWEA chief executive Christian Kjaer."
EU wind power construction slows, coal gains -EWEA
Reuters, 31 January 2011

"Fears that the turmoil in Egypt could disrupt oil shipments passing through the Suez canal and engulf the Middle East drove the price of Brent crude oil through the $100 barrier for the first time in over two years. The price of a barrel of the benchmark Brent crude soared by more than $1.50 to as high as $101.08 a barrel as the protests against President Hosni Mubarak's regime intensified. Prices are now at their highest since September 2008, at the start of the financial crisis. Abdullah Al-Badri, secretary general of Opec, the cartel of oil producers, expressed concern about the situation in Egypt and added that Opec did 'not want 2008 to be repeated', referring to when oil prices hit a record $147. But he said the cartel would not increase production on the back of the surge in prices as he believed there was no shortage of oil. Since August, oil prices have been steadily increasing from around $70 on the back of higher demand as the global economy recovers from the downturn, fuelling inflation. The latest rise in oil prices will put further pressure on the British government to head off a rise in fuel duty planned for April.... Analysts said that oil prices were rising on concerns that the turmoil could spread into neighbouring countries or even major oil producers further afield, such as Saudi Arabia. The unrest in Egypt follows the recent overthrow of the regime in Tunisia, adding to the nervousness that more chaos could engulf the Middle East, which accounts for almost a third of the world's oil production. The Egyptian authorities have said that the Suez canal is operating normally, with armed guards protecting the crucial waterway linking the Red Sea and the Mediterranean. Barclays Capital warned that some ships could be attacked if the situation deteriorates and that if a radical anti-western government seized power it could close the canal. If the canal was unavailable oil tankers would have to sail around Africa to transport oil from the Middle East to America – an extra 6,000 miles. 'We cannot ignore the possibility that the chaos will spill over from Egypt into oil-producing nations,' said Kenji Sekiguchi of Mitsubishi UFJ Asset Management. Badri said Opec ministers would discuss whether they needed to pump more oil to bring down prices at an energy conference in Saudi Arabia later this month but said a formal decision to increase production quotas was unlikely. Opec's next formal meeting takes place in June."
Egypt turmoil pushes crude oil price over $100 a barrel
Guardian, 31 January 2011

"Iraqi officials are quietly backpedaling on Baghdad's plan to boost oil production to as much as 12 million barrels per day in six years to a more modest 8 million bpd. This is largely because the country's oil industry infrastructure is so dilapidated after decades of war, insurgency, international sanctions and neglect that it cannot support such an ambitious project. The country's 4,500-mile pipeline network, a vital element in exporting oil, is barely able to handle current production levels. The Oil Ministry says that reached 2.7 million barrels per day in December. That's a modest increase but underlines the upward curve in production after foreign companies took over major fields in 2010. Indeed, that figure is the highest monthly output total since the U.S.-led invasion of Iraq in March 2003. However, it's below the 3 million bpd the country produced in the late 1980s after an eight-year war with Iran.... Some industry analysts estimate Iraq will be able to boost production to nearly 3 million bpd by the end of 2011 and hit 4.5 million by 2015, largely due to greater output from the major fields that have been underproducing for years. But few see the government of Prime Minister Nouri al-Maliki, whose actions in the next few years will be crucial to pushing Iraqi production to the limit, achieving the target of 12 million bpd by 2017 to challenge Saudi Arabia as the world's leading producer. Indeed, Thamir al-Ghadban, one of al-Maliki's senior advisers, was quoted as saying that 8 million bpd was a far more realistic production figure by 2017.... Iraq's recoverable oil reserves are pegged at 143.1 billion barrels, the world's fourth largest proven reserves of conventional crude after Saudi Arabia, Venezuela and Iran. In November, the International Energy Agency poured cold water on Iraq's plans to boost production to 12 million bpd by 2017, saying it could take 20 years just to reach half that. The only countries that have been able to pull off the kind of feat Iraq seeks to achieve are Russia and Saudi Arabia, which during the 1960s pushed through the 10 million bpd barrier. Upgrading Iraq's infrastructure will be an immense task and could cost as much as $150 billion, the IEA noted. 'Basic infrastructure, including roads, bridges, airports and water supply are all in need of repair and expansion,' it observed. 'A major expansion of shipping ports will also be needed.' The situation is so parlous that one Western diplomat observed recently, 'In some cases, the only thing holding the pipelines together is the sludge in them'"
Iraq quietly rows back on lofty oil plans
United Press International, 28 January 2011

"Less than one-third of the biofuel used on UK roads meets government environmental standards intended to protect water supplies, soil quality and carbon stocks, according to new figures. The Renewable Fuels Agency says that just 31% of the biofuel supplied under the government's initiative to use fuel from plants to help tackle climate change met its green standard. For the remaining 69% of the biofuel, suppliers could not say where it came from, or could not prove it was produced in a sustainable way, the figures show. In April 2008, suppliers began mixing biofuel into all petrol and diesel supplies under the Renewable Transport Fuel Obligation (RTFO), and by 2009-10 – the time period to which these latest figures relate – biofuels accounted for 3.3% of UK transport fuels. Suppliers were supposed to ensure that 50% of biofuel met government environmental standards, but the target is not mandatory and was not met. Several suppliers, including BP, Total, Morgan Stanley and Chevron, also failed to meet targets on reducing greenhouse gas emissions and providing data on the source of their biofuels."
Two-thirds of UK biofuel fails green standard, figures show
Guardian, 27 January 2011

"Afghan President Hamid Karzai surprised many on Friday when he agreed to cut Russian energy giant Gazprom in on the construction and operation of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline. As noted in the first half of this story on Tuesday, the move marks a dramatic about-face in policy by Karzai and may, in part, have been a response to Iran’s six-week blockade of fuel shipments to Afghanistan from Iraq. But whatever the reason, the move comes as a slap in the face to Turkmenistan President Gurbanguly Berdimuhamedov and could affect Turkmenistan’s plans for the proposed Nabucco pipeline. In August 2010, Berdimuhamedov rejected a proposal from Russian Deputy Prime Minister Igor Sechin during his visit to the Turkmen capital Ashgabat to include Gazprom in the TAPI project. He later characterized an announcement by Russia that it would be involved in TAPI as an attempt by Russia to meddle in Turkmenistan’s energy affairs. Berdimuhamedov also defied the Kremlin last year when he pledged to provide gas to the proposed Nabucco pipeline, which will deliver Central Asian gas to Europe through a line not controlled by Russia. Nabucco is part of Turkmen efforts to diversify its exports routes beyond Russia after Turkmenistan’s energy economy was severely damaged after a Russian-controlled pipe exploded in 2009, severely limiting Turkmenistan’s exports. Russia, however, remains adamantly opposed to Nabucco. Russia wants to transport gas to Europe through its own South Stream pipeline, which would run through pro-Russian Bulgaria and Serbia. But now that Russia has powered its way into TAPI, it is likely to redirect its formidable and underestimated influence in Eurasia to kill the Nabucco project.... Russian TAPI involvement also damages the United States' interests in the region. The U.S. has supported TAPI – and Turkmen efforts to keep Russia off the project – as a way to break Russia’s and China’s monopoly on exporting Caspian Basin energy to the rest of the world. But because Karzai folded to Kremlin pressure, Russia will have influence over the pricing policies and volume of gas pumped through TAPI. Karzai’s decision also diminishes U.S. standing across Central and Southern Asia. Karzai would last no more than a few days in office if U.S. forces were withdrawn tomorrow. And many believe he can only remain in office after U.S. troops pull out in 2014 if he cuts a deal with the Taliban. The fact that he dared to defy Washington on such an important issue even while U.S. forces continue to fight and die on his behalf is a significant blow to the perceived influence of the U.S. in the region. Afghanistan’s defiance of the U.S. also comes at a time when Kyrgyzstan and Tajikistan have also been tilting away from the United States and towards Moscow. Uzbek President Islam Karimov – still angry about being lectured on human rights by the U.S. Secretary of State – has also been moving away from the U.S. to boost ties with Russia and the European Union. Even Kazakhstan, while seeking to improve its relations with Washington, remains first and foremost Russia’s most important, respected and reliable ally in Central Asia."
Russian TAPI involvement damages Turkmenistan, U.S.
Central Asian Newswire, 26 January 2011

