Sun4.jpg (8555 bytes)

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 2013 News Reports Archive - Click Here **


Peak Oil and Energy Crisis News

Earlier Peak Oil And Energy Crisis News










"The International Energy Agency has sounded the alarm about a potential oil supply crunch and higher prices as key Gulf producers delay investment in the face of surging US shale output. In a strident warning against complacency in the oil market, the developed world’s energy body said key Gulf producers have been adopting a 'wait and see approach' to investment, because of the perception that the US shale revolution would produce an 'abundance of oil'. 'I am really worried that we are giving the wrong signals to the Middle East, which may end up with us not having investment in a timely manner,' said Fatih Birol, chief economist at the IEA..... The IEA still expects US oil output to reduce the world’s dependence on Middle Eastern oil in the near term: it now forecasts that the US will displace Saudi Arabia as the world’s biggest oil producer in 2015, two years earlier than it had estimated just 12 months ago. But it expects US light tight oil production, which includes shale, to peak in 2020 and decline thereafter, even as global demand continues to grow to 101m barrels a day by 2035, from about 90m b/d today. Outside the US, light tight oil production is only expected to contribute 1.5m b/d of supplies by 2035, as countries such as Russia and China make limited progress towards unlocking their shale reserves. That will leave the market once more dependent on crude from the Opec oil cartel, of which Gulf producers are key members. Saudi Arabia, the United Arab Emirates and Kuwait have already been producing at record levels this year, to make up for shortfalls from other Opec members from Libya to Nigeria. But the IEA expects domestic demand in the Middle East to hit 10m b/d by 2035 – equal to China’s current consumption – thanks to subsidies for petrol and electricity, even as foreign demand for Gulf oil increases. Mr Birol said the Gulf states needed to invest significantly now to meet rising demand after 2020, because projects take several years to begin producing. But he said he was concerned Gulf countries were misinterpreting the impact of rising US shale production. “When you look at projects in the Middle East, I do not see a great deal of appetite,” Mr Birol said. Gulf producers have taken a cautious approach to investment in recent years, in the face of fast growing US output. Saudi Arabia aims to maintain spare production capacity of 2.5m b/d, and it has invested heavily to begin production from the giant offshore Manifa field this year. But the world’s largest crude exporter expects to offset this by throttling back on production from other mature fields. Overall Saudi Arabia does not plan to increase its oil production capacity in the next 30 years, as new sources of supply, from US shale to Canadian oil sands, fill the demand gap. The UAE is reported to have pushed back its target for raising production capacity to 3.5m b/d from 2017 to 2020, while Kuwait is struggling to overcome rapid decline rates from its existing fields.  Tuesday’s report from the IEA also said India would replace China as the primary motor of oil demand growth after 2020."
International Energy Agency warns of future oil supply crunch
Financial Times, 12 November 2013

"Bryan Sheffield, a third-generation oil wildcatter in Texas’ Permian Basin, knows what he’ll do if crude drops to $80 a barrel: shut down half his drilling rigs and go on a takeover hunt for weaker rivals. He’s among producers who have invested $150 billion in the Permian since 2010, seeking a piece of a shale-oil trove estimated to be valued at as much as $5 trillion. As the money pours in, risks of a bust are mounting; some analysts forecast that crude is heading down to $70 a barrel next year.... Energy producers on average need oil prices of about $96 a barrel to break even on wells drilled in Permian layers known as the Cline Shale and Mississippi Lime, says Mike Kelly, an analyst at Global Hunter Securities. Other areas of the Permian need a price of just $70 to $74. That compares with average break-even prices of about $78 a barrel in the Eagle Ford Shale a few hundred miles east of the Permian and $84 in the Bakken of North Dakota. The benchmark U.S. crude, West Texas Intermediate, dipped 4.8 percent in October, touching a four-month low of $95.95 a barrel on Oct. 24 as rising U.S. production bloated stockpiles. Brent crude, the benchmark for two-thirds of the world’s oil, is averaging $108.59 this year and probably will fall to the $70-to-$80 range, say Fadel Gheit, an analyst at Oppenheimer (OPY), and Marshall Adkins of Raymond James & Associates. Sheffield started Parsley Energy with drilling leases he bought during the oil crash of 2008, and he’s focusing on traditional vertical wells in shallower Permian fields. He estimates he’ll spend about $8 million on the company’s first horizontal well to tap one of the shale layers later this year. Oil at $80 would mean he drills only the prospects most likely to deliver the biggest, fastest gushers. The most efficient operators can manage on lower prices, so if oil falls an additional $20, it will quickly weed out the higher-cost producers."
A Texas Oil Bubble Could Pop Due to Low Prices
Bloomberg, 31 October 2013

"China has knocked the US from its top spot as the world's biggest net importer of oil, US government data shows. The country's fast-growing economy, as well as the rise in car sales, has led to its new status, according to September's data. Oil consumption in China had outstripped production by 6.3 million barrels a day, said the Energy Information Administration (EIA).  In the US, the figure was 6.1 million. China's own oil supply has been outstripped by its economic boom, and its oil fields have been damaged by flooding during the past few months. The country had had to import to make up the shortfall, said the EIA. It predicts the trend will continue into 2014. The US uses 18.6 million barrels of oil per day compared with China's 10.9 million, despite having a population a third the size of China's. But the US is increasingly able to support itself after the growth of its domestic hydraulic fracturing, or fracking - a new technique of drilling for gas and oil from shale rock. ... Jason Gammel, head of European oil and gas research at Macquarie, said he expected the trend to last for the next five years. He said he expected America to produce 20-22 million barrels of oil per day by 2022. Mr Gammel said: 'The US has moved very quickly to utilise fracking and horizontal drilling activities.' But he said such an approach would be difficult for China to mimic, as the US was already well prepared to take advantage of the new techniques, for example with its large oil field services."
China overtakes US as the biggest importer of oil
BBC Online, 10 October 2013

"The oil trader known by rivals as 'God' predicts the US shale revolution will only 'temporarily' boost production and oil prices will remain high, siding with Saudi Arabia and the Opec cartel in a debate gripping the energy market.' 'Andy Hall, whose lucrative bets on oil prices earned him a $100m salary at Citigroup in the 2000s, told investors that the rapid decline in output suffered by shale wells is 'likely [to] mean that the bounty afforded by shale resources is temporary'. …'We read almost daily of new oil discoveries and perhaps this leads to complacency among the lay public,' he added. Mr Hall also revealed a bullish bet on Brent December 2015 oil futures, currently trading at $94.60. 'We continue to hold our longer dated [oil] position with conviction,' he said."
Shale boom likely to be temporary, says successful oil trader
Financial Times, 29 May 2013

"Fracking is not going to reduce gas prices in the UK, according to the chairman of the UK's leading shale gas company. The statement by Lord Browne, one of the most powerful energy figures in Britain, contradicts claims by David Cameron and George Osborne that shale gas exploration could help curb soaring energy bills. Browne added to the government's ongoing troubles over energy policy by labelling nuclear power as 'very, very expensive indeed' and describing the fact that more state subsidies are given to oil and gas than to renewable energy as 'like running both the heating and the air conditioning at the same time'. The former chief executive of BP, who now holds a senior government position as lead non-executive director, told an audience at the London School of Economics that climate change was 'existentially important', but that without gas the transition to a zero-carbon energy system would never happen. However, Browne, who is the chairman of fracking company Cuadrilla, said: 'I don't know what the contribution of shale gas will be to the energy mix of the UK. We need to drill probably 10-12 wells and test them and it needs to be done as quickly as possible.' 'We are part of a well-connected European gas market and, unless it is a gigantic amount of gas, it is not going to have material impact on price,' he said..... Browne criticised the UK's fossil fuel subsidies: 'In 2011, the UK spent over £4bn supporting the production and consumption of oil and gas, more than they spent to support renewable energy.' Across the OECD, he added, $80bn every year is spent supporting production of carbon-based fuels: 'It is like running both the heating and the air conditioning at the same time,' he said..... Browne said nuclear power was one of the safest energy sources available, but said that had come at a cost: 'Nuclear power has become very, very expensive indeed.' In October, ministers agreed a deal to pay French state energy company EDF billions of pounds in subsidies if it goes ahead with two new reactors at Hinkley Point in Somerset, a deal that left some analysts 'flabbergasted' at the cost. Browne also said the siting of new reactors on the coast when sea level and storm surges are rising was a 'big issue' and that they must be made resilient. Lord Adair Turner, the former chairman of the Financial Services Authority and Committee on Climate Change, introduced Browne's lecture and agreed that the cost projections for nuclear power were 'disappointing' compared to a 2008 analysis he led. Turner said that in contrast, solar power costs had fallen 'beyond our wildest dreams' by about 80% in five years.' Browne, once known as the 'sun king' and who said he is now co-head of the largest private equity renewable energy fund in the world at Riverstone Holdings, said: 'Solar is a very good technology and we should use more of it.'"
Lord Browne: fracking will not reduce UK gas prices
Guardian, 29 November 2013

"The oil firm BP predicts that production of shale gas will treble and shale oil — also known as ‘tight oil’ — will grow sixfold from 2011 levels by 2030 (ref. 2). The claims do not stand up to scrutiny. In a report published this week by the Post Carbon Institute in Santa Rosa, California, I analyse 30 shale-gas and 21 tight-oil fields (or ‘plays’) in the United States, and reveal that the shale revolution will be hard to sustain. The study is based on data for 65,000 shale wells from a production database that is widely used in industry and government. It shows that well and field productivities exhibit steep declines. ... Two technologies — horizontal drilling coupled with large-scale, multi-stage hydraulic fracturing (fracking) — have made it possible to extract hydrocarbons trapped in impermeable rocks (see Nature 477, 271–275; 2011). In 2004, less than 10% of US wells were horizontal; today, the figure is 61%. ... Shale gas has risen from about 2% of US gas production in 2000 to nearly 40% in 2012 (ref. 3).... In four of the top five shale-gas plays, average well productivity has been falling since 2010 (see ‘Top five shale plays’). In the Haynesville play, an average well delivered almost one-third less gas in 2012 than in 2010. The exception is the Marcellus: supply is rising in this young, large play as sweet spots are still being found and exploited. Wells decline rapidly within a few years. Those in the top five US plays typically produced 80–95% less gas after three years. In my view, the industry practice of fitting hyperbolic curves to data on declining productivity, and inferring lifetimes of 40 years or more, is too optimistic. Existing production histories are a few years at best, and thus are insufficient to substantiate such long lifetimes for wells. Because production declines more steeply than these models typically suggest, the method often overestimates ultimate recoveries and economic performance (see The US Geological Survey’s recovery estimates are less than half of those sometimes touted by industry. New wells must be drilled to maintain supply. In the Haynesville play, almost 800 wells — nearly one-third of those that were active in 2012 — must be added each year to keep shale-gas output at 2012 levels. .... The story is similar for tight oil. Two plays produce 81% of US tight oil — Eagle Ford in south Texas and the Bakken in North Dakota and Montana. The productivity of new wells in both areas drops by about 60% after one year, levelling out to less than 40% in the second year, less than 30% in the third year and so on. Overall field decline, which combines the productivity of older and newer wells, is about 40% per year.... Given the EIA estimates of the maximum number of available drilling locations in the Bakken, however, I suggest that production will peak by 2017, when available well sites are exhausted, and then fall by 40% a year. I disagree with those who maintain that the Bakken’s production can stay at that high level for many years — this would require thousands more wells than would fit. Governments and industry must recognize that shale gas and oil are not cheap or inexhaustible: 70% of US shale gas comes from fields that are either flat or in decline. And the sustainability of tight-oil production over the longer term is questionable. High-productivity shale plays are not ubiquitous, as some would have us believe. Six out of 30 plays account for 88% of shale-gas production, and two out of 21 plays account for 81% of tight-oil production. Much of the oil and gas produced comes from relatively small sweet spots within the fields..... Production will ultimately be limited by available drilling locations, and when they run out, production will fall at rates of 30–50% per year. This is projected to occur within 5 years for the Bakken and Eagle Ford tight-oil plays."
J.David Hughes - A reality check on the shale revolution
Nature: Vol 494 - 21 February 2013


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


Current - 2013 - 2012 - 2011 - 2010 - 2009 - 2008 - 2007

"Iraq's Kurdish region has started exports of heavy crude to world markets, traders and industry sources said, a further step to wrestle more control of its lucrative oil sector from the central government in Baghdad. Trucked through Turkey to a waiting tanker, the sale of Shaikan crude comes just ahead of planned exports of light crude Taq Taq via a new pipeline. The Kurdish Regional Government (KRG) began selling its oil independently of Baghdad in 2012, first with very light oil condensate, followed by Taq Taq, produced by London-listed oil company Genel. These exports enraged Baghdad, which considers them smuggling as selling oil falls is handled by under the purview of Iraq's State Oil Marketing Organization (SOMO). Talks are underway between Iraq and the Kurds to find an agreement over oil exports and revenue sharing, after Arbil and Ankara signed a multi-billion dollar energy package at the end of November, including gas pipelines and exploration deals. Iraq's oil minister said Baghdad would retain control over the oil revenues. But despite Baghdad's threats of legal action against potential buyers over the last year, the KRG has moved ahead with exporting Shaikan, the first international exports for AIM-listed Gulf Keystone in Kurdistan."
Iraqi Kurds export first heavy oil to global market
Reuters, 31 December 2013

"Israel's successful efforts to increase water security will lessen one of the country's geographical constraints. But new sources of water are more energy intensive, and this could increase Israel's short-term dependence on energy imports unless domestic energy sources are successfully developed. While Israel enjoys relative national security compared to its neighbors, which are struggling with internal fragmentation, this will probably change eventually. Because concerted military efforts have been required in the past to secure water resources, Israel has had a strong incentive to develop technological solutions to improve water security. Additional domestic water resources -- including increasing desalination capacity and continued efforts to recycle water -- allow Israel to mitigate one of its inherent geographic constraints. Israel has substantially increased its capacity to desalinize water over the last decade. The arid country of roughly 8 million already has a number of desalination plants -- including the Sorek plant, the world's largest desalination plant of its kind, which became fully operational in October. Israel has plans to increase total desalination capacity through 2020 such that it approaches the estimated annual amount of internally generated natural water resources....Advances in the technology that Israel uses, including technologies that improve the energy efficiency of the plants, have helped drive the costs down compared to previous desalination technology. But desalinated water remains far more energy-intensive than naturally sourced water, and it increases demands for power on the national electricity grid and from independent natural gas generators. Because Israel has traditionally been an energy importer, increasing reliance on an energy-intensive water resource could in turn increase Israel's dependence on energy-exporting nations. Natural gas will likely be the predominant fuel used to produce desalinated water. The Israeli electrical grid is projected to shift further toward natural gas and away from coal in the coming years, while the desalination plants often independently employ natural gas generators. The total fuel required will vary based both on the type of desalination plant, as well as the type of power generation. Even with newer, more efficient equipment, the operation of more than 500 million cubic meters of desalination capacity could require more than 100 million cubic meters of natural gas or the equivalent energy from some other fuel sources to produce the additional power necessary to run the plants."
Israel's Water Challenge
Stratfor, 25 December 2013

"Hardly a week goes by without a story on how, thanks to horizontal drilling and 'fracking' of impervious rock, America is on its way to energy independence and a bright new future as the world’s biggest energy producer. Never mentioned in these stories is the cost involved in drilling and fracking the new horizontal oil wells; the fact that these new wells are nearly dry in two-three years; that the natural gas producers are going broke; or that the future of deep water oil production is not looking so good due to high and rapidly rising costs of production. Also lost in the euphoria is the undeniable fact that the world’s existing oil wells are drying up at the rate of 3-4 million b/d each year so that it is taking all the efforts of the oil industry just to keep conventional oil production flat. The growth in what is loosely deemed 'oil' these days is now coming from fracked wells, biofuels, natural gas liquids, and mythical 'refinery gains' in which the products of refining take up more volume than the original crude did. No real energy comes from these refinery gains, just more full barrels. Last week the Department of Energy added its weight to the euphoria by announcing that the US shale oil boom is going to be bigger and last longer than anyone thought. Instead of contributing only 2 million barrels a day (b/d) to U.S. crude production, shale oil output will climb by another 2 million b/d in the next three years so by the end of 2016 the US will be producing a grand total of 9.6 million barrels from all sources. To make matters even better, the government says this level of production will continue until 2021 after which it will decline so slowly that we will never notice. How’s that for a Christmas present? The problem, of course, is that this optimistic scenario is highly unlikely to play out the way our government is telling us. The Department of Energy’s optimism probably is based on the spectacular increases in fracked oil production during the past two years – far exceeding what the government’s analysts had been expecting as recently as last year. This recent surge in production, however, came at a price. The most productive places in our shale oil fields are being drilled first and intensively. Why drill a well that will only produce 300 b/d day when for the same money you can drill one that will produce 1,500 b/d or more? In the U.S.’s two most productive shale oil deposits drillers have been directing their efforts to a very limited number of 'sweet spots' where they get the most profitable results. When places to drill in these sweet spots are gone, growth will be over. Rarely put into context is the rapid decline in production from fracked oil wells. According to the EIA, it is currently taking more than 7 out of every 10 barrels of oil produced from new fracked wells just to maintain production from existing wells. This number is climbing rapidly. When 10 out of 10 barrels of new oil production go to maintain production, it is game-over. How soon 10 out of 10 will be reached is a matter of some debate. Some observers believe it can happen as soon as 2014 in which case the government’s 4.6 million b/d of US produced oil will never happen. Others see the shale oil continuing to grow into 2015, 2016, or even 2017 but not at the 600,000 b/d each year as the government says. Nearly all outside observers agree, however, that when places to drill productive new wells run out, shale oil production will decline at circa 45 percent a year and will not continue to provide large amounts of oil into the 2040s as we are being told. All this says we are getting close to a turning point in the history of our oil production in the next year or so. Either U.S. shale oil production continues to climb at spectacular rates or the industry will be unable to increase production by enough to offset decline. By the end of 2014 we should have a better idea of whether recent trends will reverse or carry on for a while."
The Peak Oil Crisis: The Mother of All Bubbles
Fall Church News-Press, 23 December 2013

"Up to 50 nuclear power stations could be built under plans being looked at by the government. The remarkable figure – 10 times the number the government is openly discussing – is revealed in documents submitted to the Department of Energy and Climate Change by one of its own advisory bodies. The documents are likely to raise questions as to what extent the government's energy policy is weighted in favour of nuclear and away from renewables such as wind turbines. It comes as Brussels begins an investigation into whether Britain is providing up to £17bn of potentially illegal public guarantees for the first nuclear power plant in a generation, Hinkley Point C in Somerset, which aims to provide 7% of the country's electricity. In a submission to a consultation on geological waste disposal, the Committee on Radioactive Waste Management has said an upper limit of 75 gigawatts of nuclear power is "being examined" by the DECC in London. The current programme announced by ministers is to build 12 reactors to supply 16 gigawatts at five sites. The higher figure equates to more than 50 new large-scale modern reactors. The committee has been given the task of assessing the number of disposal facilities that might be required for the waste that will be produced by new nuclear power stations. It notes that the 16-gigawatt programme is only the "first tranche" and is "substantially below the 75 gigawatts upper limit being examined in [the Department of Energy and Climate Change]"."
Fifty new nuclear plants could be goal in official energy plans
Observer, 21 December 2013

"When the USS Ronald Reagan responded to the tsunami that struck Japan in March 2011, Navy sailors including Quartermaster Maurice Enis gladly pitched in with rescue efforts. But months later, while still serving aboard the aircraft carrier, he began to notice strange lumps all over his body. Testing revealed he'd been poisoned with radiation, and his illness would get worse. And his fiance and fellow Reagan quartermaster, Jamie Plym, who also spent several months helping near the Fukushima nuclear power plant, also began to develop frightening symptoms, including chronic bronchitis and hemorrhaging. They and 49 other U.S. Navy members who served aboard the Reagan and sister ship the USS Essex now trace illnesses including thyroid and testicular cancers, leukemia and brain tumors to the time spent aboard the massive ship, whose desalination system pulled in seawater that was used for drinking, cooking and bathing. In a lawsuit filed against Tokyo Electric Power Company (TEPCO), the plaintiffs claim the power company delayed telling the U.S. Navy the tsunami had caused a nuclear meltdown, sending huge amounts of contaminated water into the sea and, ultimately, into the ship's water system. 'At our level, we weren’t told anything,' Plym told “We were told everything was OK.”
Sickened by service: More US sailors claim cancer from helping at Fukushima
Fox News, 20 December 2013

"U.S. oil demand rose 4.9% year-on-year in November on signs of broader strengthening in the nation's economy, the American Petroleum Institute said Thursday. At 19.435 million barrels a day, demand in the world's biggest oil consumer was the highest since December 2010. API's report shows strong gains in demand for gasoline, the most widely used petroleum product in the U.S., as well as in diesel fuel and jet fuel. 'Last month's increase in demand reflected gathering strength in the broader economy,' John Felmy, API's chief economist, said in a prepared statement. The trade group said U.S. crude oil output continued to climb, topping eight million barrels a day for the first time in 25 years."
U.S. November Oil Demand Rises 4.9% on Economic Strength
Dow Jones, 19 December 2013

"Mexico, which is reforming and opening up its energy sector, could take off as a strategically important global oil producer in just over a decade, according to a former US senior official on energy affairs. But with pressure on international oil prices – the Energy Information Administration sees Brent prices of around $109 per barrel in 2025, but has a worst-case scenario of just over $70 – Mexico will have to ensure that the terms it offers oil companies are attractive enough to lure them to Mexico amid attractive prospects worldwide..... Presenting a report for the Atlantic Council in Washington on Mexico’s move to open its energy sector after 75 years of state dominance, Mr Goldwyn said Mexico had the chance to be in 'pole position' for investment in the sector in the hemisphere. But with oil from Mexico’s vast deepwater potential unlikely to start flowing for a decade, he noted: 'We could be dealing in a world with $80 [a barrel] oil.' Oil prices will dictate worldwide investment choices. 'They really have to be savvy,' said Mr Goldwyn, noting that Britain and Norway had offered tax breaks to attract investors to marginal fields, for example. Mexico is blessed with attractive resources – an estimated 160bn barrels of oil equivalent, which includes potentially 55bn mostly in deep waters and about 60bn in shale. Its geology is also well understood with some basins being an extension of shale fields that have fuelled an energy revolution in the US.Enrique Ochoa, Mexico’s undersecretary of hydrocarbons, forecasts that oil output – which has dropped by almost 1m barrels per day (bpd) since 2004 – will increase from 2.5m now to 3m by 2018 and to 3.5m by 2025. Ironically, Mexico, the world’s 10th largest crude producer, imports a third of its natural gas and half its petrol, but economists say the reform could bring $20bn a year in investment to the sector."
Mexico predicted to become strategic oil producer by 2025
Financial Times, 19 December 2013

"... it is said that in a globalised world, easy and ready access for business travel is essential for UK’s economic success. But business trips only account for a sixth of all UK flights, and that proportion is already shrinking because of free video-conferencing. The problem is rather cheap holidays in the sun for the middle classes (classes D and E hardly use air travel at all according to the aviation data). There are then two issues here – one is that holiday passengers should be required to pay the full environmental costs that their travel entails, and the other is that it should be borne in mind that tourism is a net deficit to the UK of some £14bn each year."
Heathrow expansion is wrong on all counts
Michael Meacher MP » Blog Archive » 19 December 2013

"A record two fifths of electricity used in Scotland came from renewables last year, official figures have revealed. UK government figures showed 40.3% of energy consumption in 2012 was met by the sector - up from 36.3% the previous year and 24.1% in 2010. Energy minister Fergus Ewing said the figures showed renewables were 'going from strength to strength'. Environmental campaigners welcomed the figures but said more needed to be done to meet targets. The Scottish government said it was on course for half of electricity use to come from renewable sources by 2015, an interim target ahead of the goal of having the sector generate 100% of the country's electricity by 2020. Scotland continues to produce more energy than it uses, with more than 26% of electricity generated here last year being exported, figures from the Department of Energy and Climate Change showed. Nuclear power provided 34.4% of electricity generated in Scotland in 2012, while 29.8% came from renewables, 24.9% came from coal, 8% from gas and 2.8% from oil and other sources. The proportion of power in Scotland generated from renewable sources was significantly higher than the rest of the UK.  While 29.8% of electricity generated in Scotland was from renewables, in England the sector produced only 8.2% of electricity, while in Wales and Northern Ireland renewables accounted for 8.7% and 15.9% respectively."
Renewable energy use at record high in Scotland
BBC Online, 19 December 2013

"William Hague came under fire from a host of human rights campaign groups last night as he prepared to sign a major gas pipeline deal with the controversial regime of Azerbaijan. The Foreign Secretary is in the capital of Baku today to sign a deal for the line which will feed into the Euro-Caspian Mega Pipeline and transport 16 billion cubic metres a year of offshore gas from Azerbaijan to southern Italy. BP, Statoil, Total and others are investing, along with the Azerbaijan government, around $45bn in the new pipeline and expansion of the existing terminal facilities in what will create a fourth major pipeline route into Europe. It will help BP profit from its exploitation of the Shah Deniz gas field, which it operates with a consortium of smaller companies. However, critics argue the deal will also provide revenues for the dictatorial leader Ilham Aliyev, whose regime in October appeared to release by accident details of his landslide election victory the day before polling began. The UK, according to Amnesty, provides almost half of all foreign investment in the country, largely due to BP’s work on the gas field there. The NGO’s head of policy and government affairs, Allan Hogarth, said: 'Azerbaijan has an appalling human rights record and the country is currently embarked on a particularly aggressive crackdown on freedom of expression.'  He urged Mr Hague to seek guarantees on human rights, as well as focus on “gas and profit”. Amnesty has regularly cited concerns about the numbers of prisoners of conscience in the country.... Those in favour of the pipeline point out that it will mean the BP-led consortium will nearly double its gas output from Shah Deniz from its current 9 billion cubic metres output. The pipeline will go through Turkey and Georgia to as far as Italy and Greece, adding to southern Europe’s security of supply. Emma Hughes, of the activist group Platform, said: “Hague’s trip follows hot on the heels of another undemocratic election in Azerbaijan. Making energy deals with this corrupt dictatorship means that the UK’s ‘dash for gas’ is contributing significantly to the political repression of democracy activists in Azerbaijan.' Azerbaijan may be classed as an 'emerging' economy, but in the world of oil and gas it is one of the longest established exporters by pipeline in the world. In the 1870s, the Nobel family, which went on to establish the peace prize of the same name, began refining and exporting the kerosene that seeped up out of the ground. Robert Nobel had been sent on a mission to the country to find walnut trees to use as rifle butts for the family gun factory. He failed but hit upon the idea of an oil pipeline instead, as an alternative to the more costly transport with barrels."
Hague’s Azerbaijan gas pipeline deal attacked
Independent, 17 December 2013

"U.K. Foreign Secretary William Hague discussed the arrest of an Azeri civil rights activist with President Ilham Aliyev during a visit to the former Soviet republic for the signing of a natural gas export deal. Anar Mammadli, head of the non-governmental Election Monitoring and Democracy Studies Center, was arrested yesterday for tax evasion and illegal entrepreneurship, charges his defense team rejected as politically motivated. “We have raised that specific case; we will continue to raise concerns,” Hague told reporters in Baku, the Azeri capital, after meeting with Aliyev and Foreign Minister Elmar Mammadyarov. “For us, economic development and greater prosperity go along with greater human rights.' Hague today attended the signing by the BP Plc-led group of a $45 billion deal to produce and export gas to Europe from the Shah Deniz field in the Caspian Sea. Mammadli’s election monitoring group deemed fraudulent the Oct. 9 presidential election, won by Aliyev with almost 85 percent of the vote, according to official results. The Organization for Security and Cooperation in Europe, or OSCE, also said the vote 'fell short of international standards' and was marred by 'serious shortcomings.' The charges brought against Mammadli are groundless and politically motivated, defense lawyer Rashid Hacili said by phone from Baku. Aliyev, who took over from his late father in disputed elections 10 years ago, is heading a government that is ranked among the world’s most corrupt and repressive by Transparency International and Reporters Without Borders. Dozens of activists, journalists, bloggers and other critics have been arrested or convicted of 'bogus charges' during the past 18 months, Human Rights Watch said in a September report. Azerbaijan, the largest oil producer in the former Soviet Union after Russia and Kazakhstan, agreed today with BP and its partners in the Shah Deniz project to export 16 billion cubic meters of gas a year to the European Union and Turkey starting from 2019."
Hague in Baku for Gas Deal Raises Concern at Azeri Arrest
Bloomberg, 17 December 2013

"U.S. production of crude oil will approach a record high in 2016, helping the nation lessen its need for imported oil, says a new report from the U.S. Department of Energy. The agency’s Energy Information Administration said domestic crude production will grow by an annual average of 800,000 barrels per day, pushing it close to the historic high of 9.6 million barrels a day reached in 1970. But the agency also projects production will level off after 2016 and slowly decline after 2020. The report, which offers the energy department’s outlook for 2014, says domestic natural gas production will grow steadily with an overall increase of 56 percent between 2012 and 2040. The projections reflect the effects of the U.S. shale boom, including development of shale plays in eastern Ohio, Pennsylvania and West Virginia, as well as advanced technologies for oil and gas production."
U.S. oil production to reach peak in 2016, Department of Energy predicts
Columbus Business First, 17 December 2013

"U.S. oil production is on track to reach a near historic high by 2016, before leveling off and eventually beginning to taper in 2020, according to a new federal forecast. The nation’s crude output will crest at 9.5 million barrels per day in 2016, according to the U.S. Energy Information Administration’s latest annual energy outlook, released Monday. The United States hit its peak oil production in 1970, with 9.6 million barrels of crude harvested daily. Advancements in oil field technology — particularly the combination of horizontal drilling and hydraulic fracturing, or fracking — have helped reverse years of declining oil production in the United States. Growing U.S. oil production will have an impact on global crude oil prices. The spot price for Brent crude, the international benchmark, is set to decline to $92 per barrel (in 2012 dollars) in 2017, down from $112 per barrel a year ago, according to the EIA. But after 2017, the agency predicts the price for Brent crude oil will start climbing, ultimately reaching $141 per barrel in 2040, as the oil industry tries to meet growing demand by developing more costly resources. Natural gas production also will rise, despite the precipitous decline in its domestic price during the early shale gas boom. The price will remain low enough to propel domestic chemical and metal manufacturing, even as companies sell more of the U.S. harvest overseas, the EIA forecasts. The Henry Hub natural gas spot price, the U.S. benchmark, will rise to $4.80 per million British thermal units in 2018, according to the EIA outlook. That’s 77 cents higher than the agency predicted last year for 2018, and about 60 cents higher than current prices. Ultimately, by 2040, the EIA expects natural gas to sell for $7.65 per million Btu. The federal agency said the price hike will be driven by 'faster growth of consumption in the industrial and electric power sectors and, later, growing demand for export at liquefied natural gas facilities.' The EIA is the statistical arm of the U.S. Department of Energy."
US oil boom’s end in sight, feds say
Fuel Fix (Blog), 16 December 2013

"Production from shale formations in the United States, which has led to an unexpected reversal in long declining oil output, will peak at 4.8 million barrels per day (bpd) in 2021, according to an Energy Information Administration forecast issued on Monday. This year is the bumper year for production out of the tightly packed shale rock. Output should rise by 1.2 million bpd, the highest annual jump, to 3.5 million bpd this year, according to tables in the EIA's Annual Energy Outlook. Production will exceed 4 million bpd next year and rise more gradually toward its peak. It will fall to 3.2 million bpd by 2040. Last year, the EIA expected shale oil production to peak in 2020 at 2.8 million bpd with this year's production at 2.3 million bpd."
U.S. shale oil production to peak in 2021 at 4.8 mln bpd-EIA
Reuters, 16 December 2013

"While the oil forecasters were pumping out bearish calls, the market itself has stuck to its triple-digit price outlook. Oil buyers apparently know the Western world’s economic recovery will boost consumption, since growth and oil use are aligned. That’s not all. They also know that the math doesn’t work: Prices can’t go into gradual, long-term decline, or even stay flat, when the world’s conventional oil fields are in fairly rapid decline. Exotic production – oil sands, biofuels, natural gas liquids – are supposed to fill the gap. But this so-called unconventional production is highly expensive and quite possibly insufficient to cover the drop off in cheap, conventional production. Prices will rise to the point that demand will have to level off or fall. The 'peak oil' and 'peak demand' theories are really opposite sides of the same coin. A few days ago, Richard Miller, the former BP geochemist turned independent oil consultant, delivered a sobering lecture at University College London that laid out the case for dwindling future oil supply. His talk was based on published data from the U.S. Energy Information Agency, the International Energy Agency, the International Monetary Fund and other official sources.The data leave no doubt that the inexpensive oil is vanishing quickly. Conventional oil production peaked in 2008 at about 70 million barrels a day and is declining by about 3.3 million barrels a day, every year. Saudi Arabia pumps about 10 million barrels a day. The math says a new Saudi Arabia has to be found every three years to offset the conventional oil drop off. Good luck. Now you know why Russians, Canadians and Americans are so keen to lock up the Arctic, the alleged keeper of vast new reserves. About one-quarter of conventional production comes from the 20 biggest fields and most of them are in decline, some precipitously. North Sea oil production peaked at 4.5-million barrels a day in 1999. This year’s production is forecast at between 1.2 million and 1.4 million barrels a day. The so-called Forties field, the North Sea’s biggest, has been losing 9 per cent a year for more than 20 years. Ditto two other North Sea biggies – Brent and Ninian. Great Britain shed its status as an energy powerhouse about a decade ago, when it became a net energy importer. Its energy import bill is horrendous. Last year, Britain spent almost £22-billion ($38-billion) buying foreign oil, natural gas and coal. Repeat all over the world, from Mexico to Indonesia. Indonesia’s oil production has been in steady decline since the mid-1990s, and the country has gone from oil exporter to importer, at which point it got kicked out of the Organization of Petroleum Exporting Countries. While new exploration and technologies will extend the life of some of the gasping old fields, the long-term downward trend is intact. The conventional fields are running out of puff just as world demand is climbing again, which can only put upward pressure on prices. This week, the IEA estimated that oil demand will rise by 1.2 million barrels a day in 2014, or 1.3 per cent, to 92.4 million barrels. The increase is driven by economic recovery and ever-rising demand in China and elsewhere in the developing world. China is willing to pay almost any price for oil because oil drives growth more than it does in the West, where energy use is less intensive per unit of economic output."
Inexpensive oil vanishing at alarming rate
Globe and Mail, 13 December 2013

"High energy bills may top the political agenda in the UK, but households all over Europe are feeling the squeeze. Taking exchange rates out of the equation, Helsinki is the cheapest of the 23 European cities surveyed for electricity prices. Households in Berlin - the most expensive - pay two-and-a-half times as much, largely due to taxes and subsidies designed to boost renewable energy production. In fact, almost a third of a Berliner's electricity bill comprises energy taxes. The equivalent figure for the UK is currently 9%, but this will fall - possibly by three or four percentage points - once energy suppliers pass on recently announced changes in green levies. In the past month, prices have risen in seven cities, and nowhere more so than in London. This has sparked dismay among consumers and sparked heated political debate about how best to reduce bills - hence the reduction in green levies. And yet UK consumers are less active in changing energy companies than at any time since 1999 - when they were first free to pick and choose supplier - with just 10% of customers switching during the past year. Even after the recent price rises, however, London remains one of the cheaper places to buy electricity, and below the European average. But prices haven't been going up everywhere - electricity bills have fallen in nine cities in the past month, particularly in Central and Eastern Europe, with the Hungarian government reducing prices by 11% and its Croatian counterpart cutting them by 6%. On average across Europe, the actual energy price component, including supplier profit margins, represents about 41% of a household's electricity bill, while distribution represents 33%, energy taxes 11% and sales tax 16%, according to Vaasaett. In the UK, the price of energy including margins is 58%, distribution is 26%, energy taxes 11% and VAT 5%. Compare this with Copenhagen, where the cost of energy comprises less than a fifth of bills while taxes make up more than half..... Gas prices also vary a great deal, with households in Stockholm - the most expensive city - paying three times more than those in the cheapest, Luxembourg City. Stockholm is much more expensive than everywhere else simply because the gas market is so small - there are only 33,000 households buying gas in the whole of Sweden. London is the second cheapest city, where households pay well below the European average, despite recent price rises. In the past month, seven countries have seen gas price rises, while eight have seen prices fall. Across Europe, the actual wholesale gas price, together with suppliers' profit margins, represents 54% of an average gas bill, while distribution represents 23%, energy taxes 7% and sales tax 16%. In the UK, the price of energy including margins makes up 67% of a gas bill, while distribution represents 23%, energy taxes 6% and VAT 5%."
Energy bills: Who pays the most in Europe?
BBC Online, 12 December 2013

"Recent challenges in exporting energy to Europe have made an orientation toward Asia more desirable for Moscow. Russia's economy depends on hydrocarbon exports, and while Western Europe is attempting to become less dependent on Russia by seeking new energy sources, Asian markets have large and indiscriminate appetites for energy. Although Russia's focus in Asia traditionally has been on China, Japan and South Korea, it also has ties to Southeast Asia, which remains a strategically significant -- though not absolutely essential -- area for Moscow's efforts to extend its influence and energy exports eastward. Notably, Moscow recently struck a spate of energy and defense deals with Hanoi in an effort to strengthen their relationship, open up new markets for Russian energy and balance against China's moves in Central Asia. Moscow's moves into Asia through Vietnam are proceeding piecemeal, paralleling Russian moves elsewhere in the region."
Russia Strengthens Ties With Vietnam
Stratfor, 12 December 2013

"In the final years of the Soviet Union, Soviet leader Mikhail Gorbachev began orienting his foreign policy toward Asia in response to a rising Japan. Putin has also piloted a much-touted pivot to Asia, coinciding with renewed U.S. interest in the area, and hosted the Asia-Pacific Economic Cooperation summit in 2012 in Vladivostok, near Russia's borders with China and North Korea. Russia's efforts in Asia have been limited by the country's more direct interests in its periphery and in Europe, but Moscow recently has been able to look more to the east. Part of this renewed interest involves finding new export markets for Russian hydrocarbons. Russia's economy relies on energy exports, particularly crude oil and natural gas exported via pipeline to the West. However, Western Europe is diversifying its energy sources as new supplies come online out of a desire to reduce its dependence on Russian energy supplies. This has forced Russia to look for new export markets. Because Asia is hungry for energy supplies and is less fearful than Western Europe of a reliance on Russia, Moscow is attempting to shift its energy exports eastward, first with oil and then with natural gas. With Northeast Asian economies experiencing robust growth, Russia's push into Asia has concentrated on Japan and South Korea, with a strong interest in securing deals with China. But such markets make up only part of the potential Moscow sees in Asia. There are a number of growing energy consumers to the south as well."
Russia Strengthens Ties With Vietnam
Stratfor, 12 December 2013

"Production outside the world’s traditional oil-rich nations has ballooned during the past year, rising to nearly half of the global output. According to the latest report on the market by the International Energy Agency (IEA), countries outside the Organisation of Petroleum Exporting Countries (Opec) are producing the most that they have in decades. States not included in Opec produced 43m barrels of crude oil per day this year, nearly half of the world’s total demand for oil, which rose to 91bn. According to the group, US consumption of oil in November reached the highest one-month level since 2008, as the American economy returns to strength. Forecasts for oil demand in the year ahead were also hiked, with 1.2m barrels per day now expected, up by over 100,000 barrels from the September prediction. The IEA had initially predicted demand for 895,000 barrels of oil per day this year. Earlier this week, a separate report by the organisation noted the dependence of emerging south east Asian economies on coal for energy, predicting that they will increasingly move away from gas and towards coal over the rest of this decade. The world’s energy markets have been transformed in the past year by the continual growth of US shale gas production. Earlier in the year, the IEA projected that the US will become practically self sufficient in energy, surpassing Russia as the world’s biggest supplier of gas."
Oil production outside Opec at modern peak
City AM, 12 December 2013

"There was an important study released by the Post Carbon Institute last week that gives us an insight into how long our great shale oil bonanza or more likely bubble is going to last. As you might suspect, the thrust of the new report is bad news so we are unlikely to ever read much about it in the mainstream media which continues to tell us about the bright energy-rich future ahead..... While areas in Texas and North Dakota are where spectacular increases in oil production have taken place, less well known is that our energy future really is supposed to rest in California, where the government says some two-thirds of America’s shale oil will be found.... Our new study by an experienced Canadian geologist, who has already examined the productivity of other shale oil formations in the US, concludes that the government and its contractor’s study is absurdly optimistic about the prospects for shale oil production in California. Despite the use of all the latest drilling and production techniques, oil production in California has fallen from 1.1 million b/d 30 years ago to 500,000 b/d today. It is highly unlikely that this will be turned around given the geology of the region. The Department of Energy’s report starts with the assumption that California’s shale is much like that in Texas and North Dakota. It posits that the oil industry will only have to drill 28,000 new wells, each yielding ridiculously large 550,000 barrels of oil, to extract California’s shale oil. This is simply not supported by the recent history of drilling in the state and is unlikely to happen. We will be lucky if California’s oil production does not continue to decline, for its geology is simply not the same."
The Peak Oil Crisis: California’s Bubble Pops
Falls Church News-Press, 11 December 2013

"The former Soviet republic of Kyrgyzstan has approved a deal to sell the country’s debt-ridden natural gas monopoly to Russia’s state energy company Gazprom for $1. The decision, backed by 78 deputies in the 120-seat parliament, hands Moscow control over a strategic asset in the Central Asian state in exchange for a guaranteed supply of fuel. Under the agreement, Gazprom will gain control over pipelines, gas distribution stations and underground storage facilities owned by Kyrgyzgaz. Gazprom has committed to invest 20 billion rubles ($610 million) in modernizing the Kyrgyz company’s infrastructure over the next five years."
Russia’s Gazprom takes over gas monopoly in Kyrgyzstan for $1
RIA Novosti, 11 December 2013

"Russia's state nuclear energy monopoly has delivered the last portion of uranium fuel made from Soviet nuclear warheads to the US. Rosatom is now looking forward to mutually profitable cooperation with America’s nuclear energy industry. The final shipment consisting of four containers of U-235 uranium fuel, downblended from approximately 80 Soviet nuclear warheads, arrived in Baltimore from St. Petersburg on the Atlantic Navigator vessel. Containers were sent to a gaseous diffusion plant in Paducah (Kentucky) belonging to America’s United States Enrichment Corporation (USEC), which produces fuel assemblies for American nuclear power plants. The last assembly made of HEU-LEU (Highly Enriched Uranium - Low Enriched Uranium) nuclear fuel will be produced in 2017. It is expected that they will last till 2020. Half of America’s nuclear power generation facilities used HEU-LEU uranium, which means that one in 10 light bulbs in the US are lit with energy generated from uranium derived from Russian nuclear warheads. All in all, Russian nuclear fuel has given America around seven trillion kilowatts of electrical energy. Now that the HEU-LEU agreement is over, Rosatom is going to sell enriched uranium to the US at an international market price, which is considerably higher than the cost of HEU-LEU fuel. This could have an impact on internal US electric power generation and consumption. In 2012, the Russian Foreign Ministry announced that Moscow is not going to extend the so-called Nunn–Lugar program, (Cooperative Threat Reduction (CTR) Program), within the framework of which the Megatons to Megawatts Program has been operating. This is due to national security reasons. The HEU-LEU agreement (dubbed Megatons to Megawatts Program) signed in 1993 involved the downblending of 500 tons of Soviet-made military grade, highly enriched uranium (HEU) (equivalent to 20,000 nuclear warheads) into low-enriched uranium (LEU) to produce nuclear fuel for America’s 104 nuclear reactors, which generate nearly a fifth of all US energy. Russia made a commitment to supply fuel at a fixed price, with the total worth of the contract reaching $17 billion. The last payment for the fuel is expected to be made in January 2014. Considering the production costs of the weapon-grade enriched uranium, the deal has been extremely profitable for the US nuclear power generating industry. All in all, Americans have been ‘buying out’ Soviet HEU for a mere $34,000 per kilogram since 1995.... Russia’s state nuclear corporation, Rosatom, has been heavily investing in a national nuclear energy infrastructure, in particular innovative uranium enrichment technologies and fuel assembly production. Today Rosatom possesses a cutting edge gaseous centrifuge enrichment industry, concentrated at four facilities in Siberia and the Urals, accounting for up to 40% of the world enrichment capacities. In the meantime, America’s USEC continues to rely on outdated and extremely costly gas-diffusion enrichment technology. Despite years of work and billions spent on enrichment infrastructure, the corporation’s $3 billion dollar gaseous centrifuge enrichment project at the American Centrifuge Plant in Piketon, Western Virginia, reportedly continues to suffer constant technical problems.... Practically all countries that officially possess nuclear weapons (China, France, India, Pakistan, Russia, UK, US) ceased production of weapon-grade highly enriched uranium years ago. The US stopped producing HEU back in 1964, when the country reached a total of 30,000 nuclear warheads, while Russia ceased to produce it in 1988, when the USSR already had 44,000 nuclear warheads. For some time the United States Enrichment Corporation (USEC) continued producing HEU for submarine nuclear reactors, but ceased this kind of production in 1992. Production of military grade plutonium was also stopped in both the US (in 1988) and Russia (in 1994). Both France and the UK stopped HEU production in 1990s. At least a third of the estimated 2,000 tons of highly enriched uranium ever produced by all members of the ‘nuclear club’ has already been recycled into fuel. Since no nuclear-capable country is willing to disarm altogether, the process of downblending military-grade U-235 is finite. With 65 nuclear power plants generating over 19 percent of electric power in the country, America owns world's largest number of commercial nuclear power plants and therefore is the biggest consumer of nuclear fuel..... In the meantime Russia is the only country that has developed industrial scale fast-neutron nuclear reactors, the so-called breeder reactor technology that enables the use of a wider range of radioactive elements as a nuclear fuel. Besides producing electric energy, it generates more fissile material that can be used as nuclear fuel. This brings us to the closed nuclear fuel cycle, a long-lasting dream of the nuclear energy industry that one day might come true. With BN-600 breeder reactors (600 megawatt) at Russia’s Beloyarskaya nuclear power plant (running since 1980), the assembly of the next generation BN-800 breeder reactor (880 megawatts) at the same site is set to be finished by the end of 2013, and commissioned in September 2014. Russian physicists have already elaborated the next step for the revolutionary technology, a BN-1200 breeder reactor that is set to be assembled at the Beloyarskaya nuclear power plant by 2020. Overall eight BN-1200 breeder reactors are expected to be constructed by 2030, and that would mark the dawn of anew era of nuclear energy power generation – a truly ‘green’ and ecologically secure closed nuclear fuel cycle."
Megatons to Megawatts 2.0: Russia eyes new nuclear project with US energy industry
RT, 11 December 2013

"Britain could be at risk of blackouts by next winter, the boss of one of the Big Six energy companies has warned, as old power plants are closed and have not yet been replaced. Npower chief executive Paul Massara said Britain needs new energy infrastructure as the country's amount of spare generation at peak times had fallen from 15 per cent to five per cent this year. Mr Massara said the shortfall raised concerns over the possibility of blackouts as soon as next year. Mr Massara told the BBC's Panorama programme investors needed clarity over energy policy to be provided by the Government, in order for new plants to be built. He said: 'The amount of spare generation at the peak has gone down from about 15 per cent to this winter when we'll be about five per cent. Next winter will be even smaller. 'So will we get through this winter? Yes. Will we get through next winter? I don't know.' The warning came as the chief corporate officer of ScottishPower today warned the Government's carbon tax, which charges companies for burning fossil fuels, could make the country 'even more vulnerable to the threat of blackouts'. Writing in The Daily Telegraph, Keith Anderson said the green levy will force coal-fired plants to close too quickly."
Npower boss warns of energy blackouts NEXT WINTER due to closures of coal-fired power plants
Mail, 9 December 2013

"....Goldman [Sachs] is maintaining its price forecasts for next year for both North Sea Brent crude and U.S. benchmark West Texas Intermediate at $106 and $98, respectively..... Since hitting a record of almost 21 million barrels per day (bpd) in 2005, U.S. oil demand has fallen by more than 10 percent to 18.5 million bpd last year, data from the U.S. Energy Information shows. But in September, U.S. demand was up by 1 million bpd on the same month in 2012 - the biggest year-on-year leap since 2001 - while Chinese demand growth has been muted in the second half of this year. Currie estimates total Chinese demand growth at just 230,000 bpd throughout 2013. Growth was as low as 70,000 bpd in October year-on-year. U.S. demand has been boosted in part by the fact that gasoline prices are 15 percent lower in Chicago than in Singapore, Currie said."
Goldman tells oil market U.S. is the new China as cycle reverses
Reuters, 6 December 2013

"Royal Dutch Shell has dropped plans for a multibillion-dollar flagship plant in the US that would have converted natural gas into diesel and jet fuel, amid concerns over the costs of the $20bn-plus project. It said the gas-to-liquids plant was 'not a viable option for Shell in North America', citing the likely cost, 'uncertainties on long-term oil and gas prices and differentials', and the company’s strict capital discipline. Shell had touted the possible GTL plant in the Gulf of Mexico region as a way to exploit the arbitrage opportunities that have opened between cheap and abundant US shale gas and expensive crude oil. However, with shale oil production also now booming in North America, putting downward pressure on US crude prices, that argument looks less compelling. There were also concerns about the price tag. The original estimate suggested a budget of least $12.5bn, but the project was on course to cost more than $20bn. Tens of billions of dollars of investment projects in petrochemical plants and terminals for exporting liquefied natural gas have been proposed for the US gulf region, to take advantage of the shale gas boom, raising fears of shortages of labour and equipment and consequent inflation in construction costs. Shell has come under mounting pressure from investors to show more capital discipline, after spending a record $45bn this year; $5bn more than it had planned."
Shell ditches plans for US gas-to-liquids plant
Financial Times, 5 December 2013

