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.
It is now 8 weeks since the Deepwater Horizon Explosion, and while BP claims to be capturing around 15,000 barrels of oil a day, there are still widely varying estimates of the amount of oil still escaping into the ocean. As public and political anger against the company increase, the knock on effects of the disaster for the company and the industry are growing.
President Obama raised the pitch of his criticism of BP this week. In an interview he effectively called for the dismissal of CEO Tony Hayward saying that "he wouldn’t be working for me". Ken Salazar stated this week that BP would be charged for the lost wages of all workers affected by the drilling moratorium imposed in response to the disaster – thus further increasing the company’s liability and causing renewed pressure on its share price. On Tuesday BP was issued with a 72 hour deadline from Federal Authorities to present it latest plans to deal with the spill. Political pressure to replace BP in the clean-up is huge for a country brought up on superheroes and Hollywood endings, and unused to a problem without a quick solution.
Peak oil received some high profile news attention this week, both as a result of the Gulf of Mexico disaster and also the release of BP's annual Statistical Review of World Energy. ODAC trustee Chris Skrebowski and ODAC patron Jeremy Leggett were both interviewed for a headline piece on the BBC's Newsnight (available to UK based readers only). Leggett took the opportunity to call into doubt assurances from the oil industry about security of supply, comparing them to the assurances of the banking industry before the credit crunch.
The BP 2010 Statistical Review confirmed that the global economic crisis resulted in a drop in oil consumption in 2009 of 1.2 million barrels per day, the largest drop since 1982. Tony Hayward took the opportunity in his introduction to stress the importance of deepwater drilling as he pointed out that the largest source of new oil last year was from the Gulf of Mexico. With oil demand set to rise in the developing economies, and the вЂeasy' oil in decline the impact of the off-shore drilling moratorium, which has now also been extended to Norway, is going to hasten the oil crunch which is already coming.
In the UK this week the Chatham House think tank and Lloyds 360 Risk Insight released a joint report Sustainable Energy Security Strategic Risks and Opportunities for Business , which sets out the huge risks faced by business from the coming energy crunch. To quote “Businesses which prepare for and take advantage of the new energy reality will prosper – failure to do so could be catastrophic”.
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OilGulf oil spill: US sets action plan deadline for BPBP oil spill: UK to step up checks on North Sea oil rigsNorway bans deepwater oil drillingGulf oil spill 'may top 100,000 barrels a day'BP faces bill for lost drilling wagesBP oil spill: Most new oil 'coming from Gulf of Mexico' Newsnight report on peak oil (only available week of 10/06/2020 and in the UK)The oil spill and credit crunch were bad. An oil crunch would be worseTop scientist says politicians have 'heads in the sand' over oilLloyd's predicts BP disaster will prove oil industry's Three Mile IslandEnding Fossil-Fuel Aid Will Cut Oil Demand, IEA SaysIEA Raises Oil Demand Outlook, But Warns on U.S. Drill BanChina’s Five-Month Oil Imports Rise on Fuel Demand Decline in oil consumption largest since 1982Oil Rises the Most in Almost Two Weeks on China Exports, Dollar GasPennsylvania nat gas well capped after blowoutBehind the Russia-Ukraine deal on gasBP suffers $1bn setback in SiberiaTurkey brokers key gas supply deals for NabuccoShale gas not yet game-changer for EuropeUKOnshore wind produces “cheapest zero carbon” electricityUK alarm over attack on BPClimateNew UN climate chief calls for more ambition TransportHow China's hybrid cars could change the world OilGulf oil spill: US sets action plan deadline for BPBBC Online, 10 Jun 2010View original article
The US government has given BP 72 hours to present its latest plans to clean up the oil spill in the Gulf of Mexico.
BP says its containment effort is going well, but there are signs of mistrust between the company and the government...
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BP oil spill: UK to step up checks on North Sea oil rigsRoland Gribben and Ben Harrington, The Daily Telegraph, 08 Jun 2010View original article
Chris Huhne, Energy Secretary, is doubling annual inspections made to offshore rigs to 16 and increasing the number of inspectors carrying them out from three to six. At present 24 rigs are drilling for oil and gas.
Other measures now in train could mean companies will see costs rise at a time when they are seeking incentives to halt the slowdown in exploration. Mr Huhne has ordered a review of the indemnity and insurance provisions covering companies operating on the UK continental shelf following shortcomings identified in the US set-up after the BP disaster in the Gulf...
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Norway bans deepwater oil drillingCarola Hoyos in London, Financial Times, 09 Jun 2010View original article
Norway will not allow any deepwater oil and gas drilling in new areas until the investigation into the explosion and spill in the US Gulf of Mexico is complete, Terje Riis-Johansen, the Nordic country’s energy minister, has said...
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Gulf oil spill 'may top 100,000 barrels a day'Jacqui Goddard, Miami, The Times, 10 Jun 2010View original article
BP’s oil leak in the Gulf of Mexico may be up to four times the scale estimated by a government scientific panel, pumping out 100,000 barrels a day in what equates to the company’s “worst case scenario” and prompting new accusations that executives are stonewalling the truth.