"Investment in renewable energy technology could suffer as a result of new government rules that favour gas-powered generation, MPs are warning. Plans to speed up the planning process for major energy projects do not prioritise low-carbon generation over conventional capacity, according to a report from the House of Commons Energy and Climate Change Committee. This could encourage a ‘dash for gas’ from investors, and the development of too much gas capacity could crowd out opportunities for renewable sources of energy, the report warns.... Committee chair Tim Yeo MP said: ‘If we want to keep the lights on and create an energy system fit for the future then new rules are needed to fast track energy projects through the UK’s notoriously glacial planning system. 'If these new policy statements don’t put the cleanest forms of energy at the top of the agenda they will leave us dangerously dependent on fossil fuels. ‘The UK’s energy security and our prospects for creating a successful low-carbon economy depend on the government kick-starting a dash for low-carbon technology, not a new dash for gas.’ The Department for Energy and Climate Change (DECC) has said that £200bn of new investment in energy infrastructure is needed by 2020 to cope with rising demand and meet targets on renewable energy and climate change. The committee sees a continuing role of abated gas generation in order to provide baseload power, as well as unabated gas capacity for peak-time use.But the report warns that too much gas could stop renewables becoming a substantial component of the UK’s energy mix. The committee is also sceptical about the ability of the government to deliver its aims on nuclear power. Ministers told the committee that the National Policy Statements should enable the development of 16GW of new nuclear plant by 2025. That is two new nuclear plants each year. ‘Hooking up this amount of new nuclear and other generation to the National Grid poses an unprecedented challenge,’ said Yeo. ‘Two plants a year is a very high target to reach. The NPSs lack any real framework for co-ordinating the process of setting and linking up the new power stations.’"
MPs warn that UK rules could hamper renewables investment
The Engineer, 26 January 2011

"International oil companies are racing to develop new oilfields in the Arctic. But developing the vast reserves could be far more expensive than first thought, according to new calculations by US geologists obtained by SPIEGEL ONLINE. Two complete failures and one aborted test drill -- a miserable outcome. When Scottish company Cairn Energy published the preliminary results of its search for oil off the coast of Greenland last October, the firm's share price plunged 7 percent in one day. Its findings revealed not a trace of black gold. On the contrary: the company said it would have to write off costs totalling €180 million ($246 million). And still, the Arctic fascinates oil and gas firms more than virtually any other region at the moment. Companies are hoping to tap massive, undiscovered reserves in this remote area that is free from the political instability plaguing other oil-rich parts of the world. The polar treasure was the subject of the conference 'Arctic Frontiers' that began on Monday in the northern Norwegian town of Tromsö. Almost 1,000 visitors made the journey far beyond the Arctic circle to attend. Cairn's oil exploration off the western coast of Greenland has attracted intense interest because it was the first such venture in years. It's unclear how many will follow, because the vast cost of drilling in the Arctic is likely to become evident in the coming years. This is made abundantly clear in unpublished interim findings by the US Geological Survey obtained by SPIEGEL ONLINE. They refer to an area in the northeast of Greenland that had so far been regarded as a particularly promising location for oil exploration. Geologist Don Gautier and his research team examined what it would cost to search for oil in the East Greenland Rift Basins. Scientists had previously estimated that the region could yield some 7.5 billion barrels of oil -- 1.2 trillion liters. But statistically, the likelihood of producing that amount is the same as failing to find even a drop. However, the geology of the area is interesting -- after all, on the other side of the Greenland Sea, along Norway's west coast, there are attractive oil reserves that have been bringing in billions of euros for the Norwegian government for decades. Greenland is hoping for a similar boom..... But the amount of oil that can actually be pumped out of this region is likely to be significantly lower than previous estimates indicated, according to the latest findings. Assuming production costs of up to $100 per barrel, only 2.5 billion barrels of oil could be lifted, according to the USGS calculations -- and only with a 50 percent probability. In order to reach further reserves, companies would have to spend much more. Even based on outlandish exploitation costs of $300 per barrel, only 4.1 billion barrels could be raised, with the same 50 percent probability. 'And that is before paying a cent of tax or making any profit,' says Gautier. The figures are based on statistical calculations and should therefore be treated with caution. But they indicate that only a fraction of the oil and gas believed to be in the Arctic could likely be exploited at economically viable costs. Canadian companies have already found that out for themselves. They carried out major exploration projects in the 1970s but ended up sealing off even promising test drillings because commercial production would have been too expensive. The danger of causing environmental damage is a further factor."
The Exorbitant Dream of Arctic Oil
Der Spiegel, 26 January 2011

"Rapidly rising oil, energy and food prices pose a serious threat to global stability, leading U.S. economist Nouriel Roubini has warned. Speaking at the World Economic Forum's 2011 annual meeting in Davos, Switzerland, Roubini said the global economy was a 'glass half-full and a glass half-empty', with some signs of recovery....Roubini, an economics professor at New York University's Stern School of Business, said the world had seen only too recently the effects a spike in commodity prices could have. 'When oil reached $148 a barrel in the summer of 2008, that was the tipping point for the global economy, it led to the global recession - it was not just the effect of Lehmann [Brothers],' he said. 'That rise in oil and commodity prices led to a significant negative effect on income and spending in the US, in Europe, in Japan, in China and in India -- in all the net commodity importers.' Roubini told CNN the U.S. the eurozone and China would all face tough challenges over the coming year."
Roubini: Oil, energy, food prices a risk to stability
CNN, 26 January 2011

"ConocoPhillips, which posted a 60% increase in fourth-quarter earnings, said Wednesday it plans to continue shifting its production in North America from natural gas to more profitable oil. The oil giant also said it expects to spend $2 billion to $3 billion acquiring assets in the Gulf of Mexico this year. Conoco Chief Financial Officer Jeff Sheets said in an interview that the shift from natural gas to oil production reflects the company's view that gas prices will remain depressed in the near future while oil prices will continue strong in the long term."
Conoco Putting Oil Before Gas
Wall St Journal, 26 January 2011

"The International Monetary Fund (IMF) has said that the global economy will grow faster this year than expected. The IMF revised up its growth forecast from 4.2% to 4.4%, but warned of a two-speed recovery as advanced economies grow slower than emerging ones. It said Europe's economic health was weak, and said the size of the bank rescue fund should be increased. Emerging countries, however, should see growth of 6.5% this year and a similar expansion in 2012, the IMF said. In its World Economic Outlook, the IMF said US growth was projected to reach 3%, up from the previous estimate of 2.3% published in October. The IMF estimates UK growth will be 2%, unchanged from its previous forecast. And there was also no change in the 1.5% growth forecast for both the eurozone and for Japan. The IMF said in its report: 'In advanced economies, activity has moderated less than expected, but growth remains subdued, unemployment is still high, and renewed stresses in the euro area periphery are contributing to downside risks'."
IMF predicts faster global economic growth in 2011
BBC Online, 25 January 2011

"Exxon Mobil Corp., the largest U.S. oil company, is looking for unconventional natural gas pockets in western Germany, where giant volumes are believed to be locked underground. Over the next five years, Exxon Mobil will spend several hundred million dollars and up to more than $1 billion on exploring shale gas in North Rhine-Westphalia, Gernot Kalkoffen, head of Exxon Mobil Central Europe, told German business daily Handelsblatt. The company has drilled six exploratory wells, two in coal and four in shale sediments. 'We're in the early phase of the exploration but the theoretical potential is relatively large,' Kalkoffen said.'"If one of the test wells hits the target' and the gas can be extracted in an economically viable manner, he added, 'then we will quickly try to start producing.' Full-scale production would mean investments of 'several billions (of dollars),' Kalkoffen said. To make a difference for Exxon Mobil on the market, the German unconventional gas would have to be able to compete with liquefied natural gas and pipeline gas from Russia.... Kalkoffen knows that he has to sweeten the decision to drill for gas in western Germany. The region is densely populated and its people are wary about the environmental impact of drilling for gas in their backyard. Extracting unconventional gas is demanding for companies and the environment; a significant amount of energy and funds has to be invested to get the gas out of the rock. Critics complain that the chemicals used to crack open rock formations to get at the gas, dubbed fracking, could contaminate water supplies."
Exxon Mobil looks for shale gas in Germany
United Press International, 25 January 2011

"As gas prices increased from $1.45 in 2002 to $2.92 in 2006, American families lost $2,000 per year of disposable income. More and more families were forced to choose between paying for their commute or their mortgage. Foreclosures collapsed the banking system, housing market, and jobs."
TWIP fails to warn of a 1.8 mb/d supply shortfall
ASPO-USA, 24 January 2011

"Chancellor Angela Merkel’s government rejected a report by Germany’s armed forces that global crude-oil production reached its maximum last year, parliament’s HIB newsletter said. Crude output 'can be increased through 2035 under today’s conditions, assuming an optimal development and exploitation of reserves,' HIB said today, citing the government’s response to a query by the opposition Green party. The government’s outlook is based on International Energy Agency estimates, it said. The German armed forces said in a report that maximum global crude output, so-called peak oil, occurred in 2010 'with a certain likelihood,' according to HIB. The study is yet to be completed, HIB cited the government as saying. Members of the Organization of Petroleum Exporting Countries may boost oil supply this year as demand for crude rises amid a recovery in economic growth rates to near levels last seen before the global financial crisis, Saudi Arabian Oil Minister Ali al-Naimi said today. The IAE last week raised its 2011 global crude-oil demand forecast for a fourth month as the recovery gathers momentum."
German Government Rejects Report ‘Peak Oil’ Occurred in 2010
Bloomberg, 24 January 2010