"Iran on Wednesday named seven Western oil companies it wants back in its vast oil and gas fields once international sanctions are lifted and said it would offer contract terms in April next year. Iranian Oil Minister Bijan Zanganeh named the seven in order: BP, Royal Dutch Shell, Total of France, Italy's ENI, Norway's Statoil, and US companies Exxon Mobil and ConocoPhillips. Iran has the world's fourth-largest proved national reserves of oil - most of it cheap to produce - and is also home to the biggest proved reserves of natural gas, some 18pc of the global total. With nationalisation in the Islamic revolution of 1979, the oil companies were thrown out. Iran's share of world oil production fell to below 40pc by 1997 from 55pc in the 1970s. Its gas output remained negligible. Oil companies from around the world drifted back in the 1990s, and Zanganeh oversaw their return as minister under the reformist government of 1997-2005..... He said contract terms would be better than those in post-war Iraq, which limited oil companies to operating fees rather than the share of production deals they prefer. 'I cannot say more about the detail,' Mr Zanganeh said."
BP and Shell among oil firms Iran wants back in country
Telegraph, 4 December 2013

"Grangemouth is set to become the first chemical plant in the UK to receive shale gas from the United States, the site's operator has said. Ineos said it planned to build a new ethane tank at the site, which was recently the scene of a bitter industrial dispute. Imports could begin as early as 2016 after a £150m investment to an import terminal project. The move will supplement declining North Sea supplies, the company said. Ineos threatened to close the petrochemical site at Grangemouth in October after a dispute with the Unite union."
Grangemouth to import US shale gas
BBC Online, 4 December 2013

"While average gas and electricity bills in the UK are lower than in many other European countries, they are rising faster than incomes.... In a detailed examination of Labour's energy policy Dieter Helm, professor of energy policy at Oxford University, said Labour's 20-month price freeze, would undermine its own aims. 'At a stroke,' writes Helm, 'uncertainty will have gone up not only regarding the 20 months but also about what happens thereafter. This must raise the cost of capital and in turn mean that electricity bills will be higher than they need be."
Be brave, George, and pull the switch on Ed's energy gimmick
Sunday Times, 1 December 2013, Print Edition, P33

"The Office for National Statistics estimates that the share of household income going on 'essentials' is up from 28% in 2003 to 36% now. One cause is the cost of natural gas. Gas overtook petroleum as the largest single source of UK energy in 1996, and is used to produce much of our electricity. Why have prices risen when the UK's recovery has been so tepid? It may not always seem obvious, but high gas prices are a result of continuing turmoil in the Middle East. As North Sea provision has declined, the UK has become dependent on imported gas - and that makes us dependent on world prices. Gas prices are related to oil, since they are viewed as substitutes. It's not just the Middle East that has driven up oil prices globally. Increased demand by industrialising countries such as China and India have also pushed oil prices from less than $30 per barrel a decade ago to more than $100 now - so oil prices have more than tripled during a period of low global inflation. Due to the historic link between gas and oil prices, gas prices tend to be indexed to oil prices in Europe. ... In 2003, imported gas accounted for just 2% of UK demand. Now, it's 45%. In the first half of the year, the UK's gas imports hit 1 trillion cubic feet, which is the highest on record. By 2018, imports could account for the majority, an estimated 70%-80%, of the UK's gas needs. Three-quarters of the gas imported is from Europe via pipelines from Norway, Belgium, and the Netherlands. In 2011, the Parliamentary Committee on Climate Change published its report examining what drove the 121% price increase for gas between 2004 and 2011, which equates to an increase in the average annual energy bill of £295. The conclusion was that wholesale energy costs accounted for 66%, transmission another 20%, VAT 5% - which leaves almost 10% on policy-related costs. The share is much higher for electricity prices: around 28% of the price rise is due to policy-related costs, such as efforts to achieve greener energy aims. So, where does that leave energy prices? A lot depends on where global oil prices are headed, as much of the increase is due to expensive wholesale prices. It begs the question as to why the UK doesn't produce more of its own energy. One factor is that investment has not kept up. Coal-fired power plants have closed and not been replaced by new, cleaner ones."
What’s driving up household energy prices?
BBC Online, 29 November 2013

"The UK's wind energy industry has set a new record today, delivering more than 6GW of power to the grid for the first time.National Grid confirmed the half-hour average output from the UK's wind farms reached 6,004MW between 2:30 and 3pm, providing 13.5 per cent of the UK's total electricity demand – equivalent to the demand from more than 3.4 million homes. The total figure for wind power output is likely to be higher still, as the UK is home to a fleet of off-grid small-scale turbines that are not required to provide real time output data to National Grid. The previous record was set on 15 September this year at 5,739MW, but it was broken on several occasions today as strong winds swept across the country. The figures are expressed in MW, rather than MWh, as the measure is based on average output over a half-hour period."
UK sets new wind energy record
BusinessGreen, 29 November 2013

"Argentina has threatened oil businesses operating off the Falkland Islands with fines, confiscations and jail sentences for their executives. Argentina's embassy in London said new laws had been passed by the country's congress to clamp down on exploration it claims is in breach of UN decisions. The UK's Foreign Office insisted the activities were legitimately controlled by the islands' government. Islanders recently voted overwhelmingly to remain a British overseas territory."
Argentine threat over Falkland Islands oil operations
BBC Online, 29 November 2013

"Fracking is not going to reduce gas prices in the UK, according to the chairman of the UK's leading shale gas company. The statement by Lord Browne, one of the most powerful energy figures in Britain, contradicts claims by David Cameron and George Osborne that shale gas exploration could help curb soaring energy bills. Browne added to the government's ongoing troubles over energy policy by labelling nuclear power as 'very, very expensive indeed' and describing the fact that more state subsidies are given to oil and gas than to renewable energy as 'like running both the heating and the air conditioning at the same time'. The former chief executive of BP, who now holds a senior government position as lead non-executive director, told an audience at the London School of Economics that climate change was 'existentially important', but that without gas the transition to a zero-carbon energy system would never happen. However, Browne, who is the chairman of fracking company Cuadrilla, said: 'I don't know what the contribution of shale gas will be to the energy mix of the UK. We need to drill probably 10-12 wells and test them and it needs to be done as quickly as possible.' 'We are part of a well-connected European gas market and, unless it is a gigantic amount of gas, it is not going to have material impact on price,' he said..... Browne criticised the UK's fossil fuel subsidies: 'In 2011, the UK spent over £4bn supporting the production and consumption of oil and gas, more than they spent to support renewable energy.' Across the OECD, he added, $80bn every year is spent supporting production of carbon-based fuels: 'It is like running both the heating and the air conditioning at the same time,' he said..... Browne said nuclear power was one of the safest energy sources available, but said that had come at a cost: 'Nuclear power has become very, very expensive indeed.' In October, ministers agreed a deal to pay French state energy company EDF billions of pounds in subsidies if it goes ahead with two new reactors at Hinkley Point in Somerset, a deal that left some analysts 'flabbergasted' at the cost. Browne also said the siting of new reactors on the coast when sea level and storm surges are rising was a 'big issue' and that they must be made resilient. Lord Adair Turner, the former chairman of the Financial Services Authority and Committee on Climate Change, introduced Browne's lecture and agreed that the cost projections for nuclear power were 'disappointing' compared to a 2008 analysis he led. Turner said that in contrast, solar power costs had fallen 'beyond our wildest dreams' by about 80% in five years.' Browne, once known as the 'sun king' and who said he is now co-head of the largest private equity renewable energy fund in the world at Riverstone Holdings, said: 'Solar is a very good technology and we should use more of it.'"
Lord Browne: fracking will not reduce UK gas prices
Guardian, 29 November 2013

"Investors are stepping up the hunt for hundreds of billions of dollars worth of oil beneath a deep submerged salt crust offshore West Africa, seeking to emulate Brazil's major discoveries across the Atlantic. Geologists have long held that Africa's western seabed mirrors South America's. The continents were fused into a single plate nearly 200 million years ago. Now, high oil prices consistently above $100 a barrel and cheaper technology make it possible for producers to explore thousands of feet below the surface. The enthusiasm follows pre-salt finds by Total and Cobalt in Gabon and Angola, shifting focus to a region that has played second fiddle to east Africa's gas boom. William Hayes, senior VP at explorer Kosmos Energy, told Reuters the firm expected a 'suite of smaller, but still globally significant discoveries' in the region. Jasper Peijs, BP's exploration director for sub-Saharan Africa, said he expected super giant discoveries off Angola. 'All the prospects there have the potential to be giant, which I would say is at least 250 million barrels and greater, or super giant of 500 million to a billion barrels and even greater than that,' he said on the sidelines of an African oil and gas conference in Cape Town.... Wood Mackenzie's Martin Kelly, head of upstream research, estimated that total reserves in West Africa were between 10-15 billion barrels, or about a quarter and a third of Brazil's. 'The early signs are very encouraging that there will be commercial volumes of hydrocarbons,' he said."
West Africa bets on Brazilian style oil jackpot
Reuters, 29 November 2013

"The government has awarded a record number of offshore oil and gas licences in its latest round of tenders, it said on Friday, as the country scrambles to attract new exploration before existing infrastructure is decommissioned. The energy ministry awarded 52 exploration licences under the second and final tranche of its 27th offshore round. That brings the round's total to 219 licences, exceeding the previous record of 190 awarded in the 26th round. Friday's tranche included 21 smaller and independent companies that are new entrants to the market, the government said without naming them....Britain's fossil fuel reserves are declining quickly and the focus has been shifted to linking new oil and gas fields to existing infrastructure rather than building new facilities.Some new prospects can only be developed economically if they can draw on pipelines and platforms that are already in place but the established operators that run these are beginning to plan to shut them down. The government estimates that around 20 billion barrels of oil and gas can still be retrieved from the British North Sea. It plans to launch its next offshore licensing round in January."
Government awards record number of offshore oil and gas licences
Reuters, 29 November 2013

"There are mounting concerns in the North Sea oil and gas industry that the Scottish independence debate, skill shortages and soaring inflation are undermining future investment and production. The worries, some of which are highlighted in a survey from Aberdeen published on Thursday, have surfaced just days after £10bn worth of new oil and gas projects – as well as a £4bn windfarm – were postponed or reconsidered. Hydrocarbon output from the North Sea plunged by 14% last year and is expected to fall another 8.5% in 2013, putting greater pressure on the government amid fears over mounting energy security and rising fuel bills. The 19th Oil and Gas Survey – published by Aberdeen and Grampian Chamber of Commerce and sponsored by law firm Bond Dickinson – shows strong recruitment trends and high wages. But Kenny Paton, oil and gas partner at Bond Dickinson, said more and more of his clients in oil and gas plus other sectors were raising questions about uncertainty created by the referendum in Scotland..... A record number of contractors in the oil and gas sector – 98% – are looking to recruit in the next 12 months as investment in 2013 hit a record high of £13.5bn. But the current level of spending is expected to fall off in the coming years, while the number of new wells drilled so far this year has already fallen to 27, compared with 41 in 2012 and 76 in 2008. At the end of last week, Shell and Statoil revealed that they were postponing the development of the £4.3bn Bressay heavy oil field in the North Sea on the grounds of difficult conditions and high costs. The project was meant to extract up to 300m barrels of recoverable oil, but a spokesman for the operator, Statoil of Norway, said it had 'decided to reconsider the development concept and delayed the field development decision'. Statoil also postponed its even bigger Johan Castberg scheme in the Norwegian sector of the North Sea earlier this year, while Chevron of the US made clear its Rosebank scheme in the West of Shetland was in doubt. Chevron said the £6bn project was under review despite global oil prices close to $110 (£68) per barrel because it 'does not currently offer an economic value proposition that justifies proceeding with an investment of this magnitude'. Three months ago the trade body, Oil & Gas UK, warned that the production efficiency of fields had fallen from 80% to 60% over the last seven years and said that several fields now cost more than £40 ($65) per barrel to operate."
North Sea oil and gas at risk, Aberdeen survey says
Guardian, 28 November 2013

"When the EU-Russia contest for Ukraine took a decisive turn last week, the issue of energy was central to the outcome. In a last-ditch effort to persuade Kiev to sign a far-reaching integration pact that would more firmly anchor it in the west, Brussels offered a new gas pipeline from Slovakia to ease Ukraine’s reliance on Russian supplies. That offer, while appealing, was apparently not enough to trump the promise of lower prices dangled by Russia.Ukraine’s decision to not sign the EU deal at a summit that starts this evening in Vilnius will be the focus of the two-day gathering. But the tussle is just the latest round in what has become the main tension in EU-Russian relations for a nearly a decade: the belief the Kremlin is using its vast energy resources to maintain its influence in the former Soviet bloc. Much of the EU’s energy policy has been aimed at weaning the continent off its addiction to Russian energy, and so prevent Moscow from using the same tough tactics against central and eastern European EU members that it has deployed so effectively against Ukraine. Judged by that narrow objective, it has so far failed. 'People need to be realistic that European dependence on Russian gas is not going to decline over the next decade,' says Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies. The former communist states of the east, who joined the EU beginning in 2004, remain almost completely reliant on Soviet-era infrastructure for energy supplies. Many blame the failure to address this on western Europe, where countries are less beholden to Gazprom. 'In the field of energy, I have never seen a real effort from the west to help us,' said one top diplomat from an ex-communist EU member state. ... After years of debate, a new pipeline called TAP, which will deliver non-Russian gas from the Caspian region to Italy and beyond by the end of the decade, was given the green light earlier this year... Gazprom still had a 26 per cent share of the European gas market last year, which it expects to grow to 30-32 per cent by 2025. But its crown might be slipping. Alan Riley, a competition law expert at City University, says the infrastructure being built across eastern Europe will give a big boost to alternative supplies. 'All of this is breaking the hold that Gazprom has traditionally had,' he says – although not in time for today’s summit, and not as quickly as the EU would like."
EU struggles to wean former Soviet bloc off Russian energy
Financial Times, 27 November 2013

"Campaigners say Government should be 'ashamed' as official figures reveal thousands of over 75 year-olds perished in Britain during the coldest winter for nearly 50 years. Prime Minister David Cameron was tonight urged to spend hundreds of millions of pounds insulating homes across the UK as official figures revealed 31,000 people died because of the freezing weather last winter. Official figures revealed so-called 'excess winter deaths' rose 29 per cent in 2012-2013 to their highest level for four years. Campaigners said Ministers talking about cutting green levies should be 'ashamed' at the figure, which is worse than Sweden and Finland. More than 80 per cent of the 31,000 were pensioners aged over 75, who suffered from influenza as temperatures in March fell to levels not seen since 1962. The Office for National Statistics calculates excess winter deaths by comparing the death rates from non-winter months to those that occur between December and March. It said that while December last year was milder than average, a prolonged period of lower than average temperatures gripped Britain in January, February and March. Overall in March, 1,582 died every single day - 14 per cent higher than average. Dot Gibson, national secretary of the National Pensioners Convention, Britain's biggest pensioner organisation, said: "Making sure older people have got a well insulated warm home and the income to pay the fuel bills isn't green crap. It's what a decent society should do....'"
Energy row erupts as winter deaths spiral 29 per cent to four year high of 31,000
Telegraph, 26 November 2013

"Profits at Britain's 'Big Six' energy suppliers are five times higher than they were in 2009 as millions of households suffer record bills for their gas and electricity, regulators revealed today. Labour politicans launched fresh attacks on the Government over the cost of living tonight after Ofgem admitted competition in the energy sector 'is not working as well as it could'. Ofgem said the 'Big Six' - British Gas, Npower, Scottish & Southern Energy (SSE), Scottish Power, E.ON and EDF - made a combined £1.2 billion in their household supply businesses last year, up 75 per cent on 2011 and five times higher than £221 million in 2009. Profit per household was £53 in 2012, against just £8 three years before. Ofgem said last year's dramatic jump was triggered by a 17 per cent rise in average bills during 2012 and the effect of the bitterly cold weather, which forced Britons to turn up the heating. The profits do not take into account the recent round of inflation busting price rises announced by the energy companies for the coming winter....including profits from power stations, the Big Six made a combined £3.7 billion in 2012. And Ofgem's report also revealed some parts of the energy companies' operations are far more profitable than previously thought. Ofgem said the profit margins in Scottish Power's business to business arm - which supplies power to other companies - was 37 per cent for gas in 2012. British Gas' margins in its household gas supply business are more than 11 per cent. EDF Energy enjoys profit margins in its power stations of 25 per cent, before taking into account the subsidies the company will enjoy at the Hinkley Point nuclear power plant it is building in Somerset."
Profits at 'Big Six' energy companies have rocketed since the financial crisis began
Telegraph, 25 November 2013

"Energy bills will drop by a minimum of £50 a year under Government plans to cut back green and social levies on household bills, according to industry sources. The Government is expected to announce a range of measures to shift some such charges away from utility bills and instead finance them through general taxation, along with other changes. The move, expected to be announced in the Chancellor George Osborne’s Autumn Statement on December 5, will come with a demand that energy firms cut bills still further and bear the cost themselves. Prime Minister David Cameron promised earlier this month to ‘roll back’ the environmental charges that push up bills. He spoke out in response to a wave of public outrage over sharply rising costs. The average annual dual fuel energy bill is £1,320, which includes green and social charges of £115. One target of the shake-up is likely to be the Warm Homes Discount, which is used to reduce bills for two million of the poorest households at a cost of £135million – adding £15 to every annual bill. ‘It is much easier for the Government to put a social levy, like the Warm Homes Discount, into general taxation rather than the far more controversial green measures,’ said a senior executive at a leading energy provider. Deputy Prime Minister Nick Clegg has already hinted that the Warm Homes Discount could be financed through general taxation. The Energy Companies Obligation is also likely to be affected by the changes. This compels the major power suppliers to spend £1.1billion over the next two years on insulation and other energy-savings measures for people in low-income areas and those on disability benefits. It adds £60 to annual bills and is scheduled to run until 2015. Energy firms expect the Government to extend the timetable for them to fulfil their obligations under the scheme to 2017, which would spread costs and reduce bills. Energy firms have said they will reduce price rises if green levies are cut."
Energy bills to fall £50 as green taxes are cut:
This Is Money, 23 November 2013

"Britain must build more gas storage facilities or risk permanent damage to its manufacturing industry through shortages and price spikes, ministers have been warned. MPs on the Energy Select Committee will this week hear evidence from gas storage companies which argue subsidising new facilities would also lead to cheaper energy bills by protecting consumers from high import prices when UK supplies run low. Britain can only hold about 15 days’ worth of gas demand in storage. Building storage is not economically viable without subsidies, which ministers ruled out in September as a 'waste of money'."
Lack of gas storage 'a risk to industries’
Telegraph, 23 November 2013

“The European Bank of Reconstruction and Development (EBRD) estimated macroeconomic performance of Azerbaijan in its Transition Report. According to the Bank, the rates of economic growth were low due to continued decrease in oil production volumes. 'On a mid-term horizon the economic growth rates most likely will remain low, as a result of stabilization of hydrocarbons production volumes and impairment of non-oil sector growth. In 2013-2014 certain growth is expected in oil sector, though some analysts believe that most likely oil production volumes have already achieved their historical high and will keep on decreasing in future. At the same time, it’s expected that gas production will increase significantly in the nearest future when the second well on Shah-Deniz gas field is put in production', - the Bank informs in the Report."
EBRD: Azerbaijan has achieved the peak of oil production and it will keep on decreasing in future, 21 November 2013

"Scottish sales of oil, gas and refined products to the rest of the world have been estimated at £30.3bn. It is the first time there has been an estimate of the value of sales of crude oil, gas and refined hydrocarbons, and has been compiled by economists at the Scottish government. Described as 'experimental', their figures for 2012 showed £12.8bn sales to the rest of the UK. A further £17.5bn was down to international exports. Of the total, £18bn was crude oil and natural gas liquids. A further £6.5bn was natural gas, most of which was sold to the rest of the UK. The estimates showed a value of £5.9bn was in refined petroleum products. Much of this was from Grangemouth, where the petro-chemical plant - recently threatened with closure - was thought to produce 18% of the UK total output in that sector."
Scottish oil and gas exports put at £30bn
BBC Online, 20 November 2013

"The climate crisis of the 21st century has been caused largely by just 90 companies, which between them produced nearly two-thirds of the greenhouse gas emissions generated since the dawning of the industrial age, new research suggests. The companies range from investor-owned firms – household names such as Chevron, Exxon and BP – to state-owned and government-run firms. The analysis, which was welcomed by the former vice-president Al Gore as a 'crucial step forward' found that the vast majority of the firms were in the business of producing oil, gas or coal, found the analysis, which has been published in the journal Climatic Change. 'There are thousands of oil, gas and coal producers in the world,' climate researcher and author Richard Heede at the Climate Accountability Institute in Colorado said. 'But the decision makers, the CEOs, or the ministers of coal and oil if you narrow it down to just one person, they could all fit on a Greyhound bus or two.' Half of the estimated emissions were produced just in the past 25 years – well past the date when governments and corporations became aware that rising greenhouse gas emissions from the burning of coal and oil were causing dangerous climate change. Many of the same companies are also sitting on substantial reserves of fossil fuel which – if they are burned – puts the world at even greater risk of dangerous climate change. Climate change experts said the data set was the most ambitious effort so far to hold individual carbon producers, rather than governments, to account."
Just 90 companies caused two-thirds of man-made global warming emissions
Guardian, 20 November 2013

"Europe’s second largest gas supplier has broken the link to oil prices in a majority of its northern European contracts, moving much faster than expected on an issue seen as key to the continent’s industrial competitiveness. Statoil, the Norwegian state energy company, told the FT all of its German contracts and nearly all its UK, Dutch and Belgian contracts now reference prices at regional gas hubs, which the EU has been promoting as it seeks a more open gas market. For decades European companies have tended to sign long-term supply contracts linked to the price of oil, whereas US companies have been able to buy gas for immediate delivery in a widely traded market, giving them more flexibility. Last week Fatih Birol, chief economist at the International Energy Agency, urged European companies to end oil indexation to remain competitive. Eldar Sætre, Statoil’s executive vice-president for marketing, said: 'We have proactively sold gas in different ways in response to market liberalisation and what customers want.'  The new contracts reference a mixture of day ahead, month ahead and season ahead prices at hubs such as the UK’s National Balancing Point and the Netherlands’ Title Transfer Facility....The news will be welcomed by policy makers in Brussels and large gas buyers who have been fighting for an end to oil indexation for several years. Gas buyers argue that oil-indexed prices charged by Statoil and its Russian counterpart Gazprom often differ from the regulated prices at which they sell gas to consumers. Eni, the Italian energy company, has taken Statoil to arbitration this year. According to people familiar with the dispute, since the contract was last renegotiated several years ago, Eni has been buying gas at oil-linked prices of about $15 to $16 per million British thermal units, before selling much of it to third parties at European hub prices, which are about $10 per mBtu. Gas price indexation should end such situations by ensuring the price paid for gas reflects supply and demand for the commodity in the European markets where it will be used. But although the two are often conflated, gas hub pricing will not necessarily lead to lower gas bills for households and European companies. Thierry Bros, senior European gas analyst at Société Générale, notes that as Gazprom and Statoil have ceded ground on oil indexation in recent years, prices at European gas hubs have rallied strongly towards oil-indexed prices, meaning the producers’ revenues have been little impacted. While Gazprom and Statoil between them supply more than a third of European demand of almost 500bn cubic metres, the continent continues to import liquefied natural gas to satisfy demand. The prices for LNG are largely linked to the oil price and have climbed sharply because of strong Asian demand. In the US by contrast, fast growing shale production means prices have diverged from international markets, and are less than half of European levels. The US is set to become a major LNG exporter towards the end of the decade after Washington granted permits to several export projects. However, the price of LNG coming across the Atlantic from the US will not be that different from current European hub prices because of the cost of liquefying gas and shipping it abroad, say analysts."
Statoil breaks oil-linked gas pricing
Financial Times, 19 November 2013

"Shock figures reveal millons will have to turn down the thermostat, and that just four per cent of households believe energy companies should be free to set prices. Two-thirds of Britons are expecting to cut back on heating their home this winter, with more 25 to 34 year-olds likely to turn down the thermostat than pensioners. A new report last night claimed 32 per cent of people will 'definitely' turn down the heating or switch off lights over the coming weeks in a bid to save money. A further 35 per cent will 'probably' act. Some 88 per cent of households classified among those struggling with the rising cost of living fear they will have no choice but to use less gas or electricity. Only four per cent of those quizzed believe energy suppliers should be 'free to charge what they think', showing the level of fury against the recent round of price increases. The poll by market research specialist HPI will fuel fears that hundreds of thousands of families will be forced to choose between eating or heating this winter after the recent round of inflation busting price increases from energy suppliers."
Two-thirds expect to turn the heating down this winter in energy price squeeze
Telegraph, 19 November 2013

"Energy bills have risen at a rate eight times higher than average earnings over the past three years, according to Citizens Advice. The charity has found that the 'Big Six' suppliers have increased their gas and electricity prices by on average 36 per cent since October 2010, during which time earnings have risen by a measly 4.4 per cent. Prices have also easily outstripped the rate of inflation as well, almost four times the 10.2 per cent increase in the last three years."
Energy bills have risen at EIGHT times the rate of earnings in the last three years
This Is Money, 18 November 2013

"The move toward new and better technologies — from smart phones to electric cars — means an ever-increasing demand for exotic metals that are scarce thanks to both geology and politics. Thin, cheap solar panels need tellurium, which makes up a scant 0.0000001 percent of the earth’s crust, making it three times rarer than gold. High-performance batteries need lithium, which is only easily extracted from briny pools in the Andes. Platinum, needed as a catalyst in fuel cells that turn hydrogen into energy, comes almost exclusively from South Africa. Researchers and industry workers alike woke with a shock to the problems caused by these dodgy supply chains in 2011, when the average price of 'rare earths' — including terbium and europium, used in fluorescent bulbs; and neodymium, used in the powerful magnets that help to drive wind turbines and electric engines — shot up by as much as 750 percent in a year. The problem was that China, which controlled 97 percent of global rare earth production, had clamped down on trade. A solution was brokered and the price shock faded, but the threat of future supply problems for rare earths and other so-called 'critical elements' still looms. That’s why the Critical Materials Institute, located at the DOE’s Ames Laboratory, was created. The institute opened in June, and the official ribbon-cutting was in September. Its mission is to predict which materials are going to become problems next, work to improve supply chains, and try to invent alternative materials that don’t need so many critical elements in the first place. The institute is one of a handful of organizations worldwide trying to tackle the problem of critical elements, which organizations like the American Physical Society have been calling attention to for years. 'It’s a hot topic in Europe right now,' says Olivier Vidal, coordinator of a European Commission project called ERA-MIN — one of a handful of European initiatives that are now ramping up.  'It's really urgent,' says King. 'We're facing real challenges today — we need solutions tomorrow, not the day after.'  Despite the high cost and high demand of metals critical for energy technologies, very little of this metal is recycled: In 2009, it was estimated that less than one percent of rare earth metals was recovered. Ruediger Kuehr, head of the Solving the E-waste Problem (StEP) initiative in Bonn, says that 49 million tons of e-waste are produced each year, from cell phones to refrigerators. Of that, perhaps 10 percent is recycled."
A Scarcity of Rare Metals Is Hindering Green Technologies
Environment 360, 18 November 2013

"Energy prices are rising at up to eight times the rate of earnings, according to research that will put suppliers under further pressure to justify their recent price increases. As the soaring price of energy starts a national debate on how to keep gas and electricity suppliers in check, analysis from Citizens Advice projects that by next month, the big six suppliers will have increased their prices by 37% since October 2010. During the same period, average earnings will have risen by 4.4%. Earnings growth has been sluggish in recent years, potentially skewing the comparison, but the research also shows that energy companies' prices have risen at three times the rate of inflation, which has been 10.2% over the past three years. Citizens Advice says it has grave concerns about the impact that energy price rises are having on people's ability to maintain a decent standard of living. It says it 'often sees' clients in financial despair and warns that a growing number of parents are facing tough choices between putting the heating on, clothing their children and feeding the family....Which? said nine out of 10 consumers blamed the recent price rises on energy companies increasing their profits. 'We also found that energy is now top of the list of consumer worries, and for the first time more than half (51%) say that they are very worried about energy prices,' said Lloyd. Overall, more than eight out of 10 (84%) consumers are worried about energy prices, the highest proportion since October last year. Seven out of 10 (69%) energy bill payers have cut back on how much heating they use to keep costs down, and almost half (43%) are worried about getting into debt as a result of rising prices. Almost a quarter (24%) said they have taken money out of savings to pay for a bill in the past year. Three out of 10 said they do not know how they will heat their homes this winter."
Energy bills rise by 37% in three years
Observer, 16 November 2013

"The Department of International Affairs at Qatar University’s College of Arts and Sciences hosted the former United States ambassador to Egypt, Frank Wisner, to talk about the US foreign policy in Syria, Egypt and Iran. A panel of international policy experts provided commentary on Wisner’s remarks, including Dr Husam Mohammad of Qatar University, Dr Mehran Kamrava of Georgetown University, and Dr Ibrahim Sharqieh of Brookings Institute. The presentation was attended by over 100 students and faculty of QU, and members of the public. Wisner stated that this is a critical time in not only the Middle East, but in the world, especially after the Arab Spring. Such changes have had tremendous impacts on social, economic, and political life in the Mena region, which then impacts the US and the world at large. Wisner said that the US will not abandon its commitments and obligations to this region and its allies. The United States has major national and core interests in the Middle East region in terms of hydrocarbon products, the Palestinian-Israeli conflict and the need to provide support for nations seeking political balance and economic growth. In terms of the US-Iranian relationship, the two countries are now attempting to overcome the mistrust which has developed over the past few decades on many issues. 'This mistrust must be addressed in order to ensure that Iran maintains a peaceful nuclear programme and capabilities.'”
‘US not to abandon commitments’
Gulf Times, 16 November 2013

"Millions of pounds of taxpayers’ money designated to decommission the UK’s nuclear waste is being guzzled by projects overrunning by years, a damning report reveals. As much as two-thirds of the Department for Energy and Climate Change’s budget is gobbled up by decommissioning nuclear waste – a staggering £1.9billion in the last year alone. But at a time when every penny spent on energy and climate change costs is being counted, projects to decommission nuclear waste are years behind schedule and going hundreds of millions of pounds over budget, a report seen by This is Money reveals. .... Successive governments have failed to deal with the waste, the vast majority of which is at Sellafield in Cumbria, leaving current taxpayers facing a bill that has reached £67billion and is rising."
Taxpayers' money scattered 'like confetti': How two-thirds of the government's energy budget is guzzled by nuclear waste projects
This Is Money, 15 November 2013

"The boom in oil from shale formations in recent years has generated a lot of discussion that the United States could eventually return to energy self-sufficiency, but according to a report released Tuesday by the International Energy Agency, production of such oil in the United States and worldwide will provide only a temporary respite from reliance on the Middle East. The agency’s annual World Energy Outlook, released in London, said the world oil picture was being remade by oil from shale, known as light tight oil, along with new sources like Canadian oil sands, deepwater production off Brazil and the liquids that are produced with new supplies of natural gas. 'But, by the mid-2020s, non-OPEC production starts to fall back and countries from the Middle East provide most of the increase in global supply,'the report said. A high market price for oil will help stimulate drilling for light tight oil, the report said, but the resource is finite, and the low-cost suppliers are in the Middle East.  'There is a huge growth in light tight oil, that it will peak around 2020, and then it will plateau,'said Maria van der Hoeven, executive director of the International Energy Agency. The agency was founded in response to the Arab oil embargo of 1973-74, by oil-importing nations. The agency’s assessment of world supplies is consistent with an estimate by the United States Energy Department’s Energy Information Administration, which forecasts higher levels of American oil production from shale to continue until the late teens, and then slow rapidly. 'We expect the Middle East will come back and be a very important producer and exporter of oil, just because there are huge resources of low-cost light oil,'Ms. van der Hoeven said. 'Light tight oil is not low-cost oil.'"
Shale’s Effect on Oil Supply Is Forecast to Be Brief
New York Times, 12 November 2013

"For all the talk of green power, it’s black gold that still drives the economic cycle - and the key to prices is Saudi Arabia, the world’s biggest producer. ...A rising oil price is both deflationary and inflationary at the same time – a poisonous economic mix if ever there was one. If the price goes too high, it will depress the economy while simultaneously adding to inflation. More money spent on oil means less for spending on everything else. Fortunately, there is also a benign reverse effect. Eventually, weakened demand will cause the price to start falling, at which point oil becomes a powerfully reflationary force. At least, that’s how it used to work. Over the past decade, this pattern has changed. Fast growth in emerging markets has undermined the old rules, so that, despite economic stagnation in high income nations, we still have what are by historic standards very high oil prices. Opec has also got better at manipulating supply to sustain the price. The reflationary effect that Western nations used to enjoy from a falling oil price no longer occurs. No one would suggest that this is the whole or even primary explanation for the permanent stagnation that seems to have settled like a pall on many advanced economies, but it is undoubtedly part of the story. Energy prices are simply too high to allow for the resumption of more normal levels of growth. Indeed, the real surprise is that the damage hasn’t been greater still. Even 10 years ago, the persistence of $100 a barrel oil would have had a devastating effect on high-income economies. Today, we’ve had to learn to live with it. All of which gives a new dimension to the US drive for an interim nuclear deal with Iran. A removal of sanctions could add as much as one million barrels per day to global oil supply, perhaps more. In itself, this is not a huge amount, but together with rising levels of production in both Iraq and the US, it might be enough to put significant downward pressure on prices. Already, they have started to move lower in anticipation. The key to whether they move any further lies with Saudi Arabia, the world’s biggest producer. The Saudis run Israel a close second in fearing a US/Iranian rapprochement. On almost every level – ethnic, religious, geopolitical and economic – Iran is Saudi Arabia’s sworn enemy. For the first time since the fall of the Shah, it is now eminently possible that Iran will reach an accommodation with America, displacing Israel and Saudi Arabia as the key US relationship in the region. The only card the Saudis have left to play is oil. According to research by the Centre for Global Energy Studies, the minimum price Saudi Arabia needs at the present level of production to sustain government expenditure is $86 per barrel. This compares with $64 just four years ago. Saudi has jacked up public spending substantially following the Arab Spring in an attempt to keep the locals quiescent. The survival of the sheikhs carries a very high price, and may in itself have come to dictate the level of the global oil price."
Oil is both the lifeblood and the poison of the global economy
Telegraph, 12 November 2013

"The Tamar deepwater natural gas platform rises 290m from the seabed off Ashdod, in southern Israel, emerging above the waterline only for the last 50 metres or so. The $3.5bn project is described by its investors Delek of Israel and Noble Energy of the US as the largest private sector infrastructure undertaking in Israel’s 65-year history. The gas from Tamar, which began sending its output onshore in late March, will contribute about a percentage point of the country’s gross domestic product this year. Israel is on the threshold of becoming a major energy power in the Middle East – with potentially game-changing consequences for geopolitics and economic relations in a volatile region – after a court decision unlocked the path to exports. Executives at Delek and Noble told the Financial Times they are fast-tracking discussions on a range of export options for the much larger, still undeveloped Leviathan field, which lies about 30km to Tamar’s west, and holds an estimated 19tn cubic feet of gas – one of the industry’s biggest recent deepwater finds of its kind. They are moving forward following a decision by Israel’s supreme court in late October to reject petitions brought by civil society groups and opposition politicians who questioned the right of Benjamin Netanyahu’s government to set aside 40 per cent of Israel’s gas windfall for exports without having consulted the Knesset, Israel’s legislature. When Mr Netanyahu’s government set export policy in June, it estimated that gas sales outside Israel could bring the small, traditionally resource-poor economy a windfall of $60bn over 20 years....One of the most ambitious export projects being considered is an undersea pipeline from Leviathan to energy hungry Turkey, which would entail an investment of $2bn to $3bn. Noble and Delek have been sounding out potential Turkish customers and Taner Yildiz, Turkey’s energy minister, said at a conference in Istanbul last week: “Turkey is interested in Israeli gas.” To transport Israeli gas to Egypt, Noble and Delek have studied options including reversing the flow in the Egyptian export pipeline that crosses the restive Sinai peninsula, or sending it via a new undersea pipeline to its neighbour’s two onshore LNG facilities. Israel’s government is supportive of the notion of exporting, not only because of the royalties and revenues it will collect from the industry, but because of potential positive knock-on effects on traditionally strained relations with its neighbours. However, Delek and Noble are reticent about the status of their negotiations because of the political sensitivities elsewhere in the Middle East around buying anything from Israel."
Israel set to become major gas exporter
Financial Times, 6 November 2013

"When oil giant Exxon Mobil sold half of its stake in Iraq’s giant West Qurna-1 oil field to Asian investors in August, it marked a watershed moment for the Iraqi oil industry. As recently as four years ago, Big Oil was clamouring to get a piece of the prolific Iraqi oilfields. Geologically-compliant and near the hungry markets of Europe and Asia, Iraq was the great prize for Big Oil. With reserves of 143 billion barrels of oil – the fifth largest in the world – Iraq is often seen as the last of the low-hanging fruits in the oil world. Not surprisingly, international majors jumped in when the country issued its first oil license auction in 2008-09. Exxon Mobil, Royal Dutch Shell, BP and Total SA were falling over themselves to get a piece of the opportunity. However, a number of unaddressed issues have finally caught up with the country’s hydrocarbon’s sector, threatening oil production in the near-term. The International Energy Agency says Iraq’s oil production will fall below three million barrels per day for the first time in six months. Indeed, it could fall by half a million barrels due to long overdue infrastructure work at its southern terminals. 'Officially, volumes will be curtailed only in September but the fear is the shut- in could drag on for months given the scope of the work as well as the country’s poor record of delivering projects on time,' said the IEA in its August report. 'Once the work is completed, Baghdad expects exports to rise to at least 3.5 million barrels per day. Accordingly, the shut-in export capacity is expected to constrain production levels by a similar amount and may be behind a delay in the planned mid-July start-up of the Majnoon field until later in 4Q13.' Industry estimates show Iraq’s output fell by 60,000 bpd to reach 2.99 million bpd in July, while exports fell by the same amount. The Iraqi government once expected to raise production to 12 million barrels per day by 2017, rivaling OPEC rival Saudi Arabia, but the Oil Ministry has since tempered its forecast. The government’s latest assessment predicts production to average around 9.5 million barrels per day with exports of around six million barrels per day by 2017 — making Iraq the world’s third largest exporter of oil after Saudi Arabia and Russia. The International Monetary Fund predicts a more conservative production forecast of 5.7 million bpd by 2017. 'The envisaged production growth can be constrained by delays in onshore infrastructure development, and, in particular, by failure to expand pipeline, storage, and pumping capacity,' the IMF said in a report on the country. 'Furthermore, oil companies continue to report that bureaucratic, logistical and operational constraints are posing significant challenges and delays to project work. In the north, oil exports from Kurdistan are contingent on resolution of the ongoing disputes with federal government over revenue sharing.' While analysts have tempered their estimates about Iraq’s oil prospects, the country is expected to remain one of the primary drivers of global oil production. Rising Iraqi production is likely to be the largest single source of global oil supply growth over coming years – easily outstripping projected gains from US shale oil, according to most industry estimates."
Iraq’s Ambitions Crumble As Oil Giants Opt Out
Gulf Business, 16 November 2013

"A record 400 shale wells may be drilled beyond U.S. borders in 2014, with most in China and Russia, according to energy consultants Wood Mackenzie Ltd. While that’s a fraction of the thousands of shale wells drilled in the U.S., the number of rigs used onshore in Europe and the Asia-Pacific region has increased 10 percent over the past year, data compiled by oil services company Baker Hughes Inc. show. Most of those rigs are meant for shale, Bloomberg Businessweek reports in its Nov. 18 issue. ... The shale boom has moved the U.S. closer to energy independence, added jobs, helped revive manufacturing, and lowered gas bills. Yet the conditions that fostered the U.S.’s success don’t exist in Europe and Asia. In some countries landowners don’t own the oil and gas in the ground: the state retains all mineral rights. Or a country may levy much heavier taxes than the U.S. on oil and gas profits. ... 'Within three to five years, there should be exponential growth in drilling as there was in the U.S.,' Edward Morse, head of commodities research at Citigroup Inc., said in an interview. 'The big problem isn’t replicating the geology, it’s replicating the critical ingredients that got the American shale revolution going.'"
Shale Revolution Spreads With Record Wells Outside U.S.: Energy
Bloomberg, 15 November 2013

"Norway's oil and gas output has been falling since 2004, but higher prices have lifted investment in the sector to record highs and activity is expected to expand next year. The association said it expected oil companies operating in Norway to increase investment to a record NOK224 billion ($36.32 billion) next year, from NOK219 billion this year, before stabilizing at a slightly lower level through 2018. 'It looks like we'll get a preliminary peak in 2014, and then it stabilizes around NOK200 billion a year,' through 2018, as measured in fixed 2013 kroner, said Mr. Martinsen. Record-high investment has been fueled by significant spending to boost output from some of the country's giant fields, known in the sector as 'elephants,' such as Ekofisk, Asgard, Gullfaks and Troll, the association said. 'Many of the elephants are now going through significant upgrades, which has contributed to drive investments higher,' Mr. Martinsen said. 'In a few years, we'll be finishing those projects. At the same time, new developments are coming up, but they won't fully compensate for the fall in investments in existing fields....The association expected several significant developments to come on stream in 2016 and 2017, including the NOK20 billion Edvard Grieg field, the NOK24 billion Martin Linge, the NOK24 billion Ivar Aasen and the NOK30 billion Aasta Hansteen field. But oil discoveries are smaller, more complicated and less accessible than they used to be, contributing to higher costs. The association forecast a 19% increase in costs over the five-year period through 2018, but said the rise in costs should slow as new rigs entered the market."
Norway's Oil Sector Expects Investment to Peak at Record Level Next Year
Wall St Journal, 14 November 2013

"Investment in Norway's vast oil sector will nearly halt next year, then fall in following years, ending a decade-long investment boom and putting more pressure on a slowing economy....'There's increased uncertainty about future projects because of high costs, constraints on oil firms' cash-flow and increasing global competition between projects for investment,' Swedbank First Securities economist Harald Magnus Andreassen said. 'Norwegian companies are losing their competitiveness worldwide.' 'Half of Norway's economic growth in 2011 and a third of it in 2012 came from rising oil investments, so after adding to growth, this will mean a substantial deduction,' Andreassen said. 'Two important pillars, the rise in oil investment and the increase in housing investments, have been weakened.' Record-high investment in the industry over the past several years has kept the sector operating close to capacity. That has put pressure on the cost of everything from people to rigs and equipment. An unexpected tax hike earlier this year further eroded confidence and prompted state-controlled Statoil to delay its $15.5 billion Johan Castberg project, its biggest Arctic project. 'Even though oil prices are expected to remain at current levels the next couple of years, the costs are a major challenge,' oil sector analyst Thina Saltvedt at Nordea said."
Norway faces big oil investment drop in 2015 after peak
Reuters, 14 November 2013

"Gas, electricity and water bills will continue to rise by more than inflation for another 17 years, public spending watchdogs have warned. The National Audit Office (NAO) blamed the price rises on the Government’s decision to load two-thirds of the £310bn cost of infrastructure projects needed to maintain energy and water supplies on to customers’ bills rather than fund them through taxation. It predicted that the average household energy bill will rise by 66 per cent – from £1,290 this year to £2,135 by 2030. Water bills will vary around the country but could jump by 80 per cent – from £388 this year to £698 in 2030. The NAO said the investment projects are needed but criticised the Government for not coming clean about the impact on bills. It expressed concern that the poorest families would not be able to cope with the rising cost of energy and water. Some 8 per cent of average household spending now goes on energy and water, but for those in the bottom 10 per cent of the income scale, the proportion is 15 per cent, said the NAO. Its strong criticism is embarrassing for ministers, who are embroiled in a war of words with the “big six” energy companies about their price rises. The report could undermine claims that the firms are profiteering and bolster the companies’ argument that the increases stem largely from government policy."
No rest until 2030: Energy and water bills will keep soaring for 17 years, public spending watchdogs warn
Independent, 13 November 2013

"One of the founding fathers of the North Sea oil industry has called for the creation of a tough new regulator able to strip operators of their licences to maximise production from Britain's remaining oil and gas reserves. Sir Ian Wood warned that unless a strong, new regulator forced companies to collaborate rather than compete against each other, four billion barrels of oil worth £200 billion to the economy over the next two decades would never be recovered..... With North Sea production having tumbled by 38 per cent in the past three years as the the mature basin enters its twilight years, Sir Ian called on the Government and industry to respond to the new challenges they face. Compared with the early 1990s, when 90 fields were in operation, the number of small and complex projects coming on stream has pushed up that number to more than 300. Costs have increased fivefold in the past decade, while ageing platforms spend more time offline for maintenance and production rates have tumbled."
North Sea operators 'must work together in national interest'
London Times, 12 November 2013, Print Edition, P48

"....the ethanol era has proven far more damaging to the environment than politicians promised and much worse than the government admits today. As farmers rushed to find new places to plant corn, they wiped out millions of acres of conservation land, destroyed habitat and polluted water supplies, an Associated Press investigation found. Five million acres of land set aside for conservation — more than Yellowstone, Everglades and Yosemite National Parks combined — have vanished on Obama’s watch. Landowners filled in wetlands. They plowed into pristine prairies, releasing carbon dioxide that had been locked in the soil. Sprayers pumped out billions of pounds of fertilizer, some of which seeped into drinking water, contaminated rivers and worsened the huge dead zone in the Gulf of Mexico where marine life can’t survive. The government’s predictions of the benefits have proven so inaccurate that independent scientists question whether it will ever achieve its central environmental goal: reducing greenhouse gases. That makes the hidden costs even more significant. “This is an ecological disaster,” said Craig Cox with the Environmental Working Group, a natural ally of the president that, like others, now finds itself at odds with the White House. But the Obama administration stands by its environmental policy, highlighting corn-based ethanols benefits to the farming industry rather than any negative impact. “We are committed to this industry because we understand its benefits,” said Agriculture Secretary Tom Vilsack, who spoke to ethanol lobbyists on Capitol Hill recently.... Historically, the overwhelmingly majority of corn in the United States has been turned into livestock feed. But in 2010, for the first time, fuel was the No. 1 use for corn in America. That was true in 2011 and 2012. Newly released Department of Agriculture data show, however, that this year, 45 percent of corn went to livestock feed and 43 percent went to fuel. The more corn that goes to ethanol, the more that needs to be planted to meet other demands. Scientists predicted that a major ethanol push would raise prices and encourage farmers to plow into conservation land."
Ethanol push takes toll on environment
Associated Press, 12 November 2013

"The International Energy Agency has sounded the alarm about a potential oil supply crunch and higher prices as key Gulf producers delay investment in the face of surging US shale output. In a strident warning against complacency in the oil market, the developed world’s energy body said key Gulf producers have been adopting a 'wait and see approach' to investment, because of the perception that the US shale revolution would produce an 'abundance of oil'. 'I am really worried that we are giving the wrong signals to the Middle East, which may end up with us not having investment in a timely manner,' said Fatih Birol, chief economist at the IEA..... The IEA still expects US oil output to reduce the world’s dependence on Middle Eastern oil in the near term: it now forecasts that the US will displace Saudi Arabia as the world’s biggest oil producer in 2015, two years earlier than it had estimated just 12 months ago. But it expects US light tight oil production, which includes shale, to peak in 2020 and decline thereafter, even as global demand continues to grow to 101m barrels a day by 2035, from about 90m b/d today. Outside the US, light tight oil production is only expected to contribute 1.5m b/d of supplies by 2035, as countries such as Russia and China make limited progress towards unlocking their shale reserves. That will leave the market once more dependent on crude from the Opec oil cartel, of which Gulf producers are key members. Saudi Arabia, the United Arab Emirates and Kuwait have already been producing at record levels this year, to make up for shortfalls from other Opec members from Libya to Nigeria. But the IEA expects domestic demand in the Middle East to hit 10m b/d by 2035 – equal to China’s current consumption – thanks to subsidies for petrol and electricity, even as foreign demand for Gulf oil increases. Mr Birol said the Gulf states needed to invest significantly now to meet rising demand after 2020, because projects take several years to begin producing. But he said he was concerned Gulf countries were misinterpreting the impact of rising US shale production. “When you look at projects in the Middle East, I do not see a great deal of appetite,” Mr Birol said. Gulf producers have taken a cautious approach to investment in recent years, in the face of fast growing US output. Saudi Arabia aims to maintain spare production capacity of 2.5m b/d, and it has invested heavily to begin production from the giant offshore Manifa field this year. But the world’s largest crude exporter expects to offset this by throttling back on production from other mature fields. Overall Saudi Arabia does not plan to increase its oil production capacity in the next 30 years, as new sources of supply, from US shale to Canadian oil sands, fill the demand gap. The UAE is reported to have pushed back its target for raising production capacity to 3.5m b/d from 2017 to 2020, while Kuwait is struggling to overcome rapid decline rates from its existing fields.  Tuesday’s report from the IEA also said India would replace China as the primary motor of oil demand growth after 2020."
International Energy Agency warns of future oil supply crunch
Financial Times, 12 November 2013

"Although the IEA expects the US to start exporting more of its gas in the next two decades, it said the high cost of shipping it overseas would mean that importers pay a higher price than domestic customers. Foreign companies in energy intensive industries have been investing heavily in US-based plants to take advantage of cheap energy costs. The IEA expects the US share of energy intensive exports to climb by 2035 in contrast to sharp declines in Japan and Europe. ..By 2035 the IEA expects Japanese and European gas and electricity prices to be twice as high as in the US. Although for gas prices that represents a narrowing of today’s gap, Mr Birol said the price differences would still be enough to entice US carmakers and other companies to bring plants back to the US."
Shale gas boom to fuel US lead over Europe and Asia for decades
Financial Times, 12 November 2013

