ODAC Newsletter - June 25

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 IEA's latest medium term report on oil and gas presents a rosier outlook than before. The supply-demand balance will be easier than previously forecast, the Agency now says, as continuing economic weakness dampens demand growth, and stronger oil prices encourage more investment in production capacity. But the report hedges its optimism, warning that potential geopolitical eruptions, and ripple effects from the Deepwater Horizon disaster on offshore drilling remain as risks. A report from Barclays Capital this week takes a distinctly different view, predicting that oil demand will hit a new record high this year.

It now looks increasingly likely the Gulf of Mexico disaster will have a significant impact on the wider oil and gas industry. The effects range from the US drilling moratorium to increased exploration and production costs due to stricter safety rules and higher insurance premiums. It also looks as if the disaster will have a knock on effect on public perceptions of the dangers of other forms of fossil fuel extraction.

Until now most of the press around shale gas in the US, has focussed on its purportedly "game changing" impact. This week however saw a highly publicised documentary on the industry Gaslands aired on HBO. The programme reported on pollution issues allegedly caused by 'fracking', which interviewees say has poisoned water sources, caused gas to leak from domestic water taps, and made people ill — although the programme's allegations have been strongly refuted by the industry. The issue was also taken up in a high profile article in Vanity Fair magazine accompanied by an online video. Growing distrust in energy companies precipitated by Deepwater Horizon, could strengthen the hand of environmental campaigners calling for stronger regulations around the industry.

Europe had its own gas scare this week. This one was geopolitical in nature as a row over unpaid bills flared between Gazprom and Belarus. Russia cut gas supplies to Belarus by 60% on Wednesday, sparking fears of a knock-on effect in Europe, as seen during similar disputes with the Ukraine. In the end Belarus paid up, but the threat remains clear.

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OilJudge Won't Stay Drilling DecisionJudge who overturned drilling bans had shares in the oil industryBP Reinstalls Cap on Gulf Oil Leak, Intercept Well on Track BP boss hands over control of oil crisisOffshore Insurance to Shrink as BP-Like Risks Shunned Oil spill: BP reassures over Russian, North Sea assetsDeepwater oil drilling under scrutiny as Brazil's Petrobas delays flotationOil Trades Below $77 as Equities Drop Renews Growth Concerns US politicians oppose 2,000-mile oil sands pipelinePeak oil postponed againBP Is Pursuing Alaska Drilling Some Call RiskyPetrostates: What BP spill?GasShale gas pollution fears leave Americans with another energy headacheA Colossal Fracking MessRussia 'to restart' full gas supplies after Belarus rowGas imports rule as green supply slowsGas power stations 'should have carbon capture'China to double natural gas share of energy basket to 8% by 2015NuclearGreenpeace slams Government 'handouts' for nuclear industryIEA backs nuclear in low-carbon raceUKChris Huhne: Belarus gas dispute underlines Britain's desperate need for renewables and nuclearReprieve for Britain's polluting power plantsUK To Make Major Business Investments For Renewable Energy ProjectsEconomyChina unpegs yuan to let it rise againPoll Finds Deep Concern About Energy and EconomyGold reclaims its currency status as the global system unravels

Oil

Judge Won't Stay Drilling DecisionLiz Robbins, New York Times, 24 Jun 2010View original article

The Obama administration's efforts to suspend deepwater oil drilling were dealt another setback in court on Tuesday when the federal judge who struck down the administration's six-month moratorium refused to delay the decision's effects.

The Interior Department petitioned Judge Martin L.C. Feldman of the United States District Court in New Orleans to grant a stay of his decision, which lifted a ban on new drilling projects and on work on the 33 rigs already in place in the Gulf...

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Judge who overturned drilling bans had shares in the oil industryMatthew Weaver and agencies, The Guardian, 24 Jun 2010View original article

The judge who overturned deepwater drilling bans allowing BP to resume oil extraction in the Gulf of Mexico, had shares in Transocean and other firms in the industry, it was revealed today.

Yesterday, a Louisiana-based judge Martin Feldman ruled that Barack Obama's six-month drilling moratorium in the Gulf was unjustified because it assumed that all deepwater drilling was as dangerous as BP's...

