ODAC News
Sunday 08 April
The Oil Depletion Analysis Centre
1/ Iran factor fails to put a lid on energy - Collection of other
issues conspiring to support higher prices for commodity
(Globe and Mail, Thu 04 Apr)
2/ How Biofuels Could
Starve the Poor (Foreign Affaris [Council on Foreign
Relations], May/June 2007)
3/ 'Strong Possibility'
Gas [petrol] Will Rise to $4
(ABC News, Wed 04 Apr)
4a/ Energy
Group Releases Report - Peak Coal by 2025 (ODAC Bulletin Board, Thu
05 Apr)
4b/ No
Time to Lose (Energy and Capital, Fri 06 Apr)
4c/ Peak
Coal and Mountaintop Removal
(Conserve, Thu 05 Apr)
5a/ Gazprom
to start Shtokman pipeline supply in 2013, LNG in 2014
(Platts, Wed 04 Apr)
5b/ Gazprom, Total
Discuss Cooperation Within Shtokman Project
(FC Novosti, Wed 04 Apr)
6/ Investment in Russia’s Energy Sector May Reach $420 Bln
by 2020 [coal, nuclear expansion] (FC Novosti, Fri 06 Apr)
7/ Plastics are on the
run in San Francisco, the nation’s anti-petroleum
capital (Culture Change, Thu 29 Mar)
8a/ Total,
Shell Chief Executives Say `Easy Oil' Is Gone (Bloomberg, Thu 08 Apr)
8b/ Costs
Threaten Total-Petronas Iran LNG Project
(Rigzone [Dow Jones Newswires], Thu 05 Apr)
9/ Mexico Tries To Save
Big, Fading Oil Field (Rigzone
[Wall Street Journal via Dow Jones Newswires], Thu 05 Apr)
**********************************************************************************************************
1/ Iran factor fails to put a lid on energy - Collection of other issues
conspiring to support higher prices for commodity
(Globe and Mail, Thu 04 Apr)
http://www.theglobeandmail.com/servlet/story/LAC.20070405.RENERGY05/TPStory/Business
Comment: I think this article will be
pay-to-view soon. Most of article below.
Article: The Iranian threat to global
energy supplies eased yesterday, but that did little to cool the energy sector
-- evidence that the investment story runs deeper than short-term geopolitical
risk.
A collection of other factors, ranging from U.S.
driving habits to shifting currency markets to Nigerian politics to seasonal
idiosyncrasies, are conspiring to support higher prices for energy commodities.
That means oil and gas stocks will continue to look
attractive for the next several months, with room to continue to build on their
recent gains, analysts said.
... According to the U.S. Department of Energy,
gasoline inventories plunged five million barrels last week, exceeding the
300,000 barrels analysts had anticipated. Even though crude stockpiles jumped
an unexpected 4.3 million barrels, the rapid erosion of gasoline supplies has
caught investors' attention, with the high-demand summer driving season now
less than two months away.
"Geopolitics make the
headlines, but they really aren't the things that drive oil prices. It's product prices," said analyst Randy Ollenberger of BMO Nesbitt Burns Inc., who yesterday raised
Canadian oil and gas stocks to "outperform" from "market perform."
While crude oil prices have risen 28 per cent since
mid-January, the pace of
Analysts said the pressure on the energy market could
worsen before it gets better. Civil unrest surrounding this month's
presidential election in
... "There is no shortage of paths for oil prices
to travel to get to our [forecast of a] $70 average over the balance of the
year," wrote CIBC World Markets Jeffrey Rubin in a report this week,
adding that he sees the TSX energy group hitting record highs this year.
"There's good sector momentum," said Mr. Ollenberger, adding that over the next two quarters,
"I think we've got 15- to 20-per-cent upside for the [TSX energy]
group."
