ODAC News
Monday 08 Oct
The Oil Depletion Analysis Centre
Electricity Research in the
1/ Low utility bills blamed for cuts in energy research
(Telegraph, Sat 06 Oct)
Economy –
2a/ Cost
of loans rises as credit crunch bites (The
Independent, Thu 04 Oct)
2b/ Jump
off the deranged bull now
(The Telegraph, Tue 02 Oct)
2c/ Dollar's
double blow from Vietnam and Qatar (The Telegraph, Thu 04 Oct)
2d/ Sub-prime
borrowers face repossession
(BBC News, Sat 06 Oct)
Shortage of Oil and Gas Workers
3a/ Shortage of skilled staff hits oil projects
(Financial Times, Thu 04 Oct)
3b/ Shortage
of engineers likely to hit projects by 2010, says study
(Financial Times, Thu 04 Oct)
Fourth Quarter 2007 Oil Supplies
4/ Demand Growth Picks Up,
Non-Opec Supply Set To Fly
(Energy Intelligence [Energy Intelligence Briefing], Wed 03 Oct)
LNG Supplies
5/ Delays Hit Qatar's New
Gas Projects (Energy Intelligence [International Oil Daily], Thu 04 Oct)
Gas Supplies:
6a/ The
Turkmenistan - Russia - Ukraine Natural Gas Saga Comes Back To Life
(Energy Intelligence, Thu 04 Oct)
6b/ Gazprom
says it has deal on gas with Kiev ((Financial Times, Thu
04 Oct)
7/ Plans for Saudi's $3bn
smelter underway (Arabian
Business, Thu 04 Oct)
US – Corn to Ethanol
8/ US energy policy
(Financial Times, Thu 04 Oct)
Octobers issue of ‘Energy’ from Press And
9a/ Stellar
Performance With Astrophysicist At The Helm (Press and Journal ‘Energy’
supplement, Mon 01 Oct)
9b/ Peak
Oil 10-20 Years Away, Claims World Energy Council
(Press and Journal ‘Energy’ supplement, Mon 01 Oct)
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1/ Low utility bills blamed for cuts in energy research
(Telegraph, Sat 06 Oct)
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/10/06/cnenergy106.xml
Comment: The article is reporting on
the findings of a “year-long review of the [
Article: Politically popular energy
and water price cuts have forced energy and water companies to slash their
investment in new technologies to such an extent that it could impede Britain’s
ability to harness renewable energy sources, former science minister Lord
Sainsbury has warned.
Launching the findings from his year-long review of
the Government’s science and innovation policies, the Labour peer said low
utility bills were not necessarily in the public’s long-term interest. He said Ofwat, the water regulator, and Ofgem,
the energy regulator, had focused on price cuts rather than encouraging
investment in technologies that could deliver power and water more efficiently
and cleanly.
The decision led to a complete collapse in research
and development in the power sector by 2002. Last year, the industry spent just
£6.5m, which Lord Sainsbury said was “too low”. Investment by water companies
had also declined “sharply and continuously” since 2000…
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2a/ Cost of loans rises as credit crunch bites
(The Independent, Thu 04 Oct)
http://news.independent.co.uk/business/news/article3024772.ece
Article: The cost of taking out a
personal loan is set to rise significantly, with nine lenders this week raising
interest rates by up to 4 percentage points.
Personal finance analysts warned yesterday that a
price war in the loans market was over, with the global credit crunch reducing
the extent to which lenders can compete on price.
Moneyfacts
said that while rates below 6 per cent a year were available as recently as
four months ago, it is now increasingly difficult to find a loan costing less
than 7 per cent. Deals that would previously have looked expensive, such as
Direct Line's rate of 8.4 per cent for a three-year loan of £5,000, are now
making it into best buy tables.
Lisa Taylor, a spokeswoman for Moneyfacts,
warned: "With increasing uncertainty in the financial markets, rising
levels of bad debt and a year of interest rate rises putting pressure on our
disposable incomes, lenders are increasing their margins in what has become a
far more risky environment to do business."
Rate rises for new borrowers introduced this week
include Bradford & Bingley's decision to raise
the cost of its unsecured lending from 13.9 per cent to 17.9 per cent. The
In recent weeks, Eskimo Loans, Goldfish, Norwich Union
and RAC Financial Services have all edged their rates up by up to 1 percentage
point, while Norwich & Peterborough Building Society and Northern Rock have
raised rates up by 0.7 points and 0.5 points respectively…
2b/ Jump off the deranged bull now
(The Telegraph, Tue 02 Oct)
http://blogs.telegraph.co.uk/business/ambrosevanspritchard/september07/derangedbull.htm
Comment: Business blog from Ambrose
Evans-Pritchard. A bleak economic outlook.