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BP Reinstalls Cap on Gulf Oil Leak, Intercept Well on Track Jessica Resnick-Ault and Jim Polson, Bloomberg, 24 Jun 2010View original article

BP Plc said it has reinstalled a device on its Gulf of Mexico well to capture leaking oil, as an intercept well intended to plug the gusher began homing in on its target.

BP said in a statement last night it had "successfully reinstalled" the cap containment device on the well and resumed funneling oil and gas to the drillship Discoverer Enterprise on the surface...

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BP boss hands over control of oil crisisRobin Pagnamenta, The Times, 23 Jun 2010View original article

Tony Hayward, BP chief executive, has stepped down from direct control of the Gulf of Mexico oil spill crisis and handed over control to Bob Dudley, the former boss of the oil company's fraught Russian joint venture TNK-BP.

"Effective immediately, Bob Dudley has been appointed president and chief executive officer of BP's Gulf Coast Restoration Organization," BP said in a statement, adding that Mr Dudley would continue to report to Mr Hayward...

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Offshore Insurance to Shrink as BP-Like Risks Shunned Natalie Obiko Pearson, Bloomberg, 24 Jun 2010View original article

BP Plc's rig explosion that caused the worst oil spill in U.S. history is set to curtail insurance coverage for offshore drilling, forcing companies to self-insure or exit deepwater fields.

BP's leak in the Gulf of Mexico is "a market-changing event," said Dieter Berg, senior executive manager marine at Munich Re, the world's biggest reinsurer and among those exposed to losses. "Buyers and sellers of coverage will be reevaluating their appetites for offshore energy risk," said Berg in a June 11 e-mail response to questions...

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Oil spill: BP reassures over Russian, North Sea assetsRowena Mason, The Daily Telegraph, 22 Jun 2010View original article

Its shares fell by 4pc on Tuesday, closing down at their lowest since 1996 at 334.28p, as Russia also sought guarantees that BP's investments are financially secure following its US oil leak. The energy giant's market value has now halved since the accident on April 20, amid fears that the first summer hurricane could hit the Gulf of Mexico next week.

The news came as a Louisiana judge reversed President Barack Obama's six-month ban on US offshore drilling. The White House said it would challenge the ruling...

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Deepwater oil drilling under scrutiny as Brazil's Petrobas delays flotationGraeme Wearden, The Guardian, 23 Jun 2010View original article

Brazil's national oil company Petrobras has surprised investors by postponing its $25bn (ВЈ16.86bn) stock market flotation, potentially delaying its efforts to extract oil from deepwater reserves off the coast.

The Petrobras stock offering, which had been scheduled for July, will now be delayed by two months until September. It blamed the move on Brazil's ANP energy regulator, which needs more time to assess the value of oil reserves which lie deep below the seabed off the coast of Rio de Janeiro...

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Oil Trades Below $77 as Equities Drop Renews Growth Concerns Ben Sharples and Yee Kai Pin, Bloomberg, 25 Jun 2010View original article

Crude oil traded below $77 a barrel in New York, poised for the first weekly decline in three, as a slump in equity markets renewed concerns that global economic growth may slow down and limit fuel demand.

Oil rebounded yesterday from a two-day drop as U.S. durable goods orders climbed in May and applications for jobless benefits fell from a two-month high. The Standard & Poor's 500 Index is in the midst of its longest losing streak in seven weeks. Asian stocks declined the most in three weeks today on disappointing earnings forecasts by U.S. companies...

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US politicians oppose 2,000-mile oil sands pipelineStacy Feldman for SolveClimate, The Guardian, 24 Jun 2010View original article

Members of Congress yesterday implored the State Department to scrutinize the "significant" environmental impacts of a proposed massive pipeline that would carry Canadian tar sands oil 2,000 miles — from northern Alberta, across U.S. states to refineries in Texas and tankers off the Gulf coast.

In a letter to Secretary of State Hillary Clinton, nearly 50 members of the House of Representatives said the agency "must determine whether the project is in the national interest" in terms of "clean energy and climate change priorities" before rubberstamping it...