"The International Energy Agency and OPEC differ in their oil demand forecasts mainly because of assumptions on energy and environmental policies, the Riyadh based International Energy Forum (IEF) said. These factors are 'one of the key drivers for the energy outlook,' the IEF said in a statement on its website on Saturday. 'They are at the same time one of the most uncertain areas for the outlooks.' The IEF is a group of nations that account for more than 90 percent of global oil and gas supply and demand, and was established to discuss international energy security. The IEA expects demand for crude oil to rise to 92.3 million barrels a day in 2014 from 85 million in 2010, while OPEC expects it to reach 89.9 million from 84.5 million over the same period. OPEC’s secretary general Abdullah el Badri and IEA’s executive director Nobuo Tanaka will meet on Jan 24 in Riyadh, according to the IEF. They will discuss prices, supply, and demand, it said."
OPEC, IEA differ on demand outlook due to assumptions, IEF says
Bloomberg, 24 January 2011

"...there are changes both for the producers and consumers of oil. While the 34 developed nations in the Organisation of Economic Co-operation and Development (OECD) have reduced usage by almost four million barrels a day since 2007, the emerging states are vastly increasing their demand. China's consumption rose by 8.7 per cent last year. 'The impact of the recession on oil demand in the OECD and emerging markets could not be more stark,' says Osborne. 'The global market is diverging as never before. Emerging markets account for 85 per cent of the recovery in demand, and in 2011 and 2012 we expect 80 per cent of the increase in global demand to come from these markets. By 2012, we expect OECD demand to still be more than 5 per cent below pre-recession levels, while demand in the emerging markets will by 6.5 million barrels a day higher.' Even with Western economies picking up, BP expects that disparity to continue. It revealed projections last week that it normally reserves for internal use but which show OECD energy demand rising at just 0.3 per cent a year over the next two decades – and consumption per head falling – with domestic users and service businesses accounting for all that growth while manufacturing and transport usage falls. However, other countries' consumption will increase by 2.6 per cent annually, says BP, meaning that emerging markets will use 68 per cent more power in 2030 than today."
Where's the rest of the oil?
Independent, 23 January 2011

"Jatropha, a biofuel-producing plant once touted as a wonder-crop, is turning out to be much less dependable than first thought, both environmentalists and industry players say. Some biofuel producers found themselves agreeing with many of the criticisms detailed in a report launched by campaign group Friends of the Earth this week -- 'Jatropha: money doesn't grow on trees.' Jatropha has been widely heralded as a wonder plant whose cultivation on non-arable land in Africa, Asia and Latin America would provide biodiesel and jobs in poor countries without using farmland needed to feed growing numbers of local people.... Some company managers say that while the plant needs no irrigation, high yields depend on good soil and chemical additives. 'The idea that jatropha can be grown on marginal land is a red herring,' Harry Stourton, Business Development Director of UK-based Sun Biofuels, which cultivates jatropha in Mozambique and Tanzania, told Reuters. 'It does grow on marginal land, but if you use marginal land you'll get marginal yields,' he said."
Biofuel jatropha falls from wonder-crop pedestal
Reuters, 21 January 2011

"Oil majors will have to share more power with state energy companies as the world becomes increasingly dependent on Iraq and Saudi Arabia for fossil fuels. This is the frank admission of BP in a detailed new analysis acknowledging that the role of international energy majors is changing. According to the BP Energy Outlook, OPEC, the 12-member cartel of oil-producing countries, is about to enter a new age of dominance over the market. BP's forecast shows that over the next 20 years OPEC will become as powerful as it was in 1970s – the decade when the cartel presided over a series of oil shocks and shortages. The OPEC nations' share of global production is likely to rise from 40pc to 46pc over the period covered. In fact, 75pc of all growth in oil reserves over the next two decades is expected to come from OPEC nations, which include Kuwait, Iran, Angola, Libya, Saudi Arabia, Iraq and Nigeria.... BP has put its cash behind these theories by forming a partnership with Russia's biggest state-owned oil company, Rosneft, last week. The two companies swapped £5bn of shares and agreed to explore the Arctic together. In return for Rosneft's relationship with the Kremlin and access to Russian resources, BP will bring technological expertise and capital to the table. The Energy Outlook showed that the world will need to explore in remote regions like the Arctic and deeper water than ever before if it is to keep pace with a 1.7pc annual rise in consumption – a 39pc increase over 20 years. It predicts that demand will rise to about 102m barrels of oil per day by 2030, an increase of 16.5m barrels from today's level. Saudi Arabia should be able to add another 3m barrels, but the biggest growth is forecast to come from Iraq increasing its output from 2.5m to 5.5m barrels per day. An additional 2m barrels of production should come from Canada's controversial oil sands, while biofuels made from corn or sugar are predicted to provide a huge 5m barrel uplift. However, oil will probably be the slowest growing source of energy, with huge extra demand for renewables, gas and coal also adding to pressure on the world's resources. Oil is currently the dominant source of world energy, closely followed by coal, on which China is dependent for much of its industrial fuel."
World will be forced to depend on OPEC oil, believes BP
Telegraph, 20 January 2011

"In the wake of newly revised estimates that global energy demand for 2010 was 87.7 million b/d — 320,000 b/d higher than estimated last month — and demand in 2011 will be another 1.4 million b/d higher still, the IEA is clearly having second thoughts about the adequacy of global oil supplies this year. With prospects for little increase in non-OPEC production, IEA Executive Director Nobuo Tanaka said, 'OPEC must continue to be alarmed' over the recent increases in oil prices and suggested that by formally increasing its output ceilings, OPEC could help hold down prices. OPEC’s Secretary General bluntly responded to Tanaka’s statement by asserting that commercial stockpiles and OPEC's spare capacity remain robust; and that the recent price increase is due to temporary factors such as a weak dollar, unusually cold weather, speculation, and shutdowns in Alaska and the North Sea. He further stated that 'any assumption that there is tightness in the market ... is incorrect. ... [T]here is more than enough oil on the market.' He concluded by saying, 'Supplying the world's media with unrealistic assumptions and forecasts will serve only to confuse matters and create unnecessary fear in the markets. ... The IEA must be consistent in their remarks.' In its recent report the IEA noted that if oil rises to and stays above $100 a barrel in 2011, global oil expenditures could rise to above 5 percent of GDP, threatening economic recovery."
Peak oil notes
ASPO-USA, 20 January 2011

"World oil prices remained close to the $100-per-barrel mark last night as BP said Opec was set to increase its share of global oil production to levels not seen since the oil shocks of the 1970s. In the BP Energy Outlook 2030, the oil giant predicted that the producers' cartel would see its share rise to 46 per cent during the coming two decades – 'a position not seen since 1977', just years after an Opec embargo triggered the oil crisis in 1973. The projection came as US crude oil prices touched intra-day highs of around $91.8 per barrel, while ICE Brent futures for March rose to $98.6 per barrel at one point. Prices have been rising steadily in recent weeks amid debate over whether or not Opec should to increase oil supplies. Earlier this month, Fatih Birol, the chief economist of the International Energy Agency (IEA), which speaks for the big oil consumers in the West, gave warning that prices were entering a danger zone and threatening the still-fragile global economic recovery. This week, the IEA raised its oil-demand growth forecast for the year to 1.41 million barrels per day, lower than last year's jump in consumption, but higher than Opec's growth estimate of 1.23 million barrels per day. The cartel, which decided against raising output at its last meeting in December, believes the world is well supplied, blaming the high prices on 'technical matters' such as the recent disruption to the Alaskan route that supplies more than 10 per cent of US crude oil, and outages in the North Sea. 'Also the weak dollar and speculation have added to this, pushing oil prices higher, especially Brent,' said Opec's secretary general, Abdalla Salem el-Badri. Recent reports have indicated that the oil trader Hetco has cornered 30 per cent of Brent market.  Despite the official line, however, the IEA suggested that Saudi Arabia, the cartel's most influential member, may have quietly raised output to temper higher oil prices. Market sources were sceptical about the assessment, with one of the country's major buyers saying that they had not seen evidence of an increase in Saudi supplies. A recent survey also suggested that the kingdom's output was flat in December. Looking beyond the short-term picture, BP yesterday published its energy outlook for the next 20 years, predicting an increase in Opec's share of global oil production.  'At the same time oil – and gas – import dependency in the US is likely to fall to levels not seen since the 1990s because of improved fuel efficiency and the increased share of biofuels,' the oil giant said. BP's report also expects global consumption growth to be impacted by the higher oil prices seen in recent years and a gradual reduction of subsidies in oil-importing countries. Overall, China, India, Russia and Brazil are set to dominate the growth in energy demand, while the improvement in energy-efficiency measures 'are set to accelerate'."
Opec's grip on oil market to return to 1970s levels
Independent, 20 January 2011

