Monday, February 22, 2010

ODAC Newsletter - Feb 19

Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre, the UK registered charity dedicated to raising awareness of peak oil.

The mood amongst oil company executives meeting in London this week for the Petroleum Week conference was largely bullish, with global oil demand expected to recover this year as the world economy crawls out of recession. But the production side of the equation is becoming increasingly difficult and expensive.

It is also becoming clear, as ODAC has long argued, that energy security concerns are undermining the environmental agenda. In the US, the National Petrochemical & Refiners Association (NPRA) lobby group, tried to overturn California state legislation that effectively rules out the use of oil from the tar sands. At the same time, President Obama’s attempts to get cap and trade legislation through Congress took a blow as Conoco Phillips and BP withdrew from the US Climate Action Partnership (USCAP), a business lobby group supporting the legislation. BP meanwhile is pushing ahead with its oil sands programme despite recent investor protest, indeed the company is rumoured to be about to buy a further stake in the region. In the UK it emerged that RWE and EoN have been holding private talks with the Conservative Party aimed at extending deadlines on some of the coal and oil plants which are set to close under EU pollution directives.

The climate is not the only thing to suffer from our thirst for energy. A report by the non-profit agency ActionAid Meals per gallon - The impact of industrial biofuels on people and global hunger, claims that current EU 10% renewable targets for transport are already causing competition for agricultural land, and stoking food inflation and hunger. In 2009, 25% of the US grain harvest was used for biofuel, and the proportion is set to rise further, perhaps sparking a repeat of the food riots of 2008. The report also claims that jatropha, a crop which had been hailed as an answer to the land conflict as it could be grown on marginal land, has so far failed proved a failure.

The political challenge around energy was summed up well this week by Dave Pollard of the UK Association of Electricity Producers when he said “They are concerned about power cuts. You will lose a lot more votes if the lights go out than if you are not quite as green as you said you were going to be.” This attitude however hides the truth that a short-term approach to replacing oil and other fossil fuels now will undoubtedly store up huge crises for the not too distant future.

OilOil industry more upbeat, but challenges remainBarrels in Reserve but Harder to GetOil groups mount legal challenge to Schwarzenegger's tar sands banBP pushing ahead with Canada oil sands project despite investor and environmentalist angerCanada looks to China to exploit oil sands rejected by USBP pulls out of emissions reduction coalitionBlack gold may be there, but bringing it to market is another matterDrilling Bans to Cost U.S. $2.36 Trillion, Industry Study Says Crude Oil Falls as Dollar Gains on Fed’s Discount Rate Increase Saudi Arabia Says Peak Demand for Oil Is an вЂAlarm’GasTrouble on the Russian front as BP offshoot faces loss of big gasfieldGas drillers find a welcome mat in New York stateQ+A-Environmental fears over U.S. shale gas drillingNuclearObama in nuclear energy pushEDF warned of вЂmassive’ reactor billSellafield is like BP's Texas City before the fire, says NDA's bossBiofuelsSeeds of discontent: the 'miracle' crop that has failed to deliverControversy mounts in EU over fall-out from biofuelBritish Airways to fly jets on green fuel made from London's rubbish by 2014UKEnergy giants turn up the heat for dirty powerNew ВЈ600m gas storage caverns will handle just five days' demandOld salt caverns could be used for gasGeopoliticsKazakhstan threatens contracts in tax moveArgentina imposes shipping rules in Falklands oil row

Oil

Oil industry more upbeat, but challenges remainAlex Lawler and Emma Farge, Reuters, 18 Feb 2010View original article

The oil industry is benefiting from higher prices and global consumption as the economy recovers, but faces little or no demand growth in developed markets and a weak outlook for the refining business.

Hundreds of oil executives and traders are in London for the annual IP Week gathering on Feb. 15-17. The event includes a conference and lunches, as well as evening receptions held in upscale districts like Mayfair...

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Barrels in Reserve but Harder to GetChristopher Swann and Martin Hutchinson - Reuters, New York Times, 17 Feb 2010View original article

With oil majors given the cold shoulder in many developing countries, it is no mean feat that Exxon Mobil managed to replace 100 percent of last year’s production with new reserves. Even so, not all energy is equal. The stuff Exxon is using to fill its pipeline will be harder to extract and of lower value to investors.

Exxon still deserves applause for replenishing its supplies. The 100 percent figure arguably understates Exxon’s achievement, since it is based on restrictive Securities and Exchange Commission assumptions about oil prices. The oil giant’s own figures give a replacement ratio of 133 percent, beating its own 10-year average of 112 percent...

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Oil groups mount legal challenge to Schwarzenegger's tar sands banTerry Macalister, The Guardian, 14 Feb 2010View original article

A lobby group that includes BP and Shell in its membership has launched a legal challenge against low-carbon legislation in California that in effect rules out the use of oil from Canadian tar sands. The action by the National Petrochemical & Refiners Association (NPRA) comes amid growing political, investor and consumer pressure on US oil companies not to participate in the carbon-intensive tar sands of Alberta.