Of course, further gains depend largely on the
commodity prices -- which, analysts acknowledged, might be at risk if the
**********************************************************************************************************
2/ How Biofuels Could Starve the Poor
(Foreign Affairs [Council on Foreign Relations], May/June
2007)
By C. Ford Runge and
Benjamin Senauer
Comment: As Lester R. Brown put it so
succinctly in his recent article Massive
Diversion Of U.S. Grain to Fuel Cars Is Raising World
Food Prices, "And this is only the beginning". This article is
much longer than Brown’s, looking at the issue in more
detail, the history and politics – a good addition to Brown’s
article. The
Article: Now, thanks to a combination
of high oil prices and even more generous government subsidies, corn-based
ethanol has become the rage. There were 110 ethanol refineries in operation in
the
The push for ethanol and other biofuels has spawned an
industry that depends on billions of dollars of taxpayer subsidies, and not
only in the
The industry's growth has meant that a larger and
larger share of corn production is being used to feed the huge mills that
produce ethanol. According to some estimates, ethanol plants will burn up to
half of
The enormous volume of corn required by the ethanol
industry is sending shock waves through the food system. (The
... Biofuels have tied oil and food prices together in
ways that could profoundly upset the relationships between food producers,
consumers, and nations in the years ahead, with potentially devastating
implications for both global poverty and food security.
... One root of the problem is that the biofuel
industry has long been dominated not by market forces but by politics and the
interests of a few large companies. Corn has become the prime raw material even
though biofuels could be made efficiently from a variety of other sources, such
as grasses and wood chips, if the government funded the necessary research and
development. But in the
... Adm owes much of its
growth to political connections, especially to key legislators who can earmark
special subsidies for its products. Vice President Hubert Humphrey advanced
many such measures when he served as a senator from
... Biofuels may have even more devastating effects in
the rest of the world, especially on the prices of basic foods. If oil prices
remain high -- which is likely -- the people most vulnerable to the price hikes
brought on by the biofuel boom will be those in countries that both suffer food
deficits and import petroleum. The risk extends to a large part of the
developing world: in 2005, according to the un Food and Agriculture
Organization, most of the 82 low-income countries with food deficits were also
net oil importers.
Even major oil exporters that use their petrodollars
to purchase food imports, such as
**********************************************************************************************************
3/ 'Strong Possibility' Gas [petrol] Will Rise to $4
(ABC News, Wed 04 Apr)
http://abcnews.go.com/Business/story?id=3007435&CMP=OTC-RSSFeeds0312
Article: For the past two weeks,
"There's been a $5 or $6 premium that's been
built into the price of oil over this," said Phil Flynn, vice president
and energy analyst at Alaron Trading. "Even
though this crisis has ended, the oil market is still on guard that the
tensions in the
Oil prices spiked this morning when Iranian President Mahmoud Ahmadinejad appeared on
television, because of uncertainty over what he was going to announce. When he
started awarding medals to the troops who had captured the Britons, traders
assumed the worst.
But by the end of Ahmadinejad's
television appearance it was apparent that the soldiers were heading home, and
the price of a barrel of oil started to retreat from recent highs, giving up
more than $1 to drop to about $64.
Analysts say that the price reduction should hold
during the coming days but won't translate into lower prices at the pump.
"Things are looking pretty bad for the upcoming
summer driving season," said Flynn, citing a new government report showing
that the
Flynn said he believes gasoline prices will head into
record territory — currently a nationwide average of $3.07 — by the height of
the summer season.
"This is the time of year when we're supposed to
be building supplies, but it seems like the refiners just can't get ahead of
what has been very, very strong demand," he said.
Today's report shows that the national supply of gas
is at the low end of its average range for this time of year, meaning the
Analysts said that puts the country on the edge,
making any disruption in supply — such as a hurricane in the Gulf of Mexico
refining regions or an expansion of the crisis in the Middle East — that much
more dangerous.
"Everyone asks me, will we see $4 a gallon? And
the answer is, there is a strong possibility that we may see $4 a gallon,"
said Flynn.
