ODAC News
Wednesday 06 June
The Oil Depletion Analysis Centre
1/ Subsea industry suffers shortage as
skills pool shrinks
(The Herald, Fri 01 Jun)
2/ Gazprom woes could hurt Putin's drive for energy dominance
(International Herald Tribune, Mon 04 Jun)
3/ High oil price, supply
fears help turn coal to fuel
(Khaleej Times [Reuters], Mon 04 Jun)
4/ Druzhba Pipeline
Abandoned (FC Novosti, Fri 01 Jun)
5a/ Cyclone
hits Gulf state of Oman (BBC News, Wed
06 Jun)
5b/ Cyclone
Gonu Thread 3--Omani Landfall
(The Oil Drum, Wed 06 Jun)
6/ Wheat prices surge on
Romania drought [Oil stocks] (Financial Times, Tue 05 Jun)
7a/ Energy Security and Uranium Reserves
(Oxford Research Group, July 2006)
7b/ NATIONAL
NEWS: Nuclear plants will not attract investors, say academics
(Financial Times, Wed 06 Jun)
8/ Drive on biofuels
risks oil price surge (Financial Times, Wed 06 Jun)
9/ The
Oil Depletion Protocol: An Update
(Global Public Media [Richard Heinberg's Museletter], Mon 04 Jun)
10/ Azerbaijan
could produce 50 Bcm/year of gas by 2016: Bryza
(Platts, Wed 06 Jun)
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1/ Subsea industry suffers shortage as
skills pool shrinks (The Herald, Fri 01 Jun)
http://www.theherald.co.uk/business/news/display.var.1440214.0.0.php
Comment: Tagged on to the end of this
article (not written by the journalist) is a bit about
Article: THE decline in oil and gas
production in the
Moreover, monthly production fell 5% in March, after
it increased during five of the previous six months.
Andrew McLaughlin, chief economist at Royal Bank of
Meanwhile, crude oil prices have been driven higher in
recent weeks, averaging in the mid-$60s. McLaughlin said most noteworthy during
the latest run-up in prices is the widening premium of Brent over West Texas
Intermediate.
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2/ Gazprom woes could hurt Putin's drive for
energy dominance (International Herald Tribune, Mon
04 Jun)
http://www.iht.com/articles/2007/06/04/business/gazprom.php
Comment: A fairly good an up-to-date overview
of Gazprom. “the Zapolyarnoye field, peaked in 2005” – Zapolyarnoye is not in
decline, ‘reached a plateau’ would be more appropriate in this particular case.
The aim is to keep production steady for a few decades, if possible. Jonathan
Stern is a recognised expert on Russian gas production, if he thinks there
might be a gas supply crisis within 3-4 years, we should be taking note.
Article: … Yet in Gazprom's
tinted-glass tower in southern
The International Energy Agency, the advisory body for
wealthy energy-consuming nations, admonished Gazprom last year for not
investing enough in new fields.
Gazprom now buys about 55 billion cubic meters a year
from the former Soviet republics of
Jonathan Stern, director of natural gas research at
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3/ High oil price, supply fears help turn coal to fuel
(Khaleej Times [Reuters], Mon 04 Jun)
Comment: The latest overview of
coal-to-liquids progress. A good indicator perhaps of just how little CTL is likely
to contribute to global oil/liquids production in the future: “The United
States’ Energy Information Administration has revised upwards its forecast for
world coal to-liquids production to 2.4 million barrels of oil equivalent per
day by 2030 in its 2007 International Energy Outlook, compared with 2.1 million
in its 2006 outlook.” If the EIA forecast for total liquids in 2030 is still
120 Mb/d, then CTL would be about 2%. Except of course that we are close to
peak and as things look right now we will be lucky to reach 90 Mb/d.
Article: … It was also used for fuel
in
In the
Apart from the widespread availability of coal -- it
is mined in more than 50 countries worldwide and present in more than 70 --
advocates of coAl derived fuels say they can be
clean, provided that carbon capture and storage (CCS) technology is used to
bury emissions produced during manufacture…
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4/ Druzhba Pipeline Abandoned (FC Novosti, Fri 01 Jun)
http://www.fcinfo.ru/themes/basic/materials-rfcm-index.asp?folder=3192
Comment: The Druzhba
pipeline is the one that the Russians shut down at short notice last year,
cutting off supplies to a Lithuanian refinery. See Lithuania suspects Russian oil grab (NY Times, 27 Oct 2006)
Article:
[The article goes on to say that over 8000 faults were
found in the Druzhba pipeline. Are there other
Russian oil pipelines in this state?)
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5a/ Cyclone hits Gulf state of
http://news.bbc.co.uk/1/hi/world/middle_east/6722749.stm
Article: A powerful cyclone is passing
near the Gulf state of
Tropical Cyclone Gonu is
continuing north-west towards
Thousands of residents were evacuated from
The storm is the most powerful in the region for 60
years.