The news — revealed by one of the members of President Obama’s Flow Rate Technical Group, a panel that previously estimated that the flow was in the region of 12,000 to 25,000 barrels a day — counter to BP’s claims that it is now capturing “the majority” of the oil and channeling it into a tanker...
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BP faces bill for lost drilling wagesHarvey Morris in Houston and Anna Fifield in Washington, Financial Times, 10 Jun 2010View original article
The White House stepped up pressure on BP on Wednesday, telling it to add the salaries of workers laid off by an offshore drilling moratorium to its bill for the Gulf of Mexico oil disaster.
“BP is responsible for all the damages,” Ken Salazar, US interior secretary, told the Senate’s energy and natural resources committee on Wednesday...
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BP oil spill: Most new oil 'coming from Gulf of Mexico' Rowena Mason, Telegraph, 10 Jun 2010View original article
BP has revealed that more new oil was produced in the Gulf of Mexico last year than any other region in the world, as the company seeks to persuade the US government that its giant spill should not halt deepwater drilling.
At its annual economic review, the energy major made the case for pushing ahead with exploration of "difficult" – harder to extract – oil, saying global demand will now rise after last year's sharp reduction in consumption...
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Newsnight report on peak oil (only available week of 10/06/2020 and in the UK)BBC - Newsnight, 10 Jun 2010View original article
With energy experts warning that peak oil is approaching, and the Gulf of Mexico leak highlighting the risks, is the world facing an oil crunch?
View video
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The oil spill and credit crunch were bad. An oil crunch would be worseJeremy Leggett, The Guardian, 09 Jun 2010View original article
Big as BP's problems are as a result of failed risk assessments, it will very probably soon become worse. Growing numbers of people doubt its annual review of oil reserves, published today. Society builds its oil dependency on key cultural statements of faith about secure supply, such as BP's annual announcement that there is 40 years of supply or more, and no danger of supply falling short of demand, so ambushing oil-addicted economies.
You would think that BP's risk-assessment failures in the Gulf, and in US refineries, would make the company measured, given the stakes in this particular assessment. The reverse seems true...
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Top scientist says politicians have 'heads in the sand' over oilDavid Adam, environment correspondent, The Guardian, 10 Jun 2010View original article
Britain's former chief scientist has attacked politicians and industry experts who have their "heads in the sand" over dwindling oil supplies.
Sir David King said governments, including the UK's, were too eager to believe the optimistic predictions of economists who tell them that "oil will be squeezed out of the ground pretty much forever"...
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Lloyd's predicts BP disaster will prove oil industry's Three Mile IslandAndrew Donoghue, Business Green, 08 Jun 2010View original article
Over reliance on fossil fuels is driving companies to take unnecessary environmental risks as typified by the recent oil disaster in the Gulf Of Mexico.
That is the conclusion of a major new report from insurance giant Lloyd's and UK think tank Chatham House, which argues that a rapid shift towards low carbon energy sources represents the only way of tackling the energy industry's soaring risk profile...
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Ending Fossil-Fuel Aid Will Cut Oil Demand, IEA SaysBen Sills - Bloomberg, Business Week, 07 Jun 2010View original article
Fatih Birol, the International Energy Agency’s chief economist, called on leaders of the Group of 20 Nations to fulfill their pledge to end fossil-fuel subsidies, a move he said will cut oil demand and greenhouse-gas emissions.
Stopping aid by 2020 would reduce global oil demand by 6.5 million barrels a day, he said, or about a third of the current U.S. use. Subsidies that promote consumption, such as below- market gasoline prices, totaled $557 billion in 2008, he said. Nations that use them the most include China, Venezuela, Egypt Iraq and Iran, according to IEA surveys...
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IEA Raises Oil Demand Outlook, But Warns on U.S. Drill BanBenoit Faucon, Wall Street Journal, 10 Jun 2010View original article
The International Energy Agency on Thursday raised its 2010 world oil-demand forecast but warned that up to 300,000 barrels a day of future U.S. output may be at risk if a drilling moratorium is extended.
In its monthly oil-market report, the Paris-based agency increased its forecast for global oil demand by 60,000 barrels a day to 86.4 million barrels a day in 2010...
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China’s Five-Month Oil Imports Rise on Fuel Demand Bloomberg, 10 Jun 2010View original article
China, the world’s second-biggest energy consumer, imported 29 percent more crude oil in the first five months of the year as faster economic growth boosted demand for motor fuel and electricity.
Oil purchases in the January-to-May period climbed to 95.7 million metric tons from a year earlier, according to preliminary data released by the General Administration of Customs in Beijing today...
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Decline in oil consumption largest since 1982The Guardian, 09 Jun 2010View original article
World oil consumption fell by 1.2m barrels per day (bpd) in 2009, the second consecutive annual decline and the largest volume since 1982, BP said in its annual Statistical Review of World Energy today.
The world's oil production dropped by 2m bpd, or 2.6%, which was also the largest decline since 1982, the review said...