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Peak oil postponed againAmbrose Evans-Pritchard, The Daily Telegraph, 23 Jun 2010View original article

So there is plenty of oil and gas after all. Prices will bumble along gently until well into the next decade. We are becoming more efficient in our use of energy, with 3pc extra savings annually. That is a faster pace than the rising real cost of fuel. Mankind will not run out of fuel for a very long time.

That at least is the story today from the International Energy Agency. Their medium-term outlook for fossil fuel markets is a dazzling contrast with last year's warnings that a combination of break-neck industrialisation in China and lack of investment in new oil fields (thanks to the credit freeze) would exhaust global spare capacity by 2013...

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BP Is Pursuing Alaska Drilling Some Call RiskyIan Urbina, New York Times, 23 Jun 2010View original article

The future of BP's offshore oil operations in the Gulf of Mexico has been thrown into doubt by the recent drilling disaster and court wrangling over a moratorium.

The BP drilling station on the artificial island in the Beaufort Sea. Because of its location on the artificial island, it has been exempted from the moratorium on offshore drilling...

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Petrostates: What BP spill?Steve LeVine, Foreign Policy, 21 Jun 2010View original article

When Big Oil breaks ranks, and one partner in a world-class deal accuses the other of gross negligence, you know that fear has overcome the industry. But fear of what? One presumes it's the permanent loss of future -- or even currently permitted -- drilling rights in the Gulf of Mexico because of the disastrous oil spill, in addition to offshore deals around the world. After all, as I've written here before, the primacy of Big Oil rests on its claim to technological superiority...

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Gas

Shale gas pollution fears leave Americans with another energy headacheRowena Mason, The Daily Telegraph, 23 Jun 2010View original article

Still politically scorched from BP's giant Gulf of Mexico spill, it couldn't be a worse time for America's oil giants to find themselves roasting in another environmental firestorm.

But new flames of controversy are on the horizon – in fact, literally emanating from the drinking water of US citizens living near so-called "shale gas" fields...

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A Colossal Fracking MessChristopher Bateman, Vanity Fair, 21 Jun 2010View original article

Early on a spring morning in the town of Damascus, in northeastern Pennsylvania, the fog on the Delaware River rises to form a mist that hangs above the tree-covered hills on either side. A buzzard swoops in from the northern hills to join a flock ensconced in an evergreen on the river's southern bank.

Stretching some 400 miles, the Delaware is one of the cleanest free-flowing rivers in the United States, home to some of the best fly-fishing in the country. More than 15 million people, including residents of New York City and Philadelphia, get their water from its pristine watershed. To regard its unspoiled beauty on a spring morning, you might be led to believe that the river is safely off limits from the destructive effects of industrialization. Unfortunately, you'd be mistaken. The Delaware is now the most endangered river in the country, according to the conservation group American Rivers...

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Russia 'to restart' full gas supplies after Belarus rowBBC Online, 24 Jun 2010View original article

Russia's Gazprom says it is resuming gas supplies to Belarus after receiving payment for outstanding gas bills.

Belarus said that it in turn had received payment from Gazprom, which uses pipelines across Belarus to pump gas to third countries...

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Gas imports rule as green supply slowsRobin Pagnamenta Energy Editor, The Times, 25 Jun 2010View original article

Britain imported more natural gas than it produced from the North Sea for the first time since 1968 in a fresh sign of a fundamental shift away from UK energy independence.

Government figures published yesterday showed that in the three months to March 31, gas imports soared by 31 per cent to 16.7 billion cubic metres, compared with the same period of 2009, while indigenous gas production from the North Sea slumped by more than 9 per cent to 16.6 billion cubic metres...

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Gas power stations 'should have carbon capture'Juliette Jowit, The Guardian, 17 Jun 2010View original article

Britain will miss its legal target to cut emissions by 80% by the middle of the century unless action is taken to cut greenhouse pollution from gas-powered stations, influential government advisers warned today.

In a letter to Chris Huhne, the climate secretary, the climate change committee said the government's existing pledge to fit new coal power stations with expensive carbon capture and storage equipment should be extended to new gas generators as well. Such a move could see the UK be the first in the world to build such a plant and capitalise on a new "dash for gas"...