The
But there were predictions that heavy rains could
cause flash flooding by the time Gonu reached the
south coast of
5b/ Cyclone Gonu Thread 3--Omani Landfall
(The Oil Drum, Wed 06 Jun)
http://www.theoildrum.com/node/2629#more
Comment: For in depth analysis of the
cyclone, and why it matters to oil and gas supplies, see the Oil Drum.
Article: Why might Cyclone Gonu matter? Well, that answer begins with the fact that
the world production of petroleum plateauing around
85 mbbl/day, any slight blip in supply or exporting
could be quite noticeable on the world markets as a sizeable portion of the
world's petroleum exports go through the
Particularly,
Of course, this storm also has the potential to affect
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6/ Wheat prices surge on
http://search.ft.com/nonFtArticle?id=070606000726
Comment: Interestingly, the article comments
on oil stocks: “Crude and product stocks in developed [countries?] fell in the
six months to March at an “unusually high” rate of 900,000 barrels per day,
according to the IEA.” In other words, demand outstripped supply by almost 1
Mb/d, for 6 months.
Article: European and
... Drought has also badly affected wheat production in
... Crude and product stocks in developed fell in the
six months to March at an "unusually high" rate of 900,000 barrels
per day, according to the IEA.
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7a/ Energy Security and Uranium Reserves
(Oxford Research Group, July 2006)
http://www.oxfordresearchgroup.org.uk/publications/briefing_papers/energyfactsheet4.php
Comment: Links to a 4-page PDF file. Graph
1 on page 1, “Depletion of world known recoverable resources, 2006-2076”, shows
succinctly how the grade of uranium can drop to about 100th its
current value over the next 20-30 years.
Article: This factsheet,
by Jan Willem Storm van Leeuwen (an independent
nuclear analyst), shows that supplies of the high-grade uranium ore required to
fuel nuclear power generation will, at current levels of consumption, last to
about 2034. After that date, recoverable uranium ores would be of such a
low-grade that more and more energy (and therefore more CO2 emissions) would be
required to produce uranium fuel.
The nuclear industry knows this, and plans to use a
combination of uranium from spent uranium fuel and plutonium dioxide (MOX fuel)
to power future nuclear reactors. MOX fuel is produced in reprocessing plants
such as Sellafield, and transported by train and boat
to
7b/ NATIONAL NEWS: Nuclear plants will not attract investors, say academics
(Financial Times, Wed 06 Jun)
http://search.ft.com/nonFtArticle?id=070606000692
Comment: The
Article: New investment in nuclear
power and renewable energy may not materialise because the government has
failed to understand the needs of investors, a group of energy experts is
warning.
In a report to be published today, the UK Energy Re-search
Centre, a government-backed academic group, argues that ministers show signs of
continuing to believe that there is a Central Electricity Generating Board that
can be directed to follow policy objectives.
In
Robert Gross of Imperial College London and UKERC said:
"The government has set very ambitious goals for reducing carbon dioxide
emissions, but at the mo-ment it is impossible to see
how those goals will be met. Some-how you have to get the private sector to
invest in building nuclear power stations and more renewable generation, and
get away from what the market would like to build, which is essentially more
gas-fired power stations." He said last month's energy white paper had not
included enough analysis of the calculations of risk and reward that would be
made by investors.
Without such analysis, he said, the government risked
making more mistakes like the Re-newables Obligation,
setting incentives for companies to sell electricity from renewable sources,
which encouraged investment in on-shore wind farms, landfill gas production and
little else.
In the white paper, the government promised to re-move
barriers to nuclear development over issues such as licensing, planning and
waste. Several companies have expressed an interest in new nuclear power stations,
but many investors remain sceptical of their commercial appeal.
In spite of the uncertainties, EDF Energy, the
Vincent de Rivaz, EDF
Energy's chief executive, told the FT his ambition was to build four new
plants, opening a new one every two years after the first, which has a target
date of the end of 2017, although EDF might share the ownership of some or all
of them.
However, EDF is also planning to build one or two new
gas-fired power stations, to help meet the shortage of generating capacity that
it expects to emerge in the next decade.
In a speech to a nuclear industry forum today Mr de Rivaz will warn that the threat of a tight electricity
supply balance in the next decade means that "we do not have the luxury of
time", and if new nuclear investment does not proceed rapdily,
the gap will be filled by more gas-fired powerstations.
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8/ Drive on biofuels risks oil price surge
(Financial Times, Wed 06 Jun)
http://www.ft.com/cms/s/aeb9a650-136e-11dc-9866-000b5df10621.html
Article: Opec
yesterday warned western countries that their efforts to develop biofuels as an
alternative energy source to combat climate change risked driving the price of
oil "through the roof".