Article: As Alan Greenspan said this
week about the
...Today feels more like January 2001, when the
S&P 500 rallied for two weeks on the Fed’s emergency cut, only to tank by
19pc over the next two months as it became clear why the Fed had taken drastic
action – and what this meant for profits. Wall Street fell a lot further
thereafter, taking two years to stabilize. The S&P 500 halved in the end.
Or if you like parallels, try October 1987, when the
US dollar was falling in the same disorderly fashion we have seen since August
this year.
It is fundamentally worse this time: the global dollar
index has hit record lows; and the
We will find out from the TICs
data in November whether
The pattern leaves the
The Fed is boxed in by the dollar, and by lingering
inflation. Oil has jumped back up to $82. Copper is over $8,000 a tonne again.
Wheat has risen 70pc in a year. Gold has kissed $750, the ultimate reproach.
... By the way, while I did not expect the Fed to cut
a half point in September, I don’t not share the view that this was a reckless
bail-out. It was entirely necessary, given the heart attack in the commercial
paper markets – which have contracted $368bn in seven weeks, and are still
contracting; and above all, given the speed with which the
Robert Schiller is now warning that prices call fall
50pc in some areas. It is already well under way. (Interestingly, auctions of
foreclosed buy-to-let properties in the
... Will it take a 25pc correction in
True,
2c/ Dollar's double blow from
Article: Vietnam is planning to cut
its purchases of US Treasuries and other dollar bonds, raising fears that Asian
central banks with control over two thirds of the world's foreign reserves may
soon join the flight from US assets.
The Saigon Times said this morning that the State Bank
of
Together they hold $3,575bn of foreign reserves, over
65pc of the world's total.
The concern is that once one or two members of the
region jump ship, it could set off a broader scramble. None of them want to be
the last one left holding a devalued asset.
Separately, the gas-rich Gulf state of
The move is intended to increase long-term returns for
future generations, but it can easily be seen as a vote of no confidence in
The drastic shift by the Qatar Investment Authority is
a warning that petro-dollar powers with some $3,500bn
under management may pull the plug on the heavily endebted
2d/ Sub-prime borrowers face repossession
(BBC News, Sat 06 Oct)
http://news.bbc.co.uk/1/hi/business/7030723.stm
Comment: Panorama: Sub Prime Suspect:
BBC 1, 2030
Article: Sub-prime mortgage lenders
who give loans to people with bad credit records account for more than 70% of
all repossessions, a BBC investigation has found.
The market for high interest sub-prime mortgages has
been booming and it now accounts for about 8% of the total
But a survey of more than 7,000 court hearings over
the past three months - carried out jointly by BBC programmes Panorama and Five
Live Report - has found that lenders who specialise in these mortgages or offer
them as part of their business disproportionately make up over 70% of all
repossession cases.
... The investigation into
In other cases families were given mortgages which
became unaffordable within months.
Despite being in their late 50s, on benefits and in
poor health, David and Maureen Bradbury were given a 25-year mortgage worth
£55,000 by
With their interest rate currently more than 11%, the
couple have struggled to make repayments.
... The bank says it follows industry rules regarding
responsible lending and took into account the income of the daughter of the Bradburys when granting the mortgage - although she too is
on benefits.
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3a/ Shortage of skilled staff hits oil projects
(Financial Times, Thu 04 Oct)
http://www.ft.com/cms/s/0/23554182-7214-11dc-8960-0000779fd2ac.html
Comment: A shortage of workers in the
oil and gas industry will not be news to those familiar with Peak Oil, but it
may be news to the FT readership. CERA (Cambridge Energy Research Associates)
are one of the flag bearers of the anti-Peak Oil brigade, and yet here again
they are being quoted giving reasons why new oil production is being set back.
See also: Labour and Skills Crisis Could Stall Oil and Gas Investment
Boom (Booz Allen Hamilton, 24 Aug 2006)
Article: Rising drilling and riggings
costs, combined with shortages of skilled personnel and equipment, are
affecting hydrocarbon projects throughout the
Producers in the region, from
"It's having an impact and that impact is going
to increase over the next few years. We are seeing projects being delayed
simply because they can't get the equipment delivered on the timescale they
used to," says Candida Scott, an analyst at Cambridge Energy Research
Associates (Cera).
Experts say a critical bottleneck is the shortage of
skilled staff, with an industry workforce dominated by people close to
retirement and inexperienced graduates.