"The International Energy Agency (IEA) predicts that 'unconventional' resources such as shale could double our gas supply worldwide. The IEA estimates that at current usage levels, there is enough conventional gas to last the world a limited 60 years - but if one factors in remaining recoverable reserves including shale, that number increases to 250 years.... Shale gas is extracted using a process called fracking. It involves small explosions to fracture the rock, followed by as slurry of water, sand and chemicals to free the gas trapped inside. IHS Cambridge Energy Research Associates estimate the amount of available gas in the US has doubled in recent years and the US Energy Information Administration's latest figures for 08-09 showed an 11% increase in economically recoverable gas for that one year. The new supply has driven down the price. 'The recession happened at the same time as all the shale production, demand wasn't there and supply was just coming out of our ears,' says Mary Barcella from IHS Cambridge Energy Research Associates.... Plentiful cheap gas has opened up the prospect of US power companies switching from coal and therefore significantly reducing carbon dioxide emissions. But the problem with gas is it that it is notoriously difficult to transport. Following the US lead, shale is being explored in China, South America and Europe - the worlds largest market for gas. The IEA estimates that at current usage levels, there is enough conventional gas to last the world a limited 60 years - but if one factors in remaining recoverable reserves including shale, that number increases to 250 years.... But the abundance of US shale has had a knock on effect on the rest of the world. Tankers of gas previously destined for US ports now need to find a new dock. 'There is an excess of gas supply at the moment,' says Edmond George from the Economist Intelligence Unit. 'Companies are over-contracted and there are many LNG cargos which are not being sold.' Demand has picked up during the winter, but even so shale may not provide an affordable answer, at least in Europe....A report by Florence Geny, for the Oxford Institute for Energy studies in the UK, suggested drilling costs would bet two to three times higher than in the US, with water costs up to 10 times higher. That is if you can find anywhere to put the wells. 'The number of wells required is very great,' says Ms Geny. 'The way you can distribute the wells on the surface is very restricted, due to regulation and high levels of urbanisation'. Anne Sophie Corbeau from the IEA agrees with her assessment. 'It would take at least 10 years to have significant gas production, if any,' she warns."
Can Europe benefit from shale gas?
BBC Online, 20 January 2011

"Brazilian oil deposits below a layer of salt in the Atlantic Ocean hold at least 123 billion barrels of reserves, more than double government estimates, according to a university study by a former Petroleo Brasileiro SA geologist. The research, which set out to show government figures were too optimistic, found they underestimated the area’s potential, said Hernani Chaves, a professor at the Rio de Janeiro State University who worked at Petrobras for 35 years. The forecast, which the study puts at a 90 percent probability, compares with the Brazilian oil regulator’s 50 billion-barrel estimate.... Magda Chambriard, a director at ANP, said last year the pre-salt may hold more than the 50 billion-barrel estimate the agency uses in presentations. The costs and technical challenges involved in pumping oil from ultra-deep fields will likely slow development of the reserves, Chaves said. It will cost trillions of dollars to develop the entire area, he said. Petrobras expects to boost recoverable reserves to up to 35 billion barrels by 2014. The company’s proven reserves, or oil that can be extracted with existing infrastructure, rose 7.5 percent in 2010 to 16 billion barrels, the company said Friday."
Brazil Oil Fields May Hold More Than Twice Estimates
Bloomberg, 19 January 2011

"The International Energy Agency (IEA) said on Tuesday that OPEC leader Saudi Arabia had stealthily boosted output to cool an oil price rally, while OPEC accused the agency of providing inconsistent oil price views. Tensions between oil exporter group OPEC and the agency, representing industrialised consumers, have risen as Western countries put pressure on the Saudis and their allies, the only producing nations with spare capacity, to meet unexpectedly robust demand that has driven crude up near $100 a barrel. 'It appears Saudi Arabia has been making more crude available to the market in the past six months, judging by export data from independent tanker trackers,' the IEA, which advises 28 industrialised countries on energy policy, said. On Monday the IEA said current oil prices were alarming. On Tuesday OPEC's secretary general, Abdullah al Badri, produced an unusually harsh statement criticising the IEA for inconsistency in being willing to add to oil prices by imposing taxes, then asking OPEC to curb prices to safeguard the world economy.... OPEC says it believes the market is well supplied, but some analysts say street protests near OPEC members' borders in countries such as Tunisia, partly sparked by high food and fuel prices, may encourage the group to act soon to raise output. 'OPEC is likely concerned that the instability could spread to other North African (Algeria, Libya, Egypt) and Middle Eastern (Jordan, Yemen) countries suffering similar internal problems,' said David Wech from JBC Energy in a note.... The IEA said it had found out that the Organization of the Petroleum Exporting Countries had already raised production, in contrast with previous surveys of output by the producing group, including by Reuters. 'In December, Saudi output was assessed at 8.6 million bpd, up 100,000 bpd from a revised November estimate of 8.5 million bpd,' it said, adding that Iraq, Kuwait and the UAE, together with the Saudis, had reduced official selling prices to make sales 'more attractive'. By contrast, Reuters' OPEC surveys have shown Saudi production at around 8.25 million barrels in the past months and OPEC's own estimates have put Saudi output at 8.3 million. The difference of 300,000 bpd is enough to cover nearly a fifth of the world's estimated incremental demand in 2011, which is expected to slow to a half of last year's heady pace. Traders said they had doubts the Saudis were pumping more. 'We have not seen the evidence; we think its (Saudi) output has been steady,' said one of the country's major crude buyers. Core OPEC members led by Saudi Arabia do not want runaway high oil prices but need at least $80 a barrel to guarantee their budget needs and therefore analysts say the organisation is reluctant to openly agree to output increases for fear of a sharp drop."
IEA says Saudi oil output jumps, OPEC critical
Reuters, 18 January 2011

"The state-owned China National Nuclear Corporation has predicted that uranium shortage for nuclear reprocessing technology may end by 2021. It will take at least a decade for China to start the large-scale industrial application of spent fuel reprocessing technology, which may be the solution to the supply shortage, the CNNC said on Monday. The remarks at the company's annual briefing added to earlier news that China's latest spent fuel reprocessing technology, developed by CNNC, will boost the usage rate of uranium sixty-fold, reports the China Daily. 'The technological breakthrough is a crucial step toward initial practical application, which is likely to happen within a year,' said Li Tao, a spokeswoman for CNNC.... China's demand for uranium could rise to 20,000 tons annually by 2020, more than a third of the 50,572 tons mined globally last year, according to the World Nuclear Association. The nation has more than 170,000 tons of known uranium resources."
China's uranium shortage likely to end by 2021
ANI, 18 January 2011

"For nearly a decade, the Nabucco pipeline has existed only on a map – a dotted line that would connect oceans of Central Asian and Middle Eastern gas to a European market that is otherwise reliant on Russia. José Manuel Barroso, European Commission president, has nudged the dream a bit closer to reality. After a three-day visit to the Caspian region, Mr Barroso emerged with a pledge from Ilham Aliyev, Azerbaijan’s president, to supply 'substantial volumes of gas' to Europe through a southern corridor of pipelines of which Nabucco is the most prominent. Though critics scoffed at a lack of detail in the agreement, Mr Barroso hailed it as a 'major breakthrough'."
Pledge boosts Europe’s pipeline plans
Financial Times, 17 January 2011

"Ministers are being urged to halt controversial projects to drill for shale gas over fears that it poses significant risks to public health and the environment. A new report prepared for the Co-op warns that the full impact of drilling for shale gas — an energy resource that has sparked a frenzy of exploration in the US — should be assessed before the go-ahead is given projects in the UK. The warning comes as mining company Cuadrillo Resources prepares to begin more drilling at a find near Blackpool, Lancashire, which it says is the first true shale gas find in Europe."
Warning over UK shale gas projects
Guardian, 17 January 2011

"Russia's move to open up its prized Arctic reserves to oil major BP (BP.L) is driven by the Kremlin's desire to avoid a fall in production and remain the world's leading oil nation. Analysts and bankers told Reuters that the deal, in which BP agreed to a multi-billion-dollar share swap with state major Rosneft (ROSN.MM), is a boost to Russia's investment climate, though any stocks rally would be capped by political and oil tax regimes uncertainties. The deal gives BP a direct line to powerful Prime Minister Vladimir Putin and access to new reserves as it emerges from its Gulf of Mexico spill disaster. But it also locks BP into a partnership with any Kremlin regime for the decades to come. 'For Russia to maintain production at or above 10 million barrels per day, the investments required are huge. Decline rates in West Siberia are very steep and projects in East Siberia are fairly limited,' said Amrita Sen, a commodity analyst at Barclays."
Analysis - Russia opens Arctic to BP to remain top oil nation
Reuters, 16 January 2011