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China to double natural gas share of energy basket to 8% by 2015Hong Chou Hui, Platts, 21 Jun 2010View original article

China plans to double the natural gas share of its total energy consumption basket from the current 4% to 8% by 2015, a source close to the country's National Energy Administration said Monday.

The shift would come at the expense of the share of coal in the mix in order to increase its use of cleaner energy, the source added...

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Nuclear

Greenpeace slams Government 'handouts' for nuclear industryKunal Dutta, The Independent, 21 Jun 2010View original article

Environmental campaigners have accused the Government of preparing to allow a multi-million pound "handout" to firms building nuclear reactors.

Greenpeace said the move went against assurances given by ministers that the nuclear industry would not receive handouts to help build new nuclear power stations...

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IEA backs nuclear in low-carbon raceEurActiv, 18 Jun 2010View original article

Nuclear power could generate nearly a quarter of the world's electricity by mid-century, the International Energy Agency (IEA) said yesterday (16 June), arguing that it will be a key technology in curbing global warming.

The ambitious goal would require current nuclear capacity to more than triple, but the feat is achievable, according to a 'Nuclear Energy Technology Roadmap' published jointly by the IEA and the Nuclear Energy Agency (NEA) at the Organisation for Economic Co-operation and Development (OECD)...

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UK

Chris Huhne: Belarus gas dispute underlines Britain's desperate need for renewables and nuclearTerry Macalister and John Vidal, The Guardian, 24 Jun 2010View original article

Chris Huhne, the energy and climate change secretary, warned last night that the threat to gas supplies from the political row between Russia and Belarus highlighted once again the desperate need for Britain to build up a low-carbon energy policy and domestic energy security through new wind farms – and possibly nuclear reactors.

Huhne said it was also vital that Britain was better protected from any "big shocks" arising from huge increases in the price of oil, as companies such as BP were forced into increasingly environmentally sensitive areas...

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Reprieve for Britain's polluting power plantsCarl Mortished, The Times, 19 Jun 2010View original article

Britain's ageing fleet of coal and gas power stations were given a reprieve from the threat of closure with a deal struck in Brussels yesterday by EU member countries with the European Parliament.

Opt-outs will delay the day when power plant operators must fit expensive pollution scrubbers on chimneys or be forced to close power stations...

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UK To Make Major Business Investments For Renewable Energy ProjectsGovMonitor, 21 Jun 2010View original article

Business Secretary Vince Cable has confirmed Government support for multi million pound investments to secure low carbon and science projects in the UK and the Post Office Network.

This followed the Treasury concluding a review of significant projects announced since January to check they were affordable, value for money and that they fitted in with the priorities of the Coalition Government...

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Economy

China unpegs yuan to let it rise againJane Macartney Beijing, The Times, 21 Jun 2010View original article

China signalled on Saturday that it was ready to unpeg its currency from the US dollar.

The move, after 23 months of the link between the currencies, will stifle criticism that China's exports have benefited from the state-engineered weakness of the renminbi...

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Poll Finds Deep Concern About Energy and EconomyJohn M. Broder and Marjorie Connelly, New York Times, 21 Jun 2010View original article

Overwhelmingly, Americans think the nation needs a fundamental overhaul of its energy policies, and most expect alternative forms to replace oil as a major source within 25 years. Yet a majority are unwilling to pay higher gasoline prices to help develop new fuel sources...

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Gold reclaims its currency status as the global system unravelsAmbrose Evans-Pritchard, The Daily Telegraph, 20 Jun 2010View original article

Jean-ClaudeTrichet, the president of the European Central Bank (EC), talked days later of "the most difficult situation since the Second World War, and perhaps the First".

The ECB's latest monthly bulletin gives us some startling details. It reveals that the bank's "systemic risk indicator" surged suddenly to an all-time high on May 7 as measured by EURIBOR derivatives and stress in the EONIA swaps market, exceeding the strains at the height of the Lehman Brothers crisis in September 2008. "The probability of a simultaneous default of two or more euro-area large and complex banking groups rose sharply," it said...

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Gulf spill won’t dampen U.S. appetite for oilThe true value of energy is the net energy