"UK industry and manufacturing are being put at a serious competitive disadvantage by the low price of energy in rival nations, chiefly the US, according to a major report published on Tuesday. As much as 10% of Europe's market for energy-intensive industrial products, including iron and steel, glass and chemicals, could go to competitor nations within the next decade, it said. The finding has profound consequences for jobs, the economic recovery and climate change policies, and will send shockwaves through European industry. The International Energy Agency – regarded as the gold standard for energy data – warned that Europe, Japan and other nations were being outpaced by the US in competitive terms, because of the very low price of energy in America resulting from the shale gas boom there. In its annual World Energy Outlook, the organisation warned that the price differential was likely to endure for decades. Fatih Birol, chief economist at the IEA and one of the world's foremost analysts of energy, told the Guardian: 'Today, there is a substantial gap between the US and Europe in gas and electricity prices. This is a serious problem for Europe. It's even more serious because this differential in prices will remain for at least the next 20 years.' He predicted that energy intensive industries in the UK and Europe would suffer a 10% decline in their international market share. 'This will have huge costs in terms of employment, as there will be significant losses. There will be a knock-on effect on the whole economy.' Energy prices around the world have been transformed by the US push to exploit fracking for shale gas, the controversial form of gas extracted by blasting high-pressure water and chemicals at dense shale rocks. Only four years ago, according to the IEA, Europe's gas prices were roughly the same as those in the US. Now, they are three times higher. In Japan, prices are about five times higher. The result is that manufacturing and heavy industries in the US are finding their costs drastically reduced. As a result, many companies that abandoned the US for their manufacturing operations for nations with cheaper labour, such as China, are now returning to the US. A few days ago, and a decade after closing its last US manufacturing plant, Apple announced a new factory with 2,000 jobs making crystals to be used in iPads. Motorola is now making phones in the US, at a plant in Texas."
US's cheap energy pricing out UK industry
Guardian, 12 November 2013

"The US will become the world's biggest oil producer within two years but rising global supplies of shale and other unconventional oils will not reduce the need for OPEC's oil over the next two decades, the International Energy Agency said Tuesday. Non-OPEC oil production will rise to 52.9 million b/d in 2035, up from 49.4 million b/d in 2012, but down from a peak of 55.1 million b/d in 2025, the IEA said in its annual World Energy Outlook. During the period, supplies of unconventional non-OPEC oil such as light, tight oil from the US and Canadian oil sands, will swell to make up 12.3 million b/d of the total from 4.4 million b/d in 2012, the IEA said. US production of light, tight shale oil will help the country's output peak at 11.8 million b/d in 2025 before slipping to 10.9 million b/d by a decade later, according to the report. The United States moves steadily towards meeting all of its energy needs from domestic resources by 2035,' the IEA said in the report noting that US imported crude needs will almost disappear by 2035. Even by 2015, the US will likely overtake Saudi Arabia as the biggest oil producer in the world, the IEA said. 'On the assumption that Saudi Arabia reins back production levels in its capacity as the swing producer within OPEC, this means that the United States becomes the largest oil producer in the world (including crude, NGLs and unconventional oil) by 2015 and retains this status until the beginning of the 2030s,' the IEA said. Despite recent project delays, the IEA said Brazil's massive deepwater fields developments will triple the country's current crude oil output to 6 million b/d 2035, up from an estimate of 5.7 million b/d the year before. But global shale oil developments will struggle to replicate the success of the US and rising unconventional oil from non-OPEC producers will fail to reduce the world's dependence on OPEC oil, the IEA said. According to the IEA estimates, production of light, tight oil does not 'take off at scale' outside North America before 2035, but still reaches 5.9 million b/d by the mid-2020s. Meanwhile, OPEC's share of the global oil market will rise to 46% by 2035 when the producers' cartel will need to pump 45.2 million b/d, the IEA said. This compares to a market share of 43% in 2012 when OPEC pumped 37.6 million b/d and up from a low of 41% market share in 2020, the IEA said. 'The share of OPEC countries in global output rises again in the 2020s, as they remain the only large source of relatively low cost oil,' the IEA said. Saudi Arabia will continue to lead as OPEC's biggest producer, pumping 12.2 million b/d by 2035, the IEA said. But Iraq will make up the biggest single contribution to OPEC production growth, jumping from 3 million b/d in 2012 to almost 8 million b/d in 2035, the IEA said. Due to security setbacks and declining output from mature fields, OPEC's two North African members, Libya and Algeria, will, however, struggle to boost production capacity over the coming years unless they step up exploration, the IEA warned. The IEA also raised its estimate global oil demand in 2035, saying it now sees demand expanding by 14 million b/d to average 101 million b/d. In last year's report, the IEA estimated global oil demand in 2035 would be 99.7 million b/d. Soaring energy demand from China, India and the Middle East will continue to drive global energy use up by one third over the next two decades, the IEA said. As the US becomes increasingly self-sufficient in energy, energy trade will move away from the Atlantic basin to Asia, it said. As a result of rising demand, the world will need to produce a total 790 billion barrels of oil over the next two decades to meet expected demand with more than half of this volume needed just to compensate for output declines in existing fields, the IEA said. Crude prices will also rise to $128/barrel by 2035 helping to support the development of unconventional oil supplies, the IEA said. It said supplies of conventional crude during the period will drop to 65 million b/d. Under the IEA's central 'New Policy Scenario', the pace of oil demand growth slows steadily, however, from an average of 1 million b/d per year to 2020 to just 400,00 b/d thereafter, as high prices push efficiency gains and fuel switching, and the decline in OECD oil use accelerates. The IEA, which expects a drop of more than 40 million b/d in conventional crude output from existing fields between now and 2035, said its analysis of more than 1,600 fields showed that once production had peaked an average conventional field could expect to see an annual output decline of around 6%."
US-led shale boom no long-term threat for OPEC's oil - IEA
Platts, 12 November 2013

"The International Energy Agency says world markets are unprepared for when — and it's a when, not if, it asserts, — the Great American Shale Boom fizzles, The FT's Ajay Makan and Neil Hume report. In its latest World Energy Outlook released this morning, the IEA forecasts unconventional oil production will require $700 billion annually — basically about where we are now — to sustain current output levels. Even if the industry is able to do so, production will begin to slip in a decade regardless because of shale wells' high decline rates.   At that point lower-cost Middle East production will have to take over again. But those countries haven't been making the necessary investments to prepare for this outcome, the agency warns, meaning the rest of the world will be caught flat-footed. Here's what IEA chief economist Fatih Birol said in presenting the report this morning, per FT: '...key Gulf producers have been adopting a 'wait and see approach' to investment, because of the perception that the US shale revolution would produce an 'abundance of oil'. 'I am really worried that we are giving the wrong signals to the Middle East, which may end up with us not having investment in a timely manner,' [Birol] said. 'The wait and see behaviour is definitely not in the interest of consumers or global oil markets because it may mean significantly higher prices in the future.' .... analysts including Bernstein's Bob Brackett and MercBloc's Dan Dicker say the jig will be up sooner than later: production growth is already slowing in the U.S., while global demand will continue to climb. Here's what Brackett said this spring: In order to maintain current levels of overall production, marginal conventional production must be maintained with high oil prices. We expect marginal cost inflation will continue as well productivity declines, resulting in an oil price forecast that differs significantly from the forward curves. We forecast $96/bbl WTI for 2013, $101/bbl WTI for 2014, and longer term prices above $120/bbl and rising after 2017."
IEA: The World Is Totally Unprepared For When The Great American Shale Boom Fizzles
Business Insider, 12 November 2013

"When oil prices got high enough five or six years ago, it became profitable to drill and hydraulically fracture tight oil formations in North Dakota and Texas. What made fracking feasible was that oil prices in the last decade rose from $20 a barrel to circa $100 making the drilling of very expensive fracked wells with a very short productive lifetime feasible. From about 5 million b/d in 2007, U.S. domestic production has climbed by 2.5 million barrels a day (b/d) to 7.5 million this summer. For a time the oil industry had difficulties moving this oil to market as it was coming from regions without sufficient pipeline capacity so that a big glut of crude built up in the mid-West where the fracked oil came from. This glut drove down the value of domestic crude until at one point it was selling at $25 a barrel below world prices. While this oil was making its way to refineries in the mid-West, it was not getting to the Gulf or East Coast. We in the East were buying our crude at world prices which have been hanging around $100 a barrel for the last four or five years. Thus while the great fracked oil boom was helping consumers in the middle section of the country it was not doing much for the coasts where most of the people live. North Dakota where nearly a million of our 2.5 million b/d of fracked oil is coming from was, and still is, not deemed worthy of building expensive pipeline collection systems because of the rapid depletion of its wells. The solution to this dilemma turned out to be railways which America has in abundance. It took some time to build the terminals along rail lines, but once on board trains the oil could be directed to the highest bidder anywhere in the country. Movement of oil by rail costs some $5 a barrel than that moved by pipeline, but when it still costs less than imported oil it is going to be used. The next factor behind our cheaper gasoline prices is lower demand. Since the U.S. economy went south in 2008, demand for oil has been weak. While the average consumption of oil products in 2007 was 20.7 million b/d, by 2012 it was down to 18.5 million with an increasing share being exported. While some of this decline was due to more efficient cars and trucks, the bulk of it was simply less driving due to hard economic times. Our next factor is a little more complicated and has to do with what happens when oil is refined. To make the story short, when you refine crude, among other products, you end up with roughly two barrels gasoline for every barrel of distillates (diesel, heating oil, kerosene, etc.) that you produce. Now this is very nice when your demand for these products is equal to your consumption, but when they get out of balance you have to import or export to avoid shortages or gluts. Now Europe taxed itself into a lot of more efficient diesel cars years ago so European refiners had been ending up with large surpluses of gasoline which they were happy to sell to America where we really love the stuff. Currently Europe has a lot more energy problems than we do here in America. North Sea production has been dropping for decades; the economy is really bad so that oil consumption is down; refineries are closing; and to top it off Libyan oil production of 1.3 million b/d, most of which went to Europe, went down the tubes this summer amidst political chaos. The solution to this was for Europe and other Libyan customers to import diesel and other distillates from the U.S. which led to a rapid growth in U.S. exports of finished oil products. The U.S. of course was set up to refine more oil than we currently are using, but this summer our refineries hummed at record rates cranking out distillates for export. The problem was that for every barrel of diesel that we shipped out of the U.S., there were two barrels of gasoline left behind. The export statistics tell the story. In 2007 the U.S. exported 120,000 b/d of gasoline and 260,000 b/d of distillates. By the summer of 2013 gasoline exports had climbed to 380,000 b/d, but distillate exports were up to 1.4 million b/d. So there is the story of our “cheap” gasoline in a nutshell. We are refining some 1.4 million b/d of distillates for export and are ending up with 2.8 million b/d of extra gasoline as a result of which we can only export 380,000. Welcome to lower gasoline prices for as long as this imbalance lasts."
The Peak Oil Crisis: So, Why is Gasoline So Cheap?
Falls Church News Press, 12 November 2013

"Qatar is sweetening its gas sales pitch to lock-in long-term Asian buyers before a wave of new suppliers from the United States, Australia, and east Africa snatch market share and deflate prices. Up to now, importers like Japan and South Korea have had few major supply alternatives to the tiny Gulf state, whose liquefied natural gas exports represent about a third of global supply. But in a growing market for LNG, gas condensed for shipment to markets pipeline supplies do not reach, nearly 30 million tonnes a year (mtpa) of U.S. gas is already sold to Asia. Some 350 mtpa more will come on stream from the United States, Canada, east Africa, Russia and Australia in the years ahead - more than doubling worldwide output. Buyers in the Pacific have shunned Qatar's high asking prices, and China and India are also hesitating over plans to sign new long-term deals. Qatar now hopes to lure leading buyers back by offering cheap teaser deals lasting a few years, backed up by more strategic 20-year sales, sources familiar with the negotiations say.... Poor demand and oversupply has driven gas prices down in Europe while in South America's subsidised energy markets, a lack of creditworthy buyers makes direct 20-year deals risky. The United States, a market which much of Qatar's LNG production capacity was built to supply, has already become virtually self-sufficient thanks to a glut of shale gas, and will soon be competing with Qatar in the Asian market."
Qatar cuts gas prices to keep competition at bay
Reuters, 8 November 2013

"In the UK, dwindling North Sea reserves mean the country is increasingly reliant on imported gas. Some is delivered by pipeline from Europe, but the government wants to secure reliable supplies of liquefied natural gas (LNG) – gas that is cooled to very low temperatures and shipped here on super-tankers. The latest Centrica deal could provide enough to fulfil the needs of around 3million households, or 13 per cent of yearly residential demand. By 2035 LNG is expected to supply half of the UK’s gas needs."
Gas is a burning issue across our changing world
This Is Money, 8 November 2013

"Petrol prices are unlikely to fall significantly anytime soon based on the latest long-term projections for the global oil market released by the Organization of Petroleum Exporting Countries (Opec).  The group of 12 major producing nations estimates that meeting increases in world oil demand through to 2035 will require $7.5 trillion (£4.6 trillion) worth of investment into building new infrastructure such as production plants, refineries and pipelines. Opec, which accounts for a third of the world’s oil supply, says it will now have to pump 2.6 million barrels a day (b/d) more crude than it had originally anticipated by 2035, bringing its total long-term production estimate to 37 million b/d. Opec said that total world oil demand will grow by 20 million b/d to 108 million b/d by 2035, which is an upward revision on it previous forecast. Total global demand for energy will increase by 52pc over the same period, according to the report. .... The upgrades in long-term oil demand presented in Opec’s 2013 World Oil Outlook – the first since the group started publishing its forecasts - are largely being driven by rapid economic growth from Asia. Car ownership in China and emerging Asian economies is cited by Opec as a major factor behind its new outlook for world oil demand. The number of passenger cars in China is expected to increase by 380 million vehicles by 2035, which is equal to 320 cars per 1,000 people in the country. 'A major reassessment has been undertaken for the prospects for car ownership in China,' said Opec in an extract from the 346-page report. 'Earlier projections emphasized the constraints to growth, in particular through congestion and the inability of infrastructure to keep pace with the strong growth in vehicle sales. This report revisits that assumption, and leads to considerably higher vehicle stock growth than previously thought.' Opec estimates there will be more cars on the roads in developing countries than in the whole of the Organisation for Economic Co-operation and Development, with 64pc of this increase coming from Asia. This significant growth in demand is expected to result in oil trading at a nominal $160 a barrel average by 2035."
Opec says $7.5 trillion investment needed in energy
Telegraph, 7 November 2013

"David Cameron was wrong to raise the public's hopes that fracking could lead to a significant fall in energy bills, one of the UK's leading experts in the field has warned. Professor Jim Watson, research director at the UK Energy Research Centre and professor of energy policy at the University of Sussex, said: 'Don't expect the kind of prices the US has got any time soon.' He said he was 'tired of advocates saying it's going to transform our economy tomorrow', based on 'inappropriately used' comparisons with fracking in the US. ... In August Mr Cameron argued that failing to back fracking would mean missing 'a massive opportunity to help families with their bills and make our country more competitive'. But Prof Watson said: 'Certainly speculation that we could have US prices is a bit premature at the moment. 'The Prime Minister offered his own view that potentially this revolution could make our country competitive and so on. My own view is that we should wait and see.' He added: 'I really do get a bit tired of advocates saying it's going to transform our economy tomorrow and of some rather poor rhetoric coming out of some of the opposition groups as well.' He said more test drilling was needed in the UK so that extraction costs could be better estimated but said the level of public opposition to fracking was likely to make this difficult. Even if we produced cheap gas in the UK it would be sold into a market connected to the continent, meaning 'there's no guarantee' it would reduce UK power bills. Prof Watson said gas will continue to have a 'central role' in meeting UK power demand. But he said under Chancellor George Osborne's world view it could meet around 45 per cent of demand, while under Energy Secretary Ed Davey's view it might only contribute 10 per cent. 'Within our coalition government at the moment, they are trying to run two energy policies at the same time,' he said. 'As an analyst of policy, it's absolutely fascinating on one level and extremely frustrating on another."
David Cameron was wrong to raise public's hopes on fracking, says energy expert
Telegraph, 7 November 2013

"China's first coal-to-gas (CTG) project will soon start pumping gas to capital city Beijing to help meet winter heating demand, coming online after a one-year delay due to an unfinished pipeline, said an industry official involved on the project. China is spending $14 billion on projects to turn coal in remote regions into natural gas, a costly bet that could help meet the country's surging demand for the fuel.... The Datang plant, costing a total of around 25.7 billion yuan ($4.22 billion) according to state media Xinhua, is the first of four CTG pilot projects Beijing has approved that are expected to supply 15 bcm of natural gas a year by 2015, around 7 percent of China's gas demand expected for that year. The Chinese government has over the past few weeks called for boosting gas supplies, including from new suppliers like Datang, as demand for the fuel rose faster than expected. Beijing is expected to see gas use hit a record 80 million cubic metres per day during the peak heating period in the coming winter months, the government said."
China's first coal-to-gas plant soon to pump gas to Beijing
Reuters, 7 November 2013

"Regulators have found no evidence of price manipulation in the UK wholesale gas market after an investigation. Energy regulator Ofgem and the Financial Conduct Authority (FCA) began an investigation a year ago, following allegations by a whistleblower. 'No evidence of the alleged market manipulation could be found [and] the interests of consumers have not been harmed,' the regulators said. The finding comes amid concern over the rising cost of gas for consumers. In recent hearings at the Energy Select Committee, energy company bosses have blamed rising wholesale gas prices for recent increases in energy bills. Four of the UK's six main energy companies have recently announced price rises, with an average increase of 9.1%, and the other two are expected to follow suit soon. The firms say the rises are largely due to increasing wholesale prices. Ofgem says wholesale costs have risen 1.7% over the last year, but the wholesale price of gas for use this winter has risen by 8% compared with last winter. About 46% of the average dual fuel bill is made up of wholesale energy costs, according to Ofgem.... Ofgem said the traders concerned had given 'credible' explanations to 'demonstrate that their trading activity was not improper'. Ed Davey said Ofgem and the FCA had conducted a 'rigorous review', but still pledged to introduce criminal sanctions for energy market manipulation."
UK firms cleared of gas price manipulation
BBC Online, 7 November 2013

"Centrica has secured nearly five years' worth of liquefied natural gas supply for Britain, after sealing a £4.4bn deal with Qatar. Centrica, one of Britain's 'Big Six', revealed that the major LNG supply agreement meets approximately 13% of the UK annual residential gas demand. Furthermore, the four and a half year agreement with Qatar equates to Centrica purchasing up to 3 million tonnes of LNG annually. The Big Six account for 99% of the UK's energy sector. Each company has blamed rising import costs and market prices for an average 11.1% hike in household energy bills.  Centrica said it will raise its household charges for electricity and gas by an average of 9.2% from November. Meanwhile, its subsidiary British Gas said its electricity and gas prices will rise by 10.4% and 8.4% respectively, from 23 November."
Centrica Seals £4.4bn Gas Deal with Qatar
International Business Times, 6 November 2014

"Brazilian oil production climbed 8.9% year-on-year in September amid continued growth in the pre-salt sector, according to national hydrocarbons regulator ANP."
Brazilian oil output surges on pre-salt peak
Business News Americas, 6 November 2013

"A bid to renationalise the electricity grid in the German capital Berlin has narrowly failed in a referendum. The measure was backed by 24% of those eligible to vote, but a quorum of 25% was needed for it to pass. It had been supported by green groups, who believe the current provider relies too much on coal. Opponents said it would burden Berlin with debt. In a referendum last month, Hamburg, Germany's second biggest city, voted to buy back its energy grid. In Berlin's referendum, 80% of those who voted supported the measure, but a 'yes' vote required at least 25% of eligible voters to cast ballots and that figure fell just short. The wording had called for Berlin to set up a public enterprise to trade in electricity from green sources and sell it to residents. Voters were also asked to decide whether the city government should open the way for the grid to be taken back into public ownership. There has been disappointment in Germany that privatisation of the energy grid has not always led to the hoped-for falls in prices and improvements in quality. The switch from nuclear to solar and wind power has also led to a steep rise in electricity costs. But the authorities in Berlin - which is already 60bn euros (£50bn; $80bn) in debt - said the city could not afford to renationalise the grid."
Berlin energy grid nationalisation fails in referendum
BBC Online, 4 November 2013

"A production ramp-up at Gazprom Neft and Surgutneftegas brought Russia's oil output, the world's largest, to a new post-Soviet record high of 10.59 million barrels per day (bpd) in October, Energy Ministry data showed on Saturday. This was up 0.6 percent from 10.53 million bpd pumped in September. In tonnes, Russia's crude production was 44.77 million last month. That's above 10 million bpd produced last month by Saudi Arabia, the world's top oil exporter. But, according to the International Energy Agency, the West's energy watchdog, the United States will next year overtake Russia as the world's top oil producer thanks to hard-to-recover crude production boom. Russia is aiming to produce at least 10 million bpd this decade and has introduced some tax relieves for the 'tight oil' output, seen as the next source of oil output growth as deposits in West Siberia, the hinterland of the country's crude production, are becoming increasingly depleted. Oil and gas production are a cornerstone of energy-dependent Russian economy and accounts for over a half of state's budged revenues."
Gazprom Neft, Surgut send Russian oil output to post-Soviet peak
Reuters, 3 November 2013

"The price oil sands producers received fell back to more than $37 a barrel below US benchmark crude this week, dropping to lows last seen in January. The deepening discount paid for Western Canada Select – a blend of heavy oil sands crude and conventional oil – comes on top of a slide in West Texas Intermediate (WTI).... The US is Canada's sole customer for crude and the glut in the US has turned Canada into a price taker as pipeline projects suffer years of delays, denying domestic producers access to lucrative growing markets in Asia."
GLUT: Oil sands crude drops below $60 a barrel, 1 November 2013

"Bryan Sheffield, a third-generation oil wildcatter in Texas’ Permian Basin, knows what he’ll do if crude drops to $80 a barrel: shut down half his drilling rigs and go on a takeover hunt for weaker rivals. He’s among producers who have invested $150 billion in the Permian since 2010, seeking a piece of a shale-oil trove estimated to be valued at as much as $5 trillion. As the money pours in, risks of a bust are mounting; some analysts forecast that crude is heading down to $70 a barrel next year.... Energy producers on average need oil prices of about $96 a barrel to break even on wells drilled in Permian layers known as the Cline Shale and Mississippi Lime, says Mike Kelly, an analyst at Global Hunter Securities. Other areas of the Permian need a price of just $70 to $74. That compares with average break-even prices of about $78 a barrel in the Eagle Ford Shale a few hundred miles east of the Permian and $84 in the Bakken of North Dakota. The benchmark U.S. crude, West Texas Intermediate, dipped 4.8 percent in October, touching a four-month low of $95.95 a barrel on Oct. 24 as rising U.S. production bloated stockpiles. Brent crude, the benchmark for two-thirds of the world’s oil, is averaging $108.59 this year and probably will fall to the $70-to-$80 range, say Fadel Gheit, an analyst at Oppenheimer (OPY), and Marshall Adkins of Raymond James & Associates. Sheffield started Parsley Energy with drilling leases he bought during the oil crash of 2008, and he’s focusing on traditional vertical wells in shallower Permian fields. He estimates he’ll spend about $8 million on the company’s first horizontal well to tap one of the shale layers later this year. Oil at $80 would mean he drills only the prospects most likely to deliver the biggest, fastest gushers. The most efficient operators can manage on lower prices, so if oil falls an additional $20, it will quickly weed out the higher-cost producers."
A Texas Oil Bubble Could Pop Due to Low Prices
Bloomberg, 31 October 2013

"Oil industry shareholders concerned about poor returns and costly projects urged executives from Big Oil this week to return cash to shareholders - and at least one of the world's top five petroleum companies fully acquiesced. As they posted third-quarter results, the leading oil companies vowed to control spending and to put cash in the pockets of investors through asset sales, share buybacks or dividends while analysts grumbled about lagging stock prices..... The other companies - Exxon Mobil Corp, Chevron Corp , Royal Dutch Shell Plc and Total SA - acknowledged spending heavily to prevent output from falling but stopped short of major changes.... Spurred on by historically high oil prices in the past few years, integrated oil companies have increased exploration work in areas once deemed too risky. France's Total, which embarked on a so-called high-risk, high-reward exploration strategy to find massive fields in areas such as the southern African seas, conceded last month it would start what CEO Christophe de Margerie called a "soft landing" in capital expenditure."
Big Oil faces pressure from shareholders over costs
Reuters, 31 October 2013

"The U-S.-led shale boom will have a lasting impact on global energy prices and push crude oil prices down to $80 a barrel, according to an analysis by Germany's BND intelligence agency obtained by Reuters on Thursday. The BND said the U.S. shale boom would have a greater impact on global markets than it predicted in a previous analysis earlier this year. 'The effects from the unconventional production of oil and natural gas in the United States will be pronounced over the next 10 to 20 years,' the report said. It added that it now expects global oil prices to sink substantially, which will cause considerable problems for gas and oil producers such as Russia and Libya and trigger changes in the Middle East. The report said such changes would cause the biggest risks for Iran, Libya, Venezuela and Yemen, because the governments in these producer countries were banking on high prices. It said it is possible crude oil prices will fall lastingly to about $80 per barrel. A Reuters survey published on Wednesday found Brent crude will average $95 a barrel over the course of 2020, a drop of $20 from the estimate in a similar poll a year ago even though spot oil prices have changed little since then. Assuming an inflation rate of 2.5 percent per annum, that would mean Brent would cost only $80 in 2020 in real terms, or in today's money, down from $109 a barrel now. Oil-importing nations have become accustomed to crude prices over $100 a barrel, with 2013 set to record a third year in succession of average prices near $110 a barrel for the Brent benchmark. More than half of those polled in the Reuters survey of 20 consultants, banks and energy analysts said they expected rising supplies and fuel efficiency gains by consumers to push oil below $100 a barrel."
German BND spy agency sees shale depressing oil prices for decades
Reuters, 31 October 2013

"OGX, the Brazilian oil and gas company controlled by the billionaire Eike Batista, has filed for bankruptcy protection in a Rio de Janeiro court. The move came after OGX said long-running talks with creditors to restructure some of its $5.1bn (£3.2bn) debt failed on Tuesday. The company has struggled with large debt and a crisis in investor confidence."
Brazil's Batista oil firm OGX in bankruptcy
BBC Online, 30 October 2013

"The uranium market shows no signs of a looming shortage. Quite the opposite. Prices dwell near record lows while nuclear producers are in no rush to secure future supply. But a scarcity of the green metal is on the way, many analysts say. That realization hasn’t yet dawned on investors. And until it does, uranium stocks will remain cheap. 'We forecast a fairly large global uranium shortfall towards the end of this decade,' said David Sadowski, an analyst at Raymond James. 'So there’s a ‘buy’ recommendation on the space.' For many investors, Cameco Corp. is the uranium sector. It’s by far the largest North American producer, accounting for 14 per cent of global supply last year. Cameco beat expectations with a third-quarter earnings spike, announced on Wednesday. The stock rose by almost 5 per cent as a result. But the pleasant surprise says nothing about a possible rebound in uranium prices, which depends largely on Japan restarting its idle reactors. The uranium market really misses Japan. Since the country suspended its nuclear program in the aftermath of the 2011 Fukushima disaster, spot prices for the metal have plunged more than 50 per cent and now sit at about $35 (U.S.) a pound. Prior to the Fukushima meltdown, Japan was the world’s third-largest producer of nuclear power. A big chunk of global demand for uranium disappeared when the country shuttered its 50 nuclear reactors. But Japan continued to honour its uranium contracts, which has resulted in an enormous stockpile of around 100 million pounds, Mr. Sadowski said. 'Because of that overhang in Japan, many buyers have backed away from the market, thinking that supply could get dumped,' he said.... 'We need prices to get to at least $70 or $75 to incentivize new mines to be constructed,' Mr. Sadowski said. 'It’s just a matter of time before prices get to those levels and current valuations are not suggesting the price will get there.' At 19 times earnings, the valuation on Cameco, which attracts by far the bulk of investor attention, is not as discounted as some of its peers. But the stock is still cheap by historical standards and is certainly not valued for a full rebound in uranium prices."
The (nearly) inevitable rise of the uranium sector
Globe and Mail (Canada), 30 October 2013

"... not only is fracked oil very expensive, requiring circa $80 a barrel to cover the costs of extraction, but ... production from fracked oil wells drops off quickly so that new wells have to be drilled constantly to maintain production. Until recently information about just how fast our fracked oil wells were depleting was rather hard to come by, so that the hype about the US becoming energy independent and a major oil exporter became conventional wisdom for most. Last week the US’s Energy Information Administration issued the first in a new series entitled Drilling Productivity Report- For key tight oil and shale gas regions. This report analyzes the six onshore oil and gas regions in the U.S. where 90 percent of the growth in oil production and nearly all of the growth in natural gas production has taken place in the last few years. The report tallies the number of drilling rigs at work in these six regions; the amount of new oil and gas they are bringing into production each month; and most importantly the rate at which production from those wells already in production is falling......In looking at the steep decline in production from legacy wells in the Bakken and Eagle Ford shales, decline between November 2012 and November 2013 increased from 44,000 b/d to 60,000 b/d and from 54,000 b/d to 78,000 b/d respectively. Given that there will be another 4,000 or so legacy wells in production by this time next year the decline going on by this time next year is certain to be considerably greater. While the EIA does not seem willing to make a forecast, it sure looks as if the increase in production for these two fields will be unlikely to keep up with the rate of decline within the next 12 to 18 months and that US shale oil production will no longer be growing. While it is possible that a surge of investment will increase the drilling to keep up with declines in production from the older wells, this is expensive, and for now it looks as if oil prices are heading for a level where fracked oil production is not profitable. Outside geologists with access to proprietary data on decline rates have been forecasting for some time now that as the number wells increases and their quality declines, the shale boom will be coming to an end in the next two years. The release of EIA data seems to confirm these predictions."
The Peak Oil Crisis: The Shale Oil Bubble
Falls Church News-Press, 29 October 2013

"Libya's oil exports have dropped to less than 10 percent of capacity as protests have halted operations at western ports and fields, frustrating government efforts to end a three-month stranglehold on the industry. The OPEC producer's crude oil exports have fallen to around 90,000 barrels per day, according to Reuters calculations, as Libyan and market sources said crude exports from the Zawiya and Mellitah oil terminals had been suspended. The government had been relying on relatively stable revenue from its western ports in recent weeks, while it has struggled to reach a deal with protesters blocking its big eastern facilities, with some demanding a greater share of the oil wealth. Libya had brought exports back to around 450,000 bpd over the last month, although that level was still far short of its pre-war export capacity of around 1.25 million bpd. But the new shutdowns, which began over the weekend, have extended the worst disruption in Libya's oil industry since the 2011 civil war."
Libya's oil exports down to trickle as unrest picks up
Reuters, 28 October 2013

"Profits made by energy firms on household bills have more than doubled in a year, damning new figures reveal. As the Big Six companies drive through price hikes of up to 10 per cent, it also emerged that the costs to them of buying gas and electricity has remained almost unchanged since autumn 2012. Increases in what energy companies pay for gas and electricity have added just £10 to household bills, but profit margins added £50 in a year....The firms have variously blamed rising wholesale prices, bills for upgrading gas mains and electricity cables and extra green levies imposed by the government. But official figures released by energy regulator Ofgem reveal company profits have doubled in a year. Mr Cameron said last week: ‘I think it is wrong for bills to go up when wholesale prices are not going up substantially, but we have to look at the causes of why bills are going up and act on those causes rather than just have some sort of blanket policy that doesn't work.’ Ofgem analysis shows that the average bill stood at £1,320 this month, up £70 or 5.6 per cent on the same month last year. Wholesale energy costs – which make up the singled biggest part of the bill - have barely changed, up just 1.67 per cent or £10 in a year. VAT, operating and other costs make up £1,255 of the bill, up £40 or 3.29 per cent. However the biggest increase is the average net profit margin made on bills, up 111 per cent from £45 in 2012 to £95 now."
Profits for energy firms DOUBLE in a year adding £50 to every family's bill while wholesale prices barely change
Mail, 28 October 2013

"Iraq's oil exports hit a 19-month low in September, oil ministry spokesman Assem Jihad said on Sunday, attributing the decline to maintenance and improvement projects at the country's ports. Iraq exported 62.1 million barrels of oil in September, or about 2.07 million barrels per day (bpd), Jihad said -- the lowest daily average since February 2012. The country earned $6.511 billion from the exports, its lowest monthly figure in over a year. Sales of crude, which account for the vast majority of Iraq's government income, had averaged 2.579 million bpd in August and raised revenues of $8.3 billion. Jihad said the September decline was due to 'periodic maintenance activities for the southern ports and projects' to add new floating oil storage facilities and increase the ports' export capacities. Iraq is heavily dependent on oil exports, and the government is seeking to dramatically ramp up its sales in the coming years to fund the reconstruction of its battered infrastructure."
Iraq oil exports plunge to 19-month low
Agence France Presse, 27 October 2013

"Ultimately, the real economy is an energy equation. The economy began when the discovery of agriculture freed up a small proportion of the population for non-subsistence tasks. It took a huge step forward when the invention of the heat-engine enabled us to use fossil fuels to apply vast leverage to the very limited capabilities of human labour. Energy is vital, not just for warmth, cooking and transport, but for every other economic essential as well. Modern agriculture is hugely energy-dependent. Without abundant energy, we could not possibly extract one tonne of copper from 500 tonnes of rock. Hydrocarbons provide plastics as well as a gamut of chemical products. And so on. But accessing energy comes at a price, and that price is the energy that is consumed in the access process. Picture, for instance, a gas well, an oil platform, a pipeline or a refinery, and you will appreciate the scale of the materials (such as steel) and the work (both mechanical and human) that the energy-delivering infrastructure embodies. What really matters to the economy is net energy – the relationship between the energy that we access and the energy consumed in the process. In earlier times, this relationship was hugely positive. Using rudimentary wellhead equipment to access billions of barrels of energy in the sands of Arabia delivered at least 100 units of energy for each unit invested in the infrastructure. Today, those abundant, low-cost energy supplies are being replaced by resources which are ever more energy-costly to produce. The critical measure here is EROEI (the Energy Return On Energy Invested). The days of 100:1 energy returns are long gone. The ratio for new oil projects has declined from 30:1 to barely 10:1 since the 1970s. For global energy overall, the EROEI has declined from about 37:1 in 1990 to less than 14:1 now. The flip-side of EROEI is the real cost of energy. The cost ratio at an EROEI of 37:1 in 1990 was 2.6 per cent, but this has risen to 6.8 per cent today. The global EROEI may fall to 10:1 by 2020, increasing the energy cost 'levy' on the economy to 9 per cent. In blithe ignorance of this increasing levy, we have continued to grow the claims value of the financial system on the assumption of perpetual growth. These 'excess claims' show up as unsustainable debt, undeliverable welfare commitments, and unrealisable expectations for returns on investment. My calculations suggest that the system now owes $90 trillion (£55 trillion) more than it can deliver. For individuals, this is being manifested in the escalating real costs of fuel, power, food, water and physical infrastructure. Globally, it is visible in 'energy sprawl', as the energy-delivering infrastructure expands (both in scale and in cost) in response to the weakening in efficiency resulting from a deteriorating EROEI. As well as crimping disposable incomes and destroying returns on investment, this process is curbing our ability to invest in other things. The essential point is that the economy is not a monetary system governed by the theoretical 'laws' of economics, but an energy dynamic determined by the all-too-real laws of thermodynamics. Once we understand this, the squeeze on household prosperity becomes far less of a mystery."
The global economy sinks under its debts as the real cost of energy rises
City.AM, 24 October 2013

"A large majority of consumers oppose green levies on household energy bills and support the Prime Minister's plans to 'roll them back', according to a new poll. The survey found that 60% said they are against the green taxes which add an average £112 to annual bills, compared to 18% who supported them. Some 61% said they would support the repeal of some of the levies, against 11% who would not. Of the 1,000 people questioned, 40% prefer David Cameron's approach to the issue, 33% support Labour leader Ed Miliband, who is promising a price freeze and 7% back Liberal Democrat Deputy Prime Minister Nick Clegg, who has indicated he will fight to protect the green taxes. Some 35% said Mr Miliband's plan for a 20-month freeze on prices following the 2015 general election would help keep the cost of bills down, but 54% said that energy companies would get round it by raising prices before or after the freeze period. The Survation poll for the Mail on Sunday revealed almost three-quarters (72%) believe energy prices will affect the way they vote in the general election. It found more people blame the energy companies (59%) than either the current government (15%) or the previous Labour administration (15%) for the spiralling cost of gas and electricity. The survey came as energy minister Greg Barker promised to 'come down like a ton of bricks' on energy firms which are stockpiling cash from customers' direct debits. Unless customers ask for the money back, energy companies are able to hold on to sums from monthly payments in excess of the amount owed for power used, and are able to earn interest on the money while it is sitting in their accounts. Industry observers believe the total held could be as high as £2bn."
Energy Poll: Majority Oppose Green Levies
Sky, 27 October 2013

"Companies such as Scottish Power will argue that currently they are making losses in both retail supply and wholesale power generation. But that is unusual. When companies are making massive profits in power generation they always say it is illegal for them to cross-subsidise their retail side, but the fact is they can choose where to take losses. It is also worth remembering that Centrica, the owner of British Gas, spent £500m buying back its own shares earlier this year to boost shareholder returns. The big six claim the 5% margin they earn in retail is very low. However, this figure is in line with the big supermarkets. In Northern Ireland, where prices are capped, suppliers make just 2% profit.Small retailers say it is hard to build market share – partly, they say, because the big six have the wholesale power market sewn up. Miliband is right to pledge an end to "vertical integration"."
Five questions that the big six energy firms must answer
Observer, 27 October 2013

"A £400 million natural gas storage project at Islandmagee has been given a major boost by the European Union this week. The proposed facility, which involves the creation of underground caverns to store up to two month’s worth of Northern Ireland’s total gas requirement, has received ‘Project of Common Interest’ (PCI) status by the European Commission and is now included on a Europe-wide list of the most important energy projects. PCI designation means the scheme has been recognised by the European authorities as bringing benefits not only to the member state in which it is located, but to a much wider area and is important at a European level."
EU boost for gas storage project
Larne Times, 27 October 2013

"Opponents of fracking are putting British jobs at risk and failing to take advantage of a fuel source that could power the country’s gas needs for four years, the chief executive of the shale gas explorer Dart Energy warned. John McGoldrick, who last week secured the backing of French energy giant GDF Suez in a £24m deal, said he hoped to begin drilling for shale in early 2015. The company believes there could be 110 trillion cubic feet (tcf) of shale gas within its licence areas, with 60 tcf in the 13 blocks in which GDF has taken a 25pc stake. These span an area of 500 square miles, from Wrexham to York. If only 10pc could be recovered, it would be equivalent to almost four years’ worth of UK gas consumption. Mr McGoldrick said its impact could be “transformational”. Shale gas has the potential not only to ease rising domestic fuel bills but also to help supply crucial chemical feedstocks to struggling industrial plants such as Ineos’s refinery and petrochemicals plant at Grangemouth, he argued."
Shale energy 'could supply UK’s gas needs for four years and save jobs’
Telegraph, 26 October 2013

"The number of people falling behind with their energy bills in the South West has shot up four-fold this year as consumers feel the effects of 'crippling' fuel price hikes. New research shows the number in arrears to electricity providers is up from 2% to 8% in seven months. The surge comes as fuel poverty campaigners urge Prime Minister David Cameron to act to avert a 'national crisis' of cold homes. A separate report by the fuel poverty alliance Energy Bill Revolution placed the UK second only to former Soviet state Estonia among European nations for the number of people in debt to suppliers. Age UK, a member of the alliance, said the elderly bore the brunt of the ever-increasing cost of heating."
Huge increase in people behind with energy bill after 'crippling' price rises
North Devon Journal, 26 October 2013

"Researchers at Singapore's Nanyang Technological University (NTU) have been working on ways to make towns and cities more sustainable by taking waste from housing and turning it into energy. The team created a new type of toilet system which turns human waste into biogas - which can be used for cooking and generating electricity - and biodiesel."
The toilet system turning human waste into energy
BBC Online, 25 October 2013

"Development of potential offshore natural gas sources in the eastern Mediterranean Sea’s Levant basin could potentially increase global supplies significantly, but it probably won’t occur for some time, an Istanbul-based consultant suggested. Countries in the region will need to resolve their conflicts first, and Israel will definitely need to be involved because of the supplies’ location, Zeynep Derdi, managing director of APCO Worldwide’s Istanbul office, said on Oct. 24. “It’s not enough to simply have gas,” she told an audience at Johns Hopkins University’s School for Advanced International Studies. 'It has to be economical to get out of the ground. A $10/MMbtu price would make it feasible to produce gas in Israel and Cyprus.' Israel, Cyprus, and Greece have started calling themselves 'the energy triangle,' but transportation issues need to be resolved, Derdi said. 'Turkey has a huge say about what happens in the eastern Mediterranean because there are so many Turks in Cyprus,' she noted, adding, 'I don’t think it will do anything unless more countries become involved.' That probably won’t happen until Turkish-Israeli relations improve and international water boundary disputes are resolved, she added. 'I’m a bit skeptical we’re going to have development very soon,' she said. 'We should get together and discuss these issues first.' Derdi said Noble Energy Inc. reduced its potential resource estimate on Oct. 3 after completing a production test of its A2 appraisal well on Block 12 offshore Cyprus (OGJ Online, Oct. 4, 2013). The island nation may have to delay its gas export plans, she said. Proposed pipelines through the area will face increasing competition from LNG, particularly since tankers will be capable of turning their cargos back into gas onboard and not require large regasification facilities onshore, Derdi said. 'Europe clearly would be the best customer for eastern Mediterranean gas, but it could be sold to Asia as well with shipments through the Suez Canal,' she said. 'Perhaps Europe could help finance an undersea pipeline. That could help Turkey move matters along.'"
Eastern Mediterranean offshore gas production not imminent, expert says
Oil & Gas Journal, 25 October 2013

"Economists say the United States is in the process of passing Russia and Saudi Arabia to become the world’s largest oil producer. This means less dependence on oil imports, stronger economic growth, and more latitude in dealing with political problems with Saudi Arabia and the rest of the Middle East. The growing use of advanced oil extraction techniques like 'fracking' is boosting U.S. oil production sharply, according to the American Petroleum Institute’s Chief Economist John Felmy. He says experts are still toting up production figures, but the United States is either the world’s largest oil producer or soon will be. Felmy says the increase in domestic oil and gas production has sharply cut the proportion of U.S. oil demand that must be met by imports. 'Thirty five to 40 percent net basis, so that is a significant decline from 60 percent,' he said. The president of Strategic Energy & Economic Research, Michael Lynch, says rising oil supplies put downward pressure on oil prices, boosting U.S. economic growth. 'Consumers would have more money in their pockets after paying for gasoline and other things, inflation should be lower, also the cost of electricity, natural gas, plastics and transportation all go down,' he said. Worry about the supply and price of oil is one reason the United States dispatched more than half a million troops to fight in the first Gulf War in 1990 when Iraq seized Kuwait right next to Saudi Arabia. Analyst Simon Henderson of the Washington Institute for Near East Policy says fewer concerns about oil will make it harder for U.S. officials to persuade voters to pay the high costs of military actions to help Saudi Arabia in the future. 'We have to pay attention to the Middle East because of its impact on the world oil market and on energy here in the United States becomes a weaker argument,' he said. 'And people out in Minnesota, or wherever, are going to say ‘why are we bothered?’ about Saudi Arabia.' Henderson says Saudis are already complaining that Washington is ‘tone deaf” to Saudi concerns about rival Iran’s growing strength and unwilling to take strong action to end the civil war in Syria. In the past, the Saudis helped Washington when they restrained rising oil prices by increasing their oil production. Henderson says fraying relations with Washington could make them less willing to continue such actions. But an analyst at the Institute for the Analysis of Global Security, Anne Korin, says oil prices have gone up several fold in recent years, in spite of Saudi actions. 'The common interest that U.S. policy makers have perceived to have had with Saudi Arabia is of course, keeping the price of oil at bay (from soaring),' he said. 'I think that has been a completely hallucinatory [untrue] perception.' She says Saudi leaders are likely to keep oil prices high in the future because they need more revenue. Korin says Saudi leaders were shaken by Arab spring revolts in other nations and greatly increased social spending in the hope of defusing discontent that might threaten their grip on power.  But growing U.S. oil production is likely to reduce Saudi influence on how much Americans pay to fill up their gas tanks."
Rising US Oil Production May Cut Saudi Influence In Washington
VOA News, 25 October 2013

"Southeast Europe is hoping increased natural gas exploration in the Black Sea will help cut its dependency on Russian supplies, but a gas bonanza remains elusive and Moscow is taking steps to defend its dominant position in the region. Despite previous efforts, the Black Sea has so far not produced much gas because deep water and tough geology have required costly high-tech equipment. But advances in technology and an improved business climate have helped fuel optimism in a region that has disappointed exploration firms in the past. 'More companies are getting more of an appetite for offshore drilling and they think that they, unlike those who tried previously, have a real shot at it,' said Alex Jackson, a political risk analyst at London-based Menas Associates.... uncertainty about the extent of potential recoverable reserves remains and many estimates are unconfirmed. Advanced technology, such as seismic modelling, would help but many countries have not invested much in that yet, making it difficult to gauge the potential of the area. Ukrainian Energy Minister Eduard Stavytsky has said the country could in future tap at least 5 bcm from shallow shelf areas in the Black Sea. However, Ukraine would need to invest up to $10 billion a year over the next three to five years to be able to start exploration and extraction at a significant level, said Alexey Volostnov, business development director at consultancy Frost & Sullivan in Russia. Other challenges to Black Sea exploration include a lack of infrastructure, high investment risk as only one in five wells might prove successful, and difficult access via the Bosporus Straits, said OMV, which has two projects in Black Sea waters. Unless there is a major discovery which allows one of the countries to become a net gas exporter, it is likely that any gas production would be consumed locally, analysts said. Much more investment in transport infrastructure would be needed to enable exports to western Europe. If gas supplies are eventually exported, they could face other problems beyond Russian efforts to defend its market dominance - direct competition with supplies from the eastern Mediterranean. Huge offshore gas discoveries in the eastern Mediterranean Levant Basin mean that the region could begin exporting gas to Europe by the end of this decade. Recoverable gas in the Levant Basin, which lies largely in Cypriot and Israeli waters, hold some 3.5 trillion cubic metres of gas, the U.S. Geological Survey has estimated. That would meet all of Europe's gas demand for seven years and could mean exports of as much as 2 trillion cubic metres from Cyprus and Israel worth some $800 billion at current European gas prices."
Black Sea gas bonanza remains elusive
Reuters, 24 October 2013

"While higher oil prices boosted cash flow in recent years, cost inflation now threatens to eat away at returns as oil companies push the envelope with deepwater drilling and liquefied natural gas mega-projects. 'Rising capex will quickly undermine the positive arguments that can be made for the sector,' Deutsche Bank analysts wrote. Deutsche Bank noted the majors were guiding toward modest capex growth after a decade where double-digit annual expansions were the norm. Capital spending by sector leader Exxon even fell last quarter, though that was after a 33 percent year-on-year jump in the first quarter..... Kashagan in Kazakhstan, [is] the world's biggest oil find in decades, in which Exxon, Royal Dutch Shell Plc and Total all have a stake. It took 13 years and some $50 billion before output at Kashagan was started in September, and output had been expected to grow dramatically next year and in 2015. Concerns about spending more to get less prevail among those following the sector. Nomura Equity Research, while cutting 2014 earnings estimates for European majors, noted increased spending on asset integrity and security for projects due to both BP's Macondo spill and the Arab Spring uprisings. They also pointed to longer planning times due to the greater complexity of the work. 'Lastly, perhaps one of the greatest factors is exploration expense,' Nomura said. 'The market has been slow to increase the run-rate despite increased spend in drill-bit activity, something that has increasingly placed downward pressure on profitability in recent quarters.' The comments followed an announcement by Chevron Corp, ranked second by market value among the majors, of third-quarter write-offs for exploration wells of between $100 million and $200 million - along with a warning about the impact of refining on its quarterly results. Investors in oil majors may have to grow more familiar with such costly 'dry holes,' given that just one deepwater well can cost in the range of $100 million, and Deutsche Bank expects the share of Big Oil spending on deepwater to double by 2016."
Stage set for oil major growth, in costly production
Reuters, 23 October 2013

"Energy independence sounds good, and that's why politicians and oil company executives love to say the words. It's so easy to say, but oh so hard to actually accomplish, which is why the United States has been a consistent importer of oil since the late 1940s. Recent overblown statements about U.S. energy independence from the oil industry, its paid consultants and the fake think-tank academics it funds simply aren't supported by the numbers. I have discussed this issue in two previous pieces, "The Oil Industry's Deceitful Promise of American Energy Independence" and "Oil and gas industry uses deceptive energy independence message to push U.S. exports". Recently, friend and colleague Jeffrey Brown--who is best known for his Export Land Model which foretold of shrinking global oil exports--did some fairly simple math to show how difficult it will be for the United States just to maintain its current production, let alone produce all the oil and natural gas it consumes. In a recent email Brown, who is a Dallas-based independent petroleum geologist managing a joint-venture exploration program, wrote the following: 'The EIA's [U.S. Energy Information Administration's] estimate for the most recent four week average crude oil production rate (Crude + Condensate) [which is the definition of oil] was 7.6 mbpd (million barrels per day). Refinery runs were 15.8 mbpd, and net crude oil imports averaged 8.0 mbpd. The numbers for total liquids are, of course, different. As several people have noted for some time, the primary problem with the tight[oil]/[natural gas] shale plays is the high decline rate. At a (probably conservative) 10%/year decline rate for existing U.S. crude oil production, in order to simply maintain current U.S. crude oil production, the industry would have to put on line the productive equivalent of every current oil field in the U.S. over the next 10 years, or in round numbers we would need the productive equivalent of 10 new Bakken plays over 10 years, in order to maintain current crude oil production. Citi Research [an arm of Citigroup] puts the decline rate for existing U.S. natural gas production at about 24%/year, which would require the industry to replace about 100% of current U.S. natural gas production in four years, just to maintain current production, or we would need the productive equivalent of 30 new Barnett Shale plays over 10 years, in order to maintain current natural gas production. Companies are not finding one new Bakken play each year; nor are they finding three new Barnett Shale-sized plays each year.... Given the potential for U.S. tight oil in deep shale deposits and a high oil price which makes it possible to incur the high costs of getting it out, U.S. production could grow for a time. But at some point the high production decline rates for tight oil wells (around 40 percent per year) will be too much of a barrier, and total U.S. crude oil production will begin to decline once again, Brown believes. 'The cornucopian's argument is that the third time's the charm, that the industry can now do what they could not do from 1970 to 1977 [after the peak in U.S. oil production] and what they could not do from 1984 to 1991 [during the boom in Alaskan oil production], i.e., indefinitely maintain the rate of increase in production. And, of course, we are going to do this with the highest overall decline rates that we have ever seen.' Brown says you have to keep in mind that tight oil wells drilled today will in a few years be producing just a small fraction of what they are producing now. And, that means new wells will have to be drilled just to make up for this decline. Only then can production start to grow. As total U.S. production increases and the number of producing wells grows considerably, the number of new wells needed just to make up for the decline in the production of existing wells will grow along with it. At some point it will become impossible both to make up for declines in existing wells and to grow production. Brown believes that the United States is unlikely ever again to exceed the 9.6 mbpd of crude oil production it achieved in 1970, the peak year. More likely is a continuation of an undulating decline with occasional upturns followed by fresh downturns. What he finds ironic is that those who are saying that peak oil is dead are using the United States, an oil producer that saw its production peak more than 40 years ago, as the poster child for their arguments."
Kurt Cobb - The age of oil will not last forever
Christian Science Monitor, 22 October 2013