"Quebec should hold off on shale gas drilling until serious environmental, economic and legal questions about the industry can be answered, a panel of U.S. and Quebec experts told a packed public meeting in Mont St. Hilaire Saturday. 'The government of Quebec should look to Pennsylvania, and monitor how it is dealing with its problems with shale gas,' said Robert Howarth, a professor of ecology and environmental biology at Cornell University who has studied the environmental impacts of the shale gas industry in the U.S..... Howarth said studies are showing that the 'fracking' process, where water is mixed with sand and chemicals and pumped into deep wells to break up the rock to force the gas up and out, has resulted in drinking water contamination in Pennsylvania, Colorado and Texas. In Pennsylvania, where water is plentiful (as it is in Quebec), huge amounts of water are used in the process, and this water must be treated. In some cases, the waste water was trucked to municipal sewage treatment plants, which are not equipped to remove certain contaminants. 'The scale of water use and water contamination is massive,' he said. 'No good solution for the waste problem has been developed yet. The industry is working hard and has some creative ideas that it is experimenting with, but the technology is not there yet.' Howarth and his colleagues at Cornell have also done studies comparing greenhouse gas emissions of various fuels. 'Shale gas has been promoted by the industry as being better for global warming than other fossil fuels ... but the science on this is very weak. Our analysis ... showed shale gas is certainly worse than oil and probably substantially worse than coal as well in terms of greenhouse gas (emissions).'"
Quebec should 'go slow' on shale gas: experts
Montreal Gazette, 15 January 2011

"Despite talk of limiting production and tougher  environmental standards, coal output is surging and China is spending heavily on new exploration projects. While investment in renewable energy is set to hit record levels, coal will fuel most of the country's economy for the foreseeable future and policymakers are figuring out how to make better use of it. Coal has supplied more than 70 percent of China's energy  for the past 50 years and consumption has increased around 10 percent a year since 2000. Routine disruptions in supplies regularly wreak havoc on the country's economy - power cuts hit large parts of China last month after freezing weather   slowed coal deliveries, and worse is expected in January if temperatures plunge. The U.S. Energy Information Administration predicted China will need to add 736 gigawatts of coal-fired capacity by 2035  to meet the requirements of economic growth and replace  retired plants. With each gigawatt of coal-fired generation requiring some 2.9 million tonnes of coal per year, those forecasts mean China would not only require massive investment in new plants but also an additional 2.13 billion tonnes a year of coal - total output last year was an estimated 3.2 billion. That would be a 60 percent jump in coal usage, ruining Beijing's plans to reduce coal's share of total generation to 70 percent by 2020 from 80 percent now. 'We don't have a lot of gas. Nor we do have a lot of oil. The only resource that is cheap and we have in abundance is coal, so our economy will have to rely on coal for a long time to come,' said Ren Guangxi, President of Hangzhou Haoyang Energy Co Ltd.... Chinese government analysts expect annual coal demand to reach at least 4 billion tonnes by 2020, 25 percent higher than 2009... "
China tries to give old king coal a merrier soul
Reuters, 11 January 2011

"China becomes a net coal importer for the full year for the first time in its history [in 2009]."
Timeline of China's long love affair with coal
Reuters, 11 January 2011

"Strained by rising demand and battered by bad weather, the global food supply chain is stretched to the limit, sending prices soaring and sparking concerns about a repeat of food riots last seen three years ago. Signs of the strain can be found from Australia to Argentina, Canada to Russia. On Friday, Tunisia's president fled the country after trying to quell deadly riots in the North African country by slashing prices on food staples. 'We are entering a danger territory,' Abdolreza Abbassian, chief economist at the U.N.'s Food and Agriculture Organization (FAO), said last week.... As supplies tighten, prices surge. Earlier this month, the FAO said its food price index jumped 32 percent in the second half of 2010, soaring past the previous record set in 2008. Prices rose again this week after the U.S. Department of Agriculture cut back its already-tight estimate of grain inventories. Estimated reserves of corn were cut to about half the level in storage at the start of the 2010 harvest; soybean reserves are at the lowest levels in three decades, the USDA estimates, in part because of heavy buying by China. The ratio of stocks to demand is expected to fall later this year to 'levels unseen since the mid-1970s,' the agency said. 'I haven't seen numbers this low that I can remember in the last 20 or 30 years,' said Dennis Conley, an agricultural economist at the University of Nebraska. 'We are at record low stocks. So if there any kind of glitch at all in the U.S. weather, supplies are going to remain tighter and we might see even higher prices.' Higher oil prices are also pushing up the cost of food — in two ways. First, the added shipping cost raises the delivered price of agricultural products. Higher oil prices also divert more crops like corn and soybeans to biofuel production, further tightening supplies for livestock feed and human consumption. Conley estimates that more than a third of the corn produced in the U.S is now used to make ethanol. Despite tightening supplies, the rise in food prices has been much tamer in the developed world. On Friday, the U.S. Bureau of Labor Statistics reported that food prices at the consumer level rose just one-tenth of one percent. On Thursday, the government reported that the food component of the Producer Price Index rose just 0.8 percent in December. For all of 2010, food prices at the producer level rose 3.5 percent. The reason for the modest price rise in the U.S.? People living in developed countries eat more processed foods, so raw materials make up a much smaller portion of the total retail cost."
Global food chain stretched to the limit
MSNBC, 14 January 2011

"The dramatic fall of Mexican oil production, and its largest field Cantarell, is often cited as a signature example of the problems facing Non-OPEC supply. Since the production highs of 2004-2005, Mexican production has lost over 800 kbpd (thousand barrels per day) which is fairly dramatic for a country that was producing around 3.4 mbpd as recently as 5-6 years ago. But as accelerated as these declines have been in Mexico, there’s another oil producing region has seen even quicker declines. The North Sea, which comprises 'United Kingdom Offshore, Norway, Denmark, Netherlands Offshore, and Germany Offshore' has just lost 20% of its production in 24 months. Daily production is down 600,000 barrels per day in that period..... it appears that for the fifth year in a row the peak production year of 2005–in which the world produced oil at an average, annual rate of 73.718 mbpd–will once again not be exceeded. This is truly an astonishing result given that a new pricing era for oil began in 2004 as oil rose above 40.00 dollars a barrel. For over five years national oil companies and publicly traded oil companies have been free to sell oil into an ever-rising price environment. But no increase in global crude oil production has been forthcoming. Moreover, during the five year period from 2006-2010, global crude oil production actually fell in three of those years: 2006, 2007, and 2009. Equally notable is that OPEC–which currently accounts for about 42% of global supply– has been roughly steady in producing 30-32 mbpd each year during the same same period while Non-OPEC, accounting for 58% of world production has struggled with decline..... one of the core methods EIA Washington and IEA Paris have increasingly relied on in recent years–to obscure the very serious and now very real problem of oil depletion–is to include biofuels and natural gas liquids in the accounting of global oil production.... In order to rebut this Secrecy by Complexity it’s the obligation of responsible energy analysts to explain the falsehood of adding biofuels and natural gas liquids (NGL’s) to measures of oil production. The reason is simple: natural gas liquids are not oil. They are not oil in any sense and most important of all NGL’s contain only 65% of the BTU of oil. Worse, biofuels are barely an energy source themselves and are the product of a conversion process of other energy inputs. Accordingly, the world is not producing 84, or 85, or 86 million barrels of oil per day. The world is instead producing 73.436 million barrels of crude oil per day. The depletion of oil will not be solved by either by the production of biofuels and NGLs, nor their inclusion into oil data, as the world economy moves into the future. When the EIA in Washington falsely composes such forecasts, aggregating future natural gas liquids and ethanol into a supply picture for 'oil' as they do each year in their various projections, this disables the public’s ability to accurately understand the true outlook for global oil supply. While it’s still the case that EIA Washington produces data each month for Crude Oil production only, the predominant reporting and forecasting is now weighted towards 'liquids', the unhelpful aggregation of oil with NGLs and biofuels.... it’s not surprising that OECD governments use opacity and secrecy by complexity to handle this extremely important issue. OECD economies are now structurally short energy supply, having lost access to the cheap BTU in oil that built out their societies over the past 100 years. The loss of cheap energy, the loss of the cheap BTU that oil has provided to OECD nations for the past century, is a crucial factor in the dilemma the West now faces: a newly chronic economic restraint that refuses to go away."
Declining Crude Oil Production and Incorrect Energy Data
The Oil Drum, 14 January 2011

"The government faced a widening campaign by business groups tonight calling for the mounting tax burden and soaring energy costs to be curbed. The Major Energy Users Council (MEUC) has set up the Carbon Action Group to tackle the rise in fuel costs and the Federation of Small Businesses said the rises, coupled with VAT and other tax increases, were damaging companies and undermining a much-needed economic recovery. The moves, which follow the establishment of the FairFuelUK campaign by transport firms this week, came as crude oil continued to climb from a low of below $40 two years ago to nearly $100 a barrel. David Cameron admitted it could be a 'very good idea' to introduce a fuel duty 'stabiliser', despite having just introduced new petrol duties on 1 January and pencilled in a second rise for April in a bid to cut the budget deficit....Last night oil continued to trade at more than $98 on global markets due to production problems and rising demand but Libya's top oil official said $100-a-barrel oil would not harm the world economy and there was no need for the producers' cartel Opec to add more supplies. Shokri Ghanem, chairman of Libya's National Oil Corporation, said: 'We think there is enough supply and there should not be any meeting at this point in time."
Energy costs 'damaging UK recovery'
Guardian, 13 January 2011

