Chris Skrebowski Issues Open Letter to Peter Jackson of CERA
Chris Skrebowski, ODAC Board Trustee, has issued an open letter to Peter Jackson of Cambridge Energy Research Associates (CERA), in response to CERA's recent reports which assert that Peak Oil is not an imminent problem: <<Dear Mr Jackson, I was surprised and somewhat saddened to read CERA’s curious attack on the concept of Peak Oil and the implicit attack on the Peak Oil community in your recent press release and report ‘Why the “Peak Oil” Theory Falls Down – Myths, Legends, and the Future of Oil Resources’. Surprised because it appeared more or less at the same time as the IEA’s latest World Market report (WEO 2006) was announcing the IEA’s view that non-Opec oil production will peak by the middle of the next decade. Saddened because I had thought we were getting away from the sort of intemperate dismissals that have in the past been feature of the debate about Peak Oil.>> Read the full open letter.
[Posted 21 December 2006]
David Strahan Joins ODAC Board of Trustees
ODAC welcomes David Strahan as the latest person to join its Board of Trustees. David is an award-winning investigative journalist and documentary film-maker, with many years experience of popularising some of the most difficult and important stories in business and science. For a decade he reported and produced major investigations for BBC television’s flagship business strand The Money Programme, and for its world-renowned science documentary series Horizon , making highly acclaimed films such as Inside the Enron Scandal and The Moscow Theatre Siege. He quit the BBC to spend two years researching and writing The Last Oil Shock: A Survival Guide to the Imminent Extinction of Petroleum Man, to be published by John Murray Ltd in April 2007. See the 'About ODAC' menu item for the full list of ODAC Board Trustees.
[Posted 21 December 2006]
An excellent overview of the Shtokman natural gas project, Russian gas production in general, and of course, Russian geopolitics - probably the best interpretation of the Russian gas monopoly Gazprom available, from A.M. Samsam Bakhtiari, who will be speaking at ASPO-6 in Ireland next September. Samsam Bakhtiari hits the Gazprom nail right on the head - see below. There is no direct link to the article. Go to Ali Bakhtiari's website, the article is near the bottom of the page - THE SHTOKMAN SAGA. Whole article highly recommended, and comes with useful references.
<< ...Then, on October 9, 2006, 'Gazprom' Chairman Alexey Miller let off a bombshell by abruptly announcing that his company
"would spurn outsiders… and use 100 per cent of the field's resources on its own"
The problem is that no one believes that 'Gazprom' (or even all of the Russian companies bunched together) can hope tackle the formidable challenges posed by the development of 'Shtokman'...
... Just imagine spanning the 565 kilometers of icy waters between 'Shtokman' and the onshore production facilities to be located at the port of Teriberka with "icebergs looming around (design assumption of one million tonnes behemoths moving at 0.25 meter/second) and ice slacks drifting (design assumption of 1.2-meter thick ice moving at 1.0 meter/second)"
... Some still predict that 'Shtokman' ('First Phase') will come on stream by 2010-11: they either believe in Santa Claus or simply don't know what they are talking about. At best, the 'First Phase' might come on stream by 2015 [ODAC note: In November, Gazprom announced that they expect Shtokman to come onstream no sooner than 2013]... It should be borne in mind that 'Shtokman' is the most challenging and complex project on the oil and gas industry's international agenda --- with almost none of the equipment being purchasable off-shelf and most major parts having to be developed (based upon a state-of-the-art conceptual design).
For 'Shtokman', the main problem is that its owner is 'Gazprom'. The largest Russian company (capitalization of $ 257bn in October 2006) is a state within the state and the present Russian administration has understood that very well. That is why it placed political appointees in its top management (eg, Alexey Miller, Dmitry Medvedev). This situation might be adequate for the political power to retain total control but highly detrimental for executing mega-projects which require multifaceted management skills and seasoned decision-makers (e.g., Mikhail Khodorkovsky).
[Bottom Line]
... Notwithstanding the immediate, urgent need for 'Shtokman' gas in the EU (and the world at large), Russia and 'Gazprom' aren't in a hurry to develop their supergiant field. Even the development of 'Bovanenkov' (in the Yamal Peninsula) is only in its very preliminary stages and it is also far from an easy mega-project either (as Russia has no more 'easy' supergiant gas fields to develop, 'Zapolyarnoye having proven to be last one).
... Overall, the reason for Russian aloofness and complacency is easy to understand: 'Gazprom' can either optimize its revenues by volume or by price. Then why rush to invest billions in development when gas scarcity will send prices shooting into the stratosphere, thereby increasing overall revenues on diminishing gas output. Meanwhile, the intrinsic value of the gas reserves in all the supergiant fields laying idle can only multiply with time, and the gas remains underground, available for future exploitation.
Russia has no incentive to join the European-led 'Energy Charter' and probably never will. Its freeing of 'Gazprom's monopolistic domestic pipeline network (156,000 kms.) is out of the question. Bringing up local natural gas prices to the international level (as repeatedly demanded by the EU) would mean political suicide... Even declining domestic oil output (already begun in 2005) would not encourage Russia to step on the gas pedal. In the oil case too, it could optimize by price instead of by volume --- as oil prices will inevitably post tremendous increases in the 'Post-Peak' era.
These days, in Moscow, one can almost hear the triumphal exclamation:
"It's all in the price, stupid…"
Conclusion
The 'Shtokman' Saga has already had an eighteen-year run. And thus far, it is not even at the end of the beginning. So, the Saga won't go away, as it has another fifty or sixty years to run. No doubt there will be many more headlines mentioning 'Shtokman'.
The mega-project is of critical importance for the Europeans who stand to be the main beneficiaries of its output, and secondly for the Russians too (the US not being involved anymore). But Russia can wait, whereas the EU cannot. Already if the 2006-07 winter is harsh in Europe,
"gas shortages might arise leading to power shortfalls and black-outs"
as predicted by analysts at the renown 'Cap Gemini' consulting company.>>
[Posted 06 December 2006]
US Council on Foreign Relations Publishes Oil Dependency Report
The Oil Drum-USA reports that the US Council on Foreign Relations published a new report in October called National Security Consequences of U.S. Oil Dependency (PDF, 732 Kb).
From the Oil Drum review (which covers the report in some detail and is well worth a read): <<With little media fanfare as of yet, a major report by the political heavyweight think tank Council on Foreign Relations was recently released. "Independent Task Force Report #58 - National Security Consequences of Oil Dependency" paints a somewhat more urgent picture of our energy situation than most other oil and energy research coming out of Washington. Though there is no mention of the words "Peak Oil' in the 90 page report, to the astute reader it is clear that this group of experts, led by ex-CIA chiefs, John Deutsch and James Schlesinger, understand that the era of cheap energy is ending, and that our dependency on oil has major geopolitical implications with few easy answers. The bombshell in this report is the admission that the United States will be unable to achieve energy independence, and should focus instead on reducing our dependency on oil. Though this concept is nothing new to readers of this site, coming from a highly respected mainstream think tank (CFR), recommendations such as conservation, gasoline taxes, and gasoline rationing might be an uncomfortable but necessary wake up call to some of the conservative (cornucopian?) decision makers in our nations capital...>>
From the report Foreword: <<In recent years, energy prices have surged. President George W. Bush, in this year’s State of the Union address, warned of an addiction to imported oil and its perils. Yet there is no consensus on what should be done to shake the addiction. Virtually everything concerning energy has changed—except U.S. policy... The Task Force goes on to argue that U.S. energy policy has been plagued by myths, such as the feasibility of achieving ‘‘energy independence’’ through increased drilling or anything else. For the next few decades, the challenge facing the United States is to become better equipped to manage its dependencies rather than pursue the chimera of independence... But most of the leverage potentially available to the United States is through domestic policy. Thus, the Independent Task Force devotes considerable attention to how oil consumption (or at least the growth in consumption) can be reduced and why and how energy issues must become better integrated with other aspects of U.S. foreign policy>>
The report, however, seems to promote a rather unrealistic point of view regarding US natural gas supplies. From the Overview and Introduction: <<The Task Force does not believe there is a corresponding need to adopt additional measures to limit demand for natural gas. While there are reasons to be concerned about the adequacy of the near-term supply of natural gas to the North American market, at present natural gas markets work relatively well. To date, there is little dependence on natural gas from outside of North America, thus avoiding the political repercussions accompanying oil imports.>>
See for example The Oil Drum: Europe's discussion - Natural Gas: how big is the problem?