"President Francois Hollande will be rubbing his hands with glee this week when the British Government is expected to sign a deal on nuclear power that could funnel £90billion into French coffers. The agreement with French state-owned EDF Energy will create a price the Government guarantees will be paid for the electricity generated. This is likely to provoke fury as it is twice the market level. Osborne last week announced plans to allow Chinese firms to take a minority stake in Britain’s nuclear power industry. But remarkably, even after that announcement, the Department of Energy issued a terse statement saying the exact terms of the deal with EDF were ‘still being negotiated’. The Government appeared to have made promises to the Chinese before agreeing the guaranteed price with the French, though it refused to comment on its apparent blunder. Critics say the Government found itself ‘over a barrel’, with the French and Chinese the only bidders left offering to build two nuclear reactors at Hinkley Point in Somerset – the first in the UK since 1995 – at a price of £14billion. With the inflation-linked price per megawatt hour likely to be about £90, many are questioning whether this is too much or simply what Britain must pay to keep the lights on and meet environmental targets. A spokesman for the Energy Intensive Users Group, representing big business users of electricity, said: ‘Major industry needs security of supply and nuclear power can give us that – but not at any price. ‘This deal will cost the consumer more than coal and gas would, but as we decarbonise it is vital that nuclear is part of the mix. Renewable energy, like wind power, is just not reliable enough.  ‘Nuclear is not going to come cheap, but it is secure and that is what big users need.  ‘Given that we have lost control of our energy industry it is far better that this project is going ahead than not.’ China has even been told it may be allowed to operate nuclear power plants in the UK on its own in the future. Angela Knight, chief executive of the energy companies’ trade body Energy UK said: ‘Energy is a global business and the massive sums needed mean we must attract multi-national investment.’ The £90 per megawatt hour will be guaranteed to EDF through customers’ bills no matter what happens to prices in the wholesale energy market. Offshore wind power has a higher price, at £155 per megawatt hour, but that will last only 15 years. EDF will make an estimated £90billion over the length of the contract, which is likely to be 35 years, almost as much as the £110billion that the Government estimates is needed to invest in the UK energy market over the next decade. It is a far cry from the £80 per megawatt hour the Treasury was apparently seeking originally. The Government strongly denies that it is a subsidy. If it were, the whole deal could fall foul of European Union rules against state aid."
Power plant deal leaves the UK handing £90bn to France and paying DOUBLE the going price of electricity for 35 years
Mail, 19 October 2013

"'Pre-Salt'. A term that hardly anyone outside oil industry would have ever heard of and, even if they had, it holds few clues as to what it really is. But those two incongruous, single-syllable words hold the key to Brazil's hopes of becoming a major oil producer, securing billions of dollars in revenue and helping to boost a faltering economy. Not far off the coast of Rio de Janeiro State, and just to the north east of the famous coastal city is the area in question.  It is an almost unimaginably large oil deposit; 1,500 sq km (579 sq miles) and 326m (1,070ft) deep. Although it lies well beneath the sea bed, under a thick layer of rock and salt, the find is said to be relatively risk-free. Estimates vary but it could hold as many as 12bn barrels of oil."
Brazil confident of Libra oil field success
BBC Online, 19 October 2013

"Britain could be hit by power cuts next winter because the electricity supply is already ‘close to its limits’, experts warn. Capacity is so stretched that a cold spell, combined with routine problems at one or more plants, could overwhelm the system and see blackouts in 2014-15, their damning report claims. A major pressure on the National Grid is the forced closure of coal-fired power stations to meet European green directives, the Royal Academy of Engineering says. But the drive to low-carbon power from wind farms and new nuclear power stations ‘will come at a cost’ and the authors call for politicians to be honest with the public about it....For the report, engineers looked at capacity in the power network this year, in 2015 and in 2019, and how the system would cope during a peak in demand such as that seen during the freezing winter of two years ago. They concluded that a combination of adverse conditions is ‘likely to stretch the system close to its limits, notably during the winter of 2014-15, increasing the chance of power outages’. Dr John Roberts, chairman of the working group, said these were ‘real sets of challenging conditions that have happened before and can be expected again in the future’. However, coal and gas-fired power stations are being forced to close as they do not meet EU regulations on pollution, while four nuclear plants are scheduled to be phased out by 2019. Dr Roberts said this ‘would reduce the flexibility of the system and increase the chances that otherwise manageable failures could jeopardise the country’s power supply’. But Business Minister Michael Fallon insisted: ‘The lights are not going to go out. There will be a tightness in supply if nothing is done but stuff is being done. We’ve opened six new gas plants already. Another is being built. You’re going to hear very soon about our investment in new nuclear power stations.’ The RAE experts interviewed staff at the National Grid, the regulator Ofgem, the Government and the big power firms. They call on ministers to build more gas plants in the coming years, but say they must urge operators not to close them before 2015, and pay them to generate more capacity. Ageing gas plants are being closed or mothballed because the high price of gas make them unprofitable. And while coal prices have plummeted, undercut as a result of the shale gas boom in the US, around a dozen coal plants will close by 2015 because of green directives.... Major investment is needed in the electricity network, she said, but the new wave of nuclear power stations announced today will not come online until at least 2020– leaving a looming gap. ‘In the long term we will need a lot more power’, she said. ‘The important thing is before any statements are made about fixing prices there have to be decisions made about how much investment is needed and how the costs of that investment – which do not come from taxation, they come out of electricity bills – will be paid for.’ Most of the network was built in the 1960s. Since then the population has risen by more than 10million – and the use of electricity in transport systems and to heat homes has soared."
Britain's lights could go out next winter! EU green directives have left grid 'close to limit'
Daily Mail, 18 October 2013

"George Osborne announces Chinese companies to be able to buy into next generation of British nuclear power - and even be allowed to own up to 100 pc. George Osborne, the Chancellor, has announced that the UK will allow Chinese companies to take a stake in British nuclear power plants. The decision could lead to China taking a future majority stake - and even be allowed to own up to 100 pc - in the development of the next generation of British nuclear power. Mr Osborne made the announcement on Thursday the last day of a week-long trade visit to China after a visit to Taishan nuclear power station on the coast near Hong Kong. Taishan is a collaboration between French energy company EDF and the China General Nuclear Power Company. EDF is at the heart of UK Government hopes for developing new British nuclear capacity. Negotiations on a deal to build a new plant at Hinkley Point in Somerset have reached the critical stage, though it does not come under this new majority-stake arrangement. Mr Osborne said the nuclear deal with China demonstrated both the openness of the British market and would act as a boon to the taxpayer. He said: "Today is another demonstration of the next big step in the relationship between Britain and China – the world's oldest civil nuclear power and the world's fastest growing civil nuclear power. "It is an important potential part of the government's plan for developing the next generation of nuclear power in Britain. It means the potential of more investment and jobs in Britain, and lower long-term energy costs for consumers." The deal is anchored on the memorandum of understanding signed by the Chancellor in Beijing this week by which the two governments agree to help each other with their civil nuclear programmes (and pursue joint ventures in third countries by the way). It will see British companies allowed to sell their expertise in China.... Despite Mr Osborne's announcement the future of the next big nuclear power plant in Britain remains - officially, at least - undecided.  Mr Davey said last weekend that the Government is “extremely close” to finalising terms for the £14bn programme to build twin nuclear plants at Hinkley Point, Somerset. The Government was thought to be on the verge of completing a heavily-subsidised agreement to revive nuclear power development in Britain via a deal with state-owned French and Chinese companies. He insisted there was no direct state aid in the package being negotiated with EDF and China General Nuclear. But an announcement on the £14bn EDF plant at Hinkley Point has still yet to be made - although it is thought it could now be made next Monday in the wake of today's agreements in China. Consumer groups have been concerned that customers will end up paying for indirect price subsidies, potentially costing billions of pounds through levies on bills over the 35-year life of the new plants. EDF is said to have given ground on a guaranteed price of between £90 and £93 for each megawatt hour of electricity generated by the new plants – having initially demanded around £150. But the looming deal is still 50pc above the current wholesale cost of power.... The drawn-out negotiations with EDF, now in their second year, have survived a series of crises, but the French nuclear group has now brought in China General Nuclear as a partner to share rising costs. Treasury negotiators are said to have made concessions on power prices, profit sharing and construction guarantees to achieve a breakthrough in talks that have teetered on the brink of collapse. The Government could, however, face difficulties on the subsidy issue when it seeks clearance from Brussels for the Hinkley deal. EU regulations bar direct state aid. Moves to relax the rules by introducing guidelines have been blocked by France, Germany and other states . The Government hopes the Hinkley deal will provide the framework for other nuclear power projects under discussion."
Chinese companies to buy big stake in next generation of British nuclear power
Telegraph, 17 October 2013

"Shale gas will not change energy pricing structures across the world, according to the chief executive of Shell. It is a 'myth' that exports of cheap shale gas from America will cut gas prices in Europe and Asia, Peter Voser, chief executive of Royal Dutch Shell has warned. America is sitting on a glut of shale gas that has seen prices plummet to as little as a third of UK prices. It is now in the process of developing export terminals where the gas will be cooled for shipping abroad as liquefied natural gas (LNG). UK politicians have hailed the prospect of Britain importing cheap gas from the US as one solution to help consumers struggling with rising energy bills as domestic gas production dwindles. But Mr Voser said that the idea of 'cheap US gas going into the rest of the world and therefore changing the pricing structures across the world' was a 'myth'. The price impact of US exports would be 'not that significant' because the additional costs of liquefying, transporting and then re-gasifying the gas would mean its eventual cost was comparable to existing market prices, he said....Mr Voser said that while US gas might cost between $4 and $6 – Shell's assumption of longer-term prices – it would arrive in Europe at a cost of $8 to $10, comparable with European prices that have averaged between $6 and $11. Shell has repeatedly played down the prospects for shale gas development in Europe and the UK."
Peter Voser: cheap shale gas is a myth
Telegraph, 16 October 2013

"The United States is now the world's biggest supplier of oil overtaking the world number one, Saudi Arabia, according to latest output figures. A surge in US oil output, which includes natural gas liquids and biofuels, has swelled 3.2 million barrels per day (bpd) since 2009.The spike in oil production is the fastest expansion over a four-year period since Saudi Arabia's output surge from 1970-1974, energy analysis firm PIRA said in a statement. It was the latest milestone for the US oil sector caused by the shale revolution, which has upended global oil trade. While still the largest consumer of fuel, the rise of cheap crude available to domestic refiners has turned the United States into a significant exporter of gasoline and distillate fuels. Last month, China surpassed the United States as the largest importer of crude, according to the US government, as the rise of domestic output cuts the U.S. dependence on overseas oil. '(The US) growth rate is greater than the sum of the growth of the next nine fastest growing countries combined and has covered most of the world's net demand growth over the past two years,' PIRA Energy Group wrote. 'The US position as the largest oil supplier in the world looks to be secure for many years,' it added. Total liquids produced by the United States, which PIRA defined broadly to include supplies such as crude oil, condensate, natural gas liquids and biofuels, should average 12.1 million bpd in 2013, pushing it ahead of last year's No. 1 supplier, Saudi Arabia. PIRA said the increase in oil from shale, which has been centered in areas such as Eagle Ford in Texas and the Bakken in North Dakota, has seen U.S. supply grow by 1 million bpd in 2012 and again 2013. The United States still lagged both Saudi Arabia and Russia in production of just crude oil by abut 3 million bpd, PIRA noted. Rounding out the top 10 oil suppliers were China, Canada, UAE, Iran, Iraq, Kuwait, and Mexico."
U.S. has overtaken Saudi Arabia to become the world's biggest oil producer on jump in output from shale
Mail, 16 October 2013

"...sitting under West Texas is another shale play that could be larger than the Eagle Ford and the Bakken combined. This could be America's biggest oil discovery... According to early estimates provided by Pioneer Natural Resources (NYSE: PXD ) , the Spraberry Wolfcamp shale play near Midland, Texas could be the largest oil field in the country and the second largest oil find in the world. The company estimates that the play contains 50 billion barrels of recoverable oil. Only the infamous Ghawar oil field of Saudi Arabia is larger. What makes the Wolfcamp so exciting is what's called in the industry vernacular as 'stacked pay potential.' The geology in the region features several hydrocarbon-rich formations stacked one on top of the other. Think of it like a layered cake, which includes the Spraberry Shale (7,700 feet beneath the surface), the upper Wolfcamp (9,100 feet beneath the surface), the lower Wolfcamp (9,400 feet beneath the surface), and the Cline Shale (10,000 feet beneath the surface). These stacked plays are great for operators has it allows them to target several formations with a single vertical well. In some places the hydrocarbon producing zone is a much as 3,000 to 4,000 feet thick. That compares to a 300 foot pay zone for your typical Eagle Ford well.... Of course as prudent investors, we should evaluate industry claims with a certain degree of skepticism. How did Pioneer come up with that 50 billion recoverable barrel estimate? Typically oil companies take production data from existing wells and extrapolate it over the entire field. But much of the Wolfcamp hasn't been de-risked beyond a handful of core acreage, and shale production can vary wildly throughout an entire field. However, data from rival operators is starting to support Pioneer's initial estimate. Indeed, as exploration of the play is completed, those early reserve estimates may even be revised higher. If the Spraberry Wolfcamp can even live up to even a fraction of the hype, this could still be a very big development."
The Texas Oil Chart You Have to See
Motley Fool, 16 October 2013

"Royal Dutch Shell CEO Peter Voser said it will take a longer time than expected for the company to reap benefits from its shale gas projects due to poor short-term results. Weak U.S. shale liquids production contributed to a $2.2 billion charge Shell revealed in August and was a key factor in its decision to abandon its goal to deliver 4 million barrels a day of production by 2017. 'We didn't get the results which we were expecting to get in the shorter term and we will therefore have to develop this a little bit more before we can take benefits from it,' Voser told reporters on the sidelines of the World Energy Congress. 'It was clearly not as successful as thought.' Vast reserves of shale oil and gas are likely to make the United States the largest oil and gas producer in the world this year, according to the U.S. Energy Information Administration, but the rush to cash in on the shale bonanza has cost some latecomers to the market dearly. Voser was also sceptical about the success of shale development elsewhere. In contrast to more optimistic outlooks at the conference from Saudi Aramco's chief executive and Algeria's energy minister on shale gas development in their countries, Voser said it will take decades before the revolution in the United States can be replicated elsewhere in the world. 'This is a big hype at the moment,' Voser said. Shell said last year that it planned to spend at least $1 billion exploiting China's potentially vast resources of shale gas. The company secured China's first product sharing contract for shale gas, hoping that getting in early will allow it to be a big beneficiary from the sort of boom in shale that has transformed the U.S. energy market."
Shell CEO says shale gas to take longer to develop than expected
Reuters, 15 October 2013

"Royal Dutch Shell PLC officially opened Iraq's Majnoon oil field in the south of the country on Sunday, aiming to reach 175,000 barrels a day in the coming weeks and passing a big milestone for both Shell and Iraq. Majnoon, located near the city of Basra in southern Iraq, is one of four major fields that the country is developing with foreign companies and is vital to its ambitious plan to increase its output to at least 6 million barrels per day from the current production level of 3.2 million. Shell, which started production from the field's first well on September 20, said it had now opened the field's other wells and officially inaugurated the field Sunday. Production will be ramped up to '175,000 barrels a day in the next weeks,' a Shell spokesperson said. The output target is key for Shell's plans to develop the field as it is the volume required for the Anglo-Dutch oil major to start recovering costs under its deal with the Iraqi oil ministry. Hussein al Shahristani, the Iraqi deputy prime minister for energy, said in Dubai last month that output from the gigantic field is expected to rise to almost 200,000 barrels a day before the end of the year. Iraq signed a series of service contracts with major oil companies such as Shell, Exxon Mobil Corp., Total, BP PLC, and Eni SpA at the end of 2009 to develop its oil fields. Shell and Malaysia's Petronas Gas Bhd were awarded the deal in December 2009 to develop the field located in southern Iraq near the Iranian borders. Shell owns 45% of the venture and Petronas owns 30%, with the Iraq state-run company holding 25%. They have pledged to eventually raise production from Majnoon to 1.8 million barrels a day."
Shell Opens Iraqi Oil Field
Wall St Journal, 6 October 2013

"Talks with EDF, the French energy giant, over guaranteed revenues for the proposed Hinkley Point C project in Somerset have dragged on for more than a year, but are now expected to conclude within weeks. Ministers are considering bearing some of the construction risk for the £14bn project, in return for a lower subsidy level and a share of the spoils if a refinancing leaves EDF enjoying bumper profits. An agreement will see the energy company a guaranteed 'strike price', reported to be between £90 and £93, for each megawatt-hour of electricity Hinkley generates over a 35-year contract. The market price of power — currently about £50 — will be 'topped up' to the strike price with subsidies, paid for by levies on all UK energy consumers’ bills. This potentially commits bill-payers to tens of billions of pounds in subsidies over the lifetime of the plant.... Ministers want EDF to bear the most of the risk of overruns, especially given that its construction of its Flamanville reactor in France saw costs double and a four-year delay."
Hinkley nuclear deal hinges on profit sharing
Telegraph, 5 October 2013

"Researchers from the University of Maryland and a leading university in Spain demonstrate in a new study which sectors could put the entire U.S. economy at risk when global oil production peaks ('Peak Oil'). This multi-disciplinary team recommends immediate action by government, private and commercial sectors to reduce the vulnerability of these sectors. While critics of Peak Oil studies declare that the world has more than enough oil to maintain current national and global standards, these UMD-led researchers say Peak Oil is imminent, if not already here—and is a real threat to national and global economies. Their study is among the first to outline a way of assessing the vulnerabilities of specific economic sectors to this threat, and to identify focal points for action that could strengthen the U.S. economy and make it less vulnerable to disasters. Their work, 'Economic Vulnerability to Peak Oil,' appears in Global Environmental Change. The paper is co-authored by Christina Prell, UMD's Department of Sociology; Kuishuang Feng and Klaus Hubacek, UMD's Department of Geographical Sciences, and Christian Kerschner, Institut de Ciència i Tecnologia Ambientals, Universitat Autònoma de Barcelona....'The Peak Oil dialogue shifts attention away from discourses on 'oil depletion' and 'stocks' to focus on declining production rates (flows) of oil, and increasing costs of production. The maximum possible daily flow rate (with a given technology) is what eventually determines the peak; thus, the concept can also be useful in the context of other renewable resources. Improvements in extraction and refining technologies can influence flows, but this tends to lead to steeper decline curves after the peak is eventually reached. Such steep decline curves have also been observed for shale gas wells. 'Shale developments are, so we believe, largely overrated, because of the huge amounts of financial resources that went into them (danger of bubble) and because of their apparent steep decline rates (shale wells tend to peak fast),' according to Dr. Kerschner. 'One important implication of this dialogue shift is that extraction peaks occur much earlier in time than the actual depletion of resources,' Professor Hubacek said. 'In other words, Peak Oil is currently predicted within the next decade by many, whereas complete oil depletion will in fact occur never given increasing prices. This means that eventually petroleum products may be sold in liter bottles in pharmacies like in the old days. "
UMD Researchers Address Economic Dangers of 'Peak Oil'
University of Maryland, 16 October 2013

"The Asian Development Bank has published today Energy Outlook for Asia and Pacific through 2035. According to the ADB Outlook, with the production increase in the ACG oil field, Azerbaijan’s oil production will peak at 1.4 mb/d by 2015, while the production of the ACG oil field will decline from 2020 onward; therefore, overall oil production will decline to 1.26 mb/d in 2035. The Bank believes that natural gas production will expand from 15 billion cubic meters (bcm) in 2015 to 22 bcm in 2035 with the increased production from Shah Deniz field."
ADB: by 2015 oil production in Azerbaijan to reach peak – 1.4 million bpd
ABC.AZ, 14 October 2013

"Millions of households will be forced to ration their heating this winter as price hikes of up to 10 per cent hit home, campaigners warned last night. Energy giant SSE 'opened the floodgates' by announcing a price rise of 8.2 per cent yesterday. It will send gas and electricity bills rocketing by more than £100 – and there is expected to be a domino ­effect in the next few days with other major suppliers also slapping hefty rises on the average dual fuel bill. Pensioner groups said the ­elderly will be hardest hit, with many forced to decide whether to 'eat or heat' as the weather turns colder. Saskia ­Welman, the spokesperson of the National Federation of Occupational Pensioners, said: 'Any increase in energy prices could come at a huge cost to pensioners. We are extremely worried that many poorer pensioners may have to make the decision to ‘eat or heat’, which would have catastrophic consequences.' She said deaths of elderly people soar during cold weather and fuel bill price rises would only 'exacerbate an already alarming problem'. From November 15 7.3million SSE customers will pay an average of £1,465 a year for gas and electricity, a rise of 141 per cent since 2006."
Millions face 'eat or heat' dilemma as energy bills soar
Express, 11 October 2013

"The United States will become the world's largest oil producer next year - overtaking Russia - thanks to its shale oil boom which has transformed the global energy landscape, the West's energy watchdog said on Friday. The prediction comes only days after estimates by the U.S. government showed the United States, the world's largest oil consumer, has ceded its ranking as top global oil importer to China, thanks to the shale revolution cutting import needs..... The U.S. resurgence as an oil producer is already reshuffling the cards in the game of world energy diplomacy, playing it a new hand in relations with long-term ally and top OPEC producer Saudi Arabia. Major producers such as Russia are now forced to invest billions of dollars into new pipelines towards Asia as they can no longer rely on demand from the West, and have to deal with increasingly assertive Beijing. 'With output of more than 10 million barrels per day for the last two quarters, its highest in decades, the nation is set to become the largest non-OPEC liquids producer by the second quarter of 2014, overtaking Russia. And that's not even counting biofuels and refinery gains,' the IEA said. The agency, the Paris-based energy arm of the Organization for Economic Co-operation and Development (OECD) estimated that U.S. liquids production will average 11 million bpd in 2014 versus 10.86 million in Russia. The spike in U.S. production will allow total non-OPEC supply to grow by an average of 1.7 million barrels per day in 2014, peaking at 1.9 million in the second quarter, the highest annual growth since the 1970s, the IEA said. That robust growth will compensate for disruptions to Organization of the Petroleum Exporting Countries' production and provides a cushion for oil prices, which otherwise could have spiked much higher than the current $110 a barrel. OPEC crude supplies slipped to below 30 million bpd for the first time in almost two years, led by steep drops in Libyan and Iraqi exports due to unrest and terminal repairs, and despite Saudi Arabian output topping 10 million bpd for a third month running. The IEA said that growth in non-OPEC production was so strong that it further reduced its estimates for demand for OPEC crude next year by an average of 100,000 bpd to 29 million bpd - effectively 1 million bpd below current pumping levels. The IEA left its global oil demand growth forecast for 2014 broadly unchanged at 1.1 million bpd, an increase of 1.2 percent, saying the macroeconomic backdrop was improving. 'European demand data have surprised on the upside recently amid reports that the euro zone's recession ended in the second quarter of 2013 and signs of improvement in business confidence,' it said. But it added that it saw significant downside risks due to the budget standoff in the United States and currency depreciation in many emerging market economies."
U.S. soon to overtake Russia as top oil producer
Reuters, 11 October 2013

"China is overtaking the U.S. as a buyer of Middle East oil, adding fuel to diplomatic tension between the nations over security in the region. China surpassed the U.S. as importer of Persian Gulf crude several years ago, by some measures. Now it is on track to overtake the U.S. this year as the world's No. 1 buyer of oil from the Organization of the Petroleum Exporting Countries, the largely Middle Eastern energy-exporting bloc. The turnabout has added to tensions because it leaves the U.S. military securing China's growing oil shipments in the region at a time Beijing resists U.S. pressure on it to back American foreign policy in the Middle East. For years, China and other oil-consuming nations have benefited as Washington spent billions of dollars a year to police chokepoints like the Strait of Hormuz and other volatile parts of the Middle East to ensure oil flowed around the globe. But the rise of North America's shale oil and gas industry has put the U.S. on track to pass Russia this year as the world's largest combined producer of oil and gas, if it hasn't done so already, according to a recent analysis of global data by The Wall Street Journal. That rise, combined with flat U.S. oil consumption, is making America far less dependent on imported oil, including from the Middle East, even as China's reliance on the region's oil grows. China's OPEC-crude imports during this year's first half averaged 3.7 million barrels a day, versus 3.5 million for the U.S., according to Wood Mackenzie, a consulting firm. At that rate, its OPEC imports will surpass America's on an annual basis for the first time this year, Wood Mackenzie said. India ranked No. 3, at about 3.4 million barrels a day. In 2004, the U.S. imported about 5 million barrels a day from OPEC, and China imported about 1.1 million, Wood Mackenzie said. An OPEC official declined to say whether China is now the bloc's top customer. China's imports have surged in recent years from OPEC nations such as Saudi Arabia, Iraq and the United Arab Emirates, according to Chinese customs data. China is trading places with the U.S. by some other measures as well. The U.S. is still No. 1 in crude imports from all the world. But new data from the U.S. Energy Information Administration show China has slightly overtaken the U.S. in net oil imports, defined as total liquid-fuels consumption minus domestic production. China's net imports were 6.30 million barrels a day in September, versus U.S. net imports of 6.24 million, the EIA data show; the U.S. energy-production boom has helped push down its net-import figure. And China will soon import more from the Persian Gulf than the U.S. did at its 2001 peak, according to EIA and Chinese customs data. It surpassed the U.S. as a buyer of Persian Gulf crude in 2009, according to the data. China's rise as a dominant buyer of Middle East oil presents a conundrum for it and the U.S. For China, it means its economy depends in part on oil from a region dominated by the U.S. military. When tankers depart Persian Gulf terminals for China, they rely in significant part on the U.S. Fifth Fleet policing the area. For Washington, China's oil thirst means justifying military spending that benefits a country many Americans see as a strategic rival and that frequently doesn't side with the U.S. on foreign policy. Signs of tension are surfacing. Beijing has asked for assurances that Washington will maintain security in the Persian Gulf region, as China doesn't have the military power to do the job itself, according to people familiar with recent discussions between the countries. In meetings since at least last year, Chinese officials have sought to ensure U.S. commitment to the region isn't wavering, particularly as the Obama administration has pledged to rebalance some of its strategic focus toward East Asia, said people familiar with those discussions. In return, U.S. officials have pressed China for greater support on issues such as its foreign policy regarding Syria and Iran. U.S. officials in private discussions have pressed China to lower its crude imports from Iran, for example, according to a person with knowledge of the discussions."
Middle East Oil Fuels Fresh China-U.S. Tensions
Wall St Journal, 10 October 2013

"China has knocked the US from its top spot as the world's biggest net importer of oil, US government data shows. The country's fast-growing economy, as well as the rise in car sales, has led to its new status, according to September's data. Oil consumption in China had outstripped production by 6.3 million barrels a day, said the Energy Information Administration (EIA).  In the US, the figure was 6.1 million. China's own oil supply has been outstripped by its economic boom, and its oil fields have been damaged by flooding during the past few months. The country had had to import to make up the shortfall, said the EIA. It predicts the trend will continue into 2014. The US uses 18.6 million barrels of oil per day compared with China's 10.9 million, despite having a population a third the size of China's. But the US is increasingly able to support itself after the growth of its domestic hydraulic fracturing, or fracking - a new technique of drilling for gas and oil from shale rock. ... Jason Gammel, head of European oil and gas research at Macquarie, said he expected the trend to last for the next five years. He said he expected America to produce 20-22 million barrels of oil per day by 2022. Mr Gammel said: 'The US has moved very quickly to utilise fracking and horizontal drilling activities.' But he said such an approach would be difficult for China to mimic, as the US was already well prepared to take advantage of the new techniques, for example with its large oil field services."
China overtakes US as the biggest importer of oil
BBC Online, 10 October 2013

"Hard-pressed families could be forced to choose between 'heating and eating' this winter experts have warned after energy giant SSE announced it was increasing gas and electricity prices by an average of 8.2 per cent next month. The company, which has around 10 million customer accounts, is the first of the major suppliers to announce a rise this autumn, but it is feared others will follow suit. It comes just weeks after Labour leader Ed Miliband vowed to freeze bills for 20 months if he wins power in 2015, sparking fears firms would hike prices in advance of the general election." SSE has blamed the rise on the increased cost of buying and delivering wholesale energy as well as Government levies collected through bills. It said the latest increase, which is three times the rate of inflation, would come into effect from November 15. SSE, which trades as Southern Electric, Swalec and Scottish Hydro, said the hike equated to an average £2 a week for a typical dual fuel customer. But Martin Lewis, of the Moneysavingexpert website, said the price hike would mean many people this winter will have to choose 'between heating and eating'."
'It's a choice between heating and eating': Families face hardship as energy giant SSE leads price rises with an increase of 8.2%
Mail, 10 October 2013

"Every British household will pay an average of more than £400 in higher bills over the next six years to pay for subsidies under controversial Government plans to hit green power targets. The money will go solely to paying for otherwise uneconomic offshore wind turbines, onshore wind farms, biomass plants, landfill gas sites and hydro power plants, new figures show. The first analysis of newly agreed prices paid to 'green' generators, carried out by the Taxpayers’ Alliance, shows that the total subsidy will be nearly £22 billion by 2020. The subsidies are paid for by consumers and businesses through their annual bills and passed to the green energy generators. Half of energy bills are paid by business, with the other half by domestic consumers, and the total subsidy divided among British households equals £425 per household. Many, however, will pay more because they have bigger bills. As well as recouping the cost of renewable subsidies through domestic bills, households will also foot the bill for the carbon floor price tax and the Energy Company Obligation efficiency scheme, where suppliers are supposed to fit out homes with roof insulation and better boilers. The other schemes suggest the possibility of further increases to the cost of electricity. The calculation comes amid mounting political pressure over the cost of  'green' subsidies, with George Osborne, the Chancellor, and Ed Davey, the Energy Secretary, said to be at loggerheads over other aspects of attempts to reduce the amount of carbon produced to generate electricity. "
Green energy to cost consumers £400 over next five years
Telegraph, 5 October 2013

"Luxury cars cruise down 'Oilman Avenue' past five-star hotels and exclusive boutiques in the capital of Azerbaijan, where President Ilham Aliyev looks sure to be re-elected on Wednesday. While residents of cramped apartments in drab Soviet-era blocks on the outskirts of Baku, may feel excluded from the oil boom that has transformed smarter parts of town, opponents of Aliyev, 51, say controls on dissent mean they have little chance of stopping him winning a third five-year term. That will extend a dynastic rule under which he and his father, former Communist leader Heydar Aliyev, have ruled the mainly Muslim state since 1969, except for a period from 1982 to 1993. Opinion polls show him clearly in the lead. Located between Iran and Russia, Azerbaijan is a vital energy supplier to Europe and a transit route for U.S. troops in Afghanistan. Critics say this has made the West turn a blind eye to shrinking freedoms since Aliyev came to power in 2003. A new generation of Internet users, inspired by the 'Arab Spring' uprisings, sees no chance of ousting Aliyev next week, but problems are growing that they hope he will have to address in his next term - and might one day unseat him. As oil output peaks, discontent is growing over the gap between rich and poor and tensions are rising with neighbouring Armenia in a territorial dispute that caused a war in the 1990s. 'I don't believe change will come to this country through the election as there is no real election in Azerbaijan,' said Adnan Hajizade, a 30-year-old blogger who fell foul of the authorities, sipping ginger tea in a busy Baku cafe.... economic growth has slowed since 2003-2007 when the economy expanded by an average 21 percent per year. The main reason is a slowdown in oil production, raising concerns and prompting Aliyev to accuse operator BP of making 'false promises'."
Azerbaijan's leader set to keep power but problems loom
Reuters, 4 October 2013

"The US could push past Russia and Saudi Arabia as the world's largest single producer of oil and natural gas this year, an American government agency has predicted. While the US was roughly even with Russia as the top producer in 2012 of the two hydrocarbon fuels combined, it still lagged the longtime leader Saudi Arabia as an oil producer. But helped by the boom in fracking production from shale deposits, the US will surpass the Saudis in oil in 2013, making it the world leader in each fuel, the US Energy Information Administration (EIA) said. The EIA said that US petroleum production had increased dramatically over the past five years due to production in Texas and North Dakota, where the exploitation of shale-based reserves by controversial fracking techniques has rocketed. Meanwhile, natural gas production has shot up thanks to fracking-based production in the eastern part of the country, particularly in Pennsylvania. The EIA gave no detailed figures, but a chart with the report showed US production of the two hydrocarbons combined would near almost 25m barrels of oil-equivalent per day this year, well above Russian production."
US to produce more oil and gas than Russia and Saudi Arabia
Telegraph, 4 October 2013

"The impact of the federal shutdown will depend mainly on how long it lasts and how dependent you and your locality are on federal spending. ... So what happens to oil and more importantly to gasoline prices during a shutdown – either brief or extended? The short answer is that unless some outside development such as a major blowup in the Middle East occurs, oil and gasoline prices are likely to fall as there will be less money to spend, less economic activity, and less gas and oil being bought. At a minimum all those furloughed workers will not have to drive to work and will probably be watching their pennies till the situation clarifies. If nothing else, the equity markets, which have already started to fall, will likely pull oil prices down with them. It is important to keep in mind that America is no longer the preponderance of the global oil market and that a slowdown of government spending in the U.S. has little effect on demand in most other places that will continue to maintain or increase their oil consumption. With OPEC, particularly Iran, Nigeria, and Libya, producing well below their normal rate, the world oil markets are tighter than normal so there is definitely a floor under oil prices. It is unlikely that they will plunge back to the good old days with all the turmoil in the Middle East. A far worse problem, however, a possible default on the federal debt, will be in the fore about two weeks from now. If the shutdown is still going on when October 17 rolls around the situation could easily become extremely serious. For numerous reasons a default on the U.S. debt would be far worse than anything we will see even with a prolonged federal shutdown. For this reason many believe that a default will never happen as those in Congress relishing or at least acquiescing in the shutdown will come to their senses and stop the debacle. The Editorial Board of the Washington Post is not as complacent as many about the possibility of a default. They note that the 'habits of normal compromise have become so frayed' in Washington that it is equally plausible that the forces shutting down the government will add default to their handiwork. The problems that would come from a failure to raise the debt ceiling on October 17 are legion. Federal spending would be cut by about a third. There would be delays in the issuance of many federal payments. Interest rates would increase markedly despite the best efforts of the Federal Reserve. The dollar would be certain to fall substantially in relation to other currencies driving oil prices higher. There would likely be a world-wide financial crisis reminiscent of 2008 or worse. Some are already suggesting that we would likely see oil prices above $120 or $130 a barrel as a consequence of a 10 percent or more decline in the value of the dollar and the nationwide average price of gasoline would rise to well above $4. Five dollar gasoline is not out of the question if the debt crisis continues or the dollar continues falling. Such prices would do considerable economic damage as discretionary driving would fall markedly and along with it much retail spending on goods and services. Further economic growth under such a scenario would be problematic."
The Peak Oil Crisis: Oil & a Government Default
Falls Church News-Press, 2 October 2013

"Royal Dutch Shell chief executive Peter Voser is to call on the global energy industry to continue investing heavily in costly new production projects in order to avoid a return to the days of record high oil prices weighing on global growth. 'Supplying the world’s energy needs will be extremely tough,' Mr Voser will say in Tuesday's speech, seen in advance by the Daily Telegraph. 'Our first priority must be to invest heavily in new supplies, and to maintain it through economic and political turbulence. Failing to do so would be a sure path to another crunch and major price volatility.' Mr Voser’s comments come amid concern that a pullback in investment by some resource and energy companies following the global financial crisis could result in future shortfalls in supply if economic activity should pick up quicker than was previously expected. Oil prices peaked at $147 (£91) a barrel in 2008 amid concerns over the world hitting peak production and Iran shutting off supplies from the Persian Gulf. 'The cornerstone of this investment must be a sound balance sheet,' Mr Voser will tell industry delegates attending the annual Oil & Money conference in London. 'One strong enough to withstand volatile energy prices and revenues, and flexible enough to underpin billions of dollars of investment in new energy sources.'  Demand for energy will double over the next 50 years, Mr Voser will say, spurred by rapid industrialisation in China and across Asia. At the same time, world energy supply is struggling to keep up with prospective demand. The International Energy Agency (IEA) forecasts that crude oil output from wells producing in 2011 will have dropped by almost two-thirds by 2035. 'The coming decades will see a historic change in human society and the global economy,' Mr Voser will say. 'Billions of people are emerging from poverty in China, India and other emerging economies. They’re buying fridges, cars and washing machines, and all the consumer goods we take for granted in the West.' Analysts have complained that earnings at Europe’s biggest oil companies such as Shell and Italy’s Eni have failed to keep pace with oil prices consistently above $100 a barrel. Citigroup warned in August that higher costs across the upstream production business and the capital intensity of major production projects have eroded profitability in the industry. In his speech, Mr Voser will defend Shell’s commitment to a number of high risk and expensive energy projects such as the controversial Sakhalin 2 liquefied natural gas (LNG) scheme in Russia and a $19bn gas-to-liquids project in Qatar. 'Major deepwater and LNG projects can now cost tens of billions of dollars. That’s a far cry from the 1990s, when mega-projects cost several hundred million dollars. But the challenges of these projects must not obscure their importance. They are powerful engines of growth and profitability for our industry.'”
Shell chief Peter Voser warns of oil crunch without investment
Telegraph, 1 October 2013

"Late Friday afternoon, former U.S. Congressman Newt Gingrich told oil and gas industry attendees at the 2013 Pennsylvania Marcellus Shale Insight Conference, 'There are people who don't want this future, who don't want these competitive ideas,' referring to ongoing shale gas development in the Pennsylvania Marcellus. At the same time Gingrich was in Philadelphia speaking at the industry’s annual conference, the University of Texas released an updated study on the Texas’ Barnett shale formation which confirmed the Barnett’s overall shale gas production has now declined by more than 20 percent since 2011. The study also confirmed of the 16,000 Barnett wells drilled to date about 12,000 of them are now classified as depleting which means while still producing a level of shale gas, in many cases it is significantly less gas then when they first came online. The total output of depleting wells can still result in a significant amount of natural gas. With similar shale gas production declines occurring in other U.S. shale formations, issues of rapid decline rates and the capital needed to sustain the U.S. shale gas industry look to be the increasingly driving realities of which the Pennsylvania Marcellus will not escape.... With the conference in town, at the same time down in Texas, Carrizo Oil & Gas is attempting to sell off its Barnett assets while oil and gas rigs in the formation have dropped from 64 in 2011 to 35 this year, the second-largest decline among U.S. shale plays after the Haynesville Shale in Louisiana, according to Baker Hughes. The just released update to the University of Texas study of the Barnett now confirms large land areas in the formation no longer considered as viable for drilling. The facts of production life in the Barnett differ significantly today from what early on shale gas promoters said about it back in 2008 when Chesapeake Energy’s now deposed CEO Aubrey McClendon stated, the company’s Barnett shale leaseholds, '....will provide Chesapeake with significant growth opportunities for years to come.' Today, as was the case in 2012, there is virtually no mention of Barnett shale in the company’s latest investor presentation as it states a new emphasis on a, 'Drilling program targeting our best rock.' The company no longer archives for public access its prior investor presentations from 2008 to 2012 on its web site.... Capital spending concerns are growing with the realization the 12,000 shale gas wells now considered by the University of Texas to be depleting came at the cost of between $3 million to $4 million per unconventional shale gas well required billions in capital investment. The speed at which these wells are dropping in production output is much faster than conventional vertical natural gas wells. The UT study cites an optimistic 44 trillion cubic feet of shale gas remaining while the federal government and independent analysts estimate 25 trillion cubic feet at best. The UT study also estimates another 11,000 wells needing to be drilled to meet its estimate of remaining shale gas production. This will require billions more in capital from an increasingly skeptical investing public as marked by declines in the value of a number of U.S. shale gas company stocks. Similar to record production levels in Pennsylvania today, the Texas Barnett enjoyed their own record production levels in 2010 and 2011 before beginning to decline. The main Barnett production comes from just two Texas counties, Johnson and Tarrant. Similar to the Barnett, the best production in the Pennsylvania Marcellus comes from just two productive areas. A dry gas window located in northeast Pennsylvania in Bradford, Tioga, Lycoming and Susquehanna counties and a wet gas window in the southwest corner of the state in Washington County not far from Pittsburgh. Chesapeake Energy and Talisman Energy continue to cut back on their Pennsylvania Marcellus lease holds.... Evidence is clear in the UT study confirming the majority of shale gas wells in the Texas Barnett are now producing less than newly drilled wells. With the Barnett now in decline, it joins the Haynesville and Fayetteville formations also experiencing rapid production declines. Considering these formations began to see widespread drilling operations less than 10 years ago, their overall rate of field declines are happening much more quickly than expected or represented. It also appears to validate the 2009 work of such petroleum geologists as Arthur Berman who has been documenting rapid and aggressive shale gas production decline rates on a per well basis since the U.S. shale gas boom took off. In addition to dealing with rapid decline rates and investment capital resources, the industry is also facing growing doubts about its aggressive stand to export U.S. shale gas overseas while at the same time promoting energy independence. As strong statements about the Pennsylvania Marcellus continue to fly about, it’s looking more and more like the simple realities of geology and access to capital will determine its overall importance to the American energy scene."
Is the Texas Barnett a harbinger for the Pennsylvania’s Marcellus?
Examiner, 30 September 2013

"Former energy minister Chris Huhne has warned that the UK may be forced to export its reserves of shale gas produced by fracking to the rest of Europe. Mr Huhne said that under European competition laws the UK may be forced to share the gas with other countries. The Department for Energy and Climate Change has predicted gas prices in the UK could fall by as much as a quarter if the UK begins to exploit its natural reserves. But when asked by John Humphrys on the BBC Radio 4 Today programme if the UK would be forced to export the gas, Huhne said that some would be used in the UK, but trade guidelines would make exportation likely. He said it was not a question of having to export the gas, as it 'would certainly get used here', but said the UK was 'linked in to world gas price much more than the Americans are' due to the already established pipelines and terminals."
Chris Huhne: UK may have to export fracking gas to rest of Europe
Telegraph, 30 September 2013

"Libya’s oil production exceeded 700,000 barrels a day, nearly 45 percent of installed capacity, on higher output from the western region, said Oil Ministry Measurement Director Ibrahim Al Awami. The Hamada oil field resumed operations this weekend, adding 8,000 barrels a day to the North African nation’s crude production, he said in a telephone interview today. Protests staged at energy facilities since July by workers and guards brought production from the eastern oil fields to a near halt. Libya in August produced 575,000 barrels a day, the lowest level since the 2011 overthrow of Muammar Qaddafi. The country has the capacity to produce 1.55 million barrels daily, according to data compiled by Bloomberg."
Libya Daily Oil Production Exceeds 700,000 Barrels, Awami Says
Bloomberg, 29 September 2013

"Brazil's state-led oil company, Petroleo Brasileiro SA, and its Indian partners have made a 'beautiful' oil discovery off Brazil's northeast coast and it will produce a minimum 100,000 barrels of petroleum a day starting in 2018, the company's chief executive officer said on Friday. Maria das Graças Foster, the chief executive, declined to say how big the discovery is but said it was an important new oil 'province' for Brazil and that its large potential reserves would create a rush of jobs and activity to the area that will need to be managed carefully. On Thursday, Reuters exclusively reported that the discovery, centered on the SEAL-11 offshore exploration block, likely holds more than 1 billion barrels of oil and that the region will soon become Brazil's biggest new oil frontier."
Petrobras IBV Brazil offshore oil find 'beautiful' -CEO
Reuters, 27 September 2013

"Senior Conservatives have hinted at fresh moves to curb the rising cost of gas and electricity as they scaled back criticism of Ed Miliband’s plan to freeze energy prices. The 'big six' energy companies have warned that the Labour leader's proposal to peg prices for 20 months if Labour wins the next election risked power cuts. Their message has been echoed by Tory ministers including the party’s chairman Grant Shapps. However, Michael Gove, the Education Secretary, said Mr Miliband was 'absolutely right' to warn about energy price rises and took a swipe at the 'big six'. David Cameron also agreed that action was needed to reduce the cost of light and heat."
Michael Gove says Ed Miliband right to attack energy companies
Independent, 27 September 2013

"A green energy company has promised never to supply gas obtained by fracking to households in the UK. Ecotricity said it wanted to give consumers the choice not to buy gas sourced through fracking, the controversial method of extracting shale gas. 'The majority of people in Britain simply don’t want fracking to take place and we think they should be able to choose not to buy gas from such sources,' said Ecotricity founder Dale Vince. 'We’re giving people the chance to be conscientious objectors on this issue.'"
Energy supplier promises 'frack-free' gas
Telegraph, 27 September 2013

"Royal Dutch Shell on Tuesday became the most recent company to abandon efforts to turn Western Slope oil-shale rock into oil, announcing it is abandoning its Mahogany project. Chevron stopped its oil-shale research in Rio Blanco County in February 2012. 'The energy markets have evolved since we started the project in 1982,' said Kelly op de Weegh, a Shell spokeswoman. 'We are exiting our Colorado project to focus on other opportunities.' The aim of the Mahogany Research Center was to turn oily shale rock into liquid by heating the rock in situ and pumping it out. 'The economics of oil shale have always been the issue,' said David Abelson, an analyst with Western Resource Advocates, an environmental group opposing shale development. Shell spent an estimated $30 million to create a test subterranean 'freeze wall' to hold in the shale oil when it was heated. Full-scale production would probably have required building a dedicated power plant. The new oil plays in North Dakota and Texas and along Colorado's Front Range, which are producing large quantities of oil, hurt the viability of oil shale, said Jim Spehar, former mayor of Grand Junction. 'Out here on the Western Slope, oil shale will always be the fuel of the future,' Spehar said. Shell on Tuesday announced plans to build a $12.5 billion plant in Louisiana that would turn natural gas into diesel, jet fuel and other liquids.'"
Shell abandons Western Slope oil-shale project
Denver Post, 24 September 2013

"British Gas owner Centrica says it will not build two gas storage projects in a move that will leave the UK more dependant on gas imports. The company said it would not construct the facilities, in Caythorpe in East Yorkshire and in the North Sea, because the government had decided not to subsidise new gas storage. Centrica's decision will leave the UK with some 15 days of stored gas supply. The news that it will cost the company £240m left the shares down 1.5%. Converting the North Sea holding site at the Baird gas field off the North Norfolk coast would have cost £1.5bn and created the second-biggest in the country. The UK's stored gas supply is far lower than in Germany and France, where between 99 and 122 days of gas supplies are stored. But the government has pointed out that the UK does not need the same amount of storage facilities because of the country's access to North Sea supplies and an extensive range of import infrastructure."
British Gas owner Centrica stops plan to build gas storage
BBC Online, 23 September 2013

"Cheaper, dirtier Illinois coal is giving cleaner burning natural gas a run for its money as a fuel for electric power plants, helping the coal market slow the rate at which utilities are switching to abundant, less-expensive gas. Electric utilities are not switching from coal to gas as quickly as they were last year, when natural gas prices hit a 10-year low. Gas prices have almost doubled since then.... With Illinois coal now in the mix, it could become more difficult for gas producers to predict how many power plants will switch from coal to gas, a factor in determining demand. Utilities are still switching from coal to gas, but the rate has slowed by 60 percent this year, according to internal data provided by Reza Haidari, manager with Thomson Reuters Natural Gas Analytics, as natural gas prices have risen..... Some power generators, especially those in the U.S. Southeast like Southern Company, are returning to coal after shifting to more natural gas. Utilities were surprised to see they could 'aggressively run coal plants with as much of an Illinois basin blend as they have been,' said Ted O'Brien, president of Doyle Trading Consultants, an energy research firm specializing in the coal sector.... The shift toward Illinois coal has been underway for several years, and is increasingly evident among producers like Peabody Energy Corp. Its Illinois Basin output rose 11 percent last year even, while CAPP output pulled down total production.Illinois coal has become so popular that CME Group is considering launching an Illinois Basin coal futures contract. Plants burning both types of coal in 2008 had a mix of 87 percent CAPP coal and 13 percent Illinois Basin coal, according to an SNL Energy analysis of government coal delivery data. In 2012, that mix dropped to 59 percent for CAPP and rose to 41 percent for Illinois Basin coal."
Cheap Illinois coal slows U.S. switch to cleaner gas
Reuters, 20 September 2013