"In its January edition released on Tuesday the [Energy Information] Administration breaks some new ground by releasing forecasts through December 2012. The usually conservative EIA predicts that oil will average $93 a barrel in 2011, and that this will increase to $99 a barrel in the fourth quarter of 2012. Interestingly enough, the Administration goes out on a limb and mentions that it foresees an 8–10 percent chance that gasoline could touch $4 a gallon next summer. Despite the growth in demand of 2.2 million b/d that occurred in 2010, the EIA foresees only a 1.4 million b/d increase in demand this year and a 1.6 million b/d increase in 2012. Increases in non-OPEC production of only 160,000 b/d in 2011 and 20,000 b/d in 2012 are foreseen. To meet this 3 million b/d increase in demand over the next two years, the EIA sees OPEC increasing its crude output by 1.6 million b/d and its NGL production by another 1.1 million. To achieve this, OPEC’s spare capacity will only fall from 4.7 to 4.3 million b/d by the end of 2012 — assuming of course that it is really there."
Peak oil notes
ASPO USA, 13 January 2011

"Norwegian oil production will fall 6 percent this year, its 11th annual decline, as the world’s seventh-largest crude exporter struggles to maintain output after 40 years of pumping from aging North Sea fields. Production will fall to 98.3 million cubic meters in 2011, or 1.7 million barrels a day, from 104.4 million cubic meters in 2010, the Stavanger-based Norwegian Petroleum Directorate said today. Gas output is expected to rise to 109.1 billion cubic meters from 106.4 billion cubic meters, the agency said.... Aging North Sea deposits and smaller discoveries off the Scandinavian peninsula have cut crude output almost in half over the past decade. The world’s second-biggest gas exporter is raising output of that fuel and opening more unexplored northern waters to keep up production. Companies such as Statoil ASA are calling for more areas to be opened, including an environmentally sensitive area off Lofoten that may hold 1.3 billion to 3.5 billion barrels in oil and gas. The agency reduced the estimated undiscovered reserves in Norway to 2.6 billion cubic meters in oil equivalent from 3.3 billion cubic meters in part because of 'disappointing drilling results,' according to the statement.... Norway’s oil production is expected to drop to 88.9 million cubic meters in 2015, while gas output will climb to 112.2 billion cubic meters in the same period, the directorate said."
Norway Oil Output May Drop 6% in 2011, Gas Rise 2.5%, Oil Directorate Says
Bloomberg, 13 January 2011

"The global economy is 'in no position to face major new shocks', according to the World Economic Forum (WEF). Its Global Risks 2011 report warns that economic imbalances, volatile commodity prices and currencies, and governments' budget shortfalls are 'unsustainable'.  Rapid population growth is another risk, pushing up demand for food, water and energy by 30-50% by 2030. The WEF warns that there is no sign of governments agreeing on how to achieve sustainable economic growth worldwide. The Global Risks report was published in the run-up to the forum's annual meeting in Davos at the end of January, which normally attracts more than 2,000 of the world's top business and political leaders. The report identifies three clusters of risk: the world economy, suffering in the aftermath of the financial crisis and weakened by budget deficits and the cost of ageing populations; the illegal economy driven by corruption, organised crime, illicit trade and failed states; and the every growing demand for resources such as water, food and energy.... "
WEF: The world economy can not 'face major new shocks'
BBC Online, 12 January 2011

"Two people in the southern Chilean city of Punta Arenas were killed Tuesday night when a truck ran into the barricade where they were protesting the government's plan to increase natural gas prices. The world's southernmost city, with a population of 110,000, remained largely paralyzed today by a general strike as local residents and elected officials demand that the national government maintain subsidies on natural gas, which is widely used in the region to power vehicles, heat homes, and provide energy for businesses. The protests are the latest in a wave of anger in Latin America as governments attempt to reconcile budgets with energy prices, which have climbed to levels not seen since the record highs of 2008."
Chile protests turn deadly as Latin America buckles under rising energy prices
Christian Science Monitor, 12 January 2011

"From 1995 to 2004, $180 billion of upstream capital expenditure would deliver 1 million b/d of incremental oil, condensate and natural gas liquids production. From 2005, when the oil supply stalled, through year-end 2010, producing the same volume required $1.07 trillion, a six-fold increase — even after allowing for the $100 billion the Saudis invested in their spare, and currently idle, capacity. Thus, increasing the oil supply now requires either six times as much money, or technology six times more productive, than it did a decade ago. This suggests that neither a modest increase in capital spending nor modest technological improvement will create additional supply. There is not a bigger oil resource available for just slightly more investment or marginal technology improvement."
Commentary: The Tierney-Simmons bet
ASPO-USA, 10 January 2011

"The amount of gas kept in storage in the UK is at its lowest level in five years for so early in the winter, according to National Grid. Last month, was the coldest December since 1890, and the UK's gas storage facilities, which are among the smallest in Europe, are already more than half empty as they cope with record demand. Domestic supplies of gas have also been exported to the continent via the Interconnector under-sea pipeline, because prices are higher there than in the UK. As of Friday, the UK had enough gas in storage to meet in total about five and a half days' consumption, given average winter temperatures, although storage facilities can release only a fraction of this each day. These facilities – mostly old gas fields such as Centrica's Rough reservoir off the coast of Yorkshire – have in the past run down gradually during the winter and restocked over the spring and summer. But analysts said that suppliers have withdrawn stocks much earlier this year, with almost two months of the winter left to run. Nick Campbell, analyst at the energy consultancy Inenco, said that Britain's ability to import large quantities of liquefied natural gas (LNG) by tanker meant that the country no longer relied so much on storage facilities for security of energy supply. On one of the coldest days last month, a record quarter of all gas consumed in the UK came from LNG. But Britain's LNG terminals are not regulated and operate in a global market. Energy companies will ship LNG to where prices are highest. In contrast, the country's storage facilities are regulated by Ofgem."
Gas supplies at five-year low for early January
Observer, 9 January 2011

"China will step up its controls over the mining of rare earths and release new industry standards to cut pollution, a minister and media said on Friday, after the world's biggest supplier cut export quotas for the minerals. China, which produces about 97 percent of the global supply of the vital metals, slashed its export quota by 35 percent for the first half of 2011 compared with a year earlier, saying it wanted to conserve reserves and protect the environment.... China has said other countries should share the burden of mining the metals. Illegal mining practices and over-exporting rare earths have hurt China's environment and depleted its resources, it says. But China's quotas have sparked tension with global importers of the metals, and the United States has threatened to take a complaint to the World Trade Organization, which judges international trade disputes. Japan's trade minister said this week he wanted to visit China this month to talk to officials there to secure enough rare earths, which are vital to make electronics and clean energy technology including computers, wind turbines and electric cars."
China to control rare earth extraction, pollution
Reuters, 7 January 2011

"For several decades now, China has been the epicenter of rapidly increasing global coal production. In fact, it is hard to understate the significance of the China's coal industry's contribution in recent years to the world's economic growth. With total coal production of circa 1 billion metric tons in 1990, Beijing was able to grow its coal industry to the point where it might (the numbers aren't in yet) have produced on the order of 3.2 billion tons including a 10 percent or nearly a 300 million ton increase in production during 2010 alone. Now this is a whopping amount of energy. The utility of coal and oil of course are not the same for the world's transportation systems run on the liquid fuels derived mainly from oil, while the world's coal production mainly goes to generate electricity, heat buildings and make coke for steel. If one assumes each ton of coal is roughly equivalent to 4.8 barrels of oil, then Chinese coal production last year was on the order of 15 billion barrels of oil equivalent or half the world's oil production. In November, however, the Wall Street Journal reported that the word out of Beijing was the meteoric growth of coal production was likely to come to a halt possibly as soon as this year or next. This of course makes perfect sense as nothing can continue growing at 10 percent or 300+ million tons per year indefinitely and knowledgeable outside observers were saying that this unprecedented surge in growth had to end soon. Mines were getting deeper, coal seams thinner and transportation of this much coal from the mines was overloading the rail and road networks. The problem, however, is that if Beijing is to continue growing its economy in the vicinity of 8-10 percent a year, then it has only a limited number of choices. It can increase its production of nuclear and hydro generated electricity; it can replace old inefficient generating stations with new high-efficiency ones; or it can increase imports of foreign coal, liquefied natural gas, or oilWhile China is making major efforts to increase production of wind and solar power, these are still minor producers by the scale of Chinese energy consumption. While the first alternatives, hydro, nuclear, and more efficient plants are the best long-term solution, they will take many years to build and China's energy shortage is already upon them. Coming up with anything close to the equivalent of 300 million additional tons of coal by replacing inefficient generating stations and building new non-coal-fired power plants each year is clearly impossible over the short term. Importing coal, however, can be accomplished relatively quickly provided there is enough coal available. For the Chinese hard currency currently is not a problem. Finding a source of supply for coal in the quantities the Chinese will need to maintain their accustomed growth is going to be a challenge. In 2009, only about 16 percent, 940 million tons, of global coal production was exported with the rest being consumed in the producing countries. Until recently, China was not a major factor in the coal import market and was actually exporting coal. Now this is changing and Chinese demand for imported coal is increasing rapidly. Recent reports from Australia say that mines accounting for roughly 40 percent of the world's coking coal have been shut down by the flooding and it may be several months before production is back to normal. Australian steam coal production is also affected and the problem is exacerbated by the same rains hitting nearby Indonesian mines slowing coal production there. With much of Asia's coking coal supply shut-in, prices for coal and steel are going to increase rapidly. With imports severely restricted for the next several months some Chinese steel mills may be forced to shut down and imported steam coal shortages are likely to result in more reductions in China's power generation. Some are already saying that this situation could add to inflationary pressures and that shortages could markedly slow China's economic growth this winter. How this is all going to work out is difficult to foresee. Should the coking coal shortage slow China's economic growth significantly, then it is possible that Beijing's demand for oil could slow too. The other side of the coin however, is that China has a history of increasing oil imports to make up for coal and power shortages by keeping factories running with emergency generators. This is fact is what appears to have happened last fall when Chinese oil imports surged to new highs. With the global oil markets tight and prices rising, any new source of demand could easily have an outsized impact on oil prices in the next few months, right down to what you pay for gasoline at your local pump. As the global energy markets become tighter and tighter, a flood on the other side of the world is enough to trigger off a shock wave that will be felt everywhere."
The Queensland Flood is Coming to Your Neighborhood
Falls Church News-Press, 5 January 2011