The issues affect producers worldwide, with the Middle
East and
3b/ Shortage of engineers likely to hit projects by 2010, says study
(Financial Times, Thu 04 Oct)
http://search.ft.com/nonFtArticle?id=071004000012&ct=0
Comment: CERA warn of shortages of
engineers. Presumably this warning will appear in their next anti-Peak Oil
report.
Article: Big oil and gas production
projects are likely to suffer delays with the industry expected to face up to a
15 per cent shortage of qualified engineers by 2010.
The shortfall in the industry is already taking hold
with insufficient engineers to meet 2007 exploration and production project
demand, according to Pritesh Patel of consultants
Cambridge Energy Research Associates and co-author of a report into the skills
shortage.
By 2010 the industry is likely to face a shortfall of
5,500 to 6,000, leaving between 10 and 15 per cent of posts unfilled.
Cera declined to
give examples of the impact on current projects but the FT reported last month
that BP had indefinitely postponed several deepwater developments in the
BP said at the time that "like other operators,
we are adjusting our future project plans in the face of resource constraints
and significant inflation in the oil field service sector."
Current forecasts anticipate that output globally from
such deepwater projects is set to rise from 4m to 11m barrels of oil per day by
2017.
But Mr Patel warns that these projections are based on
"the assumption the industry will be able to avoid major delays, which is
becoming more unlikely - not to say impossible - every day.''
... Yet such people are leaving the industry in
unprecedented fashion, as experienced engineers reach retirement age.
"That pool is just shrinking by the day," Mr
Patel said.
Oil companies are responding to this labour crisis by
recruiting talent in
With an average age of 51 years, Cera
anticipates that more than 50 per cent of today's workforce will have retired
by 2015, an attrition rate of 6 per cent per year.
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4/ Demand Growth Picks Up, Non-Opec Supply Set To
Fly (Energy Intelligence [Energy Intelligence
Briefing], Wed 03 Oct)
No link, from Newsletter.
Article: World oil demand got its
first psychological check at $80 per barrel oil in September, and it more than
passed the test with year-on-year growth of 1.7%. Establishing a new trend,
non-OECD countries seem to be getting pretty comfortable with higher oil
prices. With maintenance out of the way in most of the non-Opec
countries, a fourth-quarter supply spurt is expected that could add as much as
2 million b/d to the third-quarter totals.
**********************************************************************************************************
5/ Delays Hit
No link, from Newsletter.
Article: Delays are creeping into
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6a/ The
No link, from Newsletter.
Comment: From the commentary section,
‘World Watch -- Comment & Interpretation on Today's News’, of the daily
newsletter, so the above title is ODAC’s.
Just when the Moscow-Kiev-Ashgabat natural gas saga
seemed to be resolved, it raises its head again. Why? Last year / earlier this
year, Ukraine, the main transit country for natural gas from Russia to western
Europe, was upset when Russia insisted it, Ukraine, started paying the same
prices as western Europe for its gas imports from Russia. This meant a
quadrupling-or-so of gas prices for
Article: Tuesday Gazprom warned that
it might cut off
6b/ Gazprom says it has deal on gas with
http://search.ft.com/nonFtArticle?id=071004000050&ct=0
Comment: The FT take on current
events.
Article: Gazprom, the Russian
state-controlled energy group, yesterday said it had secured an agreement from
Dmitry Medvedev, the Gazprom chairman and
But despite his assurances, confusion remained about
the exact nature of the agreement reached in
... President Viktor Yushchenko
of
... Mr Yushchenko earlier
this week looked poised to resurrect his partnership with opposition leader
Yulia Tymoshenko in forming a coalition that would
have probably seen Ms Tymoshenko replace Mr Yanukovich as prime minister.
Ms Tymoshenko has promised
to clean up the involvement of intermediaries in the gas trade between
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7/ Plans for Saudi's $3bn smelter underway
(Arabian Business, Thu 04 Oct)
Comment: The article explains one
reason why
Article: Malaysian infrastructure and
energy group MMC Corporation and its Saudi Binladin
Group partner agreed to co-build an aluminium smelter costing $3 billion in the
Middle East with Aluminium Corporation of
The smelter forms part of a $30 billion, 30-year
contract to build a 117-sq km "Jizan Economic
City" 725 km south of Jeddah in Saudi Arabia that MMC and its 50-50 Saudi
partner, Binladin Group won last year.
The project will include ports, aluminium smelters,
steel and copper processing plants, oil refineries, fisheries and agro-based
industries, MMC said in the November announcement.
... "In conjunction with this project and the
on-going development of the industrial zone, MMC has plans to build a power
plant with an estimated capacity of 4,860MW that will cater to the needs of the
industrial users," the firm told the stock exchange.
MMC did not provide additional details on the power
plant...