"BP and its partners behind the Shah Deniz gas project in Azerbaijan have made a long-awaited announcement on long-term supplies to Europe, with only a tenth of the gas set for eastern European states that Brussels had hoped would benefit. The Shah Deniz consortium, which includes Azerbaijani national oil company Socar, Statoil of Norway and French oil major Total, has been developing the country’s gas reserves for several years. The European Commission had hoped most of that gas would reach states in southern and eastern Europe to ease their dependence on Russia, which has been seen as unreliable supplier since it cut supplies to Europe during payment disputes with Ukraine. That became unlikely in June after the Shah Deniz consortium backed a pipeline that will terminate in Italy, rather than the Brussels-backed Nabucco project that would have passed through south eastern Europe. Yesterday, the consortium said 80 per cent of the gas would end up in Italy and adjacent markets, which are relatively well supplied. A Bulgarian utility is set to take 1bn cubic metres a year of gas for 25 years, a tenth of the total, while a Greek utility will take a similar amount. 'Shah Deniz gas is now effectively lost to eastern Europe,' said Thierry Bros, senior European gas analyst at Société Générale. 'Those countries will remain dependent on Russia for a large percentage of their supply.' The decision comes at a sensitive time for Europe’s gas industry, with indigenous supplies from the North Sea in decline, and countries including the UK struggling to secure shipments of liquefied natural gas. That is allowing Russia to regain market share lost in recent years. Société Générale analysts said last week that Russia would reclaim its position as Europe’s largest supplier from Norway this year, after exports to Europe from Russian state oil company Gazprom climbed 10 per cent compared with 2012 in the year to August. The contracts will add to the pressure on Brussels to accelerate the building of infrastructure to ensure that gas can be traded freely within Europe. The Commission has championed pipelines that would allow utilities in member states to buy gas from a variety of suppliers and ease dependence on long-term contracts. Al Cook, BP’s vice-president for Shah Deniz, said he expected Brussels to support the development of so-called interconnectors from Greece to Bulgaria and then from Bulgaria to the rest of Europe, which would allow Azerbaijani gas to flow to eastern Europe. 'We are confident [eastern European and Balkan states] will be a source of demand in the future, but we are not actively engaged in any negotiations at the moment,' said Mr Cook. But progress on the building of interconnectors has been slow, particularly in eastern Europe, and analysts said weak demand for gas in the region was holding back investment. 'If you invest in brand new gas infrastructure in eastern Europe, there’s not nearly enough confidence in future demand that you are going to get your money back,' said Jonathan Stern, head of gas research at the Oxford Institute for Energy Studies. Long-term contracts, which BP said were worth $100bn and were among the largest of their kind in the history of the oil and gas industry, would go some way to encouraging trade in gas, however."
Azerbaijan gas decision to disappoint Brussels
Financial Times, 19 September 2013

"With a subtle motion of the hand China took away the Turkmenistan – Afghanistan – Pakistan – India (TAPI) pipeline project from USA and became yesterday the chief controller of gas resources in Central and South Asia. Somebody else’s ideas and plans have been expropriated by means of contract for sale of 25 bn cu m of gas per year concluded between State Concern Turkmengas and Chinese Company CNPC. The deal will increase the total volume of Turkmen gas supplied to China up to 65 bn cu m. At the same time the agreement is achieved on the planned new direction of Turkmenistan – China pipeline (D direction) for additional supplies. Gas agreements enabled Xi Jinping, the General Secretary of PRC and Gurbanguly Berdimuhamedow, the President of Turkmenstan, to adopt mutual Declaration on establishment of strategic partnership relations between Turkmenistan and PRC. The Declaration was supported by the agreement between Turkmengas and State Bank of Development of China on cooperation in financing the second stage of Galkynysh gas field development, as well as by the contract between Turkmengas and CNPC on designing and construction of plant producing commercial gas in volume of 30 bn cu m annually at the gas field Galkynysh. Galkynysh as one of the largest field in the world must have become raw materials base for TAPI gas pipeline together with the Dovletabad field. By gaining control over the raw materials base China in fact is getting hold of TAPI and it seems that USA were ready for such development of situation and don’t mind it. To some extent it’s even more convenient for Washington if China as earlier USSR would get stuck in Afghan mayhem. Earlier the project of construction of gas pipeline TAPI (Turkmenistan-Afghanistan-Pakistan-India) has been de facto blocked by the United States: the Government of Afghanistan has postponed the construction tender on TAPI project without mentioning the exact terms of tender postponement. The reason for postponement was Afghan government’s preparation for the withdrawal of troops of the U.S. and NATO out of the country in 2014. The earlier-drawn consultants made a feasibility study of the project, presentation of which was appointed for 22-23 November. Today, it is still unclear whether the presentation will be held in fixed terms. Work-financing U.S. Agency for International Development (USAID) previously hurried the consultants in connection with the plans of withdrawal of U.S. troops from Afghanistan. As a result, as consultants had feared, the uncertainty associated with the withdrawal of troops, influenced the timing of the TAPI construction start. The $7.6 billion agreement for the supply of gas from Turkmenistan to Afghanistan, Pakistan and India was signed on the project. It was planned that gas deliveries via pipeline system TAPI will begin in December 2014. Supplies are unlikely to begin in fixed terms.World’s leading companies, including Agip and Halliburton, claimed to carry out engineering works. At least 37 million cu m of gas will be delivered daily via TAPI. Drawings of the pipeline were made by American engineers. TAPI pipeline will be laid in a deserted mountainous terrain. Its security will be provided from the air."
China took away the Turkmenistan – Afghanistan – Pakistan – India pipeline from USA, 5 September 2013

"Ed Davey, the [UK] energy secretary, is to deliver a warning against 'hype' that shale gas could revolutionise Britain's energy supplies. In a speech tomorrow Davey will warn that the country is unlikely to see benefits from shale gas until the next decade, adding: 'We can't bank on shale gas to solve our energy challenges today or this decade.'"
Shale gas is not quick energy fix, cautions Davey
Sunday Times, 8 September 2013, Print Edition, P15

"Libya, which has the world's fifth largest petroleum reserves, is importing oil to stave off power cuts after renegade guards crippled pipelines in the worst conflict since the 2011 civil war. A coalition of rebel fighters who toppled Muammar Gaddafi, and oil workers with tribal loyalties who are opposed to the government in Tripoli, have shut down wells and ports across the country. The rebels, demanding autonomy for regions in eastern Libya, say that the Government is run by Islamists who use the oil revenue to line their pockets. Once one of the world's largest producers, Libya's output has fallen below 10 per cent of its normal level, to less than 100,000 barrels per day..... The government warned that the country was losing billions of pounds in revenue, the most graphic illustration of Libya's failure to live up to the hopes of the revolution.... The rebels believe that the Justice and Construction Party, an Islamist group linked to the Muslim Brotherhood, has taken over Libya's Government, putting allies in key positions and funnelling oil revenues to favoured militias.... Libya is almost entirely dependent on oil and gas for its foreign exchange earnings. They account for more than 80 per cent of its Gross National Product and up to 97 per cent of exports."
Libya has to import oil as revolution breeds chaos
London Times, 3 September 2013, Print Edition, P28

"US crude oil imports will fall significantly from a peak of US$335 billion to US$160 billion by 2020 according to recent analysis by Wood Mackenzie. As the US dependence on oil imports continues to decrease, China's reliance on foreign oil is rapidly growing. From 2005 to 2020, China's oil imports will rise from 2.5 million barrels per day (mb/d) to 9.2 mb/d while US imports will have fallen from a peak of 10.1mb/d to 6.8mb/d within the same period. This translates to a 360% increase in China crude oil imports and a 32% decline for US. The oil supply growth combined with recent declines in US oil demand and a future trend of only weak growth to 2020 leads to an overall decline in crude imports through this decade. US net oil imports will decrease 45% to 6.9 million b/d by 2020 from the 2005 peak of 12.5 million b/d. Ann-Louise Hittle, Wood Mackenzie's Head of Macro Oils, says, 'By 2020, US import requirements will reduce due to tight oil production while 70% of China's oil demand will come from imports. It is important to note these opposing trends, as it means the US is becoming more North America-centric for its supply needs and China more dependent on Middle East and OPEC crude. We will therefore see OPEC suppliers, who traditionally focused on the US for crude sales, compelled to shift their focus towards China.' China's demand for crude oil imports will grow significantly and outstrip US at its peak, requiring spend of US$500 billion by 2020. The turning point for US crude oil imports to be surpassed by China is expected to be around 2017.... 'China and the US are heading in opposite directions for crude oil import trends. Although the US was the largest import market before, China will surpass US demand for oil imports and peak spend. Notably also is a change in traditional suppliers - China will look towards OPEC supply more as US relies on it less. These are trends that suppliers should look out for but equally, a trend China must consider in evaluating its cost structure' concludes Hittle."
WoodMac: US crude oil imports dependency to decline 32% by 2020
Wood Mackenzie, 22 August 2013

"North Sea oil and gas production could decline by as much as 22pc this year - the biggest annual slump on record – as maintenance on ageing infrastructure hits operations, the industry body has warned. Oil & Gas UK said it now expected average output to fall to between 1.2m and 1.4m barrels of oil and gas per day (boepd) this year, down from 1.54m boepd in 2012. Malcolm Webb, Oil & Gas UK chief executive, warned of a 'worrying decline' in the amount of time existing oil and gas fields spent producing, despite hailing record levels of investment, at £13.5bn this year. The group abandoned its earlier forecast, set in February, which had predicted that production would see only a 'marginal' decline, of as little as 2.5pc, to between 1.45m and 1.5m boepd in 2013. The figures highlight the challenge facing the industry in extracting the remaining potential from the North Sea. In 2003, production stood at almost 4m boepd, but has fallen every year since. Natural decline as reserves in older fields are used up is being exacerbated by increasing time lost to unintended shutdowns for maintenance or following accidents, such as the major gas leak at Total’s Elgin field last year. However, Oil & Gas UK predict that the declining North Sea trend could see some temporary reversal. It forecasts that new investment could drive output close to 2m boepd by 2017 - but only if the problems of high levels of maintenance shutdowns are overcome. It expects average production efficiency - the ratio of actual production to the maximum potential of the fields - to have fallen to 60pc in 2012, down from about 80pc eight years ago. That decline represented a loss of almost 500m boepd in 2012. 'The recent decline has resulted from deteriorating reliability, with extended maintenance shutdowns, compounded by several major production outages,' it said."
North Sea faces record fall in oil and gas production
Telegraph, 21 August 2013

"Cash-strapped families have cut their energy use since 2005 as bills have soared. A combination of increased charges and wages flatlining have forced households to turn their heating off to cut costs. New figures also reveal wide variations in the amount of energy people use in different parts of the country, with people in the East Midlands using almost double that of homes in the South West. The average home usage in England and Wales fell by 24.7% over the period to 2011, according to the Office for National Statistics (ONS). Consumer groups said that while energy savings measures may have played apart, the big drop will have been caused by people simply switching off their heating altogether. A study this month found people struggling with energy bills face a gap of £438 between their bills and what they can afford to pay – an increase of almost £200 over the last decade.  The gap means those in fuel poverty in England alone face bills totalling £1.05billion more than they can afford – a jump from £606million in 2003."
Soaring bills force cash-strapped families to cut energy use by 25% in just six years
Mail, 17 August 2013

"Antero Resources, a major Marcellus Shale driller, needs so much water for its fracking operations that it hauls truckloads from the Ohio River to its wells in West Virginia and Ohio. To cut down on transportation costs, the company now wants to build an 80-mile water pipeline. The Wall Street Journal describes the project as a 'costly wager that the hydraulic-fracturing industry’s thirst for reliable sources of water will grow' — and reports that enviros are worried about the swelling stresses that the industry is placing on the Ohio River, which is the Mississippi River’s largest tributary: Tapping the Ohio would give the pipeline access to the region’s most dependable source of water. Many of the rivers and streams that Antero now uses run low in the summer, prompting state officials to stop gas-industry withdrawals. A drought in Ohio last year curtailed water to fracking operations."
Fracking company wants to build new pipeline — for water
Grist, 15 August 2013

"When Iraq surpassed Iran last year as the second-largest Opec producer for the first time since the late 1980s, it was heralded as a sign of the recovery of Baghdad’s energy industry a decade after the US-led invasion. But less than 12 months later, Iraq has gone from being a leading source of growth in global oil supplies to an uncertain one – a development that is putting pressure on prices and posing challenges for policy makers in Baghdad, Washington and Riyadh. Iraq, which joined an elite group of countries last year producing more than 3m barrels per day (b/d) of oil, saw the figure slip back to 2.96m in June, according to Reuters data. This compares with an initial government target for this year of 3.7m b/d. Along with surging North American supplies from US shale and Canada’s oil sands, rising Iraqi output was expected to cushion the oil market from the impact of tighter sanctions on Iran. However, Richard Mallinson, chief policy analyst at Energy Aspects consultancy, said: 'Iraqi supply is going backwards this year, when a lot of the market expected it to be delivering the biggest growth outside the US. That’s a big shock.' Growing violence, political paralysis and lingering infrastructure problems have thwarted Baghdad’s plan to raise oil production. Last month was the bloodiest in Iraq for five years, according to the UN, and mounting violence has taken its toll on the oil industry."
Iraq’s faltering oil resurgence raises price fears
Financial Times, 8 August 2013

"Uranium prices are showing little sign of recovery after sinking to the lowest in more than seven years amid a glut of the radioactive metal and speculation Japan will delay restarting its nuclear reactors. Prices may average $42.82 a pound this year, according to Morgan Stanley, while Bank of America Corp. is predicting $43.80. BMO Capital Markets, which cut its price estimate by 10 percent in July, forecasts $43 a pound. Uranium has averaged $40.94 so far in 2013 after sliding to $34.50 last month, the lowest since November 2005.... World uranium demand is forecast to increase 48 percent over the next decade, according to the World Nuclear Association. About 435 reactors around the world with combined capacity of more than 370 gigawatts consume about 78,000 tons of uranium oxide concentrate containing 66,000 tons of uranium each year, according to the association. A gigawatt is enough to supply about 2 million European homes. China, the world’s biggest energy user and third-largest uranium consumer, is building 28 reactors, the most of any country, to add to the 17 it already operates, according to the association. The country is seeking to increase its nuclear- power capacity to 40 million kilowatts in 2015 from 12.54 million kilowatts at the end of 2011, according to a government paper released Oct. 24. French demand for uranium may increase as Electricite de France SA, the world’s biggest atomic power-plant operator, enters the final phase of building its Flamanville-3 reactor. The plant dome was installed on July 16, EDF said in its earnings report published yesterday. Uranium may average $56 a pound in 2014, according to the median of five estimates compiled by Bloomberg from banks including Credit Suisse Group AG and Toronto-Dominion Bank."
No rebound for uranium seen as Japan idle plants
Bloomberg, 2 August 2013

"Shell’s write-down of around $2 billion on the value of 'liquids-rich' shale assets in North America may seem like a startling development, given the current unbounded optimism about the U.S. oil boom. But many billions of dollars have been written down on the value of shale gas assets in the U.S. The industry has been so successful producing gas that the price of the fuel has plummeted from $13 per million Btu in 2008 to just over $3 per million Btu currently, making assets worth less than originally hoped. Shale oil, however, still fetches a good price and is generating a profit-seeking frenzy in places like the Bakken formation in North Dakota and the Eagle Ford in Texas. So why has Shell just wiped $2 billion off the value of some shale assets supposedly rich in the hydrocarbon liquids that everyone craves? Shell didn’t identify which shale formation has taken the write-down. It has been unwilling so far to explain the charge, beyond saying it reflected, 'the latest insights from exploration and appraisal drilling results and production information.' In this information vacuum, shale skeptics might leap on this write-down as the first evidence that the U.S. oil boom is overhyped and will fail to live up to its grand expectations. Such a declaration would be premature to say the least. Another, perhaps more likely, possibility is that Shell has discovered that its shale assets are in the wrong place. Vast shale rock formations have 'sweet spots,' which yield higher production, or greater volumes of the prized liquids compared with gas. The Eagle Ford shale, where Shell has significant operations, is well known for these sweet spots. So before saying we’ve seen the first crack in the U.S. shale boom, we should first find out whether Shell just failed to get lucky."
Decoding Shell’s Shale Write-Down
Wall St Journal (blog), 1 August 2013

"At yesterday’s press conference, Oil Minister Abdelbari Arusi announced that Libya’s oil production is down 70 percent due to armed stoppages at the various oil terminals. Arusi said that production at Sidra, Ras Lanuf, Brega, and Herega were stopped due to armed industrial action. He said that only 30% was being produced at Zawia."
Libya oil production down 70 percent – Arusi
Libya Herald, 1 August 2013

"Libya's government will use all means, including military force if necessary, to prevent striking security guards at the country's main ports from selling its oil independently, Prime Minister Ali Zeidan said. In a critical challenge to the government, strikes at Libya's largest ports have pushed oil production and exports, the lifeblood of the north African country's economy, to their lowest levels since the civil war that ousted veteran leader Muammar Gaddafi in 2011."
Libya threatens army action against striking oil workers
Reuters, August 2013

"SSE, one of Britain's 'big six' energy firms, has warned that the government's energy plans fail to address the risk of power shortages in the near term. Westminster has announced a draft package of incentives for energy companies to keep plants which might otherwise be shuttered on standby, in a bid to address an acute capacity shortage expected as ageing power stations retire. However, it will not make them available until 2018/19 - a move SSE said would create further uncertainty in the energy market and 'not address the risk of imminent shortages'. The Scotland-based group said the five-year wait for the government's financial incentive package will hold up new investment decisions and delay the construction of new plants. '[Reforms] will not, therefore, enable investment decisions for new plant to be made,' said SSE in its interim management statement. In the near-term, it could impact decisions over whether old fossil fuel plants, which have become less profitable, should continue to operate. SSE's warning comes just a day after the coalition came under fire for inadvertently rewarding energy firms for mothballing their existing plants. Under the plan announced this month, the operators of mothballed plants would be offered generous subsidies to fire them up when energy demand is high. Last month, energy regulator Ofgem warned the risk of UK blackouts has tripled since a year ago, as Britain has failed to build enough new wind farms and nuclear power stations to replace old fossil fuel plants. The problem has been exacerbated by fewer households insulating their lofts and switching to green appliances than hoped, creating higher-than-expected demand for energy in future."
Government energy plans will fail to keep the lights on, says SSE
Telegraph, 25 July 2013

"It was only two years ago that Poland was positioning itself at the forefront of a shale gas revolution for Europe. Estimated to have more untapped reserves than any other European Union nation, Poland was eager to replicate the boom from hydraulic fracturing, or fracking, in the United States that has helped lower energy prices and carbon emissions. But now the scenario is increasingly cloudy. Poland's estimates of shale have been reduced, and three major energy companies, including ExxonMobil, have recently pulled out of the country after disappointing results. It's still early, but Poland's experience speaks to the uncertainties of the shale industry's future in Europe. The process of fracking – retrieving gas from shale rock by injecting water, sand, and chemicals deep into the earth – remains controversial, and many countries are wary. And even where governments have supported it, officials have been slowed by more complicated geologies sitting under denser populations than those in US states like Texas – as well as a divided public. 'We are no longer as excited as we were two or three years ago' about the prospects of a shale gas industry in Europe, says Bartosz Wisniewski, an expert on the European industry at the Polish Institute of International Affairs in Warsaw. And the Polish experience with fracking, if it goes badly, could sour the rest of the Continent. 'There is no reason to write Polish shale gas off entirely,' he says, but 'to a certain extent, we could prove incompatibility.'... Poland's initial enthusiasm has been tempered since 2011, as hurdles have arisen. EIA estimates initially showed Poland had 5.3 trillion cubic meters of gas, but Polish geological studies, using different methodologies, estimate potential at only a fraction of that. And according to the EIA's new assessment report from June, potential has been reduced by 20 percent, in part because of more complicated geological conditions for retrieving shale gas. It's a familiar tale in Europe, where companies weigh whether harder-to-access gas is commercially viable with current technology and unclear regulations that could affect investment gains. Last year, ExxonMobil left Poland after drilling two vertical test wells; two other major energy companies followed suit this spring. Ms. Kacperczyk says that hasn't changed the the government's attitude. As the EIA report sums up: 'Poland offers Europe's best prospects for developing a viable shale gas/oil industry.'  The panorama in Britain, which the EIA says is second to Poland in pursuing its shale gas potential, shows the two divergent views that have emerged in the debate in Europe. The Institute of Directors (IoD), a Britain-based business membership organization, recently published a report that was clear in its optimism about the potential of fracking by comparing it to Britain's profitable offshore oil fields: 'Shale gas could be a new North Sea for Britain.' But Britain has seen major setbacks as it attempts to develop an industry. In 2011, testing of its first well led to a series of minor earthquakes, a moratorium on fracking, and a firestorm of protest, giving rise to perhaps Europe's best-known anti-fracking group, Frack Off.... Despite the divergent views ranging from bonanza to ban, it will likely be a long time before Europe can ever catch up to the US – if it ever could. Even if Britain, for example, is able to develop an industry, says Andrew Aplin, professor of petroleum geoscience at Durham University in northern England, it's unclear how big it would be and what kind of effect it would have on price, since so much of Europe depends on imported gas from Russia, Norway, and Qatar, and could possibly rely on imports from the US in the future. 'I don't think we are looking at anything that's the extent of the US,' says Mr. Aplin. 'But I think there are real possibilities [for] an industry if we choose to have one.' The choices Europe will make are far from certain. For starters, incentives differ from those in the US, where individuals own mineral rights, meaning they can lease their land and share in the windfall of shale exploration. In many parts of Europe, there is no similar motivation because the state owns the rights, making exploration a nuisance, not a potential boon. But beyond incentives for the individuals of Europe is the Continent's identity as the world's 'green' leader. Europe has led in its commitment to combating climate change and embraced renewables such as solar and wind power."
As Poland's fracking future turns cloudy, so does Europe's
Christian Science Monitor, 24 July 2013

"It has been an interesting summer. In the midst of a deluge of 'peak oil is dead' stories, crude prices surged upwards taking gasoline with them. Most 'end of peak oil' stories talk mainly about the rapid growth in U.S. oil production in the last few years that has come from hydraulic fracturing of tight oil formations in North Dakota and Texas, without any context. Many assume open-ended growth that will soon spread around the world as more 'shale' formations are discovered and attacked with the latest technology. A few acknowledge that even these wonderful formations will eventually run dry, but that is generally portrayed as so far down the road that we will have abundant oil for the foreseeable future. While most of these stories stem from the financial press or those beholden to the fossil fuel industry in one way or another, the notion of energy plenty is starting to creep into the publications of the OECD’s International Energy Agency and the U.S.’s Energy Information Administration. The financial press of course starts from the unstated premise that any limitation on availability of natural resources, be it fossil fuels or the capacity of the atmosphere to absorb any more emissions without triggering off devastating consequences, could be bad for economic growth and stock prices. For the next few years, all the optimism to which we have been subjected lately will probably play out and U.S. domestic oil production from tight ('shale') formations will probably increase, provided oil prices stay high enough to support this expensive way of extracting oil. Some knowledgeable observers, however, believe that the rapid increases in production will come to an end in three or four years and that U.S. domestic oil production will once again enter a decline – perhaps for the last time. This assessment is based on the speed with which production from fracked oil wells declines and the lack of places to drill productive wells in North Dakota and Texas. For the immediate future, the prospects for production of major amounts of oil and gas from other areas do not look good. Russia seems to have plenty of conventional gas that can be produced much more cheaply than by fracking tight formations. China may run into water and transportation problems in areas where they may have gas-bearing shale formations. Many other places, such as California and Europe, are so well developed that drilling and fracking operations are running into much local opposition. France, for example, has banned fracking for as long as the current government is in power. From a peak oil perspective, there are several problems with optimistic forecasts that run beyond the next few years. Optimists almost never mention the increasing rates of depletion taking place in conventional oil fields as an ever-increasing share of global production shifts from land to deepwater. The cost of producing unconventional oil is almost never mentioned amidst discussion of how much will be technically recoverable with advancing technology. Cost must be measured both in terms of how much energy is required to produce more energy, and the price of oil in relation to an economy’s ability to pay the price. Rarely is it mentioned that so far more progress towards 'energy independence' for America has come from a drop in demand by people and organizations no longer able to pay the price than from fracked oil. This in turn depends on the future of the OECD and Chinese economies, which at the minute do not look too good. While oil demand is stagnant in Europe, Japan and the U.S., it is still growing in China, but this might not always be the case. There is considerable discussion in energy optimist circles these days about how 'peak demand' might occur, thereby slowing oil production to some kind of false peak. This of course is always tied to the increased efficiency with which we use oil and not to economic hard times during which fewer will be able to afford the increasingly expensive stuff. No one ever mentions the circa 70 million people that are being added to the world’s population each year who might like a little energy in their lives. We finally get to the 800-pound gorilla in the world oil situation which is the future of the Middle East. It is hard to paint too gloomy a picture in looking at the future of the region which produces much of the world’s exportable oil. So far disruption of exports for one reason or another has been confined to Iran, Syria, Yemen, and Sudan. Political instability in Algeria, Libya, and Iraq is already slowing exports and there is little to prevent the situation from getting worse in these countries."
The Peak Oil Crisis: A Summer Review
Falls Church News-Press, 24 July 2013

"Futures trading last week resulted in a $2 a barrel increase in the price of New York crude and little change in London which closed at $108.07. At the close London crude was only two cents a barrel higher than NY, the narrowest close in nearly three years. In the past five months US crude has climbed by more than $20 a barrel against London crude so that West Texas Intermediate is now reconnected to world market prices after three years of an oil glut in the Midwest."
Peak Oil Review
ASPO, 22 July 2013

"..Iraq’s oil industry continues to press ahead. Rumaila, the country’s largest oil field, is on track to average 1.45 million b/d this year, up from 1 million b/d in 2009 when the contracts with BP and PetroChina to increase production were signed. Some realism is starting to set in on the Iraqi oil production program. The goal to increase Rumaila’s production to 2.85 million b/d has been reduced to 2 million and Eni has just signed a new agreement with Baghdad which calls for a new production target of 850,000 b/d from the Zubair field vs. the 1.2 million in the original agreement. Shipments through Iraq’s northern export pipeline to Ceyhan, Turkey resumed on Tuesday though one of the twin pipes is out of service. The pipeline itself is in bad condition due to the hastily repaired damage that numerous terrorist attacks have inflicted on it. The Turkish section is reported to be in need of cleaning, but the line has numerous wooden plugs placed there by thieves who have drilled holes in the line to steal oil."
Peak Oil Review
ASPO, 22 July 2013

"The latest exuberant shale gas news comes from a report by the British Geological Survey estimating enormous new shale gas resources in the central UK. On June 27, 2013, the British Geological Survey (BGS) released a natural gas resource assessment for the Bowland Shale in the United Kingdom stating that approximately 40 trillion cubic metres (1,300 trillion cubic feet (Tcf)) of shale gas exist in 11 counties in northern England (Exhibit 1). The BGS report, unfortunately, only addresses gas-in-place (total resources) and not extractable resources (technically recoverable resources) much less reserves (commercial supply). The most-likely reserve potential of the Bowland Shale is only about 42 Tcf (3% of gas-in-place) after applying methods used by the U.S. Energy Information Administration (EIA) and Potential Gas Committee (PGC). The potential for misunderstanding of shale resource estimates is great. Various organizations have published resource estimates for shale gas plays in the U.S. and around the world. These reports are commonly misinterpreted as representing commercially producible volumes of gas. Resources are the volume of natural gas in a particular formation, also known as gas-in-place (Exhibit 2). This has no relation to what is physically or technically producible much less commercially viable. The technically recoverable portion of total resources--Technically Recoverable Resources (TRR)--is that volume that can be produced using present technology. It similarly does not include commercial factors. This is the gas volume most often publicized and confused with reserves, the economically producible subset of technically recoverable resources. The EIA states that TRR represents approximately 25% of gas-in-place for most shale formations.... the most-likely reserve for the Bowland Shale is approximately 42 Tcf. While this is a substantial volume of gas (roughly equivalent to the Barnett Shale accumulation in the U.S. based on a recent evaluation by the Texas Bureau of Economic Geology in press), it will hardly change the energy future of the U.K. Based on well productivity from the Barnett Shale, it will take approximately 30,000 wells to fully develop the Bowland Shale potential reserves."
Arthur Berman - British Geological Survey Bowland Shale Gas Assessment
The Oil Drum, 19 July 2013

"Most people in Britain want to reduce reliance on fossil fuels, but due more to fears of shortages and rising prices than to fears about climate change, according to a poll developed by researchers at Cardiff University and funded by the UK Energy Research Centre. Nearly 2,500 people were surveyed across England, Scotland and Wales in August 2012. The results, published on Tuesday in a report on 'Transforming the UK energy system: public values, attitudes and acceptability,' provide a trove of information about public opinion on climate and energy policy. By a large majority, respondents were either very concerned (24 percent) or fairly concerned (50 percent) about climate change and thought it was partly (48 percent) or mainly (28 percent) caused by human activity. Only a minority thought fears about climate change have been exaggerated (30 percent), though more expressed uncertainty about what the effects will really be (59 percent). Nearly everyone agreed with the statement that Britain needs 'to radically change how we produce and use energy by 2050'. Yet when asked about their concerns, affordability and energy security consistently came to the fore as the most important issue. Keeping bills affordable was the most important single priority for respondents (40 percent) followed by making sure the United Kingdom has enough energy to prevent blackouts and fuel shortages (32 percent). Tackling climate change came a distant third (27 percent). Turning the question on its head, climate change was the least important priority for almost half of the respondents (48 percent). By overwhelming majorities, those polled were fairly or very concerned gas and electricity would become unaffordable (83 percent); Britain will become too dependent on energy from other countries (83 percent); the country will have no alternatives if fossil fuels are no longer available (83 percent); and petrol will become unaffordable (78 percent). Nearly four out of five respondents agreed the country should reduce its reliance on fossil fuels (79 percent). When asked for their reasons, respondents cited concerns about fossil fuels running out, being unsustainable or non-renewable (48 percent), costly (7 percent) and implied dependence on other countries (5 percent), compared with worries they are harmful to the environment and polluting (19 percent) or contribute to climate change (17 percent). While energy analysts are no longer concerned that oil and gas supplies will peak and start to run out, owing to the shale revolution, these fears continue to resonate strongly with ordinary members of the public. The same focus on affordability, reliability and convenience comes through in some of the survey's more detailed questions. Most people are prepared to reduce their own energy use (81 percent) in many cases greatly (58 percent). Britain's government and climate campaigners are pushing for wider use of electricity, as renewable power generation grows, for home heating, cooking and vehicles to help reduce carbon emissions. But the poll found fairly modest levels of support for that shift. If electric heating, cooking and vehicles were to become as convenient to use as conventional counterparts, willingness to use them would then climb significantly, especially if they were cheaper."
Peak oil, not climate change worries most Britons
Reuters, 18 July 2013

"Gas prices could fall by a quarter and help bring down household energy bills if Britain exploits its shale gas reserves, a report commissioned by Ed Davey, the Energy Secretary, suggests. The study by Navigant Consulting backs up David Cameron's claim that shale gas drilling could help cut the cost of living for families struggling with average bills of more than £1,300 per year. However, it contrasts with the claims of Ed Davey, the Energy Secretary, that shale gas is 'unlikely' to bring down household bills. He has said higher gas prices are probable regardless of the discovery of Britain's shale reserves and used this argument to justify spending billions on wind farms and nuclear power stations. This week, Mr Davey criticised NPower, an gas and electricity company, for saying that green energy would be a major factor behind rising bills, criticising their 'weird' assumption that gas prices would fall. However, the new study published today by his own department found gas prices may actually drop by 12 per cent by 2020 even if Britain does not pursue its shale resources. In Navigant's 'base case' of 'limited' shale exploration in Britain and Europe, Navigant said it expects the gas price to fall because of lower oil prices and America producing larger amounts of unconventional gas for export. The price would still be lower than it is today in 2030. In an optimistic scenario of high shale production in Britain and Europe, the price would fall 27 per cent, because of a 'combination of local gas with falling production costs' and 'readily available' imports.  In only one 'pessimistic' scenario, Navigant said gas prices would go up by 16 per cent over the next two decades. This would be caused by some sort of 'political limitation' on the availability of imports or 'US gas production declining before current expectations'.  'In two out of three of our scenarios we predict a fall in prices from current levels quite soon,' the report said.  Companies are currently in the very early stages of drilling for shale gas in Britain but local opposition could stop widespread exploration in the countryside. No-one yet knows how much - if any - can be recovered by fracking, the controversial process of blasting water, sand and chemicals into the ground to release the gas. However, estimates suggest northern England could provide enough shale gas to meet the UK's needs for more than four decades."
Gas prices could fall by a quarter with shale drilling, Government advisers say
Telegraph, 17 July 2013

"Fracking for shale gas will raise the risk of water shortages and could contaminate drinking supplies, Britain's water companies have claimed. In a blow for shale gas explorers and government alike, Water UK, which represents all major water suppliers, has published a series of concerns about fracking and warned that failure to address them could 'stop the industry in its tracks'. Ministers hope the controversial process, which involves pumping water, sand and chemicals into the ground to extract gas trapped in rocks, could unlock a major new source of gas for Britain and bring down household energy bills. Chancellor George Osborne on Friday unveils details of tax breaks for the shale gas industry, pledging the most generous tax regime in the world so that Britain becomes 'a leader of the shale gas revolution'. But Water UK, which is demanding an urgent meeting with shale companies to discuss its fears, warns: 'Shale gas fracking could lead to contamination of the water supply with methane gas and harmful chemicals if not carefully planned and carried out.' It suggests aquifers could be contaminated by fracking, by leaks from wells, or by poor handling of chemicals or waste water on the surface. It also warns that 'the fracking process requires huge amounts of water, which will inevitably put a strain on supplies in areas around extraction sites'. It adds: 'The power of the drilling and fracturing process even risks damaging existing water pipes, which could lead to leaks and shortages to people’s homes and businesses.' Shale gas explorers insist that fracking is safe but fear their attempts to test Britain’s shale potential will be hamstrung unless they can win public support.  Water UK says it is not 'taking sides' over fracking but that water supplies must be protected 'at all costs', with the utilities’ own reputations on the line. .... The water industry has commissioned its own report on the potential impact which shows the volumes needed presented a 'real concern'. This especially applies in the south east which is believed to have significant shale potential but is prone to water shortages. ... Shale gas firm Cuadrilla says it has 'robust safety measures in place' to prevent water contamination. Incidents have been 'extremely rare' in the US and caused by 'bad practice'. It says it is 'too early to say' how much water would be needed in developing shale sites."
Water firms raise fears over shale gas fracking
Telegraph, 19 July 2013

"Gas prices in the UK could fall by as much as a quarter if the country successfully exploits its shale gas reserves, according to a government-commissioned report released yesterday. The most optimistic scenario plotted by consultants predicts that the gas price will drop by more than 25 per cent by 2030, potentially saving families hundreds of pounds a year in energy costs. Even if Britain fails to get drilling on a large scale, the report’s authors forecast that the gas price will still fall 10 per cent by 2020. This is because the worldwide shale gas boom will boost global gas supplies. The report, commissioned by the Department of Energy and Climate Change, yesterday appeared on the government’s website with little fanfare. It contradicts recent claims from energy secretary Ed Davey that shale will have little effect on UK energy bills and the country should instead invest in renewable energy."
Gas prices may fall by quarter thanks to shale
City AM, 18 July 2013

".... this is a moment when an American president has come forward and spoken about climate change and exhibited his obvious and earnest desire to take on the problem; however, the emphasis on fracked gas makes this plan entirely the wrong plan. The plan focuses on carbon dioxide, but how we count global warming potential is in carbon dioxide equivalence, and methane, which is leaking out of these sites in very large quantities, is a super greenhouse gas. It’s up to a hundred times more potent than CO2 in the atmosphere, which means if you have more than 1 percent methane leakage, it’s like burning the gas twice. In the field, we’re seeing 7 to 17 percent of total production methane leaking into the atmosphere. Moving from coal to fracked gas doesn’t give you any climate benefit at all. So the plan should be about how we’re moving off of fossil fuels and onto renewable energy, which is what we know can power the planet, as we—with current technology."
Josh Fox on Gasland
Democracy Now, 12 July 2013

"According to declassified data Russia holds 17 billion tons of oil and 48 billion cubic meters of gas. Moscow believes revealing the extent of the vast reserves will lead to a surge of investment in the extraction and production of hydrocarbons. The country’s recoverable oil reserves in the C1 category (proven reserves) totals 17.8 billion tons; category C2 (preliminary estimated reserves) is 10.2 billion tons, according to data collected on January 1, 2012. Meanwhile, gas reserves were equally bountiful at 48.8 trillion cubic meters C1 category; gas stores of the C2 category is estimated at 19.6 trillion cubic meters. The Minister of Natural Resources of the Russian Federation Sergey Donskoy said the resource potential for these kinds of mineral resources remains one of the most significant in the world. ... Before the release of the official data Russia was placed second in the world by gas reserves after Iran, with 32.9 trillion cubic meters, and eighth by crude oil reserves, after Venezuela, Saudi Arabia, Canada, Iran, Iraq, Kuwait and UAE, with 11.8 trillion cubic meters of oil."
Mother (Russia) lode: Vast extent of oil, gas reserves revealed for first time
RT, 12 July 2013

"China, the world's second-largest oil consumer behind the United States and the largest global energy consumer, is looking to Nigeria as a way to diversify its sources of much-needed crude oil. Oil-rich Nigeria has an estimated 37.3 billion barrels of proven crude oil reserves as of 2011, according to the 'Oil & Gas Journal,' something that makes it appealing to China. 'It’s a long-standing policy of China to try to gain access to both energy and other natural resources around the world, but heavily in Africa,' Charles Ebinger, director of the Energy Security Initiative at the Brookings Institution in Washington, D.C., said. China gave Nigeria a $1.1 billion low-interest loan, it was announced this week, and in return China can expect more Nigerian oil, going up from 20,000 barrels per day to 200,000 by 2015, Agence-France Presse reports."
China Is Looking To Nigeria For Crude Oil And Has Been Trying To Win Favor With The Nation By Investing In The West African Country
International Business Times, 12 July 2013

"OPEC crude oil production in June dropped by 370,000 barrels a day, or 1.2 percent, mainly because of worsening supply disruptions in Libya, Nigeria and Iraq, according to the International Energy Agency. The 12 members of the Organization of Petroleum Exporting Countries pumped 30.61 million barrels a day last month compared with 30.98 million barrels in May, the Paris-based IEA said today in its monthly oil-market report. That level still exceeds a target of 30 million that the group reaffirmed at its last meeting on May 31. 'Mounting civil unrest by oil workers in Libya led to shut-ins of oil fields and export terminals while oil theft activity in Nigeria inflicted further damage to oil infrastructure,' the IEA said. 'Iraq output was constrained by pipeline damage in the north and bad weather in the south.' OPEC, which supplies about 40 percent of the world’s crude, estimated that its own production fell to 30.38 million barrels a day last month, according to a report yesterday by the Vienna-based group based on secondary estimates. A drop in Libyan output of 207,000 barrels a day led the decrease, along with cuts by Nigeria and Angola, OPEC said.... Saudi Arabia’s crude oil output rose by 100,000 barrels a day to 9.7 million barrels a day, the highest level in seven months, on increased domestic demand for crude during the peak summer cooling season in the desert country, the IEA said. Iran’s production was 2.7 million barrels a day in June, up 20,000 barrels a day from the previous month, it said."
OPEC Output Drops 1.2 Percent on Libya-Led Disruptions, IEA Says
Bloomberg, 11 July 2013

"Oil supply will outstrip an acceleration in demand growth next year as production outside of OPEC expands at the fastest pace in 20 years, the International Energy Agency predicted. World oil consumption will climb by 1.2 million barrels a day next year, up from 930,000 a day in 2013, the IEA said in its first monthly report with forecasts for 2014. Supplies from outside the Organization of Petroleum Exporting Countries will jump by 1.3 million barrels a day amid booming output in North America, shrinking the need for crude from the 12-member producer group, according to the report. The assessment should "give bulls some cause for alarm," the Paris-based adviser to oil-consuming nations said. "While demand growth is also forecast to pick up momentum," this "will still fall short of forecast non-OPEC supply growth." Oil supply will outstrip an acceleration in demand growth next year as production outside of OPEC expands at the fastest pace in 20 years, the International Energy Agency predicted. World oil consumption will climb by 1.2 million barrels a day next year, up from 930,000 a day in 2013, the IEA said in its first monthly report with forecasts for 2014. Supplies from outside the Organization of Petroleum Exporting Countries will jump by 1.3 million barrels a day amid booming output in North America, shrinking the need for crude from the 12-member producer group, according to the report. The assessment should "give bulls some cause for alarm," the Paris-based adviser to oil-consuming nations said. "While demand growth is also forecast to pick up momentum," this "will still fall short of forecast non-OPEC supply growth." Brent crude has lost about 2 percent this year, trading today near $109 a barrel on the London-based ICE Futures Europe exchange, as economic stagnation in Europe, slowing expansion in China and threats to recovery in the U.S. constrain fuel consumption. Dependence on OPEC is dwindling as new drilling techniques enable the U.S. and Canada to unlock reserves from rock formations deep underground. Global demand will average 92 million barrels a day in 2014, advancing by 1.2 million barrels a day, or 1.3 percent from this year, according to the IEA report. The agency said that today's forecast hasn't yet incorporated a reduction to 2013 economic growth estimates made by the International Monetary Fund on July 9. The Washington- based IMF trimmed its projection for global growth this year to 3.1 percent, from 3.3 percent. The agency boosted its estimate for demand in 2013 by 220,000 barrels a day from last month's report, estimating that oil use will expand by 930,000 barrels a day, or 1 percent, to 90.77 million a day this year. The revision, the third increase to the 2013 outlook to be made this year, was driven by unusually cold weather in the second quarter. "It's a balanced outlook for the next year, and growth is likely to increase," Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, said before the IEA report was released. "The million-dollar question is what is going on with non-OPEC supply," said Weinberg, who predicts that Brent will average $116 a barrel in 2014. Production outside OPEC will expand by 1.3 million barrels a day to 55.9 million a day in 2014, with almost 1 million barrels of the increase coming from North America, according to the report. Growth in Brazil, Kazakhstan and South Sudan will also help offset declines in other non-OPEC regions. The expansion means that demand for OPEC's crude will decline next year to 29.4 million barrels a day, about 200,000 a day less than will be required this year, and 1.2 million a day less than the organization pumped in June. Disruptions in Libya, Nigeria and Iraq cut the group's production by 370,000 barrels a day last month."
IEA Sees 20-Year Supply Peak Outpacing Demand Recovery in 2014
Bloomberg, 11 July 2013

"U.S. researchers say fears of running out of oil are unwarranted, as the demand for oil -- but not the supply -- will reach a peak and then decline. Warnings of 'peak oil' paint pictures of calamitous shortages, panic and even social collapse as the world reaches its peak of oil production and then supplies fall, but researchers at Stanford University and the University of California-Santa Cruz say such scenarios are not likely. Instead, they said, the historical connection between economic growth and oil use will eventually break down because of limits on consumption by the wealthy, better fuel efficiency, lower priced alternative fuels and the world's rapidly urbanizing population. 'There is an overabundance of concern about oil depletion and not enough attention focused on the substitutes for conventional oil and other possibilities for reducing our dependence on oil,' Adam Brandt, a Stanford professor of energy resources engineering, said. Writing in the journal Environmental Science & Technology, the researchers said a variety of mechanisms could cause society's need for oil to begin declining by 2035."
Global fears of running out of oil unwarranted, U.S. researchers say
United Press International, 10 July 2013

"It is true that, as we run down our conventional power sources through the closure of coal-fired power stations and our ageing nuclear reactors, the gap between our electricity supplies and the 60 gigawatts (GW) required at times of peak demand has become dangerously narrow. But the Government knows that the National Grid is quietly building up a hidden array of new power sources quite sufficient to keep our lights on and our computer-dependent economy running. There are three legs to this answer to the Government’s prayers. The first lies in the fact that there are thousands of hospitals and commercial and industrial concerns, such as banks, data centres and water companies, that have their own back-up generating facilities, largely powered by diesel. For some time, the grid has been signing up these operations to a scheme known as STOR (Short Term Operating Reserve), which, thanks to smart computer management, will enable it to call on them at very short notice to feed power into the grid. Those operators already signed up can supply 3.2GW to the grid, and this is estimated to rise within a few years to 8GW (estimates of the potential supply from such stand-by generators are between 20 and 30GW). Leg two of the scheme is that another 6GW is already available from thousands of CHP (combined heat and power) schemes, mainly gas-operated. A further 4GW could be made available, if the price were right, by recruiting those gas-fired power stations that have been 'mothballed' because gas has become more expensive than coal, the price of which has plummeted thanks to the USA’s switch to using cheap gas from shale. All this adds up to 18GW or more of capacity that can be called on to ensure that Britain’s lights stay on — equivalent to that of all our remaining major coal-fired power stations....Although this may offer a clever solution to our shortage of conventional power supplies and the huge problems created by the erratic nature of wind power, it comes, of course, with a massive downside – the prospect of yet another dramatic rise in our already soaring electricity bills. These new power sources are far from cheap; the current wholesale cost of electricity is around £50 a megawatt hour (MWh). Thanks to the subsidies levied through our electricity bills, we are already paying nearly £100 per MWh to the owners of onshore wind farms and £150 for those offshore. But, as the National Grid reveals, the tender prices submitted by those signed up to the STOR scheme can be as high as £400 per MWh, eight times the market rate. The average payment in 2011 was £225 per MWh, plus a fee of £22,000 for every megawatt of their capacity (for these fees in 2010-11 alone we stumped up £75?million). In other words, just when we are already facing a doubling of our electricity bills through 'carbon taxes', subsidies to renewables and the 'strike price' demanded by energy companies as their price for building new nuclear power stations, we are now looking at another huge spike in our bills to pay for the electricity the Government plans to call on to cover that fast-looming gap in our energy supplies."
Our lights will stay on – but it will cost us a fortune
Telegraph, 6 July 2013

"The combination of the military coup in Egypt which ousted President Morsi and a much larger-than-expected drop in US crude and product inventories sent US futures prices to a close above a $100 a barrel for the first time in more than a year. At one point NY oil was trading above $102 on Wednesday, $6 a barrel higher than the Monday low. NY closed prior to the 4th of July holiday at $101.24 and London settled at $105.76 closing the spread to $4.52. With the spread between NY and London oil prices falling to as little as $3.10 on Wednesday from a high of $23 in February, many analysts are saying the era of weak mid-western oil is over. Increased local refining coupled with improved rail and pipeline capacity to either refine or move the crude where it is needed is reducing the Midwestern glut. Disruptions caused by floods in Alberta have also slowed the import of oil into the Midwest.... The violence in Iraq continues with 761 killed in June and another 100 or so in the first days of July. Iraqi exports dropped for the third consecutive month largely because of sabotage to the Iraq-Turkey pipeline which exported 273,000 b/d in May but only 179,000 b/d in June. With violence continuing to grow, Iraq looks like the top contender for the country with a substantial drop in exports next."
Peak oil notes
ASPO, USA, 5 July 2013

"China’s pollution problem is rather simple; they now burn half the world’s coal – some 4.3 billion tons a year and 10 million barrels of oil a day. To cut pollution they have to cut coal consumption and at least put some controls on motor fuels, but to grow their economy at the targeted 7.5 percent a year, they almost certainly will have to increase coal consumption. Hydro, nuclear, and other renewables take too long to build or produce too little electricity. Something has got to go – breathable air or rapid economic growth. This year another problem has arisen – China simply is not growing as fast as it used to. For weeks now the financial press has been wringing its hands over the lackluster numbers coming out of Beijing and their impact on the global economy. Although Beijing still claims to be growing its GDP at 7.7 percent a year, these numbers are becoming increasingly suspect. While the central government may see the merits of accurate growth statistics, those at lower levels have a great incentive to look as good as possible. Some recent numbers such as the growth in electricity production in the 1st quarter suggest that China’s economy may now be growing at a rate closer to three percent. Part of the current problem dates back to 2008. In order to sidestep the effects of the global recession, Beijing undertook a $2.5 trillion stimulus program so that whatever was dear to local officials’ hearts was built with borrowed money no matter the economic benefit. Airports, apartments, high-speed rail lines, shopping malls sprang up everywhere. Many of these projects are seriously underutilized and are unlikely to ever pay back the money invested. While the exact numbers are unknown, the debt acquired by China’s local governments is thought to be on the order of $2-3 trillion while much of debt has been off the books through 'shadow financing.' This surge in local government spending amounted to a Chinese version of America’s sub-prime lending debacle, except this one went for public works and apartment buildings rather than single family housing. Unregulated off-the-books 'shadow banking' which has doubled in the last three years is now thought to total some $6 trillion. Government officials are concerned that it is out of control. Last month efforts to clamp down resulted in a spike in inter-bank interest rates and fears of a liquidity crisis. Whether China has the tools to work its way out of all this without a major economic slowdown has yet to be seen — but many observers are worried. The impact on the global oil market of efforts to control pollution and unwind excessive debt could be considerable. For the last decade, Beijing has been increasing its demand for oil by circa 500,000 barrels a day or more in most years. Until recently projections had China’s demand for oil increasing at this pace indefinitely, surpassing US oil consumption by the end of the decade and buying up all the oil OPEC and other exporters can produce soon thereafter."
The Peak Oil Crisis: China at a Turning Point
Falls Church News-Press, 2 July 2013