"Oil is one of the most important inputs to the economy. If the oil prices go up much higher than what we have been seeing in the markets, this would mean that the budget of the households in terms of more expenditure for travelling or for other energy purposes, this would mean that their income will be less, and there will be a stronger pressure on the inflation numbers.... I think the high oil prices in 2008, they were not the primary reason for the financial crisis, but they played a significant role in the run-up to the financial crisis by weakening the trade balance of many economies, by weakening the income levels of the businesses and the households. And we shouldn't forget that in 2008, the average oil price for the year was $90; yes it was $147 for a day or so, but $90, and today the level of price we have in the markets is also $90. So we are not very far in average terms from those really, if I may say so, catastrophic conditions of 2008 as far as the oil prices are concerned.... There is definitely a risk that we may face higher oil prices which could end up with major negative implications for the global economic recovery."
Fatih Birol, Chief Economist IEA
Higher oil price could affect recovery, warns IEA
BBC Online, 5 January 2011

"Analysts said on Wednesday there was no 'breakthrough' in China’s uranium reprocessing capabilities, and there would be no impact on the market for the fuel. 'The bottom line is there was no breakthrough, there will be zero impact on Chinese demand for uranium,' UxC senior vice president Mike Smith stated in an interview. This came after China Central Television reported on Tuesday that technology developed by China National Nuclear Corp could extend the country’s uranium resources to last 3 000 years. China Daily – the State-owned paper targeted at Westerners – said the following day in a front page headline that the move would solve the country’s uranium shortage. Dundee Securities analyst David Talbot was equally sceptical. 'We don't put a lot of credence into this spin about a Chinese breakthrough,' he said in a January 5 note titled 'China's uranium reprocessing hype'. Talbot pointed out that the uranium spot price actually rose after the announcement suggesting that 'recent uranium buyers don't believe the Chinese reprocessing hype either'. Smith told Mining Weekly Online that the Chinese had been in negotiations with French nuclear company Areva regarding technology transfer, and there was speculation that the announcement of a technological 'breakthrough' could be related to this. 'There has been speculation that negotiations are not going very well' and the government might be trying to pressurise Areva, he said. According to Smith, China had been reprocessing uranium for 50 years – that is how the country made its nuclear weapons – and the announcement was regarding strides made on the commercialisation of the technology, which the country was still '20 years away' from making it economically viable. 'Nothing is different from what it was on Sunday night,' he affirmed. Talbot said: 'We believe that this news should have no effect on the current supply demand situation - and if this technology is real, its implementation is unlikely for 10 to 15 years or more.' Fuel reprocessing was currently being used by Japan, UK, France and Russia and accounted for about 3% of world nuclear fuel supply."
Analysts say Chinese uranium announcement is overblown
MiningWeekly, 5 January 2011
"Desire Petroleum lost more than a quarter of its share value yesterday after the company revealed it was abandoning another dry well in the Falklands. The company drilled 1,697 metres into pre-rift sediments at the Dawn/Jacinta prospect before concluding there was no oil and preparing to plug the well. The small-cap explorer has been subject to wild stock price gyrations in recent months, as investor hype about the potential for major oil finds in the largely unexplored sea around the Falkland Islands – stoked by an early find by rival Rockhopper in May – sent the shares soaring, only to crash back to earth when a series of wells found nothing."
Desire Petroleum slumps further as it abandons yet another Falklands well
Independent, 5 January 2011

"Soaring prices of sugar, grain and oilseed drove world food prices to a record in December, surpassing the levels of 2008 when the cost of food sparked riots around the world, and prompting warnings of prices being in 'danger territory'. An index compiled monthly by the United Nations surpassed its previous monthly high – June 2008 – in December to reach the highest level since records began in 1990. Published by the Rome-based Food and Agriculture Organisation (FAO), the index tracks the prices of a basket of cereals, oilseeds, dairy, meat and sugar, and has risen for six consecutive months. Abdolreza Abbassian, FAO economist, told the Guardian: 'We are entering a danger territory.' But he stressed that the situation was not yet as bad as 2008. Sugar and meat prices are at record levels, while cereal prices are back at the levels last seen in 2008, when riots in Haiti killed four people and riots in Cameroon left 40 dead..... Julian Jessop, chief international economist at Capital Economics, said: 'The upward pressure on inflation this year from the recent surge in the cost of agricultural commodities will be much greater than that from the pick-up in oil prices'. Jessop said the price of oil was rising largely as result of demand caused by a rebound in global industrial activity. 'In contrast, the surge in agricultural food prices is largely a consequence of supply shocks, such as droughts in major wheat producing countries. These have been compounded by speculative pressures.'"
World food prices enter 'danger territory' to reach record high
Guardian, 5 January 2011

"The European Union will exceed its target of meeting 20 percent of its energy needs from renewable sources by 2020, a report by the European Wind Energy Association (EWEA) said on Tuesday. Of the bloc's 27 member states, 25 expect to meet or exceed their national targets, EWEA said, based on its analysis of national action plans submitted by EU governments to the European Commission. 'Taken together, the action plans show that the EU-27 will meet 20.7 percent of its 2020 energy consumption from renewables,' said Justin Wilkes, policy director at EWEA. Of the 15 EU countries which expect to exceed their 2020 target, Spain predicted it would surpass its goal by 2.7 percentage points. Germany said it would exceed the target by 1.6 percentage points. Luxembourg and Italy, which are predicted to fall short of their national targets by 2.1 and 0.9 percentage points respectively, said they plan to import renewable energy from other countries to make up the shortfall."
EU will surpass 20 pct green energy goal -report
Reuters, 4 January 2010

"China's ambitions to lead the world in nuclear power were boosted today by reports that its scientists had mastered a key technique in the reprocessing of spent uranium. State media claimed the technology overcame a supply bottleneck and ensured China would have sufficient nuclear fuel for at least 3,000 years. The breakthrough would be a boon to the domestic industry, which is in the early stages of what looks likely to be the most spectacular burst of reactor-building in world history. Due to surging demand for energy and growing concerns about pollution, China's nuclear-power generating capacity is projected to increase up to tenfold in the next 10 years. By 2030 China could be on course to overtake the US as the world's leading atomic energy producer. The technology, developed and tested at the number 404 factory of the China National Nuclear Corporation, situated in the Gobi desert, enables recycling of irradiated fuel, according to China Central Television. How this differs from existing reprocessing methods in other countries is unclear, but the state broadcaster said that with this technique a kilo of uranium could produce close to 60 times more power than was now possible in China. If proven this method would extend the 'usage life' of the 171,400 tonnes of the country's known uranium deposits, which previously were forecast to last less than 70 years. Reprocessing can also provide fissile material for weapons, though details have not yet been disclosed about the potential impact on China's nuclear arsenal."
China claims new nuclear technology
Guardian, 3 January 2011