**********************************************************************************************************
4a/ Energy Group Releases Report - Peak Coal by 2025
(ODAC Bulletin Board, Thu 05 Apr)
http://www.odac-info.org/
Bulletin Board
Article: A report just
released by the Energy Watch Group concludes that global coal production will
peak about 2025. From the report's Executive
Summary, Conclusion and recommendation: <<Global coal
reserve data are of poor quality, but seem to be biased towards the high side. Production
profile projections suggest the global peak of coal production to occur around
2025 at 30 percent above current production in the best case. There should be a
wide discussion on this subject leading to better data in order to provide a
reliable and transparent basis for long term decisions regarding the future
structure of our energy system. Also the repercussions for the climate models
on global warming are an important issue.>> Some of the report's
conclusions: Data are of poor quality; Six countries dominate coal globally (
See also Peak Coal - Coming Soon?
4b/ No Time to Lose (Energy and Capital, Fri 06 Apr)
http://www.energyandcapital.com/articles/peak+oil-biofuel-natural+gas/399
Comment: Chris Nelder
reviews the above report and its implications in an overall energy context –
Peak Oil, Peak Gas, Peak Coal and Peak Uranium.
Article:
Last week, I covered a startling new report on the remaining global reserves of
coal. That report was really a blow, and put the final nail in the coffin of
the fossil fuel age . . . make that the industrial age.
Here’s
why.
As that
report projected, the global peak for coal will likely be around 2020, maybe
sooner.
If the ASPO’s projection is right, then the global oil peak
(defined as “all liquids,” including non-conventional oil and natural gas
liquids) will be around 2010. The conventional oil peak appears to have been
2005, and as I have discussed previously, it appears that we may have passed
the peak of all crude oil production last year, but it will be another year or
more before we’ll know. At any rate, it looks like
some time between now and three years from now, we’ll
be past the oil peak.
The global
peak of natural gas will likely be around 2010 also, but could be as late as
2020. North America is past its peak, as ExxonMobil CEO Lee Raymond said in
2005: “Gas production has peaked in
And from a
practical standpoint, we may be past the global peak of uranium production as
well.
... According
to our best, most realistic estimates, here’s how
things stand globally:
Oil: peaking
some time in the next three years, possibly already past the peak.
Gas: peaking
some time in the next three to thirteen years.
Coal: peaking
some time in the next thirteen years.
Nuclear:
probably peaking some time in the next ten years, with lots of variables, but
its use won’t increase substantially.
... We have
some major challenges ahead. We have to change assumptions that everyone alive
today has always taken for granted, like economies that constantly expand,
populations that grow unchecked, and endless supplies of cheap fossil fuels.
The
low-hanging fruit right now is clearly efficiency. Not just swapping out our
light bulbs, but improving fuel economy and insulation, changing the ways we
make buildings and reconfiguring entire communities with a goal toward relocalization.
Solar makes
economic sense for just about anybody now, so it’s
ready to take off. Wind and geothermal are also set for big growth. Biofuels
clearly have a growing role, but innovations in transportation are popping up
like daisies. And other, more distant solutions are out there beckoning for the
large
The dimmer
the reality of fossil fuels is, the brighter the future for renewables. I’m betting my career and my future on it.
But we’ve got a lot of work to do. There is no time to lose.
4c/
Peak Coal and Mountaintop Removal (Conserve, Thu 05 Apr)
http://www.conservemag.com/2007/04/05/peak-oil-energy/peak-coal-and-mountaintop-removal/
Comment: Looks like an interesting
website. http://www.conservemag.com/
Article:
The biggest nightmare for global warming, aside from the Bush presidency, is
the prospect that the world will burn more coal. Compared to other fossil
fuels, coal creates the most greenhouse gas pollution per unit of energy.