"Britain's new support plans for renewable energy confirm that offshore wind is the most expensive green power technology, raising the question why the country is placing so much faith in it. Offshore wind is even more expensive than solar power, which is not an energy technology where Britain has a competitive advantage, as a northern country whose climate is dominated by wet Atlantic weather. The country has one of the best wind resources in Europe, which has led to a belief by some that it makes more sense to invest in offshore wind. Such thinking is muddled because solar power is cheaper, even in Britain, and will probably remain so. Britain announced support rates on Thursday for the second half of the decade which would provide offshore wind with a 20-25 per cent premium to solar power. The premium was even greater compared with other low-carbon technologies including onshore wind, biomass, waste-to-energy and hydropower. That is before accounting for the astronomical grid connection cost for offshore wind - by sub-sea cable. This cost, about 10 times that for rival electricity generation technologies, is subsidised separately and is far from transparent. The evidence for higher costs is a concern for Britain's plans, confirmed on Thursday, to install more offshore wind capacity than any other renewable power technology by 2020. The government says it supports offshore wind because of its potential to help generate thousands of jobs, and to improve Britain's security of energy supply with low-carbon power....Under the new system of support, offshore wind will qualify for a strike price of 155 pounds per megawatt hour (MWh), from 2014/2015, while large-scale solar photovoltaics will get 125 pounds, and onshore wind 100 pounds. The rate for offshore wind is higher than any other technology, with the exception of an experimental waste-to-energy process called pyrolysis, and marine wave and tidal projects. Offshore wind will continue to earn the highest level of subsidy - with the exception of wave and tidal - through 2018/2019. (See Chart 1) The difference with pyrolysis, wave and tidal power is that these are unproven and experimental, and will therefore see negligible capacity installed by 2020 - an aggregate of about 0.4 gigawatts, according to the DECC figures. By contrast, offshore wind will see the most capacity installed of any renewable technology, at 8-16 GW. The logic of selecting the most expensive technology for the largest deployment is unclear. It may be that DECC expects the costs of offshore wind to plummet shortly thereafter, but that expectation is not demonstrated."
Solar beats wind even in cloudy Britain
Reuters, 28 June 2013

"Britain could face a return to Seventies-style power rationing to prevent blackouts. The disturbing news came amid warnings that the country may not be producing enough energy to keep the lights on by 2015. Offices and factories could be ‘bribed’ to close for up to four hours a day during the winter to prevent households losing power. In addition, nuclear power stations, which produced 26 per cent of Britain’s electricity when Labour was elected in 1997, now account for just 18 per cent. Ministers say the previous government failed to protect our energy supply by commissioning replacements for ageing reactors. Yesterday Danny Alexander, Chief Secretary to the Treasury, promised £10billion for a new plant at Hinkley Point in Somerset that could power five million homes. French firm EDF had demanded government cash to put towards the £14billion reactor. That funding was revealed as part of a£100billion package to build new roads, railways, houses and schools, in a bid to create jobs and stimulate the economy. Ministers also announced measures backing two controversial sources, wind farms and shale gas. The plans were announced as Ofgem warned that the gap between household demand for energy and the amount our power stations can supply is dangerously small.   The regulator warned of ‘faster than anticipated tightening of electricity margins towards the middle of this decade’.  It forecast that with no major action to head off the crisis, the risk of blackouts would increase from the current chance of one in 47 years to as little as one in four. To prevent an energy crisis, Ofgem yesterday announced new powers for National Grid, which could come into effect before the end of this year. Under the most radical measure, businesses that sign up to a deal with National Grid will be told to shut down between 4pm and 8pm on cold evenings.   National Grid, which has a budget of up to £800million to help control demand, will compensate firms for the energy they do not use at well-above the market rate of about £50 per Megawatt hour (MWh). Rewards would range from £500 to £15,000 per MWh.   Officials claim the closures would not unduly inconvenience factories and firms, as they could open on Saturday mornings to catch up on lost work."
Electricity to be rationed: Power cuts in 2 years unless industry cuts back, warns regulator
Mail, 27 June 2013

"Since the Gulf oil disaster in 2010, BP has spent hundreds of millions of ad dollars to cleanse its image as a dirty-energy giant. In the company's latest TV ad, wind turbines whirl in the sun as a voiceover touts the number of American jobs created by BP and promises, 'We're working to fuel America for generations to come.' There's just one problem: BP's commitment to wind energy is virtually nonexistent. In April, BP announced that it is selling off its entire $3.1 billion U.S. wind energy business – including 16 farms spread across nine states – as 'part of a continuing effort to become a more focused oil and gas company,' according to a company spokesperson. Indeed, though it famously rebranded itself "Beyond Petroleum" in 2000, BP also exited the solar energy business back in 2011. Today, its alternative energy investments are limited to biofuels and a lone wind farm in the Netherlands. And BP is far from alone. You wouldn't know it from their advertising, but the world's major oil companies have either entirely divested from alternative energy or significantly reduced their investments in favor of doubling down on ever-more risky and destructive sources of oil and natural gas."
Big Oil's Big Lies About Alternative Energy
Rolling Stone, 25 June 2013

"A new report out last week from the US Energy Information Administration (EIA) has doubled estimates of 'technically recoverable' oil and gas resources available globally. The report says that shale-based resources potentially increase the world's total oil supplies by 11 per cent. Acknowledging fault-lines in its new study, contracted to energy consulting firm Advanced Resources International Inc. (ARI), the EIA said: 'These shale oil and shale gas resource estimates are highly uncertain and will remain so until they are extensively tested with production wells.' The report estimates shale resources outside the US by extrapolation based on 'the geology and resource recovery rates of similar shale formations in the United States.' Hence, the EIA concedes that 'the extent to which global technically recoverable shale resources will prove to be economically recoverable is not yet clear.' A report released in March by the Berlin-based Energy Watch Group (EWG), a group of European scientists, undertook a comprehensive assessment of the availability and production rates for global oil and gas production, concluding that: '... world oil production has not increased anymore but has entered a plateau since about 2005.' Crude oil production was 'already in slight decline since about 2008.' This is consistent with the EWG's earlier finding that global conventional oil production had peaked in 2006 - as subsequently corroborated by the International Energy Agency (IEA) in 2010. The new report predicts that far from growing inexorably, 'light tight oil production in the USA will peak between 2015 and 2017, followed by a steep decline', while shale gas production will most likely peak in 2015. Shale gas prospects outside the US are incomparable to gains made so far there 'since geological, geographical, and industrial conditions are much less favourable.'"
Shale gas won't stop peak oil, but could create an economic crisis
Guardian (Blog), 21 June 2013

"Russia's Rosneft agreed a $270 billion deal to double oil supplies to China on Friday, as the Kremlin energy champion shifts its focus to Asia from saturated and crisis-hit European markets. The deal, one of the biggest ever in the history of the global oil industry, will bring Rosneft $60-70 billion in upfront pre-payment from China, the holders of the world's largest foreign exchange reserves. It will also allow Rosneft, the world's biggest publicly listed oil firm, to steeply cut its heavy debts and develop new remote Arctic fields.... The agreement highlights a growing partnership between China, the globe's top energy consumer, and Russia, the largest oil producer, and comes despite previously uneasy relations between Rosneft and Beijing over energy pricing. Rosneft's boss Igor Sechin, a close ally of Putin, said his firm will supply China with 300,000 barrels per day over 25 years starting in the second half of the decade, on top of the 300,000 bpd it already ships to the world's No.2 oil consumer. Putin later said total supplies could amount to as much as 900,000 bpd. The speed of change in Russian export patterns has been dramatic - switching huge volumes from Europe in only five years. Russia first started supplying China by railway and then by a new pipeline while opening a Pacific port, Kozmino, in 2009. Together with supplies to Kozmino, it is already exporting around 750,000 barrels per day to Asia, or 17 percent of its overall exports of 4.4 million bpd. Europe, by contrast, has lost out. A decline in deliveries in the past few years partially contributed to Russian Urals crude oil often trading at a premium to benchmark dated Brent. Analysts have expressed doubts Rosneft could quickly boost supplies to China from depleted fields in West Siberia, the historic homeland of Soviet and Russian oil production."
3-Rosneft to double oil flows to China in $270 bln deal
Reuters, 21 June 2013

"Oil major BP is weighing cuts of more than 1 million barrels per day in targeted peak output at Iraq’s most prolific oil field, Rumaila, its chief executive said, as Baghdad aims to pump at lower rates so resources will last longer. 'It is something the government has asked us to do,' Bob Dudley said on Thursday in the Russian city of St. Petersburg on the sidelines of the Rosneft annual general meeting."
BP looks at lower targets for Iraq’s biggest oil field
Reuters, 20 June 2013

"When petroleum companies abandon an oil well, more than half the reservoir's oil is usually left behind as too difficult to recover. Now, however, much of the residual oil can be recovered with the help of nanoparticles and a simple law of physics. Oil to be recovered is confined in tiny pores within rock, often sandstone. Often the natural pressure in a reservoir is so high that the oil flows upwards when drilling reaches the rocks containing the oil. In order to maintain the pressure within a reservoir, oil companies have learned to displace the produced oil by injecting water. This water forces out the oil located in areas near the injection point. The actual injection point may be hundreds or even thousands of metres away from the production well. Eventually, however, water injection loses its effect. Once the oil from all the easily reached pores has been recovered, water begins emerging from the production well instead of oil, at which point the petroleum engineers have had little choice but to shut down the well. The petroleum industry and research community have been working for decades on various solutions to increase recovery rates. One group of researchers at the Centre for Integrated Petroleum Research (CIPR) in Bergen, collaborating with researchers in China, has developed a new method for recovering more oil from wells - and not just more, far more. The Chinese scientists had already succeeded in recovering a sensational 15 per cent of the residual oil in their test reservoir when they formed a collaboration with the CIPR researchers to find out what had actually taken place down in the reservoir. Now the Norwegian partner in the collaboration has succeeded in recovering up to 50 per cent of the oil remaining in North Sea rock samples.... At first it was not known if the particles could be used in seawater, since the Chinese had done their trials with river water and onshore oilfields. Trials in Bergen using rock samples from the North Sea showed that the nanoparticles also work in seawater and help to recover an average of 20-30 per cent, and up to 50 per cent, more residual oil.... The Centre for Integrated Petroleum Research (CIPR) is the only institution for petroleum research under the Centres of Excellence (SFF) scheme. CIPR is now supplementing its expertise on oil reservoirs with nanotechnology know-how in seeking ways to recover residual oil. Success could have far-reaching impacts. Norway's state-owned petroleum company, Statoil, is seeking to increase current recovery rates, which range from under 50 per cent, to roughly 60 per cent. 'We hope this new method can help to raise recovery rates to 60-65 per cent,' says Mr Skauge.... In the meantime the researchers will be learning as much as they can about particles and pores. 'We are working hard to understand why the particles work well in some rock types and more marginally in others,' says Kristine Spildo, project manager at CIPR. 'This is critical for determining which North Sea fields are best suited to the method.'"
Delaying Peak-Oil With Nanoparticles
Science World Report, 18 June 2013

"A senior Iraqi official on Wednesday said his country expects to ramp up oil production to 4.5 million barrels per day by the end of next year from around 3.5 million barrels now, thanks to work by a handful of international oil companies developing the country’s prized oil and gas fields. The chairman of the prime minister’s advisory commission, Thamir Ghadhban, also said that resource-rich Iraq, which sits atop the world’s fourth-largest proven reserves of conventional crude, is also aiming to produce 9 million barrels a day by 2020."
Iraq targets 4.5 million barrels a day for next year
Globe & Mail, 12 June 2013

"Libya is struggling to keep its oil output stable, let alone increase it, as protests cut crude exports in the sector that supplies 95 percent of state revenue. In the past year, disgruntled Libyans have protested at oilfields and export ports, clouding initial optimism over a speedy return to output levels of nearly 1.6 million barrels per day (bpd) following the 2011 war that ousted Moammar Gaddafi. The state National Oil Corporation (NOC) said on its website output had slumped to less than one million bpd following 'irresponsible acts by some individuals' who shut down two export terminals and a major oilfield. 'The industry is suffering and this cannot go on as it is,' a senior Libyan oil industry source said. 'These kind of problems keep recurring and this is hurting the whole of Libya.”
Chaotic Libya Struggles to Maintain Oil Output
Reuters, 12 June 2013

"At the end of the 19th century, half of the oil in the world was produced in Azerbaijan, whose oil fields around the capital, Baku, were developed by the Nobel brothers, famed for dynamite and prizes. This is where they made their fortune. I had the pleasure of dining at their mansion a few years ago, a guest of government officials. Whatever others might have thought in that elegant house, I thought of Hitler urgently trying to reach Baku and its oil, and the fact that his disaster at Stalingrad was actually part of his attempt to seize Azerbaijan's oil fields. Azerbaijan was once the prize of empire. It is now independent in a very dangerous place. ... Since I continue to regard Azerbaijan as critical both in the struggle emerging in the Caucasus and to the United States, I continue to visit and continue to enjoy dinners that never end and rounds of toasts that test my liver. But I never forget one thing: Hitler risked everything to get to Baku and its oil. He failed to reach it, and the history of our time turns on that fact..... My latest trip had to do with a conference on U.S.-Azerbaijani relations. There are a small number of people in the United States who care about Azerbaijan and most of them were there, along with some congressmen, state representatives and a large numbers of Azeris. Compared with my first encounter with Azerbaijan, the number of people interested in the country has risen dramatically. Conferences on subjects like this are global. You can be in Washington, Singapore or Baku and it all looks the same. When you are in my business, you meet the same people several times a year.... In The Next 100 Years I forecast a number of events, beginning with the serious weakening of the European Union and the increase in relative power of Russia. Russia had its own problems, but between Europe's dependence on Russian energy and the fact that Russia had cash available to buy assets in Europe, the decline of Europe meant a more powerful Russia. The countries that would feel that power would be those bordering the former Soviet Union -- a line from Poland to Turkey and then from Turkey to Azerbaijan, the eastern anchor of Europe on the Caspian Sea. I wrote that the United States, withdrawing from its wars in the Islamic world, would be increasingly cautious and uncertain. The United States would continue to be the dominant power in the world, economically the most viable and with the most powerful military, but an adolescent power without foresight or balance in its actions.... The United States won the Cold War because the Soviets knocked themselves out. But a win is a win and the United States stood alone, really amazed to be where it was, talking about New World Orders, but truly clueless as to what it would do later. First it imagined that war had been abolished and that it was all about making money.... The point is that the United States is the world's global power but is lurching from conflict to conflict and from concept to concept. It takes awhile to understand how to use power. The British had to lose America before they started to get the idea. The United States is fortunate. It is rich and isolated, and even if terrorists kill some of us, we will not be occupied like France or Poland. We have time to grow up. This makes the rest of the world very uncomfortable. Sometimes the United States does inexplicable things. Sometimes it fails to do necessary things. When the United States makes a mistake it is mostly other countries that suffer or are placed at risk. So some of the world wishes the United States would disappear. It won't. Other parts of the world wish the United States take responsibility for their security. It won't.... This brings us back to Azerbaijan. It is a country that borders both Russia and Iran. In Russia it borders Dagestan; in Iran it borders the Iranian Azeri region. The bulk of Azeris live in Iran, where they are the largest ethnic minority group in the country (Ayatollah Ali Khamenei is an Azeri). Azerbaijan is a predominantly secular country. It feels threatened by Iranian Shiite terrorism and by Sunni Islamic terrorism in the north.... Azerbaijan finds itself in a tough place, and the country's position between Russia and Iran makes it critical. A secular Muslim state in this region hostile to both Iran and Russia is not all that common. Azerbaijan has another strategic virtue from the American point of view: energy. The Russian strategy has been to maintain and deepen European dependence on Russian energy, on the theory that this would both increase Russian influence and decrease the risk to Russian national security. The second phase of this strategy has been to limit alternatives for the Europeans, including Turkey. The complex tension over oil and natural gas pipelines boils down to the fact that the Russians do not want significant energy sources that are outside of Russian control to be available to Europe. It is in the American interest to try to limit Russian influence around its periphery in order to stabilize the pro-Western states there at a time when Europe is weak and disorganized.... a country doesn't go from being a Soviet republic to having an economy without corruption in a little more than 20 years.... Azerbaijan matters to the United States not because of its moral character. It matters because it is a wedge between Russia and Iran. Any regime that would follow the current one would likely be much worse in a moral sense and might be hostile to the United States. The loss of Azerbaijani oil to either Russia or Iran would increase the pressure on Turkey and eliminate energy alternatives along the periphery of Russia. The United States must adopt a strategy of early and low-risk support for strategic partners rather than sudden, spasmodic military responses to unanticipated crises. An independent Azerbaijan is a bone in Russia's and Iran's throat and an energy source for Turkey. And Azerbaijan pays cash for weapons that will be used by Azerbaijani troops and not by Americans... Both Hitler and Stalin understood that control of Baku meant control of the Eurasian landmass. The realities of energy have shifted but not to the extent that Baku doesn't remain critical."
George Friedman, Chairman of Stratfor - Geopolitical Journey: Azerbaijan and America
Stratfor, 11 June 2013

"Former Soviet Union (FSU) crude oil exports declined from 6.76 mb/d in 2010 to 6.39 mb/d in 2012 (-370 kb/d), or 5.5%, mainly due to a 13% decrease in Black Sea shipments.... Russia is at its 2nd and last oil peak. The easy oil is gone. The FSU export peak comes ahead of the production peak. Some oil importers can manage a 2-3% decline rate for some time. But watch out for those export decline rates when the many small green fields can no longer offset decline rates of legacy brown fields running at -4% pa and local demand still growing."
FSU crude oil exports declined by 5.5 % in last 2 years
Crude Oil Peak, 9 June 2013

" the United States, home of the hydraulic fracturing 'miracle,' domestic natural gas production has been flat since January 2012. The shale gas revolution may well be over in the United States as the current production level becomes increasingly difficult to maintain in the face of ferocious decline rates for shale gas wells--rates that range between 79 to 95 percent after just three years according to a comprehensive survey of 65,000 oil and gas wells in 31 U.S. shale plays. This means that at least 79 percent of all shale gas production must be replaced every three years just to keep shale gas production flat! With shale gas making up more than 34 percent of all U.S. production in 2011, merely keeping overall domestic production stable will be a formidable task and, given these decline rates, one with no historical precedent.... Further undermining the abundance narrative, U.S. crude oil production has gone almost flat since October 2012. This is not a long enough period to indicate anything definitive about the trajectory of domestic crude production. But, it comes at a time when reports from newer tight oil plays in Ohio and Colorado have proved hugely disappointing. Ohio pumped just 700,000 barrels of oil from its tight oil fields for all of 2012, an amount being pumped daily from the same kind of fields in North Dakota. In Colorado several years of development of tight oil have only been able to raise production statewide by about 100,000 barrels per day. The U.S. Energy Information Administration recently fanned the flames of exuberance once again with a recent reassessment of the potential for shale gas and tight oil production worldwide. Inattentive readers, however, might miss that this report referred to 'technically recoverable' resources, ones that are thought to be recoverable using current technology, but not necessarily profitable to recover at current prices. In addition, the EIA was careful to point out that its estimates are highly uncertain and subject to change once actual drillbits provide better information where little currently exists. Beyond this, it is important to remember that 'resources' refer to sketchy estimates of what might be in the ground whereas 'reserves' are what can be extracted profitably at today's prices from known fields using existing technology. 'Reserves' are and always have been only a tiny fraction of 'resources.' Hapless journalists often fail to understand the difference as they did in this case....If the U.S. experience is supposed to forecast the world, then the evidence so far suggests a boomlet followed by frantic efforts just to keep production level. But in some cases, such as Poland, the results have been far worse as heavily touted prospects have turned out to be duds."
Results may vary: Beware of kaleidoscopic vision in the oil and gas industry
Resource Insights, 16 June 2013

"A new EIA report increases estimates of global recoverable shale oil resources from 32 billion barrels to 345 billion, a dramatic increase. The report also puts recoverable shale gas resources at 7.3 trillion cubic feet – 10 percent higher than last year’s estimate."
Peak oil notes
ASPO-USA, 13 June 2013

"A little-known Ministry of Defence (MoD) report published earlier this year warns that converging global trends will dramatically affect UK economic prosperity through to 2040. The report says that depletion of cheap conventional 'easy oil', along with shortages of food and water due to climate change and population growth, will sustain rocketing energy prices. Long-term price spikes are likely to lead to a long recession in Western economies, fuelling internal unrest and the rise of nationalist movements. The report departs significantly from the conservative and relatively optimistic scenarios officially adopted by the British government, as exemplified in the coalition's new Energy Security Strategy published in November last year by the Department of Energy and Climate Change (Decc)..... The report predicts that 'the imminent passing of the point of peak 'easy oil' will mean that hydrocarbon-based energy prices will rise significantly out to 2040.' Other factors affecting energy prices include 'increasing demand for fossil fuels' due to South Asia's 'industrial rise' and greater 'volatility in supply' in the Middle East. Contradicting the British government's official position on peak oil - which accepts the International Energy Agency's (IEA) latest estimate that oil prices will reach '$125/barrel in real terms (over $215/barrel in nominal terms)' - the MoD report projects an exponential escalation in prices, such that 'the increasing price of oil... is likely to reach $500 a barrel by 2040' - almost double conventional projections.  This price rise will, however, 'drive the development of alternative fuel sources' including tar sands, shale gas, coal, nuclear and renewables. Rising demand for 'resources and energy' from China and India will spur a ' 'scramble' for commodities and resources' as less developed countries' ' resource requirements may go unfulfilled.' There will also be a greater chance of clashes over access to 'Middle East resources', the South China Sea and the Indian Ocean."
Rising energy prices will challenge western way of life – MoD report
Guardian (Environment Blog), 14 June 2013

"Wind farms have been branded a ‘complete scam’ by Environment Secretary Owen Paterson, reigniting coalition battle over green power. As the government unveiled new powers for local residents to block turbines blighting their villages, Mr Paterson condemned many planned schemes as ‘deeply unpopular’ and causing ‘huge unhappiness’ across the country. The outspoken remarks from a senior Tory minister in charge of environmental policy risks a furious reaction from Liberal Democrats pushing for more renewable power projects."
Wind farms are a 'complete scam', claims the Environment Secretary who says turbines are causing 'huge unhappiness'
Mail, 7 June 2013

"The European Union's three biggest member states are developing solar power, biomass and other renewable energy technologies in place of plans for offshore wind, according to data on actual versus projected deployment. Offshore wind is at an early stage of commercialisation and is more expensive than most renewable energy, which may be contributing to a switch to alternatives to meet targets under the EU renewable energy directive. Onshore wind is also slipping behind target in some countries such as Britain, where it has, for example, suffered from slow planning approvals. The EU directive was drafted in 2007-2008 before the extent of the region's financial crisis was clear and when public concern about climate change was at its height. It sets out renewable energy targets, in its annex 1, which are binding under national law. (See Chart 1) Some EU countries are now pulling back from renewable energy support, for example by trimming subsidies or taxing wind and solar power generation, to limit public debt and consumer costs. That may see them substitute cheaper green energy for more costly technologies such as offshore wind, as suggested by the examples of Germany, France and Britain. Energy efficiency is an even better option, making aggregate targets easier to meet by suppressing demand."
Solar, biomass push out offshore wind in EU targets
Reuters, 4 June 2013

"Manufacturing has begun to contract in the US and China for the first time since the Lehman crisis, raising fears of a synchronized downturn in the world’s two largest economies. The closely-watched ISM index of US factories tumbled through the 'boom-bust line' of 50 to 49, far below expectations. It is the lowest since the depths of the crisis in mid-2009 and a clear sign that US budget cuts are starting to squeeze the economy. New orders plunged 3.5 to 48.8 on weak foreign demand and reduced federal contracts. The news came hours after HSBC said its index for China also fell below 50, a major inflexion point for the world’s industrial workshop.  'This is not a good moment for the world economy,' said David Bloom, currency chief at HSBC. 'The manufacturing indices came in weaker than expected in China, Korea, India and Russia, and then we got America’s ISM. 'We thought we had a clear picture that the US was recovering, Japan was printing money and were we’re back to happy days, and now suddenly a huge spanner has been thrown in the works.' Mr Bloom said a sharp strengthening of the Japanese yen on safe-haven flows and the 16pc fall of the Nikkei index from its peak are disturbing. 'People are asking whether the 'Abenomics’ bubble is bursting.”
Global shock as manufacturing contracts in US and China
Telegraph, 3 June 2013

"Since the American-led invasion of 2003, Iraq has become one of the world’s top oil producers, and China is now its biggest customer. China already buys nearly half the oil that Iraq produces, nearly 1.5 million barrels a day, and is angling for an even bigger share, bidding for a stake now owned by Exxon Mobil in one of Iraq’s largest oil fields.  'The Chinese are the biggest beneficiary of this post-Saddam oil boom in Iraq,' said Denise Natali, a Middle East expert at the National Defense University in Washington. 'They need energy, and they want to get into the market.' Before the invasion, Iraq’s oil industry was sputtering, largely walled off from world markets by international sanctions against the government of Saddam Hussein, so his overthrow always carried the promise of renewed access to the country’s immense reserves. Chinese state-owned companies seized the opportunity, pouring more than $2 billion a year and hundreds of workers into Iraq, and just as important, showing a willingness to play by the new Iraqi government’s rules and to accept lower profits to win contracts.  'We lost out,' said Michael Makovsky, a former Defense Department official in the Bush administration who worked on Iraq oil policy. 'The Chinese had nothing to do with the war, but from an economic standpoint they are benefiting from it, and our Fifth Fleet and air forces are helping to assure their supply.'... Notably, what the Chinese are not doing is complaining. Unlike the executives of Western oil giants like Exxon Mobil, the Chinese happily accept the strict terms of Iraq’s oil contracts, which yield only minimal profits. China is more interested in energy to fuel its economy than profits to enrich its oil giants. Chinese companies do not have to answer to shareholders, pay dividends or even generate profits. They are tools of Beijing’s foreign policy of securing a supply of energy for its increasingly prosperous and energy hungry population. “We don’t have any problems with them,” said Abdul Mahdi al-Meedi, an Iraqi Oil Ministry official who handles contracts with foreign oil companies. 'They are very cooperative. There’s a big difference, the Chinese companies are state companies, while Exxon or BP or Shell are different.' China is now making aggressive moves to expand its role, as Iraq is increasingly at odds with oil companies that have cut separate deals with Iraq’s semiautonomous Kurdish region. The Kurds offer more generous terms than the central government, but Iraq and the United States consider such deals illegal. Late last year, the China National Petroleum Corporation bid for a 60 percent stake in the lucrative West Qurna I oil field, a stake that Exxon Mobil may be forced to divest because of its oil interests in Iraqi Kurdistan. Exxon Mobil, however, has so far resisted pressure to sell, and in March the Chinese company said it would be interested in forming a partnership with the American company for the oil field. If the United States invasion and occupation of Iraq ended up benefiting China, American energy experts say the unforeseen turn of events is not necessarily bad for United States interests. The increased Iraqi production, much of it pumped by Chinese workers, has also shielded the world economy from a spike in oil prices resulting from Western sanctions on Iranian oil exports.”
China Is Reaping Biggest Benefits of Iraq Oil Boom
New York Times, 2 June 2013

"The point is not that there is no exploitable tight oil or shale gas outside the United States. Rather, the quality of those resources varies far more than the industry has led the public to believe. At first, the oil and gas industry portrayed such deposits as subject to what it called the 'manufacturing model.' The notion was that a company could drill anywhere within known deposits and extract commercial quantities of oil and/or natural gas. The reality is far different. Even in the United States--the center of the putative boom--drillers have ended up focusing on a few 'sweet spots' that yield commercial quantities of oil or natural gas. These can represent as little at 15 percent of the total area of the formation. The IEA seems to be unaware of certain key information that is publicly available or doesn't understand the significance of that information. And, the agency doesn't seem to remember what it said in its last forecast. Here is a sampling: - The production decline rate of hydraulically fractured tight oil wells is around 40 percent PER YEAR in the two most prolific plays, Eagle-Ford in Texas and Bakken in North Dakota. This means that drillers must replace 40 percent of last year's production capacity EACH YEAR before they can increase the overall rate of production from their tight oil wells. The average annual production decline rate for existing wells worldwide is around 4 to 5 percent. Essentially, the IEA doesn't appear to understand that it is expecting oil extracted from wells that decline at a rate 10 TIMES FASTER than average wells worldwide to make up for worldwide declines elsewhere AND provide significant growth in world oil supplies. But, the agency apparently did not look at publicly available well data from each state to determine annual decline rates and their implications for future supply. The IEA seems simply to have taken self-interested industry forecasts on their face--forecasts made with an eye toward engendering confidence among investors and lenders and thereby pumping up the value of lucrative stock options held by company insiders."
Will the International Energy Agency's oil forecast be wrong again?
Resource Insight, 19 May 2013

"An oil trader known to competitors as 'God' has predicted the U.S. shale boom’s days are numbered, according to a news story in the Financial Times. The U.S. shale revolution will only boost output temporarily and oil prices will remain high, said Andy Hall, who runs the $4.5 million Astenbeck Capital Management hedge fund and the Phibro LLC commodity trading house. Hall told his investors that while shale wells are initially prolific, their production declines fast because 'each well only taps a single pool of rock-trapped oil, rather than an entire reservoir,' the FT said. The letter, which the newspaper said it had seen it, went on to say it was 'impossible to maintain production … without constant new wells being drilled,' which would result in high oil prices. The general public reads about new oil discoveries almost daily and that perhaps leads to complacency, Hall added, according to the FT.... Hall made his fortune predicting that oil prices would rise from $18 to $100 back in the aughts."
‘God’ has spoken, and he’s not keen on the U.S. shale boom
Market Watch Energy Ticker (Blog), 29 May 2013

"The oil trader known by rivals as 'God' predicts the US shale revolution will only 'temporarily' boost production and oil prices will remain high, siding with Saudi Arabia and the Opec cartel in a debate gripping the energy market.' 'Andy Hall, whose lucrative bets on oil prices earned him a $100m salary at Citigroup in the 2000s, told investors that the rapid decline in output suffered by shale wells is 'likely [to] mean that the bounty afforded by shale resources is temporary'. …'We read almost daily of new oil discoveries and perhaps this leads to complacency among the lay public,' he added. Mr Hall also revealed a bullish bet on Brent December 2015 oil futures, currently trading at $94.60. 'We continue to hold our longer dated [oil] position with conviction,' he said."
Shale boom likely to be temporary, says successful oil trader
Financial Times, 29 May 2013

"The oil trader known by rivals as 'God' predicts...only 'temporarily' boost production and oil prices will remain high, siding with Andy Hall, whose lucrative bets on oil prices earned him a $100m salary at Citigroup..."
Oil guru says US shale revolution is ‘temporary’
Financial Times, 29 May 2013

"Europe’s grand plan for a gas pipeline from the Caspian Sea that would make its eastern states less reliant on Russia may have been fatally undermined by Russia’s even bigger project. As Azerbaijan nears a decision on which pipeline to choose for its future exports, the Nabucco plan that was long the European Union favourite could lose out to the more modest Trans Adriatic Pipeline (TAP) across Greece to southern Italy. In a complex equation based on politics as much as economics, TAP is in the ascendancy over the Nabucco pipeline to Austria in the face of Russia’s $39 billion South Stream plan. 'The question is: 'Is Nabucco viable if South Stream is built?' said Andrew Neff, Moscow-based principal energy analyst with research firm IHS. The decision between TAP and Nabucco is expected in June from partners in the Shah Deniz consortium, led by gas field operator BP and Azeri state energy company Socar. The European Union won’t have a direct say in the choice, but its recent switch to 'project neutrality' from support for Nabucco could make a big difference. It now says it would be happy with either pipeline or even both. 'There has been a dramatic shift,' TAP’s External Affairs Director Michael Hoffmann told Reuters. Nabucco spokesman Christian Dolezal, however, said his project retained strong political support. Europe's original plan was one 3,900 km (2,400 mile) pipeline all the way from Azerbaijan, across Turkey and up through the Balkans. It was named Nabucco after the epic Verdi opera, with its rousing chorus, that the founding parties had listened to at the Vienna opera house in 2002. Although the plan, led by Austria's OMV, was scaled back to a 1,300 km (800 mile) version linked to a Turkish pipe, it had kept the favour of both Brussels and Washington. That was not least because ‘Nabucco West’ would cross former eastern bloc countries that depend the most on Russia for energy – even though initial Azeri gas supplies will account for a mere 2 percent of EU needs. The TAP pipeline is only 800 km (500 miles), including a stretch under the sea to southern Italy. Its shareholders are led by Swiss AXPO and Statoil, which has a stake in the Azeri gas fields. The business case for the two appears relatively balanced. Nabucco would be estimated to cost less than $8 billion with one Azeri expert reckoning TAP would be $500 million cheaper, but Nabucco might bring access to more markets.... Choosing TAP, which does not cut through territory that Russia traditionally dominated, could be politically expedient for Azerbaijan, which is broadly aligned with the West but has no interest in conflict with its former Soviet overlord. Russia began building South Stream in December and hopes to deliver gas to Europe well before 2019, when the Azeri gas is due to start flowing to the European Union. The Gazprom-led 2,500 km (1,500 mile) South Stream will cross the Black Sea and then closely follow the line of Nabucco West. Plans for a southern route that could have competed with TAP were scrapped, another boost for Nabucco’s rival. Southern European states see benefits for themselves too. Italy, which relies for gas on politically unstable North Africa as well as Russia, is keen to diversify supply. Struggling to recover from its debt crisis, Greece would welcome the additional revenue from the pipeline. Influential Germany would be happy with anything that strengthens Greek finances and reduces potential future bailout costs. The Trans Adriatic Pipeline would have the side benefit of forcing greater cooperation between old rivals Greece and Turkey, EU diplomats said. Bulgaria and Romania, the poorest European Countries, would appreciate the infrastructure investments if Nabucco were built. But their economies do not face the immediate pain that Greece’s does – and a South Stream pipeline through Bulgaria, Serbia, Hungary and Slovenia would also bring economic benefits even though it would not break Russia’s dominance. Washington is less concerned about the pipeline supply route to NATO allies than it was given the change in the global energy picture as a result of the U.S.-led shale gas boom and the increasing importance of liquefied natural gas, which can be shipped by sea. In fact, the emergence of those alternative gas supplies has raised debate about whether long pipelines which tie end users into relatively expensive contracts can be justified by the economics alone."
Russian gas pipeline could doom Europe's Nabucco plan
Reuters, 28 May 2013

"Brent oil crude futures fell towards $102 a barrel on Monday, due to a weak economic outlook in a well-supplied market, with oil producer cartel Organisation of Petroleum Exporting Countries (Opec) unlikely to shift policy at a meeting this week. The outlook for global oil demand growth weakened last week after disappointing data from key consumer China and reports showing ample US inventory, which have dragged Brent down from May’s high near $106."
Oil weakens on bleak economic outlook, well-supplied market
BDlive, 27 May 2013

"For centuries, Cumbria was home to some of the world’s largest and deepest coalmines. Between the earliest recorded mining in the 13th century and the closure of its last deep mine in 1986, the county’s pits employed thousands and supplied Britain with millions of tonnes of coal. Now that industry could be reborn after the discovery of one to two billion tonnes of coking coal, a key ingredient for making steel, deep under the sea near Whitehaven. Riverside Energy, an Australian-owned company, hopes to float in London next year. It has hired RFC Ambrian, a broker, to raise £13 million."
Vast coal discovery off Cumbria coast ‘could fire up British mining industry’
London Times, 24 May 2013

"Britain came within just six hours of running out of natural gas in March, it has emerged. A combination of bitterly cold weather and pipeline failures left the energy grid at breaking point, with experts warning that if the cold snap continued, rationing was 'inevitable'. Reports at the time suggested Britain's gas reserves could run dry within 36 hours. But Rob Hastings, energy and infrastructure director at the Crown Estate, said the country teetered even closer to a crisis than was previously thought. 'We really only had six hours' worth of gas left in storage as a buffer,' he told the Financial Times. 'If it had run any lower it would have meant... interruptions to supply. ‘The bottom line is that in the UK we are in a place where the gas supply is dangerously low.’ Britain came within just six hours of running out of natural gas in March, it has emerged. A combination of bitterly cold weather and pipeline failures left the energy grid at breaking point, with experts warning that if the cold snap continued, rationing was 'inevitable'. Reports at the time suggested Britain's gas reserves could run dry within 36 hours. But Rob Hastings, energy and infrastructure director at the Crown Estate, said the country teetered even closer to a crisis than was previously thought. 'We really only had six hours' worth of gas left in storage as a buffer,' he told the Financial Times. 'If it had run any lower it would have meant... interruptions to supply. ‘The bottom line is that in the UK we are in a place where the gas supply is dangerously low.’ The National Grid, which pipes gas around the UK, insisted the UK has ‘substantial resilience’ and diverse supply sources including imports of liquefied natural gas. But the supply squeeze will raise concern over Britain's increasing reliance on energy imports as domestic production falls, and add to fears over rising energy bills. Total energy imports reached a record high of 173.7million tonnes of oil equivalent in 2012, according to the Department of Energy and Climate Change. It added the UK's net import dependency rose to 43 per cent, its highest level since 1976. However, high gas prices pushed gas demand 5.5 per cent lower than a year earlier and gas imports were 6.5 per cent lower. Gas was used to generate 27.5 per cent of the UK's electricity in 2012, compared with almost 40 per cent from coal."
The day we nearly ran out of gas
Mail, 24 May 2013

"Despite the controversial techinque used to extract the fuel, the Institute of Directors has found that a domestic shale gas industry could generate 74,000 jobs and supply up to half of our annual gas needs by 2030... Britain's need for gas importa has grown from 14 per cent of annual consumption in 2000 to nearly half in 2011. It is forecast to import three quarters of gas supplies by 2030, but if the country if proven to have substantial shale gas reserves that have yet to be explored, extracting them could bring imports down to less that 37 per cent of its needs, the institute suggets."
Shale could provide half of UK gas, report claims
London Times, 22 May 2013

"The Institute of Directors claimed the fledgling industry could create 74,000 jobs, more than double its previous estimate of the industry’s potential. The business group said the industry, which involves the controversial process of fracking, could also help to support manufacturers and reduce gas imports. The IoD report works on the assumption Britain has 309 trillion cubic feet of gas – equivalent to 100 years’ worth of demand – using estimates provided by leading exploration companies including Cuadrilla, IGas and Dart Energy. Even if only 10pc of that capacity is technically or economically recoverable, the IoD says shale gas production could satisfy one third of Britain’s annual gas demand at peak output by 2030. Just eight months ago the IoD estimated that British shale gas could create 35,000 jobs, but today revised that figure upwards based on an estimate that the industry could eventually see £3.7bn a year of investment. ... The industry is awaiting the findings of the British Geological Survey report into the scale of Britain’s gas resources, due to be published before the summer. Corin Taylor, senior economic adviser at the IoD, said the BGS report, which is rumoured to say Britain could have as much as 1,800 trillion cubic feet of shale gas, could mean the group’s latest research is an underestimate. The IoD cautions that it is 'too early to tell whether shale gas production will reduce UK gas prices', but urges that it be developed any way to reduce Britain’s dependence on gas imports and to generate tax revenues and jobs."
Shale gas 'could be a new North Sea for Britain’
Telegraph, 22 May 2013

"Shale gas development in the U.K. could create 74,000 jobs and halve the country's future dependency on gas imports, according to a new report by the Institute of Directors, a U.K. business lobbying group. 'Shale gas could be a new North Sea for Britain, creating tens of thousands of jobs, supporting our manufacturers and reducing gas imports,' said Corin Taylor, a senior economic adviser at the Institute of Directors (IoD), in Wednesday's report. ...Taylor added that a move towards shale gas production could reduce the U.K.'s reliance on gas imports from 67 percent to 37 percent in 2030, with a cost saving of 7.5 billion ($11.4 billion). ...However, energy analysts have flagged concerns about whether the U.S.'s success with shale gas can be replicated in the U.K. 'The untested shale rock volume in the U.K. is very large… more drilling, fracture stimulating and production testing is necessary to prove that shale gas development is technically and economically viable,' said government scientists Toni Harvey and Joy Gray in a January 2013 report by the U.K.'s Department of Energy and Climate Change....In their report, Harvey and Gray added that even if the U.S.'s experience of producing shale gas proves applicable to the U.K., operating conditions will still be different. 'In the U.K., land owners do not own mineral rights, so there is less incentive to support development, and local authorities must grant planning consent. The U.S. has relatively permissive environmental regulations, low population densities, tax incentives, existing infrastructure, well-developed supply chains and access to technology. Cumulatively, these factors mean that it is far from certain that the conditions that underpin shale gas production in North America will be replicable in the U.K.,' they said."
Shale Gas Could Be UK's New North Sea: Report
CNBC, 22 May 2013

"Investments in shale gas drilling could yield an industry worth nearly £4bn a year to the UK economy and create more than 70,000 jobs, according to a new report from the Institute of Directors (IoD), becoming a 'new North Sea' energy business in the process.... The report cited government estimates that 76% of the UK's gas would be imported by 2030, costing £15.6bn. Taylor found that, against these estimates, shale gas production if vigorously pursued could reduce gas imports to 37% in 2030, with the cost of imports falling as a result to £7.5bn a year."
Shale gas investments 'could be worth £4bn a year to UK economy'
Guardian, 22 May 2013

"The International Energy Agency caused quite a stir with the new issue of its medium-term oil market report last week. In the report, the Agency forecasts that non-OPEC oil production, mostly from US tight oil fields and Canada’s tar sands, will increase by nearly 1 million b/d annually for the next five years. This 'supply shock' could disrupt the world oil market which is not expected to grow as fast as the supply. OPEC sales are to remain stagnant during the period and its spare capacity is to increase. Conventional wisdom in the peak oil community has held that the rapid depletion of tight oil wells and the high costs of production will slow the growth of tight oil production in the next 3-4 years. The IEA believes that new and more efficient drilling techniques will not only reduce costs of production, but will increase the yields from tight oil fields."
Peak oil review
ASPO USA, 20 May 2013

"An oil industry expert turned African gold hunter is planning to press ahead with two underground coal gasification schemes in Wales 'before the lights go out'. Algy Cluff, 72, wants to extract gas from coal beds beneath the Loughor Estuary in Swansea and the Dee Estuary in Flintshire. His firm, Cluff Natural Resources, has been awarded two UK Underground Coal Gasification (UCG) licences for the projects. Mr Cluff, a North Sea oil entrepreneur in the 1970s who more recently turned to gold mining in Africa, said UCG was 'safe, clean and essential'. But environmentalists yesterday warned of a 'number of concerns' over the extraction of gas from coal beds. Mr Cluff said he hoped to gain planning and other consents for the Swansea and Dee projects to allow drilling to start within two to three years."
Oil industry expert reveals plans to extract gas from coal beds in Wales
Wales Online, 18 May 2013

"Inflation in both the 17-strong eurozone bloc and the US has fallen to its lowest level in years. The eurozone figure, for April fell to 1.2% - a three-year low. US inflation was running at 1.1% - a two-year low. Both countries target inflation at 2%. In both cases the prime cause of the fall was a lower oil price, which is down from just less than $120 a barrel in March to about $93 a barrel now. Weak demand across both economies was also a factor. The sharp fall in the cost of fuel caused the US monthly inflation rate to fall at its sharpest pace since December 2008."
Eurozone and US inflation falls back on weaker oil price
BBC Online, 16 May 2013

"More than 26 months after the nuclear accident at Fukushima, Japan, the nuclear industry is still feeling the effects with depressed uranium prices and cost pressures that are squeezing margins. It took many years for the political fallout after the Chernobyl and Three Mile Island nuclear disasters to dissipate and for the nuclear industry to rebuild again. It looks fairly likely to follow the same path this time, which could mean several years before the uranium price recovers.The price for uranium has fallen 40% since Fukushima to US$40 a pound, as Japan suspended its fleet of nuclear plants, while Germany cancelled licence extensions, shut down some if tis oldest nuclear reactors, with others to close by 20122. And it’s not just the Fukushima incident that has affect uranium prices. Concerns over global growth and China’s demand for raw materials have seen most commodity prices dragged down....According to Tim Gitzel, CEO of Canadian uranium miner Cameco, 65 reactors are under construction around the world. Mr Gitzel predicts that annual consumption of uranium will rise from 170 million pounds to 220 million pounds by 2022."
Uranium on the nose
Motley Fool, 16 May 2013

"A new phrase, 'supply shock,' entered the lexicon of the global oil business this week when the International Energy Agency reported that unexpectedly rapid growth in tight oil production from North Dakota and Texas is leading to profound changes in the global energy markets. U.S. oil production which grew by 800,000 barrels a day (b/d) last year is now expected to grow by another 2.3 million b/d by 2018. In addition another 1.3 million b/d increase from Canada’s oil sands is expected. This 3.9 million b/d accounts for nearly half of the 8.4 million b/d increase in global production of combustible liquids that the IEA is expecting to be available by the end of the decade. This rapid increase in North American oil production is expected to outrun the growth in global demand during next few years, which is forecast to grow at about 900,000 b/d annually – at least in the near term. This implies that the demand for OPEC oil exports during the next five years is likely to be weaker than had been expected. The Agency predicts that OPEC will gain an additional 2 million b/d increase in its spare capacity during the next few years. Growth in the domestic oil supply has already resulted in major reductions in US imports from West Africa which are now flowing to China and other Asian nations....Needless to say, these new forecasts have the US financial press in ecstasy with predictions that the U.S. will soon become the world’s largest oil producer and could be energy independent by 2020 – if you throw in Canadian tar sands production and lots of pipelines to the south. Some even have U.S. output reaching an all-time high of 11.9 million b/d by 2018.... Now all this is probably good news for it gives the world’s oil situation a few years of breathing space; helps the U.S. balance of payments; creates jobs; and unless you live downstream from some of the fracking operations or note the ever increasing buildup of CO2 in the atmosphere you should probably be happy with the news. Like with most things, however, there is another side to the story — for simply talking about a few years of rapid increases in U.S. oil production does not tell the whole tale. As we should all know by now, oil obtained from hydraulic fracturing and from Canada’s tar sands is very expensive oil. As time goes on it will become still more expensive for the best spots are exploited first and costs of production will continue to increase. The only reason we can afford to exploit tight oil and tar sands oil is that prices have been holding close to $100 a barrel in recent years. We should also all be aware that tight oil wells dry up much faster than conventional ones. The best forecasts by independent geologists, that are free to talk about their findings, is that America’s tight oil bubble only has another 3-4 years to run and that production will peak at about 2.3 million b/d circa 2017. This says that in four or five years US tight oil production will start to decline, unless somebody can work out the issues involved in exploiting the tight oil that is reported to be under California – a decidedly different place to drill wells than in North Dakota or south Texas."
The Peak Oil Crisis: Supply Shock
Falls Church News-Press, 15 May 2013

"... a new assessment released yesterday by the International Energy Agency (IEA) predicts that the surge of supply from North America—most of it from new unconventional sources—will transform the global supply of oil and help ease tight markets. Between now and 2018, the IEA projects that global oil production capacity will grow by 8.4 million barrels a day—significantly faster than demand. ... First the inevitable caveats. The IEA projections—including one that new North American oil “will be as transformative to the market over the next five years as was the rise of Chinese demand over the last 15?—strike a lot of analysts as over the top....The kind of unconventional wells that are buoying new production in the U.S. tend to go dry fast and require a lot of investment. There are also political issues to contend with—see the battle that’s brewed over the proposed Keystone XL pipeline, which supporters say is key to fully developing the vast Canadian oil sands resource. Production might slow down for economic or political reasons. And even if North American oil keeps booming, we’re not likely to see a return to the rock-bottom prices of the 1990s. Expect to keep paying $3.50 or more for a gallon of gas."
The IEA Says Peak Oil Is Dead. That’s Bad News for Climate Policy
TIME, 15 May 2013

"Over the next decade many of Britain's ageing coal and nuclear power stations will close. Meanwhile, demand for power is expected to increase. Without new energy sources, the result will be higher bills at and blackouts at worst. At present Britain imports almost two thirds of its gas. Yet, according to US experts, we are sitting on top of shale beds with at least 540 billion cubic metres of recoverable natural gas - six times our current annual consumption... US federal government scientists have warned about methane leakage from fracking that could make shale's environmental footprint worse than coal..."
Will Straw, Associate Director at the IPPR think-tank
We need to frack, but we need wind power too
London Times,  14 May 2013, Print Edition P 22

"Motorists may have paid thousands of pounds too much for their petrol over the last decade, after two of Britain’s biggest companies were raided on suspicion of manipulating oil prices. MPs and energy experts have raised fears motorists have been 'taken for a very expensive ride', after officials searched the offices of BP and Shell for evidence of price-rigging. The companies are suspected of distorting the oil price since 2002, meaning drivers have potentially been ripped off for more than 10 years. Over that time, petrol prices have risen dramatically by more than 80 per cent to around 135p per litre. European investigators, who raided the London offices of BP and Shell, said the alleged price-rigging could have had a 'huge impact' on the cost of oil, including the price of fuel for consumers. ... Robert Halfon, the MP for Harlow who has long campaigned for an investigation into the oil market, said high prices have been 'crushing families across Britain'. He called for UK authorities to launch an urgent inquiry and for oil companies to 'come clean and show some responsibility for what is happening to the international price'. The raids were part of an investigation across the continent by the European Commission’s competition authorities. Offices owned by Platts, a price-reporting agency, and Statoil, a Norwegian oil company, were also raided. European officials said several companies may have colluded in manipulating the price of both oil and green 'biofuels'. This could have happened if the oil companies provided false information to Platts, the main reporting agency that collects and reports prices to the wider market.... The inquiry comes after The Telegraph revealed growing concerns about the reliability of oil prices last year. A study for G20 finance ministers, including George Osborne, said traders from banks oil companies and hedge funds have an 'incentive' to distort the market and are likely to try to report wrong prices. Scott O’Malia, a top official at the US Commodities Futures Commission, has also previously drawn attention to the 'striking similarity' between the potential for manipulating oil and Libor. The price reporting agencies strongly deny any similarities between their methods and the way Libor was calculated....Brian Madderson, chairman of the Petrol Retailers’ Association, tonight said any manipulation of the benchmark oil price over a decade could have cost motorists 'thousands of pounds each'. He said the PRA has repeatedly warned the regulators that the oil price appears to have been manipulated. An 8p rise in the price of petrol last winter cannot be explained by basic supply and demand, unusual geopolitical events or other factors, he said. .... Lord Oakeshott, a senior Liberal Democrat and former Treasury spokesman, urged the UK authorities to take a closer look at the oil market. 'Rigging oil prices would be as serious as rigging Libor,' he said. 'The price of energy ripples right through our economy and really matters to every business and families.'"
Petrol price 'rigged for a decade'
Telegraph, 14 May 2013