"Chinese scientists have made a breakthrough in spent fuel reprocessing technology that could potentially solve China's uranium supply problem, state television reported on Monday. The technology, developed and tested at the No.404 Factory of China National Nuclear Corp in the Gobi desert in remote Gansu province, enables the re-use of irradiated fuel and is able to boost the usage rate of uranium materials at nuclear plants by 60 folds."
China boasts breakthrough in nuclear technology
Reuters, 3 January 2011
"Oil and gasoline prices have risen to their highest levels in two years, and analysts say prices could shoot up dramatically this year as the thirst for fuel grows in the U.S. and around the world. The former head of Shell Oil has warned that gas prices could hit $5 a gallon by 2012 because of fast-growing demand in emerging countries such as China and India, where more and more people are buying cars, combined with restraints on drilling in the U.S. in the wake of last year's disastrous Gulf oil spill. Less-worrisome forecasts are calling for a rise in gas prices to $3.75 a gallon by spring from today's $3.07 average level, with premium crude prices easily exceeding $100 a barrel this year as demand for oil around the world returns to pre-recession levels last seen in 2007..... Energy consultant Wood Mackenzie estimates that developing economies pushed world oil demand last year to 86.7 million barrels a day — 100,000 barrels more than in 2007 — and will feed further demand growth to 88 million barrels in 2011. The Organization of Petroleum Exporting Countries was mistaken in blaming the uptick in prices on 'speculators' rather than an unexpectedly strong increase in demand in the developing world last year, and that led the oil ministers to put off any increase in production at a meeting last month, Mr. Larry said. He said that was reminiscent of mistakes the oil cartel made in 2007 that led to a run-up in prices to $147 per barrel in mid-2008 — a record high that helped throw the world economy into recession.... Mr. Larry does not see as dire an outlook as does John Hoffmeister, former president of Shell Oil who now heads the activist group Citizens for Affordable Energy. He sees $5 gas by 2012 because politicking and gridlock over energy issues in Washington are jeopardizing access to U.S. energy supplies and have virtually shut down new production in the Gulf of Mexico. 'If we stay on our current course, within a decade we're into energy shortages in this country big time,' he said last week. 'Blackouts, brownouts, gas lines, rationing — that's my projection based upon the current inability to make decisions.' While the Obama administration lifted its moratorium on deep-water drilling in the Gulf weeks ago, Mr. Hoffmeister said huge regulatory barriers to development remain, and will prevent more than one or two 'token' wells from being drilled in the next two years. Analysts attribute the sudden jump in energy prices in the past month to several developments besides growing demand and restraints on supply. Because oil is priced in U.S. dollars, it tends to rise when the dollar falls. The dollar has been declining recently in response to moves by the Federal Reserve and Congress to further stimulate the U.S. economy in a way that generates enormous budget deficits that the Fed is helping to finance by printing dollars and purchasing Treasury bonds. Investors also are starting to bid up the price of oil and other commodities such as gold and copper, as they did in 2007 and 2008, because those commodities hold their values when the dollar is falling and are seen as good hedges against inflation. Speculators also are zeroing in on evidence that world oil production may not keep up with fast-rising demand, creating the potential for tight markets and oil shortages especially if the U.S. starts experiencing healthier economic growth. With global production nearly flat at circa 86 million barrels a day since 2004, some analysts fear that the world may already have reached so-called 'peak oil' output, thus may be unprepared for another big run-up in demand like that seen in the past decade. Tom Whipple, analyst at the Post Carbon Institute, said the International Energy Agency appeared to concede recently that the world reached peak production of 70 million barrels a day of conventional crude oil from underground wells in 2004. Still, the agency continues to predict that technology breakthroughs will produce new oil sources that will replace the world's fast-declining major wells because it is under political pressure to do so from the United States and other developed nations, Mr. Whipple said. The world's political leaders do not want to admit that the world economy cannot grow without oil and any absolute limit in supplies means the end of growth, he said. In the meantime, prices will escalate, he predicted. 'Oil prices are nearing the point that, based on what we saw in 2008, they will do serious to devastating economic damage to the global economy,' he said. 'The idea that oil prices will remain below economically damaging levels for the next 25 years seems far-fetched.'"
Dramatic spike in gas prices forecast
Washington Times, 2 January 2011
"A controversial new technique for drilling gas wells, which campaigners say has polluted water courses in America, is to be tried for the first time in Britain later this month. Supporters of hydraulic fracturing or 'fracking' say it could unleash so much gas across the globe that it will solve the energy crisis for the next century, as well as help reduce carbon emissions. But an Oscar-shortlisted documentary film, released in Britain later this month, claims the use of the process in America has resulted in gas contaminating water supplies. Such is the concern that New York has introduced a moratorium on exploration of gas in the state while safety concerns are looked into. Substantial deposits of shale gas have been found near Blackpool in Lancashire and later this month the exploration company Cuadrilla Resources will carry out a test using the controversial "fracking" technique, which is designed to unlock gas molecules trapped in hard rock, rather than those which have gathered into easily exploitable pockets or reservoirs. In America, there are now 35,000 such wells, and the process is already meeting 10 per cent of the country's gas demands. This success has led to a 'gas rush', with companies exploring across Europe, India and China for shale gas deposits. There are thought to be huge amounts in Holland and Poland. Cuadrilla Resources, based in Lichfield, Staffs has been exploring the Bowland shales near Blackpool for the last year. Last month, Cuadrilla's major shareholder, the Australian mining company AJ Lucas, described its Blackpool test well as the 'first 'true' shale gas well ever drilled in Europe', adding that the finds 'confirm and possibly exceed expectations'. Cuadrilla believes shale gas could potentially meet up to 10 per cent of the UK's energy needs."
UK joins 'gas rush' despite pollution fears
Independent, 2 January 2011
"A study of eight industrialized countries, including the United States, shows that seemingly inexorable trends — ever more people, more cars and more driving — came to a halt in the early years of the 21st century, well before the recent escalation in fuel prices. It could be a sign, researchers said, that the demand for travel and the demand for car ownership in those countries has reached a saturation point. 'With talk of ‘peak oil,’ why not the possibility of ‘peak travel’ when a clear plateau has been reached?' asked co-author Lee Schipper, who shares his time between Global Metro Studies at the University of California, Berkeley, and the Precourt Energy Efficiency Center at Stanford University.Schipper and Adam Millard-Ball, a doctoral candidate at Stanford University, looked at the gross domestic product per capita of the United States, Canada, Sweden, France, Germany, the United Kingdom, Japan and Australia from 1970 through 2008 and plotted it against the distance traveled per capita per year in each country by car, pickup truck, bus, train, light rail, streetcar, subway and plane. Beginning in 1970, they found, motorized passenger travel grew rapidly in all eight countries as greater prosperity led to rising car ownership and domestic air travel. But after 2000, when per capita GDP in the U.S. hit $37,000, passenger travel stopped growing here. In the other countries, passenger travel leveled out at a GDP of $25,000 to $30,000 per capita. 'A major factor behind increasing energy use and carbon dioxide emissions since the 1970s has ceased its rise, at least for the time being,' Schipper said. 'If it is a truly permanent change, then future projections of carbon dioxide emissions and fuel demand should be scaled back.' The peak travel study runs counter to government models predicting steady growth in travel demand well beyond 2030. Schipper and Millard-Ball say that their own findings are 'suggestive rather than conclusive.' They speculate that highway gridlock, parking problems, high prices at the gas pump and an aging population that doesn’t commute may be contributing to peak travel. People already spend an average 1.1 hours per day traveling from one place to another, and driving speeds can’t get much faster. 'You can’t pronounce one single factor for the slowdown in travel,' Schipper said. 'The most important thing will be to see what happens as the economy recovers. Everybody expects oil prices to go up. But with new fuel economy standards, more hybrids and higher oil prices competing against a recovery in which people buy old-fashioned gas-guzzlers, the question is, what is going to win?' Most of the eight countries in the study have experienced declines in miles traveled by car per capita in recent years. The U.S. appears to have peaked at an annual 8,100 miles by car per capita, and Japan is holding steady at 2,500 miles. There are signs of saturation in vehicle ownership, too, at about 700 cars per 1,000 people in the U.S. — more cars than licensed drivers — and about 500 cars per 1,000 people in Japan and most of the European countries. Car ownership has declined in the U.S. since 2007 because of the recession. 'You get to a point where everybody who could possibly drive, drives,' Schipper said. Finally, researchers found, the energy intensity of cars and light trucks has declined in all eight countries since 1990. (Energy intensity is the amount of fuel expended per passenger-mile, or one passenger moving one mile.) At the same time, though, vehicle occupancy declined, as more and more people drove alone. In the U.S, the average vehicle occupancy is 1.7 people per car, down from 2.2 in 1970, reflecting a likely shift away from carpooling. So, for example, in 2007, car travel in the U.S., with two-thirds of the seats empty, was more energy-intensive than U.S. air travel, because the planes were more than 80 percent full, on average. There’s no question that the task of reducing carbon dioxide emissions in transportation is daunting. According to one estimate, vehicle travel in the U.S. would have to fall by half by 2050, or fuel efficiency would have to improve to 130 miles per gallon, or biofuels would have to make up most of the fuels on the market to avoid the worst impacts of climate change.”
A Road Less Traveled
Miller-McCune, 1 January 2011
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".... if you look around and see what the world is now facing I don't think  in the last two or three hundred years we've faced such a concatenation of  problems all at the same time.....[including] the inevitability, it seems to me, of resource wars....  if we are to solve the issues that are ahead of us,
we are going to need to think in completely different ways. And the probability, it seems to me, is that the next 20 or 30 years are going to see a period of great instability... I fear the [current] era of small wars is merely the precursor, the pre-shock, for something rather larger to come... we need to find new ways to be able to live together on an overcrowded earth."
Paddy Ashdown, High Representative for Bosnia and Herzegovina 2002 -2006

BBC Radio 4, 'Start The Week', 30 April 2007

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David Lynch Foundation


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