A NPRA statement said the legislation was unlawful for a number of reasons, including the imposition of "undue and unconstitutional burdens on interstate commerce"...

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BP pushing ahead with Canada oil sands project despite investor and environmentalist angerRoland Gribben, Telegraph, 15 Feb 2010View original article

BP is pushing ahead with plans to expand its interests in Canada's vast oil sands deposits in the face of growing opposition from some investors and environmental groups.

The oil giant is already under fire over its involvement in a $10bn (ВЈ6.4bn) project in Alberta but discussions now under way could provide the basis for a more ambitious programme to increase investment in the world's biggest oil sands territory...

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Canada looks to China to exploit oil sands rejected by USSuzanne Goldenberg, The Guardian, 14 Feb 2010View original article

Canada courts Chinese investment in Alberta oil projects as US firms boycott tar sands fuel

Canada, faced with growing political pressure over the extraction of oil from its highly polluting tar sands, has begun courting China and other Asian countries to exploit the resource...

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BP pulls out of emissions reduction coalitionSheila McNulty in Houston and Anna Fifield in,Washington, Financial Times, 17 Feb 2010View original article

BP, Europe's biggest oil company, has pulled out of the leading business group lobbying for curbs on US greenhouse gas emissions, a sign of fragmentation in the campaign for climate and energy legislation...

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Black gold may be there, but bringing it to market is another matterRobin Pagnamenta, The Times, 18 Feb 2010View original article

Billions of barrels of oil may lie trapped in the rocks deep beneath the ocean floor of the South Atlantic, but finding them and bringing them to market is likely to be a big struggle — vastly expensive and fraught with political complications.

A study by the British Geological Society suggested that the region could contain up to 60 billion barrels of oil — a similar-sized deposit to the North Sea. But such figures may give little sense of how much is recoverable using existing technology...

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Drilling Bans to Cost U.S. $2.36 Trillion, Industry Study Says Daniel Whitten, Bloomberg.com, 15 Feb 2010View original article

Restrictions on oil and gas drilling will cost the U.S. economy $2.36 trillion through 2029, according to a study requested by state utility regulators and paid for in part by industry-sponsored groups.

Drilling restrictions in Alaska’s Arctic National Wildlife Refuge and off the U.S. coastline are blocking access to about nine years’ worth of U.S. oil and gas consumption, according to the report. Among sponsors are the National Association of Regulatory Utility Commissioners and the industry-funded Gas Technology Institute, of Des Plaines, Illinois...

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Crude Oil Falls as Dollar Gains on Fed’s Discount Rate Increase Ben Sharples and Yee Kai Pin, Bloomberg, 19 Feb 2010View original article

Crude oil fell for the first day in four after the Federal Reserve raised its discount rate, pushing the dollar higher and damping investor demand for commodities.

Oil pared yesterday’s 2.2 percent rally as the U.S. currency traded at a nine-month high against the euro after the Fed increased its rate charged to banks for direct loans for the first time in more than three years. Energy Information Administration data also showed U.S. crude inventories climbed 3.09 million barrels last week, beating a forecast for a 1.73- million increase in a Bloomberg News survey of analysts...

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Saudi Arabia Says Peak Demand for Oil Is an вЂAlarm’Ayesha Daya, Bloomberg.com, 15 Feb 2010View original article

Saudi Arabia must be “very serious” about any possible peak in oil demand, which is an “alarm” for OPEC’s biggest exporter to diversify its economy, a Saudi Oil Ministry adviser said.

Saudi Arabia is making a push into renewable energy and is starting its first carbon-capture project, Oil Ministry adviser Mohammad al-Sabban said today at the Jeddah Economic Forum. The country will start injecting carbon dioxide into Ghawar, the world’s largest oilfield, in 2012, he said...

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Gas

Trouble on the Russian front as BP offshoot faces loss of big gasfieldRobin Pagnamenta Energy Editor, The Times, 17 Feb 2010View original article

BP was facing fresh troubles in Russia yesterday after the Government moved closer to stripping TNK-BP, its Moscow subsidiary, of one of the country’s biggest gasfields.

Officials from RosPrirodNadzor, Russia’s environmental agency, recommended yesterday that a licence held by TNK-BP for the Kovytka field in Eastern Siberia be revoked...

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Gas drillers find a welcome mat in New York stateEdith Honan, Reuters, 17 Feb 2010View original article

New York landowners whose properties sit on the gas-rich Marcellus Shale are pushing back against calls for greater environmental regulation, saying it has halted the U.S. gas drilling boom at the New York border.

Their concerns have opened a new front in the gas drilling wars, in which environmentalists and neighbors opposed to seeing gas wells in their back yards have put a drag on the exponential growth of onshore U.S. natural gas production...

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Q+A-Environmental fears over U.S. shale gas drillingJon Hurdle, Reuters, 17 Feb 2010View original article

The boom in shale natural gas drilling has raised hopes the United States will be able to rely on the cleaner-burning fuel to meet future energy needs.

But concerns about its impact on water quality could slow the industry's ability to tap this bountiful resource...