"Three months ago, Iraq gave the greenlight for the signing of a framework agreement for construction of pipelines to transport natural gas from Iran's South Pars field - which it shares with Qatar - across Iraq, to Syria. The Memorandum of Understanding (MoU) for the pipelines was signed in July last year - just as Syria's civil war was spreading to Damascus and Aleppo - but the negotiations go back further to 2010. The pipeline, which could be extended to Lebanon and Europe, would potentially solidify Iran's position as a formidable global player. The Iran-Iraq-Syria pipeline plan is a 'direct slap in the face' to Qatar's plans for a countervailing pipeline running from Qatar's North field, contiguous with Iran's South Pars field, through Saudi Arabia, Jordan, Syria and on to Turkey, also with a view to supply European markets. The difference is that the pipeline would bypass Russia.  Qatar, Saudi Arabia and Turkey have received covert support from Washington in the funneling of arms to the most virulent Islamist elements of the rebel movement, while Russia and Iran have supplied arms to Assad. Israel also has a direct interest in countering the Iran-brokered pipeline. In 2003, just a month after the commencement of the Iraq War, US and Israeli government sources told The Guardian of plans to 'build a pipeline to siphon oil from newly conquered Iraq to Israel' bypassing Syria.  The basis for the plan, known as the Haifa project, goes back to a 1975 MoU signed by then Secretary of State Henry Kissinger, 'whereby the US would guarantee Israel's oil reserves and energy supply in times of crisis.' As late as 2007, US and Israeli government officials were in discussion on costs and contingencies for the Iraq-Israel pipeline project."
Peak oil, climate change and pipeline geopolitics driving Syria conflict
Guardian (Environment), 13 May 2013

"Production in [shale] oil is probably leveling out close to 700,000 barrels a day. The wells there have a very steep decline. Will it get over a million barrels? That's very difficult to say, it's very questionable. We've certainly seen a production peak in Montana and Saskatchewan, and I don't think North Dakota is that far from peaking. I do think the lack of transportation has pushed out the peak date because companies have delayed drilling wells because of that, but I think now the transportation is in place through additional pipelines and rail systems. I think it will peak out somewhere in the 750,000 range. It may go a little higher, but not too much higher than that..... it's clear that several of the fields such as the Bakken, Haynesville, and the Fayetteville are maturing quickly and are headed into decline. Those three are in decline. And so this is going to offset any gains from the Marcellus, in my opinion, and that leaves 60% of U.S. production - which is non-shale production - in terminal decline and that's going to cause a big problem."
Interview: Energy Investor Bill Powers Discusses Looming Shale Gas Bubble
DeSmogBlog, 8 May 2013

".... existing [oil] fields are being depleted at the rapid rate of 7 percent a year, and ... the search is on for 'unconventional oil' as alternative forms of energy are slow to reach critical mass. There are many kinds of 'unconventional oil' – meaning hydrocarbons that are not found in fluid form, but that can be 'fluidised' in a straightforward way (unlike coal, for instance). These resources include Venezuelan heavy oil and Canadian tar sands. But the big change in the last two decades is shale gas and 'tight oil' - a liquid, trapped in shale (rock), where it doesn’t flow naturally but can be extracted by horizontal drilling and 'fracking'. Fracking uses high-pressure water to fracture the shale and then chemicals that reduce the viscosity of the oil trapped in the interstices of the rock and allow it to flow. .... there is now a vociferous group of shale-gas (and oil) enthusiasts who have created a mini-bubble in shale. They insist that above US$70 per barrel (well below the current price) shale gas reserves are worth exploring. Investment in shale in 2010 and 2011 was apparently a trillion dollars, with another US$600 billion scheduled for 2012. Indeed, it does appear at first glance that the kinds of shale deposits that contain recoverable gas and oil are very large. The Bakken and Eagle Ford shales under Montana and North Dakota contain up to 700 billion barrels of fluid oil bound tightly into sandstone. According to the current wisdom of the U.S. Geological Survey, 3 to 4.3 billion barrels of the oil will be recoverable, amounting to 6 months or so of current U.S. consumption. Even if the recovery rate is doubled or quadrupled, it would take care of perhaps two years of current US consumption..... Complicating the issue is the fact that shale gas (and oil) wells peak and decline much more rapidly than conventional wells. The Bakken play declined about 69 percent in the first year, 39 percent in the second year, 26 percent in the third year, etc. Based on experience, if no new wells had been drilled after 2010, the Bakken shale oil output would have declined from the peak of just over 350,000 bbl/day in 2010 to 200,000 bbl/day two years later. (Remember that production at peak was not all from new wells. It represented a number of older wells that were already declining. This is a much faster rate of decline than the afore-mentioned 7 percent per annum decline in conventional oil-fields.... The longest experience in shale gas comes from the Barnett shale play under Dallas-Fort Worth, Texas. It peaked in 2009, when over 12,000 wells had been drilled costing US$2 to US$4 million each. Production rates were high at first, but declined rapidly, typically down 65 percent in the first year. This ratcheting up and down explains why drilling for gas in the US trebled from 2000 to 2009, while the quantity of gas recovered remained virtually constant. Drilling for oil in the US in 2012 was at the rate of 25,000 new wells per year, just to keep output at the same level as it was in the year 2000, when only 5,000 wells were drilled.... The real question yet to be answered is how much energy is required to extract that gas or oil? Will it be more, for example, than the energy required to extract oil from Canadian tar sands? Each 'fracking' well drilled into shale (which costs US$3 to US$10 million, with oil wells costing on the high side) has a much shorter useful lifetime than a well drilled into a liquid petroleum or a gas deposit. The optimists are assuming well lifetimes of 40 years, as compared to experience thus far in Texas which suggests that 8 years is more likely (Hughes 2010).... David Hughes conclusion [is] that the peak of shale oil will occur (circa 2020) but will be around only about one third of the IEA’s 10 million bbl/day estimate for natural gas liquids and a similar fraction of Citi-Group’s bloated estimate of about 4 million bbl/day for U.S. shale oil."
Shale Oil and Gas: The Contrarian View
Robert U. Ayres, Sandoz (Novartis) Professor of Economics and Technology Management, Emeritus
INSEAD Knowledge, 7 May 2013

"Saudi Arabia raised crude output in April to the highest in five months while making little change in the total amount it supplied to foreign and local markets, a person with knowledge of the country’s production said. The world’s largest crude exporter pumped 9.32 million barrels a day in April, about 180,000 barrels more than in March, the person said, declining to be identified because the information is confidential. The kingdom produced 9.93 million barrels daily the previous year, according to oil ministry data. Output last month was the highest since November, when Saudi Arabia pumped 9.49 million barrels a day, the data showed....The Saudi oil ministry forecasts world demand will rise this year by about 1 million barrels a day and exceed 90 million barrels 'for the first time in history,' Ibrahim al-Muhanna, an adviser to Saudi Oil Minister Ali al-Naimi, said in Kuwait on April 10."
Saudi Arabia Said to Boost April Oil Output to Five-Month High
Bloomberg, 6 May 2013

"Falkland Oil and Gas (FOGL) on Tuesday confirmed it had completed a 3D seismic survey over the Diomedea Fan within its southern area licences in the Falkland Islands. A total of 5,235 square kilometres of full fold seismic data had been acquired, more than originally anticipated, but within budget....Analysts at FoxDavies questioned whether the 'tide was turning' for the company, saying the announcement from the seismic acquisition programme should be the prelude to the next phase of drilling in the South Falklands Basin. 'While we have been lukewarm on the prospects for the South Falklands Basin in the context of the fact that the Falklands Islands government has imposed a blanket ban on onshore oil and gas development and the [basin] is gas prone, more recently we have been hearing more positive noises from the Falklands that a well-managed development could be entertained and that the [government] believes that there is 'plenty' of room in remote locations for a development,' they commented."
'Tide turning' for Falkland Oil and Gas
Interactive Investor, 16 April 2013

"... with the rapid production decline rates in shale gas wells already bringing storage down below the 5-year average and more than 30 percent below year ago levels, both Kevin and Jim Hansen expect production to undershoot and prices to overshoot, perhaps dramatically, before a ramp up in new drilling begins in earnest. That means very high volatility in the U.S. natural gas market in the not-to-distant future...Given the high production decline rates, he believes that once U.S. shale gas resources are tapped out, 'it's 2005 all over again.' The country will be faced with declining natural gas production as it was in 2005, but this time with no relief in site. And unlike the industry, he doesn't think that scenario is decades away. Take the 's' off of decades, he says, and you'll likely be closer to being right about the timeline for America's next rendezvous with persistently falling domestic natural gas production."
Patient Contrarians: The natural gas market isn't what it seems
Resource Insights, 5 May 2013

"Courtesy of the shale revolution, U.S. oil production has soared in recent years, even reaching its highest level since 1998 last year. The staggering growth in domestic production has helped sharply reduce U.S. oil imports, which fell to 8.5 million barrels a day last year -- the lowest level since 1997. But what this broad import data doesn't show is that, even as total imports have fallen, the U.S. has become more reliant on just a handful of suppliers, especially Saudi Arabia and Canada. ... According to annual data from the U.S. Department of Energy, U.S. crude oil production rose by 812,000 barrels per day last year, representing the largest annual increase since the birth of the U.S. oil and gas industry in the late 1850s. The growth in output was led by the nation's two largest oil-producing states, Texas and North Dakota. The majority of production from these states consists of light, sweet crude oil, which has a relatively low sulfur content and is less viscous than heavier grades of crude. As a result, U.S. Gulf Coast refiners have been able to slash their dependence on foreign imports of light, sweet crudes. For years, they were forced to rely on light oil imports from Nigeria and Angola, OPEC's two biggest West African members. But since July 2010, imports of Nigerian crude have fallen by about half, according to the U.S. Energy Information Administration, while Angolan imports are down to less than 200,000 barrels per day, compared with an average of 513,000 in 2008. ...But even as imports from countries like Nigeria and Angola have fallen dramatically, the concentration of U.S. crude oil imports from its five largest suppliers -- Canada, Iraq, Mexico, Saudi Arabia, and Venezuela -- rose to 72% of total U.S. net crude imports, the highest in 15 years, according to the EIA.... Imports of mostly heavy crude oil from Canada and Saudi Arabia, in particular, have risen significantly. Last year, the U.S. purchased a record 2.4 million barrels of crude oil per day from its neighbor to the north, 8% more than the previous year, while Saudi imports soared to 1.4 million barrels a day, the highest level since 2008 and up 14% from the year earlier. Meanwhile, Iraqi imports edged up 3% from 2011 levels, coming in at 0.5 million barrels per day last year, while Venezuelan imports climbed 4% to 0.9 million barrels per day. Meanwhile, imports from Mexico actually fell, dipping below 1 million barrels per day for the first time since 1994, as that country's crude production continues to slow. While the rise of oil imports from Canada is not concerning at all -- after all, the U.S. and Canada have the largest trade relationship of any two countries in the world -- rising Saudi imports may be disconcerting to some since they go against the idea that the U.S. is becoming less reliant on Middle Eastern oil. If the U.S. wants to lower its reliance on Saudi oil, approving the Keystone XL pipeline could be one of the most effective ways to do so. The TransCanada -operated pipeline would bring up to 830,000 barrels per day of mostly heavy Canadian crude from Alberta's oil sands to U.S. refiners. However, the project has come under heavy fire by environmentalist groups and climate-change campaigners who argue that it's a major threat to the environment."
U.S. Oil Imports Are Falling, But Reliance on These Countries Is Rising
Motley Fool, 4 May 2013

"The latest EIA report shows a 15 percent drop in US oil imports in February from a year earlier, falling to 9.2 million barrels a day, their lowest level since March 1996. But the United States cannot totally stop importing oil, if only because it has long-term supply contracts with oil producing countries, said Robert Yawger, an analyst with Mizuho Securities USA."
Surging US oil production strains distribution system
AFP, 3 May 2013

"Offshore fields in the deep waters west of Shetland are leading a revival in the U.K.’s oil and gas output, which has declined every year since 1999. As explorers invest a record 13 billion pounds this year, production is poised to rise as much as 33% to 2 million barrels a day over the four years, according to industry group Oil & Gas U.K. 'There is a lot of activity and this is expected to last until 2016 or 2017,' said Lindsay Wexelstein, an analyst at consultant Wood Mackenzie, which estimates US$65-billion will be spent on U.K. projects betweeen 2012 and 2015. 'Stable oil prices at the moment and government fiscal relief is giving confidence to investors.' After oil and gas producers received a surprise tax increase in his 2011 budget, Chancellor George Osborne has used rebates to encourage investment. Oil prices that have averaged more than $100 a barrel for more than two years are encouraging projects delayed when prices slumped during the financial crisis....Wood MacKenzie estimates that last year’s investment levels, when oil companies battled cost inflation and technically challenging projects, were equivalent to the boom in the mid-1970s. As a result, there may be a rise in production in the coming years, or at least a temporary halt in the decline, it said....The spending won’t last unless more and bigger fields are discovered. 'The exploration success rate was at an all-time low in 2012,' Wexelstein said. 'There haven’t been any big discoveries announced since the start of the year.' In about five years, after the burst of new start-ups and lacking big finds, all of the U.K.’s biggest operators are set to begin a steady decline. The International Energy Agency is projecting a decline in non-OPEC oil production almost entirely due to dwindling North Sea fields, with the largest drop in the U.K. By 2035, U.K. output is projected to slide to just 340,000 barrels a day, compared with 1.1 million barrels a day in 2011 and a peak of 2.9 million barrels of oil a day in 1999, the IEA said in its 2012 World Energy Outlook. Norwegian output will fall to 700,000 barrels a day from 2 million barrels a day in 2011 and 3.4 million barrels a day in 2001. 'Most U.K. producing fields are already in long-term decline and the fields that have been found in recent years are generally very small,' according to the IEA. Norwegian decline could be partly offset by increasing output from the Norwegian and Barents Seas and the Johan Sverdrup field in the central North Sea."
BP and Total lead U.K. oil revival
Bloomberg, 3 May 2013

"Brent crude oil fell on Friday, following a two-day, $3 rally, as weak economic data from the United States sounded a note of caution on growth prospects in the world's largest oil consumer. Oil and other commodities such as metals slid in a midday selloff that traders said may have been prompted by fund liquidations as European markets closed for the weekend. Later, Brent pared losses in the afternoon....Brent slipped 25 cents a barrel to settle at $103.16 a barrel after touching a low of $102.25. U.S. crude settled down 64 cents at $93.00 after going to $92.06 at midday. U.S. crude prices have skidded from over $97 at the beginning of April to below $86 by mid-month."
Oil prices fall on poor global growth outlook
Reuters, 26 April 2013

"Crude oil prices at 'roughly' $100/barrel are required for future upstream investments in unconventional oil production as well as for the sustainability of producer governments, Xavier Preel, vice president for Middle East E&P at France's Total, said Tuesday. Speaking at the Middle East Petroleum and Gas Conference in Abu Dhabi, Preel said that without the relatively high oil prices since 2005, upstream investment would not have seen the 'fivefold increase' that has happened. 'Without those prices, we would not be where we are today.'  Total itself was involved in deep-water, costly projects, for which the company needed a long-term view of oil prices that could support such investments, he added. 'There's plenty of oil in the ground, but you need the price to produce,' Preel said. As a result, he said, 'high prices remain probably in the long term' despite the marked increase in oil supplies from the US. That was in marked contrast to earlier views expressed Tuesday by US bank Citi's global head of research, Edward Morse, who said that in the next five years $90/b would be the ceiling on oil prices rather than the floor."
Oil investments, producer governments need $100/b price: Total
Platts, 23 April 2013

"The United States, the Euro-zone, and Japan are already past peak oil demand. Oil demand has to do with how much oil we can afford. Many of the developed nations are not able to outbid the developing nations when it comes to the world’s limited oil supply. A chart of oil consumption shows that oil consumption peaked for the combination of the United States, EU-27, and Japan in 2005.... We can see an even more pronounced version of this pattern if we look at the oil consumption of the five countries known as the PIIGS in Europe: Portugal, Italy, Ireland, Greece, and Spain. All of these countries have had serious declines in oil consumption in recent years, as high oil prices have impeded their economies. Oil consumption for the PIIGS in total hit its highest level in 2004, before the decline began. Peak oil consumption by country varied a bit: Portugal, 2002; Italy, declining since 1995; Ireland, peak in 2007; Spain, peak in 2007; Greece, peak in 2006. Peak demand is very much related to jobs. Peak oil demand occurs when a country is not competitive in the world market-place, and because of this, loses industry and jobs. One reason this happens is because the country’s energy cost structure is not competitive in the world market-place. With the run-up in oil prices starting about 2003, oil is by far the most expensive of the traditional energy sources we have available today. Countries that use a large percentage of oil in their energy mix can be expected to have a hard time competing, because of oil’s higher cost."
Peak Oil Demand is Already a Huge Problem
The Bull, 22 April 2004

"The price of fell to near $86 a barrel Thursday in Asia after economic data from Europe suggested global demand for energy will remain subdued. Benchmark oil for May delivery was down 20 cents to $86.48 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract dropped $2.04, or 2.3 percent, to close at $86.68 in New York on Wednesday — the fourth daily drop of at least 2 percent in April.... In London, Brent crude, which is used to price oil used by many U.S. refiners, was down 18 cents to $97.51."
Oil falls toward $86 per barrel as economic growth worries accumulate
Associated Press, 18 April 2013

"Analysts urged consumers of oil products such as airlines and petrochemical companies to lock in low prices as Brent crude dipped below $100 a barrel for the second day running. Brent June futures fell to $97.69 in late trade on Wednesday, after settling below $100 on Tuesday for the first time since July. The global benchmark oil price has come under pressure from weak macroeconomic data from China in particular. But oil traders and analysts say the dip will be shortlived, as refineries return from seasonal maintenance and begin buying crude again. ... 'Brent is around $100 a barrel now, and it will be around $100 in six months, so our clients are saying, why hedge?' the head of commodities at one large investment bank said this week. But as oil has fallen sharply this month from more than $110 at the start of April to below $100, some clients have been tempted back into the market, according to brokers. Trading in Brent futures has increased sharply, with more than 1.13m contracts changing hands on London’s ICE Futures Europe exchange on Tuesday, the busiest day since June, when Brent prices also fell sharply. Call-buying by consumers, to lock in low prices, would support Brent prices. The recent retreat in the Brent market has come as supplies from the North Sea have come back online, and expectations of demand have fallen amid concerns about global growth. But the retreat has been focused on short-term prices. Having traded at a premium for nine months, Brent crude for immediate delivery is available at a small discount to forward contracts. Long-term futures contracts, however, remain anchored in the $90-to-$95 a barrel range. Many market participants have argued that regardless of short-term changes in demand, over the longer term the oil market is likely to remain tight because spare production capacity is limited and focused in the Gulf states. 'We haven’t planned correctly for event risks,' Michael Camacho told the FT Global Commodities Summit in Lausanne. Mr Camacho is chief executive for commodities in the Europe, Middle East and Africa at JPMorgan Chase. '[The Middle East] is maybe not such an easy place as the market is telling you it should be,' he added."
Oil buyers urged to lock in low prices
Financial Times, 17 April 2013

"Scientists are struggling to explain a slowdown in climate change that has exposed gaps in their understanding and defies a rise in global greenhouse gas emissions. Often focused on century-long trends, most climate models failed to predict that the temperature rise would slow, starting around 2000. Scientists are now intent on figuring out the causes and determining whether the respite will be brief or a more lasting phenomenon.... Weak economic growth and the pause in warming is undermining governments' willingness to make a rapid billion-dollar shift from fossil fuels. Almost 200 governments have agreed to work out a plan by the end of 2015 to combat global warming."
Climate scientists struggle to explain warming slowdown
Reuters, 16 April 2013

"At the close Friday NY futures were at $91.29, the lowest since early March, and London was at $103.11 after having touched an intraday low of $101.09. US crude prices have now fallen by more than $7.50 a barrel since April. In addition to gloomy employment, retail sales, and consumer confidence numbers in the US and a jump in US crude inventories to a 22-year high, the IEA, EIA, and OPEC all came out with forecasts of somewhat lower increase in global demand for oil this year. For now the realities of supply and demand seems to have taken over the oil markets as US domestic crude production continues to increase and demand in the US and EU remains quite weak. The IEA, however, still forecasts that the world is on track to increase oil consumption by some 800,000 b/d this year which would largely consume projected increases in US tight oil production. While there is a general consensus that oil prices will weaken for the next few months, the IEA’s monthly report expresses concern about oil production from Libya and Nigeria which are having serious domestic security problems. The agency warns that the lower prices may not last long. Some analysts are also raising nagging questions as to whether the recent drop in Saudi production in recent months was completely voluntary or whether the Saudis are having trouble maintaining production."
Peak oil review
ASPO USA, 15 April 2013

"In 2005, we reached 73 million barrels per day. Then, to increase production beyond that, the world had to double spending on oil production. In 2012, we’re now spending $600 billion. The price of oil has tripled. And yet, for all that additional expenditure, we’ve only raised production 3 percent to 75 million barrels per day [of conventional crude oil].... Mature OPEC fields are now declining at 5 to 6 percent per year, and non-OPEC fields are declining at 8 to 9 percent per year. Unconventional oil can’t compensate for that decline rate for very long. Even all the growth in U.S. tight oil from fracking, which has produced about 1 million barrels per day, hasn’t been enough to overcome declines elsewhere outside of OPEC. Non-OPEC oil has been on a bumpy plateau since 2004... Look at Ghawar in Saudi Arabia [the largest conventional oil field in the world]. We know that its water cut has been increasing — they’re getting more water with the oil that comes out, which is an indication that the field is in decline. That’s a field with a high flow rate and cheap production costs. And we’re replacing it with tight oil wells in the U.S. that decline 40 percent in the first year, where the production cost is over $70 per barrel. Or deepwater wells, which deplete at 20 percent per year. Or tar sands, which is expensive. Anticipated production growth for tar sands has consistently failed to meet expectations, year after year after year. Ten years ago, tar sands production today was expected to be twice what it actually is... At some point, you wind up investing so much energy to produce more energy that you start losing the race. It becomes non-useful or ineffective to keep trying to produce more energy. And there’s a turning point on this — it’s called the 'net energy cliff.' When the ratio of energy output to energy input gets down to about 6, then you fall off this cliff, and it’s just not worth doing. In the early days of oil production, that ratio was about 100 to 1. Globally, right now, it’s approaching 11 to 1. And it’s even lower for some newer sources. The return on investment for heavy oil from the Kern River field in California is about 4 to 1. The point is that the net energy available to society has been declining radically. Researchers have done a number of papers on this. If you want to run a society, your net energy for oil production has to be at least 5. And if you want to run a modern complex society, with televisions, iPads, highly advanced medicine, etc., then you probably need an EROI closer to 10. So it’s reaching the point where we’re in the danger zone.... One of the implications of peak oil is that as production starts to falter, we need much higher prices in order to sustain production. And that’s exactly what’s happened since 2005. Another implication is that the economy would be unable to tolerate those high prices and would contract. That also seems to have happened. U.S. employment is still below 2008 levels. Europe is struggling. Now, it’s difficult to sort out the effects of high oil prices on the global economy because we also had the financial crisis and everything else. But guys like James Hamilton have done some interesting research showing that when oil expenditures reach a certain percentage of GDP, that induces a recession. So there is some evidence.... A number of analysts have argued that the floor on oil prices is now around $85 per barrel. It might vary from place to place. An existing well in the Bakken might be profitable when oil’s at $70 or $75. For Arctic drilling, prices might have to rise to $110 per barrel. But the floor is around $85. But there’s also a price ceiling for what consumers are able to pay. I think that’s probably around $105 for West Texas Intermediate and $125 for Brent. This is why world prices have been bouncing around this narrow ledge between floor and ceiling since 2007. We have to keep prices in that range, not too high to kill demand, but not too low to kill supply. Again, that’s very consistent with the concept of what peak oil has always been.... Right now, all of the new oil consumption in the world is coming from outside the OECD and the developed world. It’s largely coming from in China and India. And that new oil demand is now being met, almost exactly, by declining demand in North American and Europe... Another consequence of hitting that plateau is that net global oil exports will continue to fall. Oil-exporting nations will make a lot of money thanks to higher prices, and they’ll grow as a result. But that means they’ll also start consuming more of their own oil. And this is exactly what’s happening worldwide — net global oil exports have declined since 2005. Countries like Saudi Arabia have seen enormous growth in oil consumption. And what that means is that the United States will have to cut consumption in response. We are the most vulnerable oil importer: We consume about 18 million barrels per day and produce about 7 million. So as net global exports decline, our consumption will have to fall. And that’s already happened.... The growing economies of Asia get so much more marginal economic utility out of a gallon of fuel than we do. In a poorer country, you might have a couple guys on a moped, burning one gallon of fuel to get to the market and back. They get so much more economic value out of doing that than a construction worker in the U.S. gets in his pickup truck burning 5 gallons per day. In China you’ve now got cars that get 50 miles per gallon. And I’ve done the math on how many of these new vehicles they’re building in China and how many new vehicles we’re buying per year. And it turns out we will never catch up with China on fuel economy, because we still have 240 million vehicles out there with low fuel economy.... The upshot is that we need to prepare for the day when oil is going to leave us. The sooner we commit to an energy transition, to renewable energy, the better off we’ll be in every respect. You can make that argument just on the basis of production rates and price. And that’s not even considering carbon emissions and climate change, which is another great reason. Let alone what oil is doing to the global economy. And there are always going to be unforeseen developments. If you were a hard-core doomer 10 years ago, you might have said that when oil gets to $100 per barrel, our economy will simply shut down. But you would’ve missed the fact that a lot of Americans have quit driving and switched to public transportation. You would’ve missed a significant transition from 18-wheel trucking to rail over the past decade — a huge transformation of freight. So you can’t always predict things perfectly. But likewise, it’s just not correct to say that because we’ve unlocked tight oil and we’re drilling in shale that everything is great, that we’re off to the races, that we can keep growing the global economy on this stuff."
Peak oil isn’t dead: An interview with Chris Nelder
Washington Post (Blog), 13 April 2013

"Hitherto the future of nuclear in Britain has hinged around whether the French nuclear behemoth, EDF (Electricite de France), can find a partner to help bear the cost of new nuclear plants – currently some £14bn apiece – and, not entirely unrelated, whether EDF can squeeze the British government where it hurts into agreeing a ‘strike price’ at nearly twice the current costs of electricity generation, using the blackmail that if the government does not agree, EDF will walk away and there will be no nuclear generator left willing to step into the breach. At that point the government’s much vaunted new nuclear build programme collapses like a pack of cards. Indeed the chances of this happening are rising by the day. But now another bombshell has been thrown into the mix (if that is not an unfortunate metaphor). EDF is close to bankrupt. EDF’s stock value has plunged by up to a staggering 85% since 2007 and its indebtedness has grown rapidly from €29bn in 2011 to €39bn now. To put that into perspective, this very level of debt now amounts to more than half its turnover of €73bn. In addition, France’s nuclear fuel company, Areva, is also in free fall. It made a loss of €2.5bn in 2011, but that has now exploded (again, not quite the word) to €100bn in 2012. It also is stricken with very high debt, amounting to €4bn on a turnover of just over €9bn. It too has suffered a catastrophic fall in its stock value of no less that 88% since 2007. Now Areva has suffered two further highly damaging blows. It has been down-rated by the ratings agency Standard & Poor’s to BBB – one notch off ‘junk bond’ – and its stand-alone credit profile has been downrated to BB- which is one notch off ‘highly speculative’. As if that does not say it all, it has now just been announced that Areva’s chief finance officer is jumping ship and taking up a post in Canada. The significance of all this is that these were the two companies lined up by DECC for building the first new nuclear plant at Hickley Point in Somerset. The options available for the government are now beginning to close rapidly."
Are we seeing the end of nuclear in Britain?
Michael Meacher MP (Blog), 12 April 2013

"CHINA'S thirst for natural resources will lead to a doubling in the size of the world's shipping fleet by 2030, according to research published yesterday. The shipping industry will increase its carrying capacity from nine billion tonnes a year to between 19 billion and 24 billion tonnes a year to cope with demand from China and the developing world, the Global Marine Trends 2030 report says."
China expected to double world's shipping by 2030
Australian/Times, 10 April 2013

"Think mobile devices are low-power? A study by the Center for Energy-Efficient Telecommunications—a joint effort between AT&T's Bell Labs and the University of Melbourne in Australia—finds that wireless networking infrastructure worldwide accounts for 10 times more power consumption than data centers worldwide. In total, it is responsible for 90 percent of the power usage by cloud infrastructure. And that consumption is growing fast. The study was in part a rebuttal to a Greenpeace report that focused on the power consumption of data centers. 'The energy consumption of wireless access dominates data center consumption by a signifcant margin,' the authors of the CEET study wrote. One of the findings of the CEET researchers was that wired networks and data-center based applications could actually reduce overall computing energy consumption by allowing for less powerful client devices. According to the CEET study, by 2015, wireless 'cloud' infrastructure will consume as much as 43 terawatt-hours of electricity worldwide while generating 30 megatons of carbon dioxide. That's the equivalent of 4.9 million automobiles worth of carbon emissions. This projected power consumption is a 460 percent increase from the 9.2 TWh consumed by wireless infrastructure in 2012."
Mobile cloud sucks power grid harder than data centers
ArsTechnica, 9 April 2013

"In a new research paper entitled 'Global Oil Demand Growth – The End Is Nigh,' Citigroup's Seth Kleinman argues that the combination of two factors – a shift away from oil and toward natural gas, combined with improving fuel economy – suggests that global oil demand is 'approaching a tipping point.' Kleinman's view is certainly not a commonly accepted one. Numerous oil market commentators, including widely respected oil and gas companies, have espoused different opinions. For instance, ExxonMobil, in its recently released 'Energy Outlook to 2040,' forecasts global oil demand to continue growing through 2040, albeit at a more modest pace than in previous decades. Like Kleinman, the integrated oil major suggests that increased fuel efficiency and the substitution of other transport fuels for oil will lead to slowing global demand growth. But unlike Kleinman, Exxon predicts total oil demand, excluding biofuels, to climb above 105 million barrels per day by 2040. In contrast, Kleinman envisions a scenario where improving fuel efficiency and the transition toward natural gas lead to a flattening out of oil demand growth in coming years, with global consumption remaining under 92 million barrels per day over the second half of this decade. Exxon's view is definitely more in line with mainstream beliefs. But if Kleinman turns out to be right, it will have massive implications for both the global oil market and the global economy over the next couple of decades. The trends of improving fuel efficiency and shifting toward natural gas as a transport fuel are unmistakable, though the future rate of progress on these two fronts is hotly contested. Already, natural gas as a fuel source has made significant progress among trucking fleets. For instance, Waste Management (NYSE: WM ) reckons that, over the next five years, some 80% of its new trucks will burn natural gas as opposed to diesel. Among natural gas truck manufacturers, a similar view prevails, with truckmaker Navistar (NYSE: NAV ) projecting that, within a couple of years, a third of all trucks it sells will be powered by natural gas. The other necessary components of the equation – refueling stations and natural gas engine manufacturers – are also firing on all cylinders. Cummins (NYSE: CMI ) and Westport Innovations (NASDAQ: WPRT ) recently announced that they are joining forces to provide engines for two of the biggest natural gas transit fleet orders ever filled in North America. And Clean Energy Fuels (NASDAQ: CLNE ) continues to lead the way in developing the refueling infrastructure needed to support natural gas vehicles. The T. Boone Pickens-backed company already has more than 300 natural gas refueling stations across the U.S., of which roughly 80% are equipped to refuel passenger cars and light-duty trucks running on compressed natural gas. It certainly appears that trucks and heavy-duty vehicles are making impressive progress in transitioning to natural gas.... the pace of these developments hinges on a few unknowns. How quickly will gas-powered trucks, consumer vehicles, locomotives, and shipping vessels catch on? Where are natural gas prices headed and how will they affect the pace of adoption for these vehicles? How long will the U.S. shale boom last? Have we underestimated decline rates for shale gas wells? What initiatives will governments take to support the development of more fuel-efficient vehicles and/or reduce subsidies provided to oil companies? And lastly, where are marginal crude oil production costs headed given the trajectory of global demand growth?"
The Shocking Implications of the Rebuke of Peak Oil Theory
The Motley Fool, 3 April 2013

"As Jeremy Grantham, chief investment strategist of the $106 billion Boston-based investment-management firm GMO, told BBC last month, 'it turns out that GDP in the U.K. and GDP here is a pretty awful mishmash of things. It’s really more a description of costs than it is of utility, of output.' Over the past decade, the world has been forced to produce more and more of its oil from expensive and risky projects in the deep waters off the Gulf of Mexico and off the coast of Brazil to replace the cheap oil from declining mature fields in places like Saudi Arabia. We’re replacing oil that costs $10 a barrel to produce with oil that costs $80 a barrel or more, Grantham explains. But that cost inflation increases GDP, making the energy intensity ratio look like it’s improving. 'Now that is clearly nonsense. Society is paying a bigger price to get out the expensive oil — it needs the oil to function,' Grantham protests. 'GDP is calculated inaccurately — it’s counting what is obviously a cost and including it as if it were a virtue, as if it were a gain.'”
The 2020 Deadline: No Excuse Left for Delaying the Energy Transition
GetRealList, 2 April 2013

"The conventional wisdom holds that global oil demand will continue to rise. Demographics and the need to fuel emerging markets make it so, says the consensus in the energy industry. However, the consensus is wrong. This is due to the substitution of natural gas – often obtained through the hydraulic fracturing of shale rock, or fracking – for oil, and fuel- efficiency mandates in many key countries. The prospect of oil demand hitting a plateau this decade is much more feasible than the market seems to think. The shale revolution in the US has already upended energy markets. There is more to come. US natural gas prices have recovered from below $2 per million British thermal units (the standard metric for natural gas prices) over the past 12 months, but it still remains much cheaper than oil. The market seems to be slowly accepting that the spread between gas and oil will stay wide for the foreseeable future. This has resulted in a rush in the US to substitute natural gas for oil. It will soon go global. Environmental concerns, politics and sheer availability are all facilitating the spread of the substitution trend. The usual bullish arguments for oil demand growth rely on China and other emerging markets and the low level of car usage rates among consumers in these countries. More money, more drivers, goes the logic. What these arguments miss is that in 2010 cars only accounted for about 22m barrels a day out of a global oil market of 87m b/d, to use the size given by Opec, the oil cartel. The rest of the demand comes from trucks (13m b/d), aircraft (5m b/d), ships (4m b/d), railways (2m b/d), petrochemicals (9m b/d), other industrial activity (14m b/d) and power (5m b/d) or heat generation (9m b/d). Almost all of these sectors are using more and more natural gas, rather than oil. Aviation is an exception, though even here Boeing has a concept aircraft that runs on liquid natural gas and this year Qatar Airways made its first commercial flight running on a blend of conventional jet fuel and an oil-type fuel made from natural gas. It is important to note that this shift is neither far off nor hypothetical. We are not looking at hydrogen-fuelled cars or Japanese methane hydrates. The substitution is already happening. In the US the shift is visible in strategies of many companies, from Warren Buffett’s railway BNSF, to UPS and FedEx parcel delivery fleets, and Apache and other oil and gas exploration and production companies shifting their fracking and high-horsepower drilling rigs to run on gas as opposed to diesel.... In February the European Commission issued draft legislation that would mandate LNG filling stations be located every 400km on the core trans-Europe highway network. This same legislation will mandate LNG filling stations be located at all 139 maritime and island ports in Europe, also by 2020. Crucially, China is also beginning to make the shift. There 8 per cent of heavy duty truck sales in 2012 were LNG-fuelled, taking the number of LNG trucks on the road to more than 40,000. This is partly down to economics but environmental concerns are also important, with many city governments increasingly worried about pollution.  In the US, Europe, Japan and China, tighter fuel economy mandates are increasing the fuel economy of the world’s fleet of vehicles. For example, research by Citigroup estimates that new vehicles’ fuel economy is increasing by about 2.5 per cent a year.  This change in fuel economy is enough to significantly cut the expected growth in global oil demand – and, of course, oil prices. When you add in the shift from natural gas to oil, it should be enough to stop the forecasters of another boom in oil prices in their tracks."
Oil demand is set to fall in the age of gas
Financial Times, 1 April 2013

"Over vehement objections from Washington and Baghdad, Turkey and the Iraqi Kurds appear to have decided to move forward with an oil deal that will give the Turks a stake in the Iraqi Kurds’ oil fields and the construction of new pipelines for the export of oil and gas to Turkey. Iraqi officials are becoming increasingly concerned that the Syrian civil war will spread into Iraq as Sunni tribes that range across the border have started joining in the effort to overthrow the Assad government. Despite the multiple political crises facing the Iraqi government, it announced that the long-awaited National Energy Strategy Plan has been completed and is ready for cabinet approval. The plan envisions three scenarios with the 'medium' one having Iraq’s oil production hitting 9 million b/d by 2020 from the current 3.3 million b/d and the 'high' scenario seeing production at 13 million b/d. Both plans envision production at 4.5 million b/d by the end of next year. Senior Iraqi parliamentarians involved in oil policy say these estimates are too optimistic given the current state of Iraq’s oil production infrastructure and the political landscape. One parliamentarian thinks the country is more likely to produce an average of 2.9 million b/d in 2013 given the dispute with the Kurds. As US oil companies bail out of Iraq they are being replaced by the Chinese who don’t seem to mind the political instability. One estimate says that in a few years a third of Iraq’s oil production will come from Chinese-run oil fields."
Peak oil review
ASPO USA, 1 April 2013

"The financial collapse is related to Energy Return on Energy Invested (EROEI) that is already too low. I don’t see any particular EROEI target as being a threshold–the calculations for individual energy sources are not on a system-wide basis, so are not always helpful. The issue is not precisely low EROEI. Instead, the issue is the loss of cheap fossil fuel energy to subsidize the rest of society. If an energy source, such as oil back when the cost was $20 or $30 barrel, can produce a large amount of energy in the form it is needed with low inputs, it is likely to be a very profitable endeavor. Governments can tax it heavily (with severance taxes, royalties, rental for drilling rights, and other fees that are not necessarily called taxes). In many oil exporting countries, these oil-based revenues provide a large share of government revenues. The availability of cheap energy also allows inexpensive roads, bridges, pipelines, and schools to be built.  As we move to energy that requires more expensive inputs for extraction (such as the current $90+ barrel oil), these benefits are lost. The cost of roads, bridges, and pipelines escalates. It is this loss of a subsidy from cheap fossil fuels that is significant part of what moves us toward financial collapse. When a company decides to extract a resource such as oil, gold, or fresh water, it looks for the least expensive source available. After many years of extraction, the least expensive sources become depleted, and the company must move on to more expensive resources. It always looks like there are plenty of resources left; they are just increasingly expensive to extract. Eventually an extraction limit is reached; this limit is a pricelimit. The need to use greater resources in the process of resource extraction leaves fewer resources available for other purposes. Prices adjust to reflect this out of balance. If there is no substitute available for the resource that is reaching limits, the economy adjusts by contracting to match the amount of resource that is available at an affordable price. Some economists might call the situation 'reduced demand at high price'. What the situation looks like, in terms most of us are used to using, is recession or depression.... This is not a temporary passing phase; it is a permanent long-term situation, caused by the ratcheting up of oil and other commodity prices, as resource extraction becomes more expensive."
Gail Tverberg, How high oil prices lead to financial collapse
Christian Science Monitor (Blog), 30 March 2013

"U.S. motor gasoline consumption peaked at 142 billion gallons in 2007. In each year since, American drivers have used less gasoline. In 2012, gas use came in at 134 billion gallons, down 6 percent off the high mark. Three trends underlie falling U.S. gasoline use: a shrinking car fleet, an overall reduction in driving, and improved fuel efficiency. The number of registered vehicles in the United States rose rather steadily from 1945 to 2008, when it topped out at close to 250 million and then abruptly changed course. As the economic recession hit, new car sales in the United States fell from more than 16 million in 2007 to below 11 million in 2009. For two years, scrappage exceeded new purchases, causing a contraction in the overall size of the fleet. Even with a rebound in sales to nearly 15 million vehicles in 2012, the days of annual sales exceeding 17 million—as seen through the early 2000s—are likely over. The car promised mobility, but in urbanizing communities it instead brought traffic congestion and air pollution. With four out of five Americans now living in urban areas, private vehicle ownership is starting to lose its allure. This is particularly true among younger people, who are readily embracing mass transit and the car-sharing and bike-sharing programs that are popping up in cities around the country. Fewer than half of American teenagers ages 15 to 19 have a driver’s license, a share that has been falling over recent decades as states have tightened restrictions and as socialization patterns have shifted from cruising the streets to cruising the Internet. Retirees also tend to drive less; as the baby boomers retire, more people will be putting away their car keys. As gasoline prices have risen, private vehicles have traveled fewer miles and public transit ridership has increased. Not only are there fewer vehicles traveling fewer miles on U.S. roads than there were just five years ago, but new cars today can drive farther on a gallon of gasoline. This will soon accelerate: after more than two decades of near-total stagnation, in 2011 the Obama administration increased fuel efficiency standards for cars and light trucks from an average of 27.5 miles per gallon in 2008 to 54.5 miles per gallon by 2025. In addition to the technological changes that can improve the fuel economy of conventional vehicles, new plug-in hybrid electric cars and fully electric vehicles use far less gasoline or even do away with it entirely."
Falling Gasoline Use Means United States Can Just Say No to New Pipelines and Food-to-Fuel
Earth Policy Institute, 28 March 2013

"Nearly 2m homes in the UK will be heated by shale gas from the US within five years, under a deal agreed on Monday that is likely to be the first time major exports of the controversial energy source are used in the UK. The US government has kept a tight rein on exports since the shale gas boom started more than five years ago. But the deal struck by energy company Centrica marks the start of a new era in gas use in the UK, because it opens up the market to cheap supplies from the US, as North Sea gas fields run out and pipelines to Europe remain expensive. Shale gas exploitation has been blamed for environmental problems in the US, including water, ground and air pollution and leaks of methane. Under the deal, Centrica will pay £10bn over 20 years for 89bn cubic feet of gas annually – enough to heat 1.8m homes – from Cheniere, one of the first US companies to receive clearance from the federal government to export shale gas in the form of LNG (liquefied natural gas). The first deliveries, by tanker, are expected in 2018. The announcement of the deal comes at a crucial time, as Britain's gas reserves have been severely depleted by the unseasonable cold snap, which has increased demand. Last week, it emerged that there were only two days' worth of gas left in storage."
US shale gas to heat British homes within five years
Guardian, 25 March 2013

"The coldest March in decades is putting a strain on the supply of stored gas, according to a fresh analysis that predicts reserves could be depleted as soon as April 8. With the Met Office forecasting that the cold weather will stretch into April, analysts said that Britain may be forced to reduce gas supplies to big business customers. The analysis of supplies also heightens concerns over how Britain will meet its future energy needs. Those fears were added to yesterday when SSE, one of the largest electricity suppliers, said the Government was badly underestimating the risk of a power shortage in coming years. 'The Government is significantly underestimating the scale of the capacity crunch facing the UK in the next three years,' said Ian Marchant, SSE’s chief executive. 'There is a very real risk of the lights going out as a result.' SSE’s prediction came as the company announced plans to close a quarter of its unprofitable and polluting plants. The more immediate need may be to find ways of bolstering gas reserves should the cold weather persist. Britain retains about 15 days’ worth of energy demand on hand compared with roughly 100 days for France and Germany."
Gas is running low as chill continues
Telegraph, 21 March 2013

"U.S. utilities will use more coal and less natural gas to generate power as coal becomes cheaper and gas more expensive, electricity traders said on Friday. The relative price difference between NYMEX Central Appalachian coal and NYMEX Henry Hub gas is at its widest since June 2011 at almost $1.50 per million British thermal units (mmBtu), according to Reuters data. Natural gas traded at $3.87 per mmBtu on Friday morning, while Eastern coal was selling at $2.40 per mmBtu. Prices of Central Appalachian coal have slipped to their lowest levels since late January. Meanwhile, natural gas prices climbed to their highest levels since November due to four straight weeks of larger-than-expected drawdowns from inventories....In 2012, the price of gas, which has historically been more expensive than coal, dropped to a more than 10-year low due primarily to record production from shale. Those weak gas prices depressed power prices to at least decade lows in most regions and led generators to switch from coal to gas plants in record numbers."
U.S. utilities to burn more coal as natgas prices climb -traders
Reuters, 15 March 2013

"The Dow Jones Industrial Average is at an all-time high, the jobless rate has fallen to a four-year low and the housing market is seeing a recovery. But for many lower income and middle class Americans, the improving economy has yet to take hold. Instead, they are anxious enough about higher gasoline prices and a payroll tax increase to slash their spending. ... The biggest reason given by those who said they are cutting spending—72 percent of those polled—was increasing savings and paying off debts. The second biggest was higher gas prices, cited by 63 percent. Of those cutting back specifically because of gas prices or tax increases, 81 percent said they are cutting down on meals at restaurants, 73 percent are reducing entertainment costs such as movies and concerts and 62 percent are spending less on travel and vacations. At the same time, affluent consumers are showing signs of increased confidence, according to at least one recent survey. This bifurcation may play into concerns about income inequality and could add to pressure on President Barack Obama and Democrat lawmakers in Congress to resist any budget deficit cutting deal that reduces spending on the social safety net and doesn't include further taxes on the wealthy."
Despite Gains, Many Americans Still Spending Less
Reuters, 12 March 2013

"The oil firm BP predicts that production of shale gas will treble and shale oil — also known as ‘tight oil’ — will grow sixfold from 2011 levels by 2030 (ref. 2). The claims do not stand up to scrutiny. In a report published this week by the Post Carbon Institute in Santa Rosa, California, I analyse 30 shale-gas and 21 tight-oil fields (or ‘plays’) in the United States, and reveal that the shale revolution will be hard to sustain. The study is based on data for 65,000 shale wells from a production database that is widely used in industry and government. It shows that well and field productivities exhibit steep declines. ... Two technologies — horizontal drilling coupled with large-scale, multi-stage hydraulic fracturing (fracking) — have made it possible to extract hydrocarbons trapped in impermeable rocks (see Nature 477, 271–275; 2011). In 2004, less than 10% of US wells were horizontal; today, the figure is 61%. ... Shale gas has risen from about 2% of US gas production in 2000 to nearly 40% in 2012 (ref. 3).... In four of the top five shale-gas plays, average well productivity has been falling since 2010 (see ‘Top five shale plays’). In the Haynesville play, an average well delivered almost one-third less gas in 2012 than in 2010. The exception is the Marcellus: supply is rising in this young, large play as sweet spots are still being found and exploited. Wells decline rapidly within a few years. Those in the top five US plays typically produced 80–95% less gas after three years. In my view, the industry practice of fitting hyperbolic curves to data on declining productivity, and inferring lifetimes of 40 years or more, is too optimistic. Existing production histories are a few years at best, and thus are insufficient to substantiate such long lifetimes for wells. Because production declines more steeply than these models typically suggest, the method often overestimates ultimate recoveries and economic performance (see The US Geological Survey’s recovery estimates are less than half of those sometimes touted by industry. New wells must be drilled to maintain supply. In the Haynesville play, almost 800 wells — nearly one-third of those that were active in 2012 — must be added each year to keep shale-gas output at 2012 levels. .... The story is similar for tight oil. Two plays produce 81% of US tight oil — Eagle Ford in south Texas and the Bakken in North Dakota and Montana. The productivity of new wells in both areas drops by about 60% after one year, levelling out to less than 40% in the second year, less than 30% in the third year and so on. Overall field decline, which combines the productivity of older and newer wells, is about 40% per year.... Given the EIA estimates of the maximum number of available drilling locations in the Bakken, however, I suggest that production will peak by 2017, when available well sites are exhausted, and then fall by 40% a year. I disagree with those who maintain that the Bakken’s production can stay at that high level for many years — this would require thousands more wells than would fit. Governments and industry must recognize that shale gas and oil are not cheap or inexhaustible: 70% of US shale gas comes from fields that are either flat or in decline. And the sustainability of tight-oil production over the longer term is questionable. High-productivity shale plays are not ubiquitous, as some would have us believe. Six out of 30 plays account for 88% of shale-gas production, and two out of 21 plays account for 81% of tight-oil production. Much of the oil and gas produced comes from relatively small sweet spots within the fields..... Production will ultimately be limited by available drilling locations, and when they run out, production will fall at rates of 30–50% per year. This is projected to occur within 5 years for the Bakken and Eagle Ford tight-oil plays."
J.David Hughes - A reality check on the shale revolution
Nature: Vol 494 - 21 February 2013

"..... since 2000 China’s coal consumption has increased three fold and is now over 4 billion short tons a year, nearly half the world’s coal consumption. Beijing plans to increase this consumption to 4.4 billion short tons in 2015. They are going to need it because they apparently plan to build another 360 coal-fired power plants in the foreseeable future. China is also on track to consume about 10 million b/d of oil this year, slightly more that half that of the US. The Chinese, however, currently are selling themselves 20 million new cars and trucks a year (and there are not many trade-ins) so unless there is a major turn of events they will be up with the US’s oil consumption in another decade or so."
The Peak Oil Crisis: The Beijing Syndrome
Falls-Church News-Press, 21 March 2013

"No less authority than the United States government itself has declared that some time this year, the country should reach a landmark not seen in nearly two decades – indeed, one that many experts believed had been permanently consigned to the history books. The U.S. will be producing more oil than it is importing."
Peak oil takes an unexpected turn
Globe & Mail, 21 March 2013