But with oil
and natural gas depleting, and other energy sources either maxed out (nuclear
and hydroelectric) or years away (wind, solar and other renewables), the coal
industry has already begun to step in aggressively to fill energy demand around
the world, particularly in China and the U.S., the world’s
two biggest coal users.
... But
finally, there may be some good news — which is to say, some bad news for the
industry — on both mountaintop removal and on the world’s
future in coal.
... First, at
the end of March U.S. District Judge Robert C. Chambers blocked four permits
that the Army Corps of Engineers had issued to subsidiaries of coal giant
Massey Energy to dump toxic tailings from mountaintop removal sites into
mountain valleys.
... The
second piece of news is that, however the companies are allowed to extract
deposits, evidence has now surfaced that there may actually be far less
recoverable coal underground than the industry has led us to think. If this
proves to be true, a simple lack of supply could cut short today’s
coal rush.
... Living
with less energy will bring much inconvenience, and, if we are not prepared,
some suffering as well. But in the long run, running out of coal is the best
thing that could happen to slow down global warming pollution and save beleagured coalfield communities in
The sooner we
start to do without coal, the better.
**********************************************************************************************************
5a/ Gazprom to start Shtokman pipeline supply in 2013, LNG in 2014
(Platts, Wed 04 Apr)
Comment: “Development of the Shtokman
project will start in 2011.” Getting the gas flowing by 2013, which
implies a two-year project, seems very optimistic. Ali Samsam Bakhtiari in his ‘The Shtokman Saga’
article suggests “At best, the 'First Phase' might come on stream by 2015”.
Seems like the Russians have forgiven the
Article: Russian gas giant Gazprom
plans to start pipeline gas supplies from its Shtokman gas field in the
"First gas will be shipped via a 2,000 km long Vidyaevo-Volkhov pipeline, which will be linked with the Nord Stream export pipeline as early as 2013," said
Alexander Shaikhutdimov, Gazprom's
deputy head for transportation and storage department. "LNG supplies to
the North American market will start in 2014," he said. Development of the
Shtokman project will start in 2011.
This is the first time Gazprom has revealed its
start-up schedule for the project after the company decided in late-2006 to
develop the field without foreign partners and prioritize pipeline supplies...
5b/ Gazprom, Total Discuss
Cooperation Within Shtokman Project (FC Novosti, Wed 04 Apr)
http://www.fcinfo.ru/themes/basic/materials-rfcm-index.asp?folder=3192
Article: Alexei Miller, CEO of Russian
gas giant Gazprom, and Christophe de Margerie, director general of France’s Total, have discussed their companies’ cooperation
in the gas sector during their meeting, in particular, the possibility of
cooperating in the development of the Shtokman gas condensate deposit.
US-based ConocoPhillips and
The Shtokman deposit lies in the central part of the
Russian Barents shelf segment. Its reserves are estimated at 3.7 trln cu m of gas and over 31 mln
metric tons of gas condensate.
**********************************************************************************************************
6/ Investment in
http://www.fcinfo.ru/themes/basic/materials-rfcm-index.asp?folder=3192
Comment: In terms of future energy
plans,
By 2020, the share of coal-burning power plants is
to grow tenfold from the 2006-2010 figure. The plan also provides for
the commissioning of one power unit at Russian nuclear power plants a year
until 2012, two power units in 2013, three in 2014-2015, and four power units a
year since 2016.
Article: The master plan for placing
energy facilities in
The bulk of the funds is to be invested in 2016-2020,
mainly in the grid and distribution networks.
The programme provides for a substantial increase in the
share of nuclear power plants and hydropower and coal-burning power plants
through a reduction in the share of gas-burning power plants.
By 2020, the share of coal-burning power plants is to
grow tenfold from the 2006-2010 figure. The plan also provides for the
commissioning of one power unit at Russian nuclear power plants a year until
2012, two power units in 2013, three in 2014-2015, and four power units a year
since 2016.