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Oil Rises the Most in Almost Two Weeks on China Exports, Dollar Margot Habiby and Paul Burkhardt, Bloomberg.com, 09 Jun 2010View original article
Crude oil rose the most in almost two weeks in New York as Chinese exports surged and the dollar fell against major currencies.
Oil jumped as much as 4.1 percent after Chinese exports in May grew about 50 percent from a year earlier, according to a Reuters report. The dollar retreated amid speculation the European Central Bank may act to stabilize the region’s debt markets. U.S. oil supplies dropped to the lowest level since April in a government report...
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GasPennsylvania nat gas well capped after blowoutJon Hurdle, Reuters, 07 Jun 2010View original article
Workers capped a natural gas well in central Pennsylvania on Friday after it ruptured
during drilling, spewing gas and drilling fluid 75 feet (23 meters) in the air, officials said.
The well, operated by EOG Resources Inc (EOG.N) in a remote area of Clearfield County, blew out at about 8 p.m. EDT (midnight GMT) on Thursday when a drilling team "lost control" of the well while preparing to extract gas, according to a statement from the state Department of Environmental Protection...
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Behind the Russia-Ukraine deal on gasYevgeny Kiselyov, The Moscow Times, The Daily Telegraph, 04 Jun 2010View original article
There are several reasons behind the deal between Russia and Ukraine which saw a significant discount on Russian gas in exhange for the extention on the lease for the Black Sea Fleet in Sevastopol.
Passions are raging in Kiev over the agreement president Dmitry Medvedev signed with Ukrainian president Viktor Yanukovych on April 21 in Kharkiv, which provides a significant discount on the price of Russian gas in exchange for extending the lease for the Black Sea Fleet in Sevastopol until 2042...
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BP suffers $1bn setback in SiberiaThe Times, 08 Jun 2010View original article
The political storm engulfing BP intensified yesterday as the group came under renewed pressure on its Russian front.
Gazprom, the Kremlin-controlled gas monopoly, has raised new questions over the future of a giant gasfield in Siberia controlled by the British group’s Russian joint venture TNK-BP...
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Turkey brokers key gas supply deals for NabuccoEurActiv, 08 Jun 2010View original article
Azerbaijan and Turkey yesterday (7 June) signed a deal to ship 11 billion cubic metres of Azeri gas per year to Turkey. Shipments would start in 2017 and some of the gas may be pumped into the EU's planned Nabucco pipeline. Meanwhile, Northern Iraq declared in Turkey that it stands ready to provide gas supplies "to make Nabucco work".
The agreement was signed in Istanbul by Azerbaijan's minister of industry and energy, Natig Aliyev, and Turkey's minister of energy and natural resources, Taner Yildiz, EurActiv Turkey reported...
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Shale gas not yet game-changer for EuropeEurActiv, 08 Jun 2010View original article
Shale gas cannot be seen yet as a game changer in Europe as it is in the United States, where roughly 50% of the country's needs are met by developing unconventional gas. The conclusion was reached by international experts at a public event held in Brussels yesterday (7 June).
To illustrate the possible impact of developing shale gas in Europe, Don Gauthier of the US Geological Survey said that in an area the size of the Benelux countries, there would have to be up to 6,000 wells, an impact that would probably attract environmental opposition...
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UKOnshore wind produces “cheapest zero carbon” electricityNew Energy Focus, 09 Jun 2010View original article
Onshore wind is the "least cost zero carbon" technology option in the near to medium term with regards to generation costs, according to a report published by the Department of Energy and Climate Change (DECC) today.
However, the study also found that biomass plants could become even cheaper than onshore wind projects over time as carbon prices increase...
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UK alarm over attack on BPJean Eaglesham, Chief Political Correspondent, Financial Times, 10 Jun 2010View original article
UK industry expressed alarm yesterday at the "inappropriate" and increasingly aggressive rhetoric being deployed against BP by Barack Obama, US president, warning that the attacks on the oil company could damage transatlantic relations.
The concerns come amid mounting political unease in Britain that attacks on BP over its handling of the Gulf of Mexico oil spill are being dictated by the politics of November's crucial mid-term elections in the US, rather than normal regulatory considerations...
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ClimateNew UN climate chief calls for more ambition Richard Black, BBC Online, 09 Jun 2010View original article
The incoming head of the UN climate convention has said rich nations must pledge bigger emission cuts if climate change is to be tackled effectively.
But Christiana Figueres said she was confident that leaders would meet the challenge "because humanity has to meet it - we don't have another option."...
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TransportHow China's hybrid cars could change the worldSteve LeVine, Foreign Policy, 09 Jun 2010View original article
Unless you follow blogs such as The Wall Street Journal's excellent China Realtime Report, you probably missed the biggest global energy news in recent weeks (and no, I'm not forgetting about BP): Last week, China announced considerable subsidies for consumers who buy electric or plug-in hybrid vehicles. Beijing will pay the first $7,800 to $8,800 of the sticker price for the first 50,000 such vehicles bought in five designated Chinese cities, or roughly 31 percent, for instance, of BYD's $25,000 F3DM...
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The demise of BP?Gulf spill won’t dampen U.S. appetite for oil
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