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8/
http://search.ft.com/nonFtArticle?id=071004000247&ct=0
Comment: Comment from the FT, ‘LEX’
section, suggesting the
Article: If
Cheap oil meant that "bigger is better"
became the mantra of vehicle design. High oil prices have had a small effect
recently, with an increase of 0.9mpg in average fuel economy since 2004. But
energy policy remains focused on allowing drivers to have their cake and eat it
rather than curbing demand.
Nothing demonstrates this better than
Inducements have fuelled oversupply, causing ethanol
margins to collapse while also pushing up food prices. Meanwhile,
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9a/ Stellar Performance With Astrophysicist At The Helm
(Press and Journal ‘Energy’ supplement, Mon 01 Oct)
Comment: The Press and Journal
(P&J) is the main
Article: … Talisman has been in the
"The world consumes 30-plus billion barrels of
oil a year, but is finding less than 10billion. This is unsustainable. I do
believe in the Peak Oil theory. It's obvious, which means oil prices will move
higher. It also means that a premium is placed on existing fields.
"In the
… But Buckee didn't get everything he wanted.
Consider Forties. Not many years ago it was the next
big thing for BP in the
"We looked at Forties. BP had left a very clear
roadmap of what to do. It had done 4D seismic, carried out very clever
subsurface work - including applying subtle seismic interpretation techniques -
set out a drilling schedule, and so forth.
"But Apache bought the field, said thanks very
much and used that map. We would have, too. We bid Forties, but they bid more
than us (two others bid, too)."
The winning bid? It was 1.3billion, according to
headlines at the time, and almost certainly a steal for Apache.
Buckee said: "However, majors are coming around
to the view that they've been giving away assets that are much more valuable
than they seemed at the time. In the case of Forties, John Browne (ex group
CEO) was trying to send the signal out that there were no sacred cows in the BP
portfolio - even Forties, the backbone of BP.
9b/ Peak Oil 10-20 Years Away, Claims World Energy Council
(Press and Journal ‘Energy’ supplement, Mon 01 Oct)
Comment: Gives a very rosy picture of
global natural gas reserves, overlooking the trend that global gas demand is
beginning to outstrip supply now, as detailed in the IEA’s Natural Gas Market
Review 2007.
Article: Global proved recoverable oil
reserves stood at 1.215trillion barrels (160billion tonnes) at the end of 2005,
according to the World Energy Council. It says in a new report that this is
117billion barrels (11billion tonnes) higher than at the end of 2002.
However, it acknowledges that Peak Oil may be just a
few years off.
The Middle East remains the principal location of oil
reserves with 61% of the global total, followed by Africa with 11%, South
America and Europe (including the whole of the
Pointing to work carried out by the Federal Institute
for Geosciences and Natural Resources (BGR) in
After adjustments for technical reserves, according to
the BGR, there are some 625billion barrels of additional recoverable
conventional oil remaining in the world - equivalent to just over another 50%
on top of the existing level of proved reserves.
WEC says oil supplies will not run out for a very long
time to come. However, it acknowledges the Peak Oil debate and says that, with
37% of conventional oil resources already extracted, the depletion midpoint
will be reached within the next 10-20 years.
Natural gas resources are in better shape. Since 1980,
the world's proved reserves of natural gas have increased at an average annual
rate of 3.4% (compared with 2.4% for oil) owing to a number of exploration
successes and improved assessments of some existing fields. The volume of
proved gas reserves has more than doubled during this period. In comparison
with the level reported for end-2002 by the WEC, total reserves show an
increase of 5.9trillion cu m, or 3.5%.
At the present level, global gas reserves are
equivalent to more than 56 years' production (net of re-injection) at the 2005
rate.
Some 44% of total proved reserves is concentrated in
about 20 mega and supergiant fields, within which the
world's largest non-associated gas field - North Field/South Pars, which
straddles Qatari and Iranian waters - accounts for very nearly half.
WEC goes on to state that the amount of natural gas
remaining to be discovered has been "consistently and significantly
underestimated". Moreover, gas exploration is at a less mature stage than
that for crude oil.
Many territories have been only partially explored, if
at all. In addition, improvements in the economics of transportation are
opening up access to hitherto "stranded" deposits (see SBM story on
Page 17) while advances in technology will enable exploration and production
activities to be undertaken in deeper and more complex horizons.
Conventional sources of natural gas are already
augmented by substantial quantities of coal-bed methane (CBM), and other
non-conventional sources such as tight gas sands, gas shales and possibly gas
hydrates will come to play a part in gas supply.
Add together proven and technical resources and the
belief is that there are more than 130 years' worth of natural gas supplies at
present consumption rates.
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