**********************************************************************************************************
7/ Plastics are on the run in
http://culturechange.org/cms/index.php?option=com_content&task=view&id=106&Itemid=2#cont
Comment: The
<<San
Francisco bans the bags - San Francisco's city
council has voted to make it the first US metropolis to ban plastic grocery
bags from large supermarkets; current city consumption is 181m bags a year,
which end up as landfill. Recyclable plastic bags will be permitted. >>
Article: Come this fall, almost no one
in
... We are all up against industry propaganda to
continue to use plastics and to believe they are so useful to be essential,
while supposedly harmless. Political muscle is sometimes applied, such as when
Arnold Schwartzenegger signed a law last year banning
cities in
This maneuver, however,
served to galvanize the outraged City of
**********************************************************************************************************
8a/ Total, Shell Chief Executives Say `Easy Oil' Is Gone
(Bloomberg, Thu 08 Apr)
http://www.bloomberg.com/apps/news?pid=20601207&sid=aH57.uZe.sAI&refer=energy
Comment: Christophe de Margerie, the
chief executive officer of Total SA, is the only head of a major oil company to
give a near-medium term date for Peak Oil, 2020. More telling, at the annual
Scottish Oil Club gathering on the 9th March, where he was guest
speaker, The Times as stated: <<[de Margerie] has also questioned
whether it is possible to raise global oil output from today’s
85 million barrels per day to 100 million barrels per day, given the cost and
logistical challenge.>> Note that de Margerie has now gone one step
further and is now implying shortages.
Article: The days of so-called ``easy
oil'' are over, making it harder to meet demand without complicated and
expensive projects, the heads of two of Europe's largest oil companies said
today.
The International Energy Agency, an adviser to energy
importing nations, estimates oil supply will have to rise 39 percent to 116
million barrels of oil a day by 2030 from about 86 million barrels a day now to
meet world demand.
Meeting such targets with conventional oil sources
will be ``extremely difficult,'' Christophe de Margerie, the chief executive
officer of Total SA, Europe's third-largest oil company and its largest
refiner, said at a conference in Paris today. New supply will be based on
``huge high-tech'' projects.
Jeroen
van der Veer, the chief executive officer of Royal
Dutch Shell Plc,
``We can't expect profits in easy oil,'' Van der Veer said at the same conference. ``If there is easy
onshore oil, people don't need Shell.'' He said there are enough opportunities
for international oil companies to invest in complex, large oil and gas
projects using new technology.
... ``Governments need to take their share of the
responsibility'' de Margerie. ``Don't come crying when we are facing a
shortage. We're going to face huge challenges to bring additional capacity on
stream.'' ...
8b/ Costs Threaten Total-Petronas
http://www.rigzone.com/news/article.asp?a_id=43558
Comment: LNG supplies are projected to
be tight enough as it is thro to as late as 2015, without the loss of another
LNG project.
Article: Rocketing costs on a planned
$10 billion liquefied natural gas project in southern
Christophe de Margerie told reporters Thursday that
costs at the project, which aims to extract gas from
Margerie has previously estimated the cost of the
project, in which Total holds 30%, at almost $10 billion.
"We have to renegotiate all our agreements"
with suppliers, de Margerie said, adding costs "have more than
doubled" in recent years and that this is a "strong concern."
One concern is the low number of local oil services
companies in
Once the cost issue is resolved, he said, the company
will then evaluate the geopolitical environment before making a final
investment decision.
An Iranian lawmaker, speaking from
"If they are thinking of pulling out I don't
think it's because the costs are high," he said, suggesting the political
environment may be playing a role.
**********************************************************************************************************
9/
http://www.rigzone.com/news/article.asp?a_id=43560
Comment: Reads like a Peak Oil story,
but no mention of Peak.
Article: … A few decades and 12
billion barrels of oil later, the field that bears Mr. Cantarell's
name is dying, and Pemex, as the state-owned company is known, is struggling to
stave off the field's demise. From January 2006