Abdalla
El-Badri, secretary- general of the Organisation of the Petroleum Exporting
Countries, said the powerful cartel was considering cutting its investment in
new oil production in response to moves by the developed world to use morebiofuels.
The warning from Opec, which
controls about 40 per cent of global oil production, comes as the group of
eight leading industrialised nations meets today with climate change at the top
of its agenda. The US and
Opec has
previously expressed scepticism about alternative energy but Mr El-Badri's comments mark the first clear threat that the
cartel might act to safeguard its interests in the face of a shift towards
biofuels.
"They are really concerned," said Julian Lee
of the Centre for Global Energy Studies in
"It is a difficult situation for Opec. On one hand they are asked to produce more, on the
other one, Washington and Brussels are telling the cartel 'we are betting on
biofuels and we don't want to rely on you [Opec]'."
George W. Bush, the
World production of biofuels, which are derived from
agricultural commodities such as corn and sugar, was equal to 1 per cent of all
road transport fuelin 2005.
Mr El-Badri warned that
biofuel production could prove unsustainable in the medium term as it competed
with food supplies. Biofuels are one reason retail food prices are now heading
for their biggest annual increase in about 30 years.
Mr El-Badri said this meant
the biofuel strategy championed by Mr Bush and European leaders would backfire
because "you don't get the incremental oil and you don't get the ethanol".In this case, he warned, oil prices would go
"through the roof".
He said Opec members had so
far maintained their investment plans but he warned: "If we are unable to
see a security of demand . . . we may revisit investment in the long
term."
Opec plans to
invest about $130bn (£65.3bn) until 2012 to raise its oil output. Excluding production
from
Global oil benchmark Brent touched $70.60 a barrel
yesterday, close to a nine-month high.
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9/ The Oil Depletion Protocol: An Update
(Global Public Media [Richard Heinberg's Museletter], Mon 04 Jun)
http://globalpublicmedia.com/richard_heinbergs_museletter_the_oil_depletion_protocol_an_update
Article: Relevant developments during
these few months have been both encouraging and discouraging.
First the encouraging items. The Oil Depletion Protocol
(ODP) has been explicitly endorsed by several cities, including
... Now for the discouraging developments. There was
not an enormous amount of immediate public or official response to the book.
There has so far been no discussion of the Protocol at high levels of
government in any nation—including
Of course, increasing public awareness of the threat
of climate chaos is a very good thing. However, as I have discussed elsewhere (see
MuseLetter #177, “Bridging Peak Oil and Climate Change Activism”), ignorance of
energy supply issues is likely to lead to climate solutions that fail. And lack
of attention specifically to the problem of oil depletion may well lead to an
economic and geopolitical crisis in which efforts to stabilize climate will be
thrown overboard as nations desperately attempt to maintain their economies and
their geopolitical influence (more discussion on this below). Hence the need
for special policies to address the problem of Peak Oil on its own terms—of which the Oil Depletion Protocol is the clearest
and simplest I have seen.
This slower-than-hoped-for progress in publicizing the
ODP is leading to a reconsideration of strategy, and even some rethinking of
the Protocol itself...
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10/
Article:
Bryza told the
14th annual Caspian Oil and Gas Conference in
BP, the operator of the country's biggest gas field Shah
Deniz, was equally optimistic in assessing
BP Azerbaijan president Bill Schrader, buoyed by
initial results from a new appraisal and exploration well at Shah Deniz, said
that on the basis of existing operations and planned developments, gas
production would double from around 10 Bcm this year to around 20 Bcm in 2010
and reach 30 Bcm in 2016.
Future opportunities mean
"At its most exciting, [new well] SDX-04 has
reached a record depth of 7,300 meters, enabling us to begin to understand the
section of the reservoir below the main Shah Deniz sands," Schrader said.
"This was critical not just for evaluating the
further potential of the Shah Deniz field, but also in providing information of
crucial importance for wider exploration with the Azerbaijani section of the
This was as close as Schrader came to signaling that BP may have found gas in zones that were
untapped when Chevron drilled to a lesser depth at the nearby Absheron field some five years ago.
A senior official at France's Total, which is now
negotiating with Azerbaijan to take over the field surrendered by Chevron,
would not confirm, however, that there was a geological connection or
correlation between Shah Deniz and Absheron. "It
is a completely separate project from Shah Deniz," the official said.
Schrader said the current first stage at Shah Deniz,
which is due to produce 8.8 Bcm/yr over a 15-year period from the end of this
year to around 2023 before starting to tail off, represented only a fifth of
the field's resource potential.
"And that doesn't take into consideration any
unanticipated breakthroughs in technology which will be inevitably occur during
the lifetime of this world class field," he said.
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