[Posted 06 December 2006]
Latest International Natural Gas Prices - EIA
The US Energy Information Administration (EIA) has just published up-to-date data on International Natural Gas Prices. The data on prices is missing for a lot of countries, but the ‘Natural Gas Prices for Households’ data shows that for 2005, compared to other European countries, UK natural gas was relatively cheap, and almost the same as the USA. The data also shows where US natural gas imports originate (more than two thirds LNG imported from Trinidad and Tobago), and the large variation in prices paid – Oman and Qatar cheap, Egypt and Nigeria expensive.
[Posted 01 December 2006]
Australian Institute of Energy - Transport Fuels: Future Prices & Supply Security Risks
The South Australia branch of the Australian Institute of Energy held its 22nd Annual Forum & Dinner on 9th November in Adelaide. The theme running through the Forum, Transport Fuels: Future Prices & Supply Security Risks, was Peak Oil. Beyond Oil South Australia (an Adelaide Peak Oil group) member James Ward attended the Forum, which at the time received some local media coverage because the speaker from ExxonMobil said there was sufficient oil reserves to satisfy growth in global oil production to 2030, contrary to what Chris Skrebowski, Richard Heinberg and Ali Morteza Samsam Bakhtiari had said during each of their respective Australian Peak Oil tours over the summer. However, it is clear from James' excellent notes below that in general the speakers believe Peak Oil is a real and imminent problem, with only one dissenter - the ExxonMobil speaker.
Presentations (see James' notes for speaker affiliations):
Energy Insecurity and the Great Convergence, Mark Thirlwell
World Oil Reserves – Are we running out?, Doug Schwebel
Peak Oil – Myth or Risk?, Lloyd Taylor
Responding to the Challenge, Eriks Velins
Australian Transport Fuel Supply Security – South Australia’s Risks and Options, Andy Fischer
Suburban Shocks: Urban location, housing debt and oil vulnerability in Australian cities, Jago Dodson
Oil Prices and Technological Change, Dan Atkins
The Senate’s Future Oil Supply and Alternative Transport Fuels Inquiry, Senator Rachel Siewert
Forum Notes by James Ward
[Posted 29 November 2006]
Jim Puplava and Matthew Simmons Review The Latest CERA Peak Oil Report
Jim Puplava interviews Matt Simmons with a critique of CERA's recently published report Why the "Peak Oil" Theory Falls Down -- Myths, Legends, and the Future of Oil Resources (see below) - about 35 minutes long. For the moment at least there is no transcript, audio only and as the interview is a part of Financial Sense News Hour, starts 5-10 minutes into the program, but it is excellent. Needless to say, Matt repeats that he thinks Peak Oil is very close, and CERA's forecast, Peak about 2030, will soon proven to be wrong. Matt makes the important point that Enhanced Oil Recovery techniques tend to extend the 'tail of production' of an oil field. He also points out that CERA recently produced a report on USA gas reserves that soon proved to be wrong, and suggests that it, CERA, is now making the same mistake with global oil production. Critique of the CERA Report.
[Posted 28 November 2006]
Energy Institute Oil Depletion conference - ODAC Review
The UK Energy Institute held its annual Oil Depletion conference at its headquarters in London on Tue 7th Nov. All the talks were insightful, some excellent. One of the highlights of this conference was that Chris Skrebowski and Michael Smith, who to the best of ODAC’s knowledge, have no direct ties, both predict global oil demand outstripping supply fairly soon, 2010/2011 for CS, about 2015 for MS. Christopher Smith, an airline pilot, told the conference that there big changes in store for the airline industry irrespective of the outcome of Peak Oil, because the EU will enforce levies on flights to reduce carbon dioxide emissions, by 2011. Duncan Anderson made the interesting observation that oil companies operating in the North Sea UK sector were not in general applying the Enhanced Oil Recovery techniques available to them. Claire Durkin, head of Energy Markets at the DTI, hinted that she is concerned about future UK gas supplies, and how keen she was to communicate and hold talks with the conference delegates.
The Energy Institute have supplied a copy of most presentations but have stated that they will be removed 28th November 2006.
See also: The Oil Drum: Europe: Energy Institute Oil Depletion Conference
[Posted 24 November 2006]
Saudi Arabia’s Strategic Energy Initiative: Safeguarding Against Supply Disruptions
In early Nov. 2006, Nawaf Obaid, the Managing Director of the Saudi National Security Assessment Project (a Saudi-government consultancy based in Riyadh) and the private Security & Energy Advisor to HRH Prince Turki Al Faisal, the Saudi Ambassador to the USA, gave a PowerPoint presentation at the Center for Strategic and International Studies (CSIS) entitled Saudi Arabia’s Strategic Energy Initiative: Safeguarding Against Supply Disruptions. The presentation includes a summary of all the major new Saudi oil production projects coming onstream up to 2011. Highlights (all quotations):
Slide 3: Saudi Arabia has a production capacity of 11.1 - 11.3 mb/d; exports 8 mb/d; and produces between 8.6 - 9.0 mb/d and 1 - 1.3 mb/d of natural gas liquids.
Slide 5: Only Saudi Arabia has means to increase production capacity. Iran, Venezuela, Iraq and Nigeria do not. See slide for reasons.
Slide 6: March 2006 - Aug 2009 estimated sustainable oil production capacity will increase by a net of 1.55 Mb/d. Depletion rate used works out at about 1.8% per annum.
Slide 9: Aug 2009 - 2011 estimated sustainable oil production capacity will increase by a net of 0.9 Mb/d. Depletion rate used works out at about 2.8% per annum over two years.
[If a depletion rate of 5% is used, net gain is zero.]
Slide 13: Two thirds of Saudi oil is stabilized at the Abqaiq Processing Facility (the remaining 1/3 at Ras Tanura) - the reason they are prime terrorist targets.
Slide 15: The water cut in Ghawar, the world's largest [oil] field, which has a sustained production capacity of 5 mb/d, has declined from a peak of 35% to just 32% because of advances in technology and continual improvements in field management. If past years are any indication, this trend will continue.
Slide 16: The Kingdom's average state of reserve depletion for all its fields is approximately 29%.
Slide 16: The oldest field, Abqaiq, is 74% depleted, and the world’s largest field, Ghawar, has produced just under 50% of its reserves. By contrast, Shaybah, one of the Kingdom's youngest fields, has 95% of its proven reserves remaining.
Slide 16: Without “maintain potential” drilling to make up for production, Saudi oil fields would have a natural decline rate of a hypothetical 8%. As Saudi Aramco has an extensive drilling program with a budget running in the billions of dollars, this decline is mitigated to a number close to 2% [for how long?].
Slide 16: These depletion rates are well below industry averages, due primarily to enhanced recovery technologies and successful “maintain potential” drilling operations.
Note that the presentation refers to new capacity, not new production. This is important, because as the IEA points it in its Medium-Term Oil Market Report, the extra capacity makes no difference if the quality of the oil is such that no-one wants to buy it.
Net new capacity to 2009: 1.55 Mb/d
Net new capacity 2009-2011: 0.9 Mb/d
Commentary from Matt Simmons:
"I have also read Nawaf's paper and think highly of him. The Saudi's view depletion as % oil produced of what is in theory total to be produced instead of discussing what the actual decline rates are from the key producing fields.
I find it hard to believe the water cuts at Ghawar have been coming down unless this means that a major part of Ghawar's current production now comes from the southern producing fields which just came on stream. An SPE [Society of Petroleum Engineers] paper published in early 2006 or late 2005 had a graph showing what was described as a typical well in North Ghawar and it steady rose from 30% up towards around 70%.
I also find it hard to believe they are exporting 8 million b/d of crude. The exports into the IEA member countries have stayed in the 4.6 mmb/d range for last several years. China imports just over 500,000 b/d of Saudi oil, up from around 250,000 b/d four or five years ago. There are not many other major oil importers, other than Singapore whose imports only match their refinery inputs that could account for the balance. I suspect they include natural gas liquids in the 8 million total. If so, it reduces crude to probably around 7 million or 6.5 million?
Until Saudi Arabia begins reporting field by field production statistics, all this is fog, smoke and mirrors."
View presentation (PDF, 545 Kb). CSIS Strategic Energy Initiative website.
[Posted 23 November 2006]
Another Report Warns of Gas/Electricity Shortfalls For the UK, Sooner Than Expected ASPO-USA Autumn Presentations Now Available Online
LogicaCMG launched a new report 21st Nov. called Mind the gap - the black hole at the heart of the UK's energy supply, the latest to warn of impending gas and electricity shortages for the UK over the coming years. The report warns that the UK 'energy gap' will come sooner and be more severe than expected. From the report Foreword:
<<There is a looming energy crisis in the UK. Domestic prices have risen 93 per cent in two years, we have become a consistent net gas importer for the first time in 30 years and in March this year National Grid issued its first ever ‘balancing alert’, to warn industry that it may need to shut off their gas supplies. This crisis is primarily caused by the decline in our indigenous fuel and the ageing of our generation capacity. There is now a significant risk of an ‘energy gap’, where the supply of energy is no longer sufficient to cope with the levels of demand, leading to voltage reductions ['brown outs'] and power cuts ['black outs']... In particular, LogicaCMG is concerned that the current focus is heavily on energy provision post 2020. It is our view that a sizeable gap could occur much earlier, circa 2015. During this timescale we will see significant closures in our nuclear and coal fleet, but it will be much too early to build nuclear or significant renewables capacity - we have already started to see significant issues with the nuclear fleet this year.>>
and from Chapter 1, Summary:
<<A flurry of hosepipe bans and drought orders raised the spectre of our water supply being cut off this summer. Last winter, many UK industrial companies received warnings to shut down as our gas risked drying up. Is our electricity supply next? Is the looming energy crisis going to return us [the UK] to a world of power cuts and a three day week?>>
The conclusion from the report seems to be yes. The report runs through various scenarios, what it calls 'Optimistic' and 'Conservative' for the years 2010, 2015 and 2020. The problems could be severe by 2010. From the summary of the 2010 scenarios:
<<In 2010 we foresee a risk of a 5 - 15 per cent (allowing for contingency) gap at peak times. A likely scenario is that this would be managed by asking energy intensive users to curtail production. These users, from industries such as aluminium, steel, glass, refineries, bricks, lime and cement, Chlor-alkali, paper and manufacturing use 5 - 6 per cent of UK gas. Diverting from these users could free up gas for homes and gas power stations to maintain electricity supplies. The cost to these industries of shutdown has already been modelled for the DTi:
1 day outage: £188m, 3 week outage: £3,951.39m, 6 week outage: £7,902.79m
The cost of the gap could therefore be £7.9bn if sustained outages are required. These would directly affect 7,235 firms and 349,000 employees.>>
Interestingly, the report states that the UK could be importing 80% of its gas by 2014 (see JESS Sixth Report, April 2006, PDF, 1Mb, p14), this is six years earlier than the usual quoted year of 2020. The report's 'Primary Risks' section lists the reasons why gas imports might not be as forthcoming as expected:
Gas is not available through the Bacton interconnector due to problems with the supply from Russia.
Gas is not available due to excessive demand on Continental Europe.
LNG diverted to other countries offering higher prices.
Storage delayed due to planning problems.
The discussion of the 2010-Conservative scenario where there is a shortfall in gas supply, goes into detail in how/why a shortfall may come about. Very realistic, very close. There is also an excellent discussion of UK gas supplies in Appendix E.
The report was covered by a few media outlets:
Call for action on energy gap - The Times
UK energy gap will be larger, closer and more expensive: report - Platts
Energy gap 'could cost Britain £108bn' - The Independent
LogicaCMG’s Press Release (a good summary)
The full report (PDF, 1.6 Mb) is also available to download. You have to insert contact details, but it is free, detailed and well-researched/referenced. View/Download report.
The UK Dept of Trade and Industry's document UNDERSTANDING WINTER GAS SUPPLY - Answers to frequently asked questions from business (PDF, 87 Kb) makes it clear that should a shortfall occur, it is the business community who will get their gas supplies cut off first. This document explains in detail the processes - see Section 5, p11. Note that the DTI document states that a gas supply shortfall is 'very unlikely', whereas the LogicaCMG report suggests otherwise.
[Posted 22 November 2006]
Latest Liquefied Natural Gas Import/Export Figures - EIA
The US Energy Information Administration (EIA) has just published its country-level exports/imports of liquefied natural gas (LNG) by country of origin for the year 2005. Excel spreadsheet, html. Tables for 1993-2005 are available here.
[Posted 15 November 2006]
CERA Launches Another Optimistic Report on Peak Oil
Cambridge Energy Research Associates (CERA) have issued a new report with a Press Release entitled Peak Oil Theory – “World Running Out of Oil Soon” – Is Faulty; Could Distort Policy & Energy Debate. This heading suggests that CERA itself does not understand Peak Oil, or rather is trying to misrepresent the principal message from the Peak Oil community. Peak Oil proponents do not state that the world is 'going to run out of oil soon', rather that global oil production is going to peak soon. From the CERA report Press Release: <<In contrast to a widely discussed theory that world oil production will soon reach a peak and go into sharp decline, a new analysis of the subject by Cambridge Energy Research Associates (CERA) finds that the remaining global oil resource base is actually 3.74 trillion barrels -- three times as large as the 1.2 trillion barrels estimated by the theory’s proponents -- and that the “peak oil” argument is based on faulty analysis which could, if accepted, distort critical policy and investment decisions and cloud the debate over the energy future.>>
Just last week the International Energy Agency (IEA) did a massive u-turn and is now warning of Peaking, stating in its World Energy Outlook 2006: “non-OPEC conventional crude oil output peaks by the middle of the next decade”.
Jan Lundberg, a petroleum industry analyst who now runs Culture Change, was quick to write a rebuttal of the CERA report, A disservice to the world: Oil-industry consultant CERA denies peak oil : <<I started reading the news release and immediately my strong feelings started to bubble up, prompting me to give a general reaction (1) before I subject myself to the rest of CERA's Big-Oil propaganda in its report. Then I'll give a more detailed reaction, (2). I invite you to use my text as you wish. As you may guess, I would like to testify in Congress on the nation's oil reality and what might be pursued as doable mitigation (considering the realities made clear by Roscoe Bartlett, Robert Hirsch, Matt Simmons and others).>>
A good overview of the report has been posted on the Energy Bulletin website (see the second half of the post - Editorial Notes). See also the Press Release issued by US Congressional Peak Oil Caucus Co-Chairmen Reps. Bartlett & Udall, Congressional peak oil caucus responds to CERA study, and comments from Jérôme Guillet, Peak oil: the last skeptic.
Bloomberg, the News Agency, gives a lot of coverage to the pro-Peak Oil point of view, Global Oil Output Won't Peak for 25 Years, Yergin's Group Says: <<... The Association for the Study of Peak Oil estimates the world has 1.46 trillion barrels of oil left and that production will peak in 2010, according to the group's November newsletter. The group's leaders include British geologist Colin Campbell, who helped popularize the peak-oil theory with his 1997 book, "The Coming Oil Crisis." An August report from Cambridge Energy that took issue with the peak-oil theory was criticized by the President of the peak oil association, Kjell Aleklett, as a money-making vehicle based on proprietary data that the firm was unwilling to submit to impartial scientific review. Aleklett said Cambridge Energy analysts were too optimistic about the ability of big producers including Saudi Arabia to increase output. U.S. Representatives Roscoe Bartlett, a Maryland Republican, and Thomas Udall of New Mexico, formed the House Peak Oil Caucus to promote the theory among lawmakers. Bartlett and Udall endorse the peak oil association's prediction that output will start declining after 2010. "There is not much time to act," Udall, a Democrat, told a House Energy and Commerce Committee panel in December. "Since oil provides about 40 percent of the world's energy, a peak in global oil production will be a turning point in human history." ... >>
MSNBC published the Reuters report, World oil supply still plentiful, study shows: <<World oil production will not begin to fall for at least another 24 years, contrary to doomsday theories that supply is already in terminal decline, a prominent energy consulting group said Tuesday. Cambridge Energy Research Associates said in a report that the world has some 3.74 trillion barrels of oil left -- enough to last 122 years at current consumption rates and triple the amount estimated by “peak oil” theorists... >>
The Houston Chronicle gives coverage to Matthew Simmons, Analysts dispute theories of oil production drop. Future historians will look back and remember Daniel Yergin of CERA for his oft-repeated anti-Peak Oil slogan: "This is the fifth time that the world is said to be running out of oil".
Other reviews from the Peak Oil community:
ASPO-USA plus Jeremy Gilbert : Peddling PetroProzac: CERA Ignores Ten Warning Signposts of Peak Oil
The Oil Drum: Does the Peak Oil "Myth" Just Fall Down? -- Our Response to CERA
Kurt Cobb: Does The Oil Drum threaten CERA's market share?
The 16-page full report, Why the "Peak Oil" Theory Falls Down -- Myths, Legends, and the Future of Oil Resources, can be purchased for $1000.
[Posted 15 November 2006, updated 21 November]
The High Price Of Gas - BBC Documentary Online
The BBC's Panorama program ran a feature last Sunday on the UK's inability to find enough gas supplies during the current period of rapid North Sea gas depletion. The documentary is now available to view any time online. From the website: <<Soaring gas prices in Britain are a symptom of the country's failure to spend its historic North Sea windfall wisely, experts have told Panorama. Long-term this could mean higher prices for consumers, loss of jobs and even a threat to national energy security, senior industry figures have said. Some experts believe the industry failed to plan for the current steep fall-off in domestic supplies. They warn the UK will have to learn how to play power politics with energy.>> All essentially true.
[Posted 11 November 2006]
From The Wilderness (FTW) was one of the first groups/web sites to start campaigning on Peak Oil. Unfortunately, it has ceased trading. The loss of FTW is the end of an era. FTW founder, Mike Ruppert, explains the most recent turn of events and why his flight to Venezuela has not turned out as well as expected. Story.
[Posted 10 November 2006]
ASPO-USA Autumn Presentations Now Available OnlineASPO-USA Autumn Presentations Now Available Online
ASPO-USA have published the presentations from their October 2006 conference. The presentations are listed separately from the agenda and speaker information, so to get the gist of what each speaker was talking about, check the agenda first: Agenda, Speakers, Presentations.
EV World recorded Matt Simmons' presentation at the conference on video, a testimonial about his personal journey through the Peak Oil and Gas story. You can watch Matt's PowerPoint presentation using the link above, while listening to the talk here - How I Came to Believe in Peak Oil (video - 28 mins).
[Posted 10 November 2006]
Oil Field MegaProjects – Why Did the Prime Dates Change?
Several people have asked ODAC why it is that until the end of 2005 in his Oil Field MegaProjects analysis, Chris Skrebowski predicted global oil demand outstripping supply 2007/2008, then in his latest published analysis of April 2006 the date changed to 2010/2011. This is explained in an ODAC commentary.
[Posted 09 November 2006]
The International Energy Agency released its World Energy Outlook 2006 this week. The UK business newspaper the Financial Times focused on data suggesting that oil depletion is becoming a very serious issue, IEA warns of ongoing energy crisis: <<The world is on a course that will lead it “from crisis to crisis” unless governments act immediately to save energy and invest in nuclear and biofuels, the International Energy Agency warned on Tuesday. In an apocalyptic forecast, Claude Mandil, the agency’s executive director, said that our current path “may mean skyrocketing prices or more frequent blackouts; can mean more supply disruptions, more meteorological catastrophes – or all these at the same time”. The IEA said that the oilfields on which Europe and the US had come to depend to reduce their reliance on the Organisation of the Petroleum Exporting Countries would peak in the next five to seven years. These include those in Russia, the US, Mexico and Norway. According to this year’s World Energy Outlook, the IEA’s flagship publication, that would mean: “Growing oil exports from the Middle East will focus attention on the world’s vulnerability to oil-supply disruptions, not least because the bulk of the additional exports will involve transport along maritime routes susceptible to piracy, terrorist attacks or accidents.” ... >>
Probably the single most important statement from the report is this: "non-OPEC conventional crude oil output peaks by the middle of the next decade". While it is true that some observers think non-OPEC crude prodcution has peaked already, this is a major change for the IEA who now seem comfortable discussing a Peak being close. Maybe next year they will bring the date of non-OPEC Peak closer ?
Other media outlets covered the story in an uncompromising manner:
Adviser sees global shortage of energy - Boston Globe
World energy supply 'heading for crisis' - The Scotsman
Watchdog warns of one energy crisis after another - The Times
Many headlines chose to promote one of the main solutions - investment in nuclear power or energy efficiency.
World Energy Outlook 2006 links:
i/ IEA World Energy Outlook Press Release
ii/ On the main IEA web page, on the line below the link to the World Energy Outlook 2006 Press Release, is this:
“Blackouts...see related books: Learning from the Blackouts and Saving Electricity in a Hurry”
The subtext could hardly be clearer.
iii/ World Energy outlook 2006 – book details
iv/ World Energy outlook 2006 website
[Posted 09 November 2006]
UK Energy Trends - September 2006
The UK Dept of Trade and Industry’s quarterly Energy Trends (PDF, 2Mb) was released end of September. It contains some interesting data:
Summary
- Oil production fell by 13 per cent compared to the second quarter of 2005 as production from older established fields continued to decline.
- Gas production was 14 per cent lower compared with the second quarter of 2005. Gas imports increased by 30 per cent while gas exports increased by 8 per cent. The UK was a net exporter of gas in the second quarter of 2006, albeit 82 per cent lower than in 2005. Gas demand was 8 per cent lower than a year earlier.
- Coal production was 2½ per cent higher than a year earlier. Coal imports were 11½ per cent higher. Generators’ demand for coal was up 10½ per cent.
- Coal supplied 10½ per cent more electricity than in the same period a year earlier, while gas supplied 14 per cent less. Nuclear supplied 6 per cent less. Net imports of electricity were 35 per cent higher than a year earlier.
Particularly interesting Charts:
Chart 2.1 - Coal production and imports
This shows phenomenal growth in UK coal imports Q1 2003 – Q2 2006, and a gradual decline in indigenous coal production.
Chart 3.1 - Production of crude oil and NGLs
Total indigenous UK production of crude oil and NGLs in the second quarter of 2006 was 13.2 per cent lower than a year earlier. Two new fields started production during the past year, but production from these fields was insufficient to make up the general decline in production from older established fields.
Chart 3.2 - UK trade in crude oils, NGLs and petroleum products
The long-term trend of this graph clearly shows that the UK is now a net importer of oil + refined products:
- During the second quarter of 2006 the UK was a net importer of oil and oil products by 1.6 million tonnes, whereas in the second quarter of 2005 the UK was a net exporter by 1.1 million tonnes.
- The UK was a net importer of crude oil, NGLs and refinery process oils (2.0 million tonnes).
- Exports of crude oil, NGLs and refinery process oils decreased by 14.3 per cent while imports decreased by 3.8 per cent.
- Net exports of petroleum products decreased to 0.5 million tonnes in the second quarter of 2006.
- Exports of petroleum products fell by 2.1 per cent whilst imports rose by 16.4 per cent.
Chart 4.1 - Production of natural gas
This chart shows clearly that compared to 2003, 2004 and 2005, 2006 seems to be a particularly bad year for gas depletion:
- Total indigenous UK production of natural gas in the second quarter of 2006 was 14.4 per cent lower than in the corresponding quarter a year earlier.
- Overall, gas production is declining as UKCS reserves deplete. This trend is likely to continue and become more apparent during the winter months when demand increases.
Chart 5.2 - Electricity supplied
The pie charts for Q2 2005 v Q2 2006 show a clear swing from gas to coal. Over the last few years this has been more of a winter phenomenon (Q1), when the UK has been short of gas in winter and fired up every coal-fired power station available, but this data suggests gas to coal is becoming more of a year round trend.
Special Feature - Coal imports into the UK 2000 to 2005
“The UK used to produce the vast majority of its coal requirements; for example in 1980 it produced 130 million tonnes and imported 7½ million tonnes. Imports were mainly of coking coal or other grades that the UK’s mines could not readily produce. As the UK’s coal production declined, imports rose steadily and a milestone was reached in 2001 when more coal was imported (35½ million tonnes) than was produced in the UK (32 million tonnes). Imports have continued to increase as more coal handling capacity has been installed at British ports and imports reached a record 44 million tonnes in 2005. UK coal production in 2005 was 20½ million tonnes. Since 1997 power stations (which currently account for 85 per cent of coal consumption in the UK) have used more coal each year than has been produced in the UK and Chart 1 shows how increased imports have filled this gap.
Since 1999 coal use by UK power stations has been on a rising trend because high gas prices made gas use for generation less attractive. Slightly lower gas prices in 2002 led to a small recovery in gas use and the requirement for imported steam coal was correspondingly less. However, a further reduction in UK coal production in 2004 and 2005 has increased the need for
imported coal although the increase in coal use at power stations has been more modest. In 2005 about two-thirds of the coal used by power stations was imported and over 90 per cent of the coal used by other consumers.
UK coal imports are likely to rise further to 47 million tonnes in 2006, which will be a doubling in the 6 years since 2000. Within this total, coking coal imports have remained fairly constant at around 7 million tonnes per year with the growth being in steam coal imports.”
Earlier versions of Energy Trends
[Posted 03 November 2006]
OIES - The New Security Environment for European Gas: Worsening Geopolitics and Increasing Global Competition for LNG
Jonathan Stern is Director of Gas Research at the Oxford Institute for Energy Studies (OIES) and recently published The Future of Russian Gas and Gazprom. His latest report (PDF, 188 Kb) for the OIES discusses future natural gas supplies for Europe:
<<A new paper from the OIES, launched Oct 4, 2006, challenges the conventional wisdom that the major problem for European gas security is rising import dependence. Rather, it suggests that despite ample resource availability and commercial profitability, it is not clear where Europe's next major tranche of gas supplies will be sourced after 2015, and particularly after 2020 when indigenous production is likely to be in sharp decline. This "new security environment" is being created by a combination of:
* declining indigenous European production;
* worsening political relationships between Europe and Russia which will place a limit on Russian gas exports to Europe;
* the worsening security environment in the Middle East region,
particularly in relation to key potential exporters such as Iran, which will prevent Middle East gas pipelines to Europe from becoming a reality.
While Europe will be able to gain access to liquefied natural gas (LNG) supplies in increasing quantities from a greater variety of sources, it will have to compete with both North America and Pacific importers in an increasingly global marketplace in which ability to attract supplies will depend on price.
In the short term - the next few years - European gas security discourse will be dominated by the problems between Russia and the countries which transit its gas to Europe, principally Ukraine but also Belarus. These problems are commercially and politically complicated and will take time to resolve. During this period there will be nervousness about maintaining Russian exports to Europe, especially during winter months.
Over the same time period at least as much, and probably more, attention should be devoted to dealing with the risk that end-users could be deprived of supply due to a combination of infrastructure failure and insufficient storage to meet extreme weather conditions. Ensuring adequate supplies to meet peak demand, and preventing domestic infrastructure failure, particularly in countries such as the UK which have limited storage capacity and deliverability relative to the size of their markets, will be of paramount importance>>
[Posted 03 November 2006]
Peaking Of World Oil production, An Overview
Robert L. Hirsch is best known for being the lead author of Peaking of World Oil Production: Impacts, Mitigation & Risk Management (PDF, 1.61 Mb) and the article Shaping the peak of world oil production. Last week he gave a PowerPoint presentation, Peaking Of World Oil production, An Overview (PDF, 735 Kb), a very clear summary of the Peak Oil problem split into five sections: On the road to peaking, Timing, Why is it so complicated & contentious?, One "simple" approach to forecasting, Mitigation & risk.
[Posted 01 November 2006]
Notes From The ASPO-USA Peak Oil and Gas Conference, 25-27 Oct.
The ASPO-USA Peak Oil and Gas conference was held in Boston last week. Various sources reported on the conference, including the news agency Reuters (World oil production may have peaked-executive). However, the ASPO-USA website reports that the conference was poorly attended by the media, presumably because of the US mid-term elections next week, and the big fall in crude oil/gasoline/petrol prices have made them lose interest. The ASPO-USA website has listed several blog sites that reported on the conference. The Oil Drum also reported on the conference, Impressions of ASPO-USA : <<Speaking with Michael Klare in the hallway, he reiterated his belief that some military action will be taken against Iran in the coming year. I will be doing an interview with him soon — the one I scheduled fell through — and there will be an article here on it. I note that there are now no less than three aircraft carrier task forces in the area now.>>
Byron W. King of Whiskey and Gunpowder focuses on the early part of the conference in his first article 2006 Boston ASPO: Global Warming (other articles yet to come). However, the solutions to Peak Oil and Global Warming largely overlap, as this quotation from Byron's article indicates: <<Komanoff went through a series of mathematical explanations that were remarkable in demonstrating how relatively low-cost some of the policy solutions might really be. With a "carbon tax" on all fossil fuels (coal, oil, natural gas) at the equivalent of about $1 per gallon of gasoline, it is possible to envision a stunning amount of change in energy usage patterns, and in the increased use of carbon-mitigating technology such as wind power and photovoltaic systems. Yes, changing energy technology will cost a lot of money. But then, mankind burns a lot of carbon, so a carbon tax will also raise a lot of revenue and alter a lot of behavior at the margin. Komanoff was careful to emphasize that carbon taxes are, in essence, "use taxes," that force people who add carbon to the atmosphere to pay for the deed ...And any revenues raised by government entities through carbon taxes should be offset, according to Komanoff, with tax reductions elsewhere, such as in reduced payroll taxes.>>
[Posted 31 October 2006]
Resource Depletion: Modeling and forecasting oil production - Michael Smith
Michael Smith of EnergyFiles speaks regularly on Peak Oil / oil depletion, and is one of the speakers at the UK's Energy Institute Oil Depletion - dealing with the issues seminar in London, 7th November. Michael gave an interesting PowerPoint presentation in April this year, Resource Depletion: Modeling and forecasting oil production (PDF 883 Kb), covering the modelling of oil depletion in general, and Egypt, the UK, and USA specifically, and lists all countries that are past Peak. Judging from the relevant graphs, Peak year is shortly after 2010. Michael's modelling suggests the last year in which oil supply can match demand is 2006-2018, depending on demand growth. Some of Michael's conclusions: "Companies and governments must take more energy risks: With capital intensive projects, alternative energy sources, new models of transport ...and with taxes. Energy efficiency is not enough as demand grows faster than savings are made. Conservation is a necessity ...but it will be painful."
Michael's talk was part of a 2-day energy workshop, Modeling the Oil Transition: A DOE/EPA Workshop on the Economic and Environmental Implications of Global Energy Transitions, held in the USA, April 21-22 2006. The seminar seems to have been a very interesting one, with presentations (nearly all available online) including Understanding the Maximum of World Conventional Oil Production from Robert Hirsch, SAIC. Further details.
[Posted 30 October 2006]
The UK's Carbon Disclosure Project Discusses Peak Oil
From the Carbon Disclosure Project website: "The Carbon Disclosure Project (CDP) provides a secretariat for the world's largest institutional investor collaboration on the business implications of climate change. CDP represents an efficient process whereby many institutional investors collectively sign a single global request for disclosure of information on Greenhouse Gas Emissions. CDP has historically sent this request to the FT500 largest companies in the world however in 2006 we have expanded our reach to 2180 companies, with over 950 responding with an answered questionnaire."
Every year the CDP publishes a report containing the results of their survey of Greenhouse Gas Emissions from some of the world's largest companies. This report is known as CDP 1,CDP 2 etc. This year's report, CDP 4, launched in September and entitled Carbon Disclosure Project Report 2006 Global FT500 (PDF, 2.27 Mb), was different from its predecessors in that it dedicated a whole section (Eight, pp78-82) to the topic of Peak Oil. This is an important contribution to the Peak Oil debate - a concise introduction that ideally will pique the curiosity of the big corporations.
[Posted 30 October 2006]
Jim Puplava Interviews Matthew Simmons and Richard Heinberg
As mentioned before on the Bulletin Board, what makes Jim Puplava such a good interviewer is that he has developed some expertise in Peak Oil himself, and knows the right questions to ask:
Jim Puplava interviews Matthew R. Simmons, Financial Sense Online, 30 September 2006
Jim Puplava interviews Richard Heinberg, Financial Sense Online, 21 October 2006
[Posted 26 October 2006]
Official opening of the Langeled Pipeline
The latest edition of the UK Dept of Trade and Industry's (DTI) Sustainable Energy Policy Network (SEPN) newsletter begins with an introduction to the Langeled gas pipeline that transports natural gas from Norwegian gas fields to the UK: "A new era of enhanced energy security for the UK was ushered in on 16 October when the Prime Minister, and the Norwegian Prime Minister, Jens Stoltenberg, officially opened the Norwegian Langeled pipeline, set to deliver up to 20% of the UK's average winter gas needs... The Langeled pipeline is one of a number of important gas import projects being constructed by the energy industry to replace the UK's declining domestic production. In two years' time we expect to have additional gas import capacity equivalent to 70% of Britain's annual gas consumption."
It is difficult to tell how secure the UK's future gas supplies will be. One problem is that when the gas supplies from the Ormen Lange gas field come on full stream towards the end of 2007, the amount of gas the pipeline will supply may not be much more than the amount of gas lost to depletion from UK gas fields during 2006/2007. For example, according to DTI statistics, UK total net gas production fell from 94.533 billion cubic meters in 2004 to 85.745 billion cubic metres in 2005, a fall of almost 9 billion cubic metres in one year. Supply from Ormen Lange is forecast to be 20 billion cubic metres/year.
The above quotation refers to an "additional gas import capacity equivalent to 70% of Britain's annual gas consumption." The important word here is capacity. The UK's import capacities are indeed impressive, but much more important is - where is the additional gas going to come from ? In addition to Norwegian gas supplies, either it will be piped from mainland Europe, there are two pipelines now, or it will be imported as LNG. The new Netherlands-to-UK Balgzand-Bacton Line (gas pipeline) suffers from the same problem as the existing Zeebrugge-Bacton Interconnector (gas pipeline) - limits to the amount of spare gas available from Europe. A recent Platts article states that it will be 2010-2012 before Russia supplies gas directly to the UK thro the currently-being-built Nord Stream pipeline. The other main source of UK gas imports will be LNG. The UK managed to obtain precisely one cargo of LNG last winter.
In August 2006, the Guardian newspaper published an article Government warns of another winter of gas shortages : <<The government gave a warning yesterday that Britain was heading into another winter of potential power shortages as one household gas supplier announced a record 30% increase in prices. The energy minister, Malcolm Wicks, said rising demand and plunging output from North Sea fields cancelled out the benefits of new gas pipelines from Norway and the Netherlands. "It's not going to be the easiest of winters and we need to manage this with care and make sure we get it right," said Mr Wicks from the sidelines of an energy industry conference in Norway. "It's looking the same as the last two or three years.">>
The SEPN newsletter also announced a new DTI consultation: "A consultation on the resilience of the UK gas market was also published on the same day... The consultation on the effectiveness of current gas security of supply arrangements forms part of the implementation of the Energy Review conclusions published on 11 July. Consultation closes on 12 January 2007 and the document is available from " here. The consultation document Gas security of supply arrangements - the effectiveness of current gas security of supply arrangements: an energy review consultation (PDF, 319 Kb, 78+ pages) gives a detailed overview of government thinking. Chart 2: Daily gas deliverability (p27, with gas supply projections to 2025) implies a rather optimistic view of UK North Sea gas depletion rates for 2006-2008. The Royal Bank of Scotland for example, in their September Oil and Gas Index report, stated: "[July] Gas production decreased 4% to 6,901 million standard cubic feet per day (mmcf/d) compared to June and was down 16% on the year."
[Posted 25 October 2006]
Short-Term Energy and Winter Fuels Outlook: Energy Information Administration
The US Energy Information Administration (EIA) published its Short-Term Energy and Winter Fuels Outlook earlier this month. Here are some of the highlights.
Regarding energy prices, there have been lots of articles in the US media recently about how less expensive energy in general, and natural gas in particular, is compared to last winter. But the EIA’s forecast for this winter as a whole suggests prices similar to last winter: “Under the baseline weather case, winter (October 1 to March 31) residential natural gas prices, which were hardest hit by last year’s hurricanes, are expected to average $12.23 per thousand cubic feet (mcf) compared to $14.64 per mcf last winter; heating oil prices are expected to average $2.46 per gallon compared to $2.45 per gallon; propane prices are expected to average $1.85 per gallon compared to $1.95 per gallon. Residential electricity prices are expected to average around 10.1 cents per kilowatthour (kwh) compared to 9.6 cents per kwh last winter.”
On petroleum/crude oil:
"Surplus world crude oil production capacity, all of which is located in Saudi Arabia, is expected to increase only slightly in 2007 (World Oil Surplus Production Capacity). As a result, surplus world oil production capacity is projected to remain near 30-year lows. Non-OPEC Supply. The increase in demand growth will be partially met by new supplies from non-OPEC countries. The net annual growth in non-OPEC oil production for 2006 will likely total around 0.7 million barrels per day (bbl/d) (Growth in World Consumption and Non-OPEC Production). Although production will be limited at first, Russia’s Sakhalin I Project and the United Kingdom’s Buzzard field should begin adding new supply during the fourth quarter. Growth in 2007 non-OPEC production likely will rise to 1.2 million bbl/d (International Oil Supply Charts), as new projects in the Caspian Region, Africa, and Brazil are expected to add more than 0.9 million bbl/d of new production.”
Natural Gas:
“Supply. Domestic dry natural gas production is expected to increase by 0.8 percent in both 2006 and 2007 due in large part to restored production capacity from the major disruptions caused by Hurricanes Katrina and Rita in the Gulf of Mexico in 2005. Meanwhile, total net imports of natural gas, including both pipeline and liquefied natural gas (LNG), are expected to show a 4.5-percent decline in 2006. The drop in net imports is the result of a decrease in the amount of Canadian production available for export to the United States Currently, total LNG imports for 2006 are expected to be approximately 650 billion cubic feet (bcf) compared to 630 bcf in 2005. LNG imports are projected to total 920 bcf in 2007. Robust expectations of LNG import growth of 41 percent in 2007 are largely due to rising incremental supplies from Africa—Algeria, Nigeria, Libya, and Egypt in particular.
Demand. Total natural gas consumption is projected to decline by 1.1 percent in 2006 primarily due to the warmer-than-average January 2006 weather. Consumption is expected to rebound in 2007, growing by 2.9 percent.”
See also the Figures, in particular:
World Oil Supply Growth (Change from Previous Year)
Russia Oil Supply (Change from Previous Year)
Caspian Region Oil Supply (Change from Previous Year)
North Sea Oil Supply (Change from Previous Year) It is interesting that the EIA forecasts Buzzard's maximum production to be 100,000 barrels/day, about half of other forecasts. Note that since the UK has been a net oil-plus-refined-products importer since the beginning of 2006, this graph implies that the UK will remain a net importer, and that Buzzard will not make the UK a net exporter again.
This item was picked up from the excellent website Policy Pete – Petroleum Policy and Geopolitics
[Posted 25 October 2006]
Oxford Energy Comment - The Peak Oil Theory
The Oxford Institute for Energy Studies recently released a Comment in September entitled The Peak Oil Theory (PDF, 0.47 Mb), a rather odd title given that the author, Robert Mabro, acknowledges Peak Oil as fact. In his comment, Robert is very critical of current attempts and methods to predict when Peak Oil may occur.
Here is an ODAC summary of ‘the problem’:
• The peaking in global oil production, Peak Oil, is a fact, not a theory
• It is expected to happen 2005 – 2012, but we will not know until at least a year after it has happened
• It is likely that before we even reach Peak, global oil demand will outstrip supply, leading to oil prices much higher than now
• Very few members of the general public, and arguably, media, are aware of the problem
• Whilst so few people are aware of the problem, they are not seeking solutions
• At the global level, we need to urgently develop what some have called ‘a new Marshall Plan to reduce energy consumption’, not just oil, but especially oil
• We use huge quantities of crude oil. Continuing our current levels of energy consumption using alternatives to oil are generally considered to be a pipedream, except most notably by many, but not all, economists who envision a smooth transition to currently non-existent alternatives.
• There are policies that we can implement immediately to drastically reduce our oil consumption, bearing in mind that about two thirds of all oil is used as vehicle fuel e.g. reduce and strictly enforce speed limits.
What does The Peak Oil Theory have to say about Peak Oil ? This paper makes many points that are either misleading or plain wrong. Read ODAC comments.
[Posted 24 October 2006]
The BBC recently reported Skills shortage hits oil sector : <<A skills shortage is jeopardising the future of the oil and gas industry, according to a new report. The survey warned that the industry must continue to fight to attract staff if it is to grow in coming years. Aberdeen and Grampian Chamber of Commerce's oil and gas report found an urgent need for chemical, process, drilling and reservoir specialists. Current employment market conditions mean it can take as long as three months to fill job vacancies. Operators and contractors' efforts to pull new faces into the industry from other disciplines are to intensify, with a shift to permanent over temporary staff expected iin the next year as firms try to respond to "serious" recruitment issues...>>
Much worse than local personnel shortages in the UK, in an article entitled A Growing Skills Shortage, the October issue of Petroleum Review reports on a new study from Booz Allen Hamilton on global personnel shortages:
“…. Over the last 12 to 18 months, oil prices, planned investments and industry demographics have combined to stretch industry resources to breaking point with the real potential of stalling the oil and gas boom, states the company. The study indicates that the average employee working for a major operator or service company is 46 to 49 years old – with an average retirement age for the industry of 55 years, the industry faces a crisis over the next decade as more than half of the employee base leaves the work force... The shortage affects all positions from rig workers to senior scientists and engineers. With oil and natural gas prices soaring, expansions and reactivations are everywhere, companies are confronted with a shortage of skilled workers who can man and service the installations… As overstretched companies are forced to do more with less, on-the-job training, mentoring and coaching have become virtually things of the past, suggests the report…”
[Posted 24 October 2006]
Ireland Publishes BioEnergy Report
The Bioenergy Strategy Group, part of the Irish government's Department of Communications, Marine and Natural Resources, has just published a report called Bioenergy in Ireland (PDF, 1.1 Mb). From the Executive Summary:
"The Bioenergy Strategy Group was established by DCMNR in December 2003 to consider the policy options and support mechanisms available to Government to stimulate increased use of biomass for energy conversion, and to make specific recommendations for action to increase the penetration of bioenergy in Ireland. This report presents the findings of the Group setting out options for action recommended to DCMNR.
Bioenergy is the general term used to describe renewable energy derived from biomass, which covers
the biodegradable fraction of products and residues from agriculture, forestry and related industries, as
well as the biodegradable fraction of industrial and municipal waste. It also includes crops specifically
grown for energy use.
More than any other area of renewable energy, bioenergy is an inter-departmental issue, touching on
many policy areas. Thus, while led by renewable energy goals, the task of promoting bioenergy both
merits and requires an inter-departmental response.
Bioenergy supports a wide range of national policy goals:
• Key energy goals including security and diversity of supply and the development of indigenous
renewable energy sources
• Key environmental goals such as greenhouse gas emissions reduction and waste management
• Key agricultural goals offering new opportunities for farmers in the context of CAP reform
• Key social goals such as employment generation in rural areas and enhancement of local economies"
The report contains the following sections: Introduction; The Bioenergy Sector – Issues, Policies and Actions; The Bioenergy Resource and Market Potential; Overcoming the Barriers, Developing the Market; Conclusions & Recommendations – Realising the Potential; Annex with sub-sections on Biomass CHP Pathway, Anaerobic Digestion Pathway, Landfill Gas Pathway, Wood Heat In Buildings Pathway, Energy Crops and Future Technologies.
If there is one limitation to the report it is that it avoids any discussion of Peak Oil and Gas. Sections of the report look to the year 2025 and beyond. The modern method for growing crops, including trees, is very dependent on chemical inputs which ultimately derive from oil and gas. To be realistic about biofuel potential 20-30 years from now, there ought to be at least a discussion of Peak Oil and natural gas availability, and what this might mean for crop yields.
[Posted 24 October 2006]
Proposing Plan C: Report on the Third U.S. Conference on Peak Oil and Community Solutions
This years, Peak Oil and Community Solutions conference was held in Yellow Springs, Ohio end of September. A summary of the proceedings is now available online. The Proceedings DVDs of Conference Speakers (PDF, 77 Kb) are available for purchase. The Community Solution website has a brief overview of 'the problem', and 'the solution'.
[Posted 13 October 2006]
Canadian Oil Sands - an Update
In June, the Canadian National Energy Board released a report entitled Canada's Oil Sands - Opportunities and Challenges to 2015: An Update (PDF, 1.7 Mb). A series of potential hurdles suggest that the Board is not sure that production can reach 3 Mb/d by 2015. This is graphically illustrated in an Executive Summary figure - Projected Total Bitumen Production. Production in 2005 averaged about 1.1 Mb/d, for 2015 the range is 1.9 - 4.4 Mb/d, base case being 3.0 Mb/d. 4.4 Mb/d seems very optimistic, 1.9 Mb/d more likely if delays, project cancellations, cost over-runs and shortages of resources and suitably qualified personnel continue: "Outlook: It is expected that there will continue to be rapid growth in the development of Canada’s oil sands. There are, however, issues and uncertainties associated with the development of the resource. The rate of development will depend on the balance that is reached between the opposing forces that affect the oil sands. High oil prices, international recognition, geopolitical concerns, global growth in oil demand, size of the resource base and proximity to the large U.S. market, and potentially other markets, encourage development. On the other hand, natural gas costs, the high light/heavy oil price differential, management of air emissions and water usage, insufficient labour, infrastructure and services are concerns that could potentially inhibit the development of the resource."
[Posted 12 October 2006]
Last week, the US news magazine Newsweek published a story entitled That Falling Feeling (the title on the magazine front cover was Is The Oil Boom Over?). It was written by Leonardo Maugeri, senior vice president of strategies and development at Eni SpA (Italy's largest oil company), who takes every opportunity to debunk Peak Oil / oil depletion. If this were the only article you ever read on Peak Oil, and for some Newsweek readers this is likely, you may be convinced that the peaking in global oil production is not a problem:
<<… But a bit farther out, between roughly 2010 and 2012, there is a good chance that supply trends will overtake demand, raising spare production capacity to a range between 7 to 10 percent of demand. That large a cushion would drive down both the price of oil and the market's major vulnerability to minor rumors. Let's try to understand why.
Essentially, the underlying causes of the new century's first oil crisis are in the process of being solved. Since 2002, the major producing countries and oil companies have gained the confidence to invest in exploration, development and refining. We are in the midst of a real investment boom, although it needs time to bear fruit. Oilfield development takes several years, and there is now a serious shortage of equipment and qualified personnel.
If investment continues at current rates, however, the global production capacity of crude could increase by 12 million to 15 million barrels per day between 2010 and 2012, outstripping expected demand growth of about 7 million to 9 million barrels per day. This would boost spare capacity and drive prices down. Of course, the spending boom depends on high prices, which depend in turn on demand. And while much of the industrial world seems to assume that global demand will continue to rise sharply, oil producers most assuredly do not. They worry demand may pop like a bubble, as has often happened in the past...>>
Here are a few recent articles that discuss some of the important topics that Maugeri missed out:
Is the world about to run out of oil? – very recent overview of Peak Oil with opposite conclusions to Maugeri
‘Tie oil output to reserve’; Review Kuwait’s energy strategy – Kuwait is contemplating linking oil production to reserves. If other Middle East countries follow suit, oil production will go down.
Global oil cos' spending soars but production, reserves growth lag – study – International oil companies (BP, Total, Exxon etc) spent $277 billion on exploration and production last year, but production increased by only 1% (less than consumption), reserves 2%.
Runaway costs imperil Canada's oil sands hope – A combination of lower crude oil prices and higher costs is making the economic case for some Canadian oil sands projects look doubtful.
Rig shortage to stunt oil output growth for years – There is a world shortage of oil rigs, and the problems will persist for years.
The Peak Oil Crisis: Hyping Jack No. 2 – A review of the exaggerated oil discoveries (Jack-2 and others) in the US Gulf of Mexico.
Pipeline crisis 'could halve flow of oil' – Matthew Simmons thinks that corrosion of oil pipelines, rigs and refineries could be a global problem, leading to a big cut in oil production.
Mexico's main oil source may be drying up – The giant Mexican oil field Cantarell may fall in production from 1.8 million barrels / day now to 0.5 Mb/d by end of 2008.
Setback at Thunder Horse will hobble BP – One example of a major oil project that has been set back months to years. There are others - see also Kashagan will not pump oil before 2009 -Kazakhstan.
[Posted 09 October 2006
Latest Global Oil and Gas Reserves Estimates - EIA
With the so-called 'proven' oil reserves of Middle East countries generally believed to be exaggerated, there must be doubts in their value. However, the US Energy Information Administration (EIA) has just published the global oil and gas reserves as of end of 2005 from the BP Statistical Review, Oil and Gas Journal and World oil. Excel spreadsheet, html.
[Posted 09 October 2006]
Anna Politkovskaya, Russian Journalist
Two years ago I was given a book called Putin's Russia: Life in a Failing Democracy, written by a journalist called Anna Politkovskaya. She was Russia's best known investigative journalist, and a critic of the Russian government's tactics in Chechnya. The book was a resume of the Russia that, in Anna's view, Putin, President of Russia, would rather we did not know about. She covered topics like some of the reasons why about 500 conscripts are killed in non-combat situations in the Russian army every year, the shenanigans in Chechnya, and touched on Russian organised crime. I could not help feeling that Anna was a very brave woman. The other person I knew who worked tirelessly to help Russian minorities and expose Russian corruption was Galina Starovoitova, who was shot in Nov 20 1998. The thought had occurred to me that anyone as outspoken as Galina in Russia would meet a similar fate, but I was delighted to meet Anna in the flesh last year at the Edinburgh International Book Festival. Not that I spoke to her, she was at a festival event talking about her then new book, Putin's Russia. Anna was killed on Saturday. As the Independent on Sunday put it: "The 48-year-old, lauded by journalists and writers around the world for her exposés in Chechnya, appears to have been assassinated. Her most powerful enemy was President Vladimir Putin. The murder came two days before she was due to publish an exposé of the Chechnyan Prime Minister." The Independent and BBC have more details today. Approximately 20 of the 25 members of the European Union depend on Russian natural gas to some extent. You might like to read Putin's Russia: Life in a Failing Democracy.
See also:
A voice of truth speaks its last: in Chechnya, the misery goes on (The Times, Fri 13 Oct)
<<… Her murder has been one of a series of high-profile contract killings in the past month and has coincided with a campaign of official persecution against Georgians living in Russia in a row over spying. Opponents of President Putin fear that dangerous emotions are being stirred up before a key election period that will determine who succeeds him in the Kremlin in 2008.
They say that a vengeful mood in Russia and the sense that anybody can be killed is creating an atmosphere of repression in which people are afraid to speak their minds. One ultranationalist group has urged supporters to kill 89 people whose names have been posted on its website. Ms Politkovskaya’s death followed the murder in Moscow of Russia’s top banking regulator, Andrei Kozlov, last month. A hitman shot dead another banker, employed at the country’s second-largest bank, on Tuesday.
Garry Kasparov, the former world chess champion and a vocal opponent of Mr Putin, said yesterday that he also feared for his life. At a conference in Portugal he said: “I try to protect myself and my family as much as possible but I am aware that no protection is possible. Putin’s regime is seen in the West as a strange democracy, a Russian-style democracy. But in reality it is a police state. And the sooner Putin leaves, the better off the country will be.”>>
[Posted 09 October 2006, updated 16 October
Richard Heinberg begins his talk with a history of energy use, then moves on to various aspects of Peak Oil. Looks at the Katrina hurricane aftermath as an example of how well prepared the USA is for Peak Oil (not very). Finishes off his talk on an optimistic note, discussing some of the many options we have for coping and preparing for Peak Oil. An all-round excellent talk. About 56 minutes long. Video.
[Posted 11 September 2006]
Australian Senate's Future Oil Supply Inquiry - Update
The Australian government's Senate Rural and Regional Affairs and Transport Committee is currently undertaking an Inquiry relating to Peak Oil, called Australia’s future oil supply and alternative transport fuels. The Committee's Interim Report was published on 07 Sep 2006. A representative of Adelaide Peak Oil Action states: "This Commonwealth enquiry has assessed information from oil industry, world oil bodies and Peak Oil proponents. Particularly, see the 'Comment' on page 7 where it states: 2.17 In the Committee's view the possibility of a peak of conventional oil production before 2030, even if it is no more than a possibility, should be a matter of concern. Exactly when it occurs (which is very uncertain) is not the important point. Australia should be planning for it now, as Sweden is doing with its plan to be oil free by 2020." The Interim Report was discussed by The Age, Tank low and running on fumes.
Our contact in Australia continues: "The Australian Government is planning for the scenario of an emergency fuels shortage (see National Oil Supplies Emergency Committee). Australia's dependence on transport to sustain its economic and social activities makes it vulnerable to oil supply disruptions. Australian Government policy is, where possible, to allow industry to manage fuel supply shortfalls without government intervention. A description of how Australia gets its oil is provided (PDF, 262 Kb). This link also considers various sudden supply problem scenarios."
Unfortunately, the chairman of Exxon Australia's says Peak Oil is not a problem, Exxon's Australia chief dismisses peak oil theory, says supplies abundant : <<The chairman of Exxon Mobil Corp.'s (XOM) Australian unit, Mark Nolan, Monday (11 Sep.) dismissed peak oil theory and insisted the world has abundant supplies of oil and other fossil fuels... "The world has an abundance of oil and there is little question scientifically that abundant energy resources exist," Nolan said. >> This statement is essentially correct, depending of course on what exactly is meant by 'abundant', but conveniently ignores the real problem. A variety of reasons including a shortage of rigs and experienced engineers and geologists; ageing existing oil fields and infrastructure; new oil fields that are technically more difficult to develop; and oil-rich areas being in geopolitically sensitive areas (Middle East, Russia) or in potential war zones (Iraq, Nigeria ...); all mean that irrespective of how abundant oil reserves are, production is close to Peak.
[Posted 11 September 2006]
Biggest Oil Find in US in Years - May Not Be So Big
Various articles this week have reported on a new oil find, the Jack-2 field, in the Gulf of Mexico (BBC - 'Huge oil find' in Gulf of Mexico). Most reports mention that there might be as much as 3 - 15 billion barrels of oil (for comparison, the UK Continental Shelf, which includes the UK sector of the North Sea, has produced to date about 22 billion barrels of oil). Various articles (Peak oil theorists don't know Jack, A Bubble In Crude, Massive Oil Find In Gulf of Mexico Brings Gloom to 'Peak Oil' Pranksters) even go as far as to suggest that this new find debunks the Peak-Oil-is-imminent argument. What is most interesting is that all the articles bar one do not actually say how much oil/gas has actually been found in Jack-2. The aforementioned "don't know Jack" article states that the amount of oil just discovered "is likely to amount to 500 million barrels". 500 million barrels is a good find but not huge. That amount of oil (if it could be produced instantly) would last the USA about three weeks, and the world about six days. Hardly enough to debunk the Peak-Oil-is-imminent argument. The 3-15 billion barrels of oil refers to the wider area that the Jack-2 field is in, known as the Lower Tertiary, but for now it is speculation that such large amounts of oil exist.
The potential for finding several billion barrels of oil equivalent (i.e. oil and gas) is discussed in more detail in a post on The Oil Drum (Deep Ocean Energy Resources -- A Critical Analysis and Jack-2 and the Lower Tertiary of the Deepwater Gulf of Mexico). The drawbacks with drilling down to about 30,000 feet include huge costs and the lead times to get the oil out to the markets, discussed in more detail in the Energy Bulletin article Clarification of the Huge Chevron Gulf Oil Discovery.
In an editorial A lot, but not enough, The Philadelphia Inquirer makes the point that even if the total oil found amounts to 15 billion barrels, in the longer term it will not make much difference to the USA's dependence on foreign oil: "The problem is that as big as Chevron's discovery may be, it's minuscule compared with a Middle Eastern field. And it cannot begin to meet Americans' seemingly insatiable appetite for oil. When the deepwater well comes online by 2012, the United States will still have to import more than half of its oil. We cannot drill our way out of our dependence on foreign oil. The answer lies in reducing demand and developing alternative fuels... In June, by contrast, a bipartisan group of senators introduced legislation seeking to gradually raise vehicle fuel economy standards to 35 miles per gallon by 2017, saving 2.5 million barrels of oil per day by 2025. That consumption-side proposal, which went nowhere, far exceeds even the most optimistic daily production expectations from Chevron's latest discovery."
In an interesting article EXTRA: Oil Discovery Saves Civilization!, Jeff Vail points out that Jack-2 was discovered two years ago, and all information about it has been known for some time: "... This larger field, of which Jack 2 is just a small part, may someday yield between 3 and 15 billion barrels of recoverable crude. It won't even start to produce oil until 2013, if everything goes according to schedule. Then, it (the entire tertiary GOM zone) may eventually produce 400,000 barrels per day. That's about how much Mexico's Cantarell field declined in production this year... There is absolutely no new information about this event to surface in the past three months. So why all the hype now? One theory--and I should be the first to admit that I cannot prove motive or intent here--is the upcoming November election."
In terms of the effect that this find will have on global Peak, Byron King gets to the point: <<Byron King "congratulates and commends" Chevron on their ultra-deep ultra-high tech oil discovery in the Gulf of Mexico, says it will have "no impact whatsoever" on the general question of peak oil >>. Byron King is an ex-geologist who has written extensively on Peak Oil. In this audio interview (23 mins), he makes the valid point that the fact we are using exceptional technological achievements to drill down to a depth of about 30,000 feet (if new oil could be found at shallower depths, we would be looking in shallower depths) is a hint we are approaching Peak, not avoiding it.
[Posted 08 September 2006, updated 11 Sept]
Russia May Face Gas Supply Crisis in 2 Years
Russian news agency FC Novosti reported on 07 Sept.: <<In two years, Russia may be hit by a gas supply crisis, said Economic Development Minister German Gref. "I do not want to scare anyone," he said, adding that he had repeatedly forecast deficit of power generation capacities. "In two years, we will have a similar problem in the gas industry.">> FC Novosti also reported that Russian gas production to end of August, 2006 increased 2.56% compared to the same period in 2005, while RIA Novosti states that Russian gas exports to the Asia-Pacific region are expected to increase dramatically: <<Russia intends to increase the number of Asia-Pacific countries to whom it exports oil and natural gas tenfold and fivefold, respectively, in 2020, a deputy industry and energy minister said Thursday. "The share of Asia-Pacific countries receiving Russian oil exports is forecast to increase from the current 3% to 30% in 2020 (up to 100 mln metric tons), and natural gas export from 5% to at least 25% (up to 65 bln cu m)," Andrei Dementyev said.>>
Regarding 'deficit of power generation capacities', RIA Novosti reports that Anatoly Chubais, the chief executive officer of Russia's electricity monopoly Unified Energy System (UES), is warning of blackouts: <<some regions in the country could face a shortage of electricity soon. "The country is entering an extremely difficult and dramatic period of electric power shortage in some regions," Chubais said. "I hope the energy shortages will not lead to large-scale accidents in the country"... Chubais also said the electric power sector had to limit electric power supply in some regions in the summer of 2006 because its equipment was operating at maximum capacity>>
The latter article makes clear that German Gref's warning should not be taken lightly. It also ties in with the International Petroleum Encyclopaedia 2006 statement: "The [Russian] government and Gazprom project steep declines in Russia's natural gas output during 2008 - 2020".
[Posted 08 September 2006]
UK Oil and Gas production, 2005 – 2006 Compared
The Royal Bank of Scotland Group (RBS) recently published its monthly report showing oil and gas production statistics for the UK, up to June, 2006 (Oil and Gas Index - August 2006, PDF 91Kb). An article in the Aberdeen Press and Journa