"President Barack Obama called on Congress to approve $2 billion in funding for advanced vehicle technology over the next decade, the latest in a series of proposals to boost research for cars and trucks. Obama made the proposal Friday at an appearance at the Argonne National Laboratory in suburban Chicago, where federally funded research helped develop lithium-ion batteries for electric cars.... Obama said funding research for an Energy Security Trust would help move the nation off oil and 'helps us free our families and our businesses from painful spikes in gas once and for all.'... Obama said the project could create more auto jobs. He pointed to progress by two U.S. automakers: 'Last year, General Motors sold more hybrid vehicles than ever before. Ford is selling some of the most fuel-efficient cars so quickly that dealers are having a tough time keeping up with the demand,' Obama said. 'We're making progress, but the only way to really break this cycle of spiking gas prices, the only way to break that cycle for good is to shift our cars entirely — our cars and trucks — off oil.'"
Obama seeks $2B for auto research
Detroit News, 16 March 2013

"If we’re to believe the current media reports out of Washington and the US oil and gas industry, the United States is about to become the 'new Saudi Arabia.' We are told she is suddenly and miraculously on the track to energy self-sufficiency. No longer need the US economy depend on high-risk oil or gas from the politically unstable Middle East or African countries.... The US Department of Energy’ EIA defines conventional oil and gas as oil and gas 'produced by a well drilled into a geologic formation in which the reservoir and fluid characteristics permit the oil and natural gas to readily flow to the wellbore.' Conversely, unconventional hydrocarbon production doesn’t meet these criteria, either because geological formations present a very low level of porosity and permeability, or because the fluids have a density approaching or even exceeding that of water, so that they cannot be produced, transported, and refined by conventional methods. By definition then, unconventional oil and gas are far more costly and difficult to extract than conventional, one reason they only became attractive when oil prices soared above $100 a barrel in early 2008 and more or less remained there.... The reason for the full-throttle extraction is telling. Shale Gas, unlike conventional gas, depletes dramatically faster owing to its specific geological location. It diffuses and becomes impossible to extract without the drilling of costly new wells..... In a sobering report, Arthur Berman, a veteran petroleum geologist specialized in well assessment, using existing well extraction data for major shale gas regions in the US since the boom started, reached sobering conclusions.... 'Decline rates indicate that a decrease in drilling by any of the major producers in the shale gas plays would reveal the insecurity of supply. This is especially true in the case of the Haynesville Shale play where initial rates are about three times higher than in the Barnett or Fayetteville. Already, rig rates are dropping in the Haynesville as operators shift emphasis to more liquid-prone objectives that have even lower gas rates. This might create doubt about the paradigm of cheap and abundant shale gas supply and have a cascading effect on confidence and capital availability.' ...He notes, 'Reserves and economics depend on estimated ultimate recoveries (EUR) based on hyperbolic, or increasingly flattening, decline profiles that predict decades of commercial production. With only a few years of production history in most of these plays, this model has not been shown to be correct, and may be overly optimistic….Our analysis of shale gas well decline trends indicates that the Estimated Ultimate Recovery per well is approximately one-half the values commonly presented by operators.'.... Basing his analysis on actual well data from major shale gas regions in the US, Berman concludes however, that the shale gas wells decline in production volumes at an exponential rate and are liable to run out far faster than being hyped to the market..... Where then did someone get the number to tell the US President that America had 100 years of gas supply? Here is where lies, damn lies and statistics play a crucial role. The US does not have 100 years of natural gas supply from shale or unconventional sources. That number came from a deliberate blurring by someone of the fundamental difference between what in oil and gas is termed resources and what is called reserves. A gas or oil resource is the totality of the gas or oil originally existing on or within the earth’s crust in naturally occurring accumulations, including discovered and undiscovered, recoverable and unrecoverable. It is the total estimate, irrespective of whether the gas or oil is commercially recoverable. It’s also the least interesting number for extraction. On the other hand 'recoverable' oil or gas refers to the estimated volume commercially extractable with a specific technically feasible recovery project, a drilling plan, fracking program and the like. The industry breaks the resources into three categories: reserves, which are discovered and commercially recoverable; contingent resources, which are discovered and potentially recoverable but sub-commercial or non-economic in today’s cost-benefit regime; and prospective resources, which are undiscovered and only potentially recoverable..... What is conveniently left unsaid is that most of that total resource is in accumulations too small to be produced at any price, inaccessible to drilling, or is too deep to recover economically. Arthur Berman in another analysis points out that if we use more conservative and realistic assumptions such as the PGC does in its detailed assessment, more relevant is the Committee’s probable mean resources value of 550 (Tcf) of gas. In turn, if we estimate, also conservatively and realistically based on experience, that about half of this resource actually becomes a reserve (225 Tcf), then the US has approximately 11.5 years of potential future gas supply at present consumption rates..... Given the abnormally rapid well decline rates and low recovery efficiencies, it is little wonder that once the euphoria subsided, shale gas producers found themselves sitting on a financial time-bomb and began selling assets to unwary investors as fast as possible. In a very recent analysis of the actual results of several years of shale gas extraction in the USA as well as the huge and high-cost Canadian Tar Sands oil, David Hughes notes, 'Shale gas production has grown explosively to account for nearly 40 percent of US natural gas production. Nevertheless, production has been on a plateau since December 2011; 80 percent of shale gas production comes from five plays, several of which are in decline. The very high decline rates of shale gas wells require continuous inputs of capital—estimated at $42 billion per year to drill more than 7,000 wells—in order to maintain production. In comparison, the value of shale gas produced in 2012 was just $32.5 billion.' He adds, 'The best shale plays, like the Haynesville (which is already in decline) are relatively rare, and the number of wells and capital input required to maintain production will increase going forward as the best areas within these plays are depleted. High collateral environmental impacts have been followed by pushback from citizens, resulting in moratoriums in New York State and Maryland and protests in other states. Shale gas production growth has been offset by declines in conventional gas production, resulting in only modest gas production growth overall. Moreover, the basic economic viability of many shale gas plays is questionable in the current gas price environment.' If these various estimates are anywhere near accurate, the USA has a resource in unconventional shale gas of anywhere between 11 years and 23 years duration and unconventional oil of perhaps a decade before entering steep decline. The recent rhetoric about US 'energy independence' at the current technological state is utter nonsense.... as Hughes points out, 'High productivity shale plays are not ubiquitous, and relatively small sweet spots within plays offer the most potential. Six of thirty shale plays provide 88 percent of production. Individual well decline rates are high, ranging from 79 to 95 percent after 36 months. Although some wells can be extremely productive, they are typically a small percentage of the total and are concentrated in sweet spots.' ... The extremely rapid overall gas field declines require from 30 to 50 percent of production to be replaced annually with more drilling, a classic 'tiger chasing its tail around the tree' syndrome. This translates to $42 billion of annual capital investment just to maintain current production. By comparison, all USA shale gas produced in 2012 was worth about $32.5 billion at a gas price of $3.40/mcf (which is higher than actual well head prices for most of 2012). That means about a net $10 billion loss on their shale gambles last year for all US shale gas producers. Even worse, Hughes points out that capital inputs to offset field decline will necessarily increase going forward as the sweet spots within plays are drilled off and drilling moves to lower quality areas. Average well quality (as measured by initial productivity) has fallen nearly 20 percent in the Haynesville, the most productive shale gas play in the US. And it is falling or flat in eight of the top ten plays. Overall well quality is declining for 36 percent of US shale gas production and is flat for 34 percent. Not surprising in this context, the major shale gas players have been making massive write-downs of their assets to reflect the new reality. Companies began in 2012 reassessing their reserves and, in the face of a gas spot price that was cut in half between July 2011 and July 2012, are being forced to admit that the long-term outlook for natural-gas prices is not positive. The write-downs have a domino effect as bank lending is typically tied to a company’s reserves meaning many companies are being forced to renegotiate credit lines or make distress asset sales to raise cash.... The company by most accounts that typifies this shale gas boom-bust bubble is the much-hailed leading player in shale, Chesapeake Energy. ...As one critical analyst of Chesapeake put it, 'the company’s complex accounting methods make it almost impossible for analysts and stockholders to determine what the risks really are. The fact that the CEO is taking out billion-dollar loans and not openly disclosing them only furthers the perception that everything is not as it appears at Chesapeake – that the company is Enron with drilling rigs.' The much-touted shale gas revolution in the USA is collapsing along with the stock shares of Chesapeake and other key players."
The Fracked-up USA Shale Gas Bubble
Global Research, 13 March 2013

"Japan says it has successfully extracted natural gas from frozen methane hydrate off its central coast, in a world first. Methane hydrates, or clathrates, are a type of frozen 'cage' of molecules of methane and water. The gas field is about 50km away from Japan's main island, in the Nankai Trough. Researchers say it could provide an alternative energy source for Japan which imports all its energy needs. Other countries including Canada, the US and China have been looking into ways of exploiting methane hydrate deposits as well. Pilot experiments in recent years, using methane hydrates found under land ice, have shown that methane can be extracted from the deposits. Offshore deposits present a potentially enormous source of methane but also some environmental concern, because the underwater geology containing them is unstable in many places. 'It is the world's first offshore experiment producing gas from methane hydrate,' an official from the economy, trade and industry ministry told the AFP news agency.... Government officials have said that they aim to establish methane hydrate production technologies for practical use within five years. A Japanese study estimated that at least 1.1tn cubic metres of methane hydrate exist in offshore deposits.   This is the equivalent of more than a decade of Japan's gas consumption. Japan has few natural resources and the cost of importing fuel has increased after a backlash against nuclear power following the Fukushima nuclear disaster two years ago."
Japan extracts gas from methane hydrate in world first
BBC Online, 12 March 2013

"The extensive rationalisation, coupled with the rundown in storage depots and refineries has reduced the amount of petrol and diesel stocks at filling stations by the equivalent of two days demand. It also means the average time it takes a motorist to get from home to the nearest petrol pump has doubled from five to 10 minutes. Currently, stock levels are enough to meet six to eight days demand but, with some operators running below capacity to save money, total storage capacity could be lower, according to data produced by business advisers Deloitte for the Department of Energy and Climate Change (DECC). The report is one of two covering the shake-out in the petrol retailing market resulting from the entry of supermarkets and the demise of independent retailers."
UK more vulnerable from disruption to oil supplies
Telegraph, 10 March 2013

"On Thursday we learned that the U.S. trade deficit widened in January by a surprising 16 percent, to $44.4 billion. The $6.3 billion increase was almost entirely the result of a sudden spike in oil imports. Excluding crude, the deficit was basically flat at around $20 billion, according to Bloomberg. What makes this so odd is that the U.S. is in the midst of a long-term trend of reducing its dependance on foreign oil. By the end of 2012, the U.S. was importing just over 8 million barrels of crude per day, about 25 percent below the peak in August 2006 of 10.7 million. Yet, in January, the U.S. imported $24.5 billion worth of oil, up from $21.2 billion in December. Part of that’s a function of higher prices. From early December to the end of January, the price of Brent crude rose about $6 a barrel, from $108 to $114. Still, the sheer amount of oil the U.S. imported in January spiked 17 percent, to 8.41 million barrels from 7.19 million. That’s the most oil imported since August."
The Strange Surge in U.S. Oil Imports
Bloomberg, 7 March 2013

"Governments and financial analysts who think unconventional fossil fuels such as bitumen, shale gas and shale oil can usher in an era of prosperity and energy plenty are dangerously deluded, concludes a groundbreaking report by one of Canada's top energy analysts. In a meticulous 181 page study for the Post Carbon Institute, geologist David Hughes concludes that the U.S. 'is highly unlikely to achieve energy independence unless energy consumption declines substantially.' Exuberant projections by the media and energy pundits that claim that hydraulic fracturing and horizontal drilling 'can provide endless growth heralding a new era of 'energy independence,' in which the U.S. will become a substantial net exporter of energy, are entirely unwarranted based on the fundamentals,' adds Hughes in a companion article for the science journal Nature. Moreover it is unlikely that difficult and challenging hydrocarbons such as shale oil can even replace the rate of depletion for conventional light oil and natural gas.  Since 1990, says Hughes, the number of operating wells in the U.S. has increased by 90 per cent while the average productivity of those wells has declined by 38 per cent. The latest panaceas championed by industry and media talking heads are too expensive and will deplete too rapidly to provide either energy security or independence for the United States, concludes the 62-year-old geologist who worked for Natural Resources Canada for 32 years as a coal and gas specialist. To Hughes shale gas and shale oil represent a temporary bubble in production that will soon burst due to rapid depletion rates that have only recently been tallied. Taken together shale gas and shale oil wells 'will require about 8,600 wells per year at a cost of over $48 billion to offset declines.' 'The idea that the United States might be exporting 12 per cent of its natural gas from shale is just a pipe dream,' Hughes, a resident of Cortes Island in British Columbia, told The Tyee. 'Unconventional fossil fuels all share a host of cruel and limiting traits says Hughes. They offer dramatically fewer energy returns; they consume extreme and endless flows of capital; they provide difficult or volatile rates of supply overtime and have 'large environmental impacts in their extraction.' Most important, bitumen, shale oil and shale gas, by definition, are much lower quality hydrocarbons and therefore can't fund business as usual. They simply do not provide the same energy returns or the same amount of work as conventional hydrocarbons due to the energy needed to extract or upgrade them, says Hughes. At the turn of the century it took just one barrel of oil to find and produce 100 more. Now the returns are down to 20. The mining portion of the tar sands offers returns of five to one while the steam plant operations barely manage returns of three to one, says Hughes. 'And that's an extremely conservative estimate.' 'Moving to progressively lower quality energy resources diverts more and more resources to the act of acquisition as opposed to doing useful work.' A society that progressively spends more and more capital on acquiring energy that does less and less work will either exhaust the global economy or cannibalize national ones as consumers redirect larger portions of their household budgets to energy costs, says Hughes. 'To view them (unconventional hydrocarbons) as 'game changers' capable of indefinitely increasing supply of low cost energy which has underpinned the economic growth of the past century is a mistake.' The exploitation of shale oil and gas (and Hughes reviewed the data for 60,000 wells for the report) may have temporarily reversed declines in conventional resources but they show dramatic limitations often excluded from the mainstream press..... In every shale play there are sweet spots and unproductive areas and marginal ones. In fact 88 per cent of all shale gas production flows from six of 20 active plays in the United States while 81 per cent of shale oil comes from two of 21 plays. Moreover shale gas and oil fields deplete so quickly that they resemble financial treadmills. In order to maintain constant flows from a play industry must replace 30 to 50 per cent of declining production with more wells. Recovery rates from shale fields are also dismal. Conventional drilling, which uses less energy, often captured up to 70 per cent of the gas in the ground. But shale gas barely averages 10 per cent despite deploying more horsepower and water over greater landscapes. Nor is shale gas long-lasting. Industry promised that shale gas plays would produce for up to 40 years but the Haynesville, a top U.S. producer, reached maturity in five years and is already in a state of decline, reports Hughes. 'Nobody had heard about Haynesville until 2009.' 'That's the Achilles heel of shale gas. You need a lot of wells and environmental collateral damage and infrastructure to grow supply.'... Hughes' analysis confirms and supports the work of Texas oil analyst and geologist Arthur Berman who has questioned the growth rate claims of the shale gas industry for years and has offered the most reliable forecasts for the industry to date. The report also provides a reality check for aggressive bitumen forecasts in Canada's tar sands. Projections of four or five million barrels a day by 2035 made by a variety of industry cheer leaders will likely not be realized due to 'logistical restraints on infrastructure development and the fact that the highest quality, most economically viable portions of the resource are being extracted first,' says Hughes. 'It has taken 40 years to grow tar sands production to 1.6 mbd, yet forecasts call for a nearly tripling of production over the next 18 years,' says Hughes. But industry has already 'high graded' or dug up the highest quality bitumen deposits first. Most of the active development is now taking place in shallow open pit mines while the bulk of the resource (and the lowest quality) lies so deep underground that it requires large amounts of water and natural gas to extract. Adds Hughes: 'The economics of much of the vast purported remaining extractable resource are increasingly questionable and the net energy available from them will diminish toward the break even point long before they are completely extracted. In conclusion Hughes warns that societies that switch to high-cost fuels that deliver diminishing returns in terms of energy output without analyzing some cold hard energy realities will experience economic contraction, and price shocks and be held hostage by industry propaganda. 'I live on a pension and don't give a damn what pundits think. My report is based on fact not hyperbole. My friends in the industry, who don't want to be mentioned, will agree with my findings.' According to Hughes, the exploitation of shale oil and gas and bitumen marks a dramatic turning point for both financial and energy markets and thereby challenge all economic growth projections."
Fracked Gas Won't Solve Energy Crunch: Report
The Tyee, 23 February 2013

"In recent months, there has been a spate on stories in the press pronouncing that any imagined energy crisis is over for the foreseeable future and that the notion that world oil production will peak is now dead. These stories talk about the great quantities of oil being found deep under the sea or that will soon be found beneath the Arctic ice cap, or in what are termed 'shale beds' around the world. Recently, attention has been focused on the rapid increase in domestic American oil production that is coming from 'shale oil' - more properly termed 'tight oil' - fields in North Dakota and Texas. Before going into why there are serious flaws in all this happy talk about how much oil we are going to have for another decade or two, we should define just what is meant by the term 'peak oil' and why it carries serious implications for global economic development, now and in the years ahead. Peak oil is simply shorthand for the point in time when world oil production stops growing and will eventually be followed by a decline in production. Note that we are talking about the flow of oil. It does not matter how much is hidden under the arctic ice cap, deep beneath Brazil's offshore waters, or in the Alberta tar sands in Canada; if it is not being extracted, processed and transported to our fuel tanks - then we have peak oil. Constrictions to the global oil flow can come for several reasons. The most obvious is that the older oil fields start to dry up and new ones cannot be found or exploited fast enough. At the present time the world's existing oil fields are believed to be losing some three to four million barrels per day of production each year due to normal depletion, which must be replaced by new oil fields just to stay even. Another factor is political restrictions on access to oil. These may simply be government mismanagement of state oil companies, insurgencies and even full-scale wars preventing access to oil deposits. It does not matter, if the oil is not getting to the world's fuel tanks fast enough to support continued economic growth - then we have a problem. Yet another constraint is the steadily increasing cost of oil, which has been increasing at about 7 percent a year. At every increase, additional consumers of oil are being priced out of the market. It is conceivable that global oil production could peak simply because a sufficient number of consumers can no longer afford to purchase it. A little-known fact of world oil production is that the major exporters are using an increasing share of their production for themselves. Global exports are down by some two million barrels per day in recent years. Given the incessant increase in the amount of oil that China and to lesser extent India are importing, it is starting to look as if there will be little or no oil available for other countries to import in another decade or so.... What growth there has been in the global oil supply recently has come from the United States and Canada. American oil production, mostly from tight oil fields in Texas and North Dakota, is up by 1.5 million barrels per day in the last two years and Canadian oil sands production is up about 400,000 barrels per day. Two of the most important questions affecting global oil supplies in the next few years are just how much longer the boom in US tight oil production will continue and when the deteriorating political situation in the Middle East will seriously curtail oil exports.Oil production from tight wells that have been hydraulically fractured depletes very rapidly with production declining by 80-91 percent of initial output in the first 24 months. In this situation, some 40 per cent of production must be replaced annually just to maintain a level output. Independent geologists looking at the prospects for tight oil in the US forecast that production from current fields will peak in 2016 and will be to down to about 700,000 barrels per day by 2025. Therefore, total tight oil from the North Dakota and Texas fields will likely be on the order of five billion barrels – equivalent to about 10 months of US consumption."
Peak oil down to war, depression and geopolitical shifts
Public Service Europe, 23 February 2013

"Will the US be able to say goodbye to its costly military involvement in the energy-rich Middle East because of the shale oil revolution at home?... the US is still importing nearly as much crude oil from the Gulf as it has done in the past. The latest monthly data from the US Energy Information Administration, indicate Washington bought 2.1m bpd, equal to 25 per cent of its crude oil imports, from the region. Although Middle East crude oil imports are down from the peak of the early 2000s, they are still much higher than in the 1990s, a time of significant US involvement in the region, including the first Iraq war. As a percentage of total US imports, the Middle East is in line with the 20-year average. Speaking at the annual Munich Security Conference earlier this month, Jorma Ollila, chairman of Royal Dutch Shell, said: 'It is hard to see a scenario in which the United States abandons its interests in the Middle East.' US crude oil imports from Saudi Arabia, at roughly 1.4m-1.6m bpd in recent months, are in line with the average of the past 25 years, only below the peaks of 1991 and 2003 during the two wars with Iraq, as Riyadh boosted production significantly to offset the loss of Baghdad’s oil production. Saudi oil shipments to the US are also sharply up from the recession-induced low of 0.7m bpd of 2009. In reality, the US shale revolution would allow Washington to say goodbye to its minimal political and military involvement in west Africa, the region that is shouldering most of the reduction in US oil imports. Oil shipments from countries such as Nigeria and Angola have halved as they produce exactly the same kind of high quality, low sulphur crude oil as the US shale fields."
Shale oil fails to dent Middle East shipments
Financial Times, 20 February 2013

"On Wednesday January 16, due to unplanned outages and cold weather, National Grid had to find power to supply roughly a million homes to keep the lights on. Fawley, an oil-fired plant in Hampshire, was one of the power stations that responded. Next winter Fawley will not be there. Indeed, about 10pc of our current generation stock goes next month as coal and oil-fired power stations close earlier than expected to meet environmental targets.  Four years ago, Ofgem’s Project Discovery report outlined how the combination of the global financial crisis, along with tough environmental targets, and the forced closure of ageing coal and oil power stations would combine to provide a unique challenge for securing electricity supply from 2015 to 2020. ... If you can imagine a ride on a roller-coaster at a fairground, then this winter, we are at the top of the circuit and we head downhill – fast. Within three years, we will see the reserve margin of generation fall from about 14pc to less than 5pc. That is uncomfortably tight..... So where will our new sources of power come from? Wind has also been hit by the financial crisis and it will take time to reach a critical mass; nuclear will not be with us until well after 2020; and carbon capture and storage technology is still in its infancy. So that leaves gas. Ofgem estimates that, by 2020, 60pc to 70pc of our generation may have to come from gas to fill the gap. That’s up from about 30pc today. The Government asked Ofgem to look at gas security of supply last year and we concluded that in all but the most extreme circumstances, supplies for domestic consumers should be secure. However, power stations and large industrial users may be affected in a squeeze. The big worry about gas for all consumers is what price will we have to pay to get it? Because just when we need more gas, world demand for gas is set to rise while our own supplies are predicted to fall by another 25pc by 2020.... In fact, the global availability of gas in the middle of the decade is set to tighten due to several factors. For example, we no longer expect gas from Russia’s large Shtokman field, which has been recently cancelled, just as demand is increasing in Europe, partly as a reaction to the closures of nuclear plants. Demand will also grow rapidly in Asia, with China’s gas consumption alone growing at 20pc each year. This growing demand is forecast by experts to lead to a tightening of liquefied natural gas (LNG) capacity for a relatively short period – but that period just happens to be when we need gas for our power stations at record levels. Britain, therefore, will have to compete for its gas on a worldwide market. Today, Asian LNG prices, which drive long-term contract prices, are about 60pc higher than UK gas prices. But what about shale gas – will that not save the day? It is true that the US has transformed its energy market thanks to shale, but in our time-frame, when Britain will rely on gas for its power stations, this is not going to happen on any significant scale either here or elsewhere in Europe. Even if the US allows exports (and assuming they come to Europe), it will still cost about the same as we are paying for our winter gas now. No one doubts that there is plenty of gas out there, but what is critical to Britain is how much will be available over the next five years and how much we will have to pay for it to ensure that it comes here."
Alistair Buchanan, chief executive of Ofgem
Keeping Britain's lights on will come at a price
Telegraph, 19 February 2013

"With the start of 2013 the 'War on Terror' has burst back into the headlines. The attack on a BP gas plant in Algeria sparked declarations from David Cameron which identified North Africa as the new front line. Already the UK has backed military intervention in Mali and upgraded military support for Algeria and Libya. In Algeria, Cameron announced a strengthened 'military partnership' to combat terrorism and 'improve security in the region', and in Libya he pledged more British training for security forces and support for securing the country's borders. The reality of the never-ending War on Terror is that it is integrally bound up with an imperialistic drive for resources. Central to understanding David Cameron's rapid reaction to events in North Africa is a government document published in November last year to little or no fanfare. That document is the UK's Energy Security Strategy, released by the Department for Energy and Climate Change: the first time the UK has ever produced such a strategy. The document rings the alarm for the UK's future energy security, stating, 'Declining reserves of fossil fuels in the North Sea are making the UK increasingly dependent on imports at a time of rising global demand and increased resource competition', which is leaving the UK 'increasingly exposed to the pressures and risks of global markets'. The point is illustrated with some dramatic statistics: UK oil production, which currently provides for 70% of UK oil demand, is 'expected to decrease by 5% per year', meaning that within 20 years the North Sea oil supplies will have run out, leaving the UK completely dependent upon imports, whilst global demand for oil is predicted to increase by 15% by 2035. There will be even more competition for gas supplies, with global demand forecast to rise by 55% by 2035. Again, declining North Sea supplies mean that the UK will go from importing about 50% of the gas it uses currently 'to nearly 70% by 2025'. At international level, the document identifies the importance of 'energy diplomacy' in securing UK supplies of oil and gas for the future. Energy diplomacy, it says, includes 'maximising commercial opportunities' for UK corporations, forcing open new markets to guarantee them unrestricted access to valuable energy resources. Here we get to the crux of the strategy: it is not the ordinary UK citizen that is being protected- for evidence look no further than the exorbitant energy bills crippling Britain's poor- but the interests of UK corporations which supply the energy. This 'energy diplomacy' is of course a euphemism for militaristic British foreign policy. This includes the provision of military aid and weapons sales to regimes which control strategic energy reserves regardless of how repressive and violent they may be, as well as the readiness to use military force against states or groups which threaten UK energy security interests or those of UK allies. Of course, militaristic British policy focussed upon securing energy resources at the expense of human rights is not new, for evidence just look at Nigeria. What we are witnessing currently is an increased sense of urgency to take control of strategic energy resources. The Ministry of Defence in 2010 laid out its analysis of future strategic threats to the UK, and predicted that in coming years major powers are 'likely to use their defence forces to safeguard supplies [of hydrocarbons]'. It identified North Africa as a strategically important area where a key focus of European states' engagement will be on securing access to energy resources. The military cooperation agreements announced last month with Algeria and Libya are part of UK 'energy diplomacy' aimed at securing access to strategic resources in North Africa. Both countries are identified in the UK Energy Security Strategy as producers of gas and oil which are important trading partners and hence countries which are important to the UK's energy security. Algeria now supplies 5% of the UK's gas needs, whilst Libya is not only an important trading partner, but is a country whose oil supply is so important to the global oil market that the price of oil rose by 10-20% when armed conflict erupted there in 2011. Before the conflict in Libya had even finished, it was reported that BP had begun talks with rebel leaders aimed at securing access to the country's oil wealth, and the French foreign minister publicly stated that it was 'fair and logical' for French companies to benefit after French military intervention in the country."
Mali, Algeria, Libya and the New Front Line In 'Energy Diplomacy'
Huffington Post (Blog), 14 February 2013

"A Czech atomic-plant expansion planned near the German border had been one of the few prizes left for Europe’s nuclear-power industry after the Fukushima disaster stopped projects from Switzerland to Romania. Russian and U.S. contractors have prepared to bid for the $10 billion contract to build two new reactors, Europe’s largest competitive tender for a nuclear project. Now a combination of cheaper European power prices and carbon credits, falling demand for electricity and concern government support may falter leaves CEZ AS’s project in doubt, analysts and investors said.  'The future of nuclear energy in Europe looks very dim indeed,' said Mycle Schneider, an independent consultant on energy and nuclear power based in Paris. 'Nuclear is too capital intensive, too time-consuming and simply too risky.' Abandoning the Temelin project would deal another blow to the foundering nuclear industry in Europe, and to contractors such as Russia’s Rosatom Corp. and Westinghouse Electric Corp., after the 2011 accident at the Fukushima plant in Japan. The catastrophe led Germany to set in motion the closure of all its reactors, while Italy and Switzerland dropped building plans. Projects already under way in France and Finland have suffered delays and cost overruns. The Czech Republic and the U.K. were seen as the the two European countries with the strongest commitment to new nuclear plants. Now projects in both countries are in doubt."
Nuclear Revival Dying in Europe as Power Prices Slump: Energy
Bloomberg, 14 February 2013

"Petrobras reported the company's lowest annual profit since 2004 on Monday, with Chief Executive Maria das Gracas Foster adding that 2013 would likely be another 'difficult' year. The company also slashed its common-share dividend to less than half of what preferred shares will pay. That sent Petrobras's common shares to the lowest level since 2008. OGX, meanwhile, continued to disappoint investors with lower-than-expected crude oil output at its lone producing field. OGX shares hit a 52-week low before recovering slightly Friday. 'Clearly, we all know that Petrobras isn't going to fail,' said Marco Aurelio de Sa, head of trading at Miami-based Credit Agricole Securities. 'But the company's negative moment is affecting the sector as a whole.'... In comments to investors after Petrobras's earnings release, Ms. Foster reiterated that the company was focused on boosting efficiency and controlling costs as it carries out a $237 billion investment plan through 2016. But Ms. Foster warned that production would likely remain flat this year as ongoing maintenance of aging offshore platforms continues through the first half of 2013. New platforms will come onstream in the second half of the year, although crude oil output isn't expected to grow significantly until 2014, she added. The result is that investors are looking at companies with big ties to Petrobras as riskier investments, Mr. Sa said."
Brazil Oil Outlook Is Uncertain as Bond, Share Offers Cancelled
Wall St Journal, 8 February 2013

"The price of gasoline in the US, which has risen 25 cents a gallon in the last month, is starting to cause concern. Prices are now at the highest on record for this time of year. While national inventories of gasoline are in good shape, local shortages and refinery outages are pushing prices towards $4 a gallon in California and the New York region."
Peak oil notes
ASPO, 7 February 2013

"Like swallows returning to San Juan Capistrano, every December some 20,000 geoscientists flock to San Francisco for the fall meeting of the American Geophysical Union..... There are certainly huge amounts of oil locked up in shale formations worldwide. In the United States alone, the Bakken and Eagle Ford shales contain up to 700 billion barrels, and the Green River shale under Colorado, Wyoming, and Utah has a whopping 2 trillion barrels. However, only a tiny fraction of this total is recoverable. For Bakken (in Montana and North Dakota) and Eagle Ford (in Texas), which account for most of the current surge in U.S. oil production, the estimated recoverable fraction ranges from 1 to 2 percent. Though all of these deposits are loosely referred to as 'shale oil,' Bakken and Eagle Ford oil is more precisely called 'tight oil,' because it is actual, fluid oil that is trapped in the pores of shale, and it can be liberated by fracturing the rock to allow the oil to flow. In contrast, the hydrocarbon in the Green River shale is not really oil at all but a waxy substance that must be cooked at around 500 degrees Celsius to turn it into flowing oil. The technology for extracting oil from deposits like the Green River shale is far more challenging than what is required to tap into tight oil, and it has never been profitably implemented at any significant scale. There is thus no credible estimate of how much oil can be recovered from the Green River formation. At the high end of the estimates, predicted production from Bakken and Eagle Ford together amounts to perhaps a two-year oil supply for the United States at 2011 consumption rates. That's significant but not a game-changer. ... Technological developments have made it possible to tap into tight oil, but these are not the same kinds of technological developments that have given us ever more powerful computers and cellphones at ever declining prices. Oil production technology is giving us ever more expensive oil with ever diminishing returns for the ever increasing effort that needs to be invested. According to the statistics presented by J. David Hughes at the AGU session, we are now drilling 25,000 wells per year just to bring production back to the levels of the year 2000, when we were drilling only 5,000 wells per year. Worse, the days are long gone when you could stick a pitchfork in the ground and get a gusher that would produce for years. The new wells are expensive (on the order of $10 million each in the Bakken) but give out rapidly, as shown in the following figure from Hughes' talk illustrating the typical production curve..... Tight oil is headed for a Red Queen's race, where you have to keep drilling and drilling and drilling just to keep your production in the same place. At several million dollars a pop, that adds up to a big annual investment, and eventually you run out of places to put new wells. The following figure, also from Hughes' talk, shows that if you try to increase production by drilling wells faster, you just wind up running out of oil sooner..... High oil prices may make it profitable to recover more oil from unconventional deposits, but ultimately physics rules. In his talk at the AGU session, Charles A.S. Hall pointed out that the energy return on investment—the amount of energy you get out of a well vs. the energy needed to produce the oil—has been getting steadily worse over time. As long as there is some net energy gain and some profit to be made, drilling may go ahead, but the benefits to the energy supply deteriorate .... Certainly, the current natural gas glut has played a welcome role in the reduced growth rate of U.S. carbon dioxide emissions, and the climate benefits of switching from coal to natural gas are abundantly clear. But gas, too, is in a Red Queen's race, and it can't be counted on to last out the next few decades, let alone the century of abundance predicted by some boosters."
The Myth of 'Saudi America'
Slate, 6 February 2013

"Diminishing oil revenues will have a major impact on Scotland’s economy if it becomes independent, an economic think-tank has warned. The Institute for Fiscal Studies forecasts in a report on the UK economy that by 2017-18 oil and gas revenues could be down as much as 17 per cent from 2011, which will be an 'important issue for an independent Scotland.' The report also warned that the UK government may have to cut public spending by a third to balance the books. The report said that by 2017, oil production is expected to have fallen by 16 per cent and gas production by 15 per cent compared with 2011."
Scottish oil and gas revenues set to sink by 17%
Scotsman, 7 February 2013

"Oil output from North Dakota’s portion of the Bakken shale formation slipped in November for the first time in 20 months after producers began pulling rigs out of the state. Production declined 2.2 percent from October to 669,000 barrels a day, according to the North Dakota Industrial Commission. It was the first month-to-month drop since April 2011. The decline closely followed a decline in rig counts in the state, from 210 on Oct. 19 to 181 on Nov. 30, according to data compiled by Smith Bits, a drilling products and services provider owned by Houston- and Paris-based Schlumberger Ltd. (SLB). Bakken wells tend to have steep decline rates because they’re created with directional drilling and hydraulic fracturing, James Williams, president of WTRG Economics in London, Arkansas, said by telephone. 'The question is, are you drilling enough new wells to make up for the decline?' he said. 'With a little decline in the rig count, and the very fast depletion rate of the wells, it’s not terribly surprising that the Bakken production leveled off.' Increased production out of the Bakken, the Eagle Ford formation in South Texas and the Permian Basin in West Texas helped U.S. oil output exceed 7 million barrels in the week ended Jan. 4 for the first time since 1993.”
Bakken Oil Output Fell in November for First Time in 18 Months
Bloomberg, 11 January 2013

"It is hard to believe that Iraq is not sinking into civil war. Bombs are going off nearly every day in Iraq and tensions between the Sunnis, Kurds, and the Shiite-controlled government in Baghdad are increasing with every passing week. Oil production is already slipping, several big western oil companies are pulling out of the oil fields under Baghdad’s control, the Kurds will no longer ship oil through Baghdad’s pipeline, and tanker shipments to Jordan have been halted. It is difficult to foresee Baghdad increasing its oil production by any significant amount in the next two years, but easy to see domestic chaos increasing to the point where production starts to slip or even stops.... So far the Algerian government has used oil revenues to keep discontent under control, but Libya is far from stable and accordingly the country’s oil production is 500,000 b/d lower than a few years ago. Given the instability there it could go even lower. There has been little change in the Sudanese and Syrian situation. The chances that either will resume normal exports in the coming year in the coming year range from low to non-existent..... Conventional wisdom says European oil demand will go down this year and possibly next, U.S. oil demand will remain about the same, and demand from China and other developing and oil-exporting countries will go up by about a million barrels a day. We should all keep in mind that the Saudis are currently building three large oil refineries so that in 3 to 4 years their export of crude will be about 1.2 million b/d lower than it would have been otherwise.... As we have been told incessantly in recent months, US oil production has been rising rapidly due to production from North Dakota and Texas tight (fracked) oil fields. Last year it grew by about 780,000 b/d and many are expecting such increases to continue for a while – hence the lack of concern about the global oil supply in the near future. Some geologists, however, noting the high cost of fracked oil wells and their short life, believe that this great upsurge in production will have to come to an end so that rates of production increases start dropping and eventually decline. While there are already a few signs, such as lower initial rates of production from fracked oil wells, most observers believe the balloon still has a year or two to go before it pops. The cost of producing oil from fracked wells is very high and in some cases close to current selling prices."
The Peak Oil Crisis: Looking at 2013
Falls Church News-Press, 23 January 2013

"If you have ever grimaced at your petrol bill and dreamed of a car that runs on fresh air, your prayers are about to be answered. French car giant PSA Peugeot Citroen believes it can put an air-powered vehicle on the road by 2016. Its scientists say it will knock 45 per cent off fuel bills for an average motorist. And when driving in towns and cities costs could be slashed by as much as 80 per cent because the car will be running on air for four-fifths of the time. The system works by using a normal internal combustion engine, special hydraulics and an adapted gearbox along with compressed air cylinders that store and release energy. This enables it to run on petrol or air, or a combination of the two. Air power would be used solely for city use, automatically activated below 43mph and available for ‘60 to 80 per cent of the time in city driving’. By 2020, the cars could be achieving an average of 117 miles a gallon, the company predicts. The air compression system can re-use all the energy normally lost when slowing down and braking. The motor and a pump are in the engine bay, fed by a compressed air tank underneath the car, running parallel to the exhaust. The revolutionary new ‘Hybrid Air’ engine system – the first to combine petrol with compressed air – is a breakthrough for hybrid cars because expensive batteries will no longer be needed. Cars fitted with Hybrid Air will be about £1,000 cheaper to buy than current hybrid models. For more than two years, 100 elite scientists and engineers have been working on the air-powered car in top-secret conditions at Peugeot’s research and development centre at Velizy, just south of Paris. Hybrid Air is the centrepiece of Peugeot chief executive Philippe Varin’s efforts to restore the fortunes of the historic car maker. The revolutionary system will be able to be installed on any normal family car without altering its external shape or size or reducing the boot size, provided the spare wheel is not stored there. From the outside, an air-powered car will look identical to a conventional vehicle.  A spokesman said: ‘We are not talking about weird and wacky machines. These are going to be in everyday cars.’ Peugeot, which unveiled its prototype yesterday, envisages introducing it in smaller models such as the 208 at first. The company said that as well as being greener and cheaper to run, the air system created no extra dangers in a collision. Motorists never run the risk of running out of compressed air late at night on a deserted country road because the car will be fitted with a sophisticated artificial brain that ensures it replenishes itself automatically. The air compresses and decompresses of its own accord as the car speeds up and slows down."
Coming soon, the car that runs on air: Peugeot Citroen unveil new 117mpg hybrid
Mail, 23 January 2013

"Refining Canada’s oil sands into gasoline may speed global warming more than previously estimated after accounting for use of a waste product, which can be burned like coal.  Opening a new front in a fight to persuade President Barack Obama to reject the Keystone XL pipeline, which would carry oil sands from Alberta to the U.S. Gulf Coast, environmental groups yesterday released a study that found refining the heavy material will create 5 billion tons of petroleum coke, or petcoke, that’s used by power plants, aluminum factories ands teel mills.   Compared with coal, petcoke is cheaper and releases more carbon dioxide when burned. Much of the U.S. supply is exported. 'Petcoke is the coal hiding in the tar sands,' said Lorne Stockman, research director for Oil Change International, a Washington-based advocacy group that works for a transition away from fossil fuels. Until now, 'the emissions of burning petcoke has not been included in the analyses.'"
Keystone’s Tar Sands Waste Said to Warm Climate More Than Coal
Bloomberg, 18 January 2013

"An editorial from Bloomberg News states that Libya may eventually fail as a petro-state unless it does more to address ongoing security and political woes. The Libyan oil sector has rebounded since last year's civil war. The country is producing around 1.6 million barrels per day, its pre-war level. The editors at Bloomberg News write that the success story for Libya makes for 'short reading.' 'Thanks to oil, the country has money, and plenty of it,' they write. Last month, Eni Chief Executive Officer Paolo Scaroni presented the new Libyan government with an investment plan worth $8 billion for the development of ongoing production and new exploration activities over the next 10 years. NATO forces responded to the Libyan civil war in 2011 with airstrikes, which paved the way to regime change in the country. Internal divisions, national protests and terrorist activity that culminated with the September death of the U.S. ambassador to Libya, however, has complicated national development. Bloomberg's editors note that 'real progress is impossible' unless the country tackles institutional and security challenges. 'A failed petro-state in Libya remains a possible outcome of the revolution that began two years ago this week,' they state."
Report: Libya on the road to oil failure
United Press International, 18 January 2013

"Iraq’s internal battle over oil deepened on Thursday as the semi-autonomous Kurdistan region condemned a threat from Baghdad to cut its budget over its decision to start independently exporting crude to Turkey. The Kurdistan Regional Government (KRG) warned that 'intimidation' from the Iraqi capital would create 'division and strife' – a resonant message after a string of sectarian terrorist attacks across the country killed more than 50 people in the past two days. High quality global journalism requires investment. Analysts say the escalating dispute over control of Kurdistan’s oil is one of the biggest threats to the stability of Iraq’s fragile, post-US occupation, political settlement and the ambitions of Nouri al-Maliki, prime minister, to entrench his authority. 'The oil issue is an existential threat to Maliki,' said Toby Dodge, author of a soon-to-be-published book called Iraq: From War to a New Authoritarianism. 'And the Kurdistan Regional Government and Maliki know it.' Abdul Kareem al-Luaibi, Iraq’s oil minister, made the Kurdistan budget cut threat this week, warning the region’s authorities that it was 'high time' they stopped the 'very dangerous behaviour' of   'illegal' crude exporting. Mr Luaibi threatened to sue Genel Energy, the independent oil producer headed by Tony Hayward, the former BP chief executive, which has just started transporting oil from one of its Kurdistan fields to Turkey.... The struggle over Kurdistan’s resources is part of a complex series of overlapping political fights in Iraq between Mr Maliki – a Shia Muslim Islamist – and factions including Moqtada al-Sadr, a firebrand Shia cleric, and Sunni minority representatives who have been holding street protests in recent weeks. Insurgents, widely thought to be Sunni extremists, killed 22 people in Iraq on Thursday in bomb attacks aimed mainly at Shia pilgrims. The slaughter came a day after another wave of bombings killed at least 33 people, with one targeting an office of the Kurdistan Democratic party of Massoud Barzani, the KRG president, in the disputed town of Kirkuk."
Kurds hit out in Iraq oil conflict
Financial Times, 17 January 2013

"Drilling for North Sea oil and gas took off last year, as a resurgence in the UK continental shelf pushed up the number of new exploration and appraisal wells by a third. A total of 65 wells were drilled in 2012, up from 49 the year before, as government tax breaks in last year's budget fuelled the revival in the UK section of the North Sea, according to Deloitte. Graham Sadler, managing director of Deloitte's petroleum services group, said: "After several years of caution and uncertainty, we have a more positive environment, where tax incentives, the high oil price and appetite to invest have combined to make 2012 the most encouraging year for a long time.... Although North Sea production will probably never return to its peak output in 1999, when it produced 4.5 million barrels a day, the expansion should help lift it from last year's level of about 2 million."
North Sea oil and gas wells leap fuelled by tax breaks
Independent, 17 January 2013

"Warnings that the world is headed for 'peak oil' – when oil supplies decline after reaching the highest rates of extraction – appear 'increasingly groundless', BP's chief executive said on Wednesday. Bob Dudley's remarks came as the company published a study predicting oil production will increase substantially, and that unconventional and high-carbon oil will make up all of the increase in global oil supply to the end of this decade, with the explosive growth of shale oil in the US behind much of the growth. As a result, the oil and gas company forecasts that carbon dioxide emissions will rise by more than a quarter by 2030 – a disaster, according to scientists, because if the world is to avoid dangerous climate change then studies suggest emissions must peak in the next three years or so. So-called unconventional oil – shale oil, tar sands and biofuels – are the most controversial forms of the fuel, because they are much more carbon-intensive than conventional oilfields. They require large amounts of energy and water, and have been associated with serious environmental damages. While some new conventional oilfields are likely to come on stream before 2020, they will be balanced out by those being depleted. BP's projections confirm some of those made by the International Energy Agency, which late last year forecast that the US would be the world's biggest oil producer by the final years of this decade, surpassing Saudi Arabia and other Opec countries.... BP also forecast that global energy demand would continue to increase at an average of 2% a year to 2020 and then by 1.3% a year to 2030. Almost all of this demand growth is forecast to come from currently developing economies, with China and India alone responsible for half the increase in demand. The company expects fossil fuels to continue to dominate over renewables, forecasting that low-carbon fuels – nuclear, hydroelectricity and other forms of renewables – will take only a 6% to 7% share each of the global energy market."
Peak oil theories 'increasingly groundless', says BP chief
Guardian, 16 January 2013

"Bloomberg published an article regarding the new frenzy of shipping domestic crude, particularly tight oil from shales, by rail rather than pipeline. This decision by shale operators is interesting for various reasons but most especially for the economics behind it. While industry touts shipping by rail as their latest great idea, there is, of course, another possibility as to why shipping by rail rather than pipeline makes sense. And it has more to do with unprofitability than great opportunity. According to Bloomberg: 'A group of oil and gas pipeline operators led by Plains All American Pipeline LP (PAA) announced plans just in the past three months to spend about $1 billion on rail depot projects to help move more crude from inland fields to refineries on the coasts.'... Oil and Gas Journal reported in September 2012: 'Oil pipeline operators’ net income soared to an all-time high of $6.1 billion, a 33.3% increase from 2010 achieved on the back of a nearly 12% increase in operating revenues.' And yet in the Bakken play in North Dakota, Oneok Partners couldn’t get enough interest from operators to build a pipeline to carry Bakken crude. According to the WSJ MarketWatch: 'Oneok cancelled its Bakken Oil Express plans…citing insufficient shipper interest.' Now record profits are being made on oil pipeline assets in the U.S. and industry touts the Bakken as one of the two hottest oil shale plays in the US and yet there is 'insufficient shipper interest'.' Further, it costs about three times as much to transport oil by rail than by pipeline... ... The USGS examined well data for every shale play in the US and extrapolated EUR’s, or reserve estimates, based on actual production. Reserve estimates were slashed significantly from operators prior overly optimistic assumptions and claims. In fact, operators have overestimated reserves by a minimum of 100% to as much as 400-500% on shale gas and tight oil. These figures are now being corroborated by other independent geologists as well. Add to this mix extremely steep decline curves for both shale gas and tight oil. A paper presented to the Society of Petroleum Engineers which researched well data in the Eagle Ford shale of South Texas found that first year decline rates were about 80-93%! Shale gas overall yearly field declines are in excess of 40%. The Haynesville is in excess of 50%. In other words, wells are playing out much quicker than expected. And this segues nicely into the heart of the matter. If operators thought that shale assets would be long-lived and highly productive they would build pipeline infrastructure to ensure equally long lived profits. But that is not the case. They have chosen instead to ship by rail for three times the cost of a pipeline. It is more likely that industry recognizes the short lives of shale wells and are not prepared to invest the capital needed to build the infrastructure."
Crude by Rail: Does It Really Make Sense?
Energy Policy Forum, 14 January 2013

"Libya's Prime Minister Ali Zeidan threatened to impose order by force on Wednesday in response to unrest that has caused astronomical losses in the oil sector and deadly violence in the capital. 'We will be compelled to use force to protect the state,' Zeidan warned on the sidelines of a ministerial meeting which he interrupted to speak to the press. 'Oil is our only source of revenue,' he said, lamenting the loss of 1.3 million Libyan dinars ($1 million) per day because of inaccessible oil installations blocked off by protesters. Oil installations have become a focal point of protests in the wake of July polls that ushered in the country's first elected authorities. In December, the strategic Zueitina oil terminal was shut down by demonstrators. Zeidan also urged citizens to support the nascent army and police. 'We will not allow any (armed) force to confront the people and threaten national security. I warn families, tribes and regions that we will take decisive measures,' the premier said. 'We cannot be patient when violence results in the disruption of oil supplies and the loss of life.' The statement comes in the wake of disparate acts of violence in the capital... "
Libya PM threatens force to protect oil sector
Middle East Online, 13 January 2013

"Brent crude oil rose more than $1 to a 12-week high today after news of a sharp cut in Saudi oil production, an explosion in Yemen that halted most of the country's oil exports and bullish Chinese trade data. Saudi Arabia cut its crude oil production by about 700,000 barrels per day (bpd) over the last two months of last year, with December output at around 9 million bpd, an industry source familiar with Saudi oil policy said. The world's largest oil exporter produced 9.025 million bpd in December, down from 9.49 million bpd in November and more than 1 million bpd below its peak production last summer. Flows of oil through Yemen's main crude export pipeline stopped on Thursday after it was blown up by unknown attackers, government and oil industry officials said. On the demand side, strong Chinese trade data raised expectations that an economic recovery in the world's second-biggest oil consumer would drive fuel consumption higher.... 'These three factors - Saudi Arabia, Yemen and the China data - are all helping to push up the market,' said Tamas Varga, an oil analyst at broker PVM Oil Associates in London. Riyadh says it favours an oil price of about $100 a barrel, but recent reports have suggested that the market is well supplied and that output from some areas, particularly North America, will grow rapidly over the next two years. 'Short term, the Saudi output figures are bullish, but longer term they are more bearish, because they suggest Saudi Arabia sees the need to cut to balance the market,' Varga said."
Oil surges on Saudi output cut
Reuters, 10 January 2013

Archives - Click Here


".... 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

"Individual peace is the unit of world peace. By offering Consciousness-Based Education to the coming generation, we can promote a strong foundation for a healthy, harmonious, and peaceful world.... Consciousness-Based education is not a luxury. For our children who are growing up in a stressful, often frightening, crisis-ridden world, it is a necessity."
Academy Award Winning Film Producer David Lynch (Elephant Man, Blue Velvet, etc)
David Lynch Foundation


NLPWESSEX, natural law publishing