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Nuclear

Obama in nuclear energy pushAnna Fifield and Kevin Sieff in Washington, Financial Times, 17 Feb 2010View original article

President Barack Obama redoubled his efforts to promote nuclear power as a clean energy source on Tuesday, saying that $8bn in loan guarantees for the first nuclear power plant to be built in three decades was “only the beginning”...

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EDF warned of вЂmassive’ reactor billPeggy Hollinger in Paris, Financial Times, 17 Feb 2010View original article

EDF could face “massive” new investment to extend the life of its French nuclear reactors beyond 40 years, the country’s safety authority has warned...

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Sellafield is like BP's Texas City before the fire, says NDA's bossTerry Macalister, The Observer, 14 Feb 2010View original article

Tony Fountain, a former BP executive, describes working practices at Britain's largest nuclear site as similar to those at the US refinery that resulted in a catastrophic fire

There are similarities between the poor operating practices at the Texas City oil refinery that blew up in America and the troubled nuclear complex at Sellafield in Cumbria, the former BP executive brought in to shake up the government's nuclear clean-up operation has warned...

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Biofuels

Seeds of discontent: the 'miracle' crop that has failed to deliverCahal Milmo and Andrew Wasley, The Independent, 16 Feb 2010View original article

A "miracle" plant, once thought to be as the answer to producing renewable biofuels on a vast scale, is driving thousands of farmers in the developing world into food poverty, a damning report concludes today.

Five years ago jatropha was hailed by investors and scientists as a breakthrough in the battle to find a biofuel alternative to fossil fuels that would not further impoverish developing countries by diverting resources away from food production.
Jatropha was said to be resistant to drought and pests and able could grow on land that was unsuitable for food production. But researchers have found that it has increased poverty in countries including India and Tanzania...

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Controversy mounts in EU over fall-out from biofuelPete Harrison, Reuters, 12 Feb 2010View original article

Fresh controversy is mounting within the European Union over biofuels and their unintended impact on tropical forests and wetlands, documents show.

One leaked document from the EU's executive, the European Commission, suggests biofuel from palm oil might get a boost from new environmental criteria under development...

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British Airways to fly jets on green fuel made from London's rubbish by 2014The Independent, 16 Feb 2010View original article

British Airways and the US bioenergy company Solena are to establish Europe's first green jet fuel plant in the East End of London.

When it is up and running in 2014, the factory will turn 500,000 tonnes of landfill waste – including household and industrial rubbish – into 16 million gallons of carbon-neutral aviation fuel every year...

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UK

Energy giants turn up the heat for dirty powerRobin Pagnamenta Energy Editor, The Times, 15 Feb 2010View original article

Two of Britain’s biggest energy companies are lobbying the Conservative Party to keep some of the nation’s most polluting power stations operating beyond a deadline set by the European Union, The Times has learnt.

RWE npower and E.ON, the two German-owned companies, have held private talks with senior Conservative politicians about the legal position of nine coal and oil-fired power plants due to close by the end of 2015 under new EU pollution rules...

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New ВЈ600m gas storage caverns will handle just five days' demandTelegraph, 15 Feb 2010View original article

A 30pc increase in gas storage capacity should result from a new development officially licenced by the Government today (Monday) but the ВЈ600m investment will only be capable of meeting five days' average demand.

The Gateway Project, 15 miles offshore, south west of Barrow-in-Furness will store 1.5bn cubic meters of gas in 20 salt caverns 750 meters below the seabed. It will be linked by pipeline to the natioal gas transmission system but will not be in service until 2014...

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Old salt caverns could be used for gasRobin Pagnamenta: Energy Editor, The Times, 17 Feb 2010View original article

Ineos, the chemicals group, is in talks about the sale of salt caverns in the North East of England to developers of gas storage sites.

Ineos said yesterday that it was in “very early discussions” with a number of groups about the sale of the sites on Teesside. Macquarie, the Australian investment bank, and Barclays Capital are understood to be among the potential bidders for the sites, which include impermeable underground caverns suited to development as commercial gas storage facilities...

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Geopolitics

Kazakhstan threatens contracts in tax moveCarl Mortished, World Business Editor, The Times, 14 Feb 2010View original article

The Government of Kazakhstan is threatening to dissolve long-standing contracts with foreign oil companies, including Britain’s BG Group, in order to subject them to new taxes and royalties.

The Kazakh Finance Ninistry said on Friday that it had doubts about the legality of existing oil contracts following a review of production sharing agreements (PSA). In January, Nursultan Nazarbayev, the Kazakh president, ordered that foreign oil companies be stripped of their tax immunity, a key feature of the PSAs, which create a ring-fenced legal regime intended to protect foreign investors from political risk...

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Argentina imposes shipping rules in Falklands oil row BBC Online, 17 Feb 2010View original article

Argentina has imposed new controls on shipping to the Falkland Islands in a growing oil dispute with the UK.

The Argentine government has ordered ships heading to the islands via its waters to apply for permission first.

The move comes as Argentina has become increasingly agitated at the forthcoming start of oil drilling in Falkland Islands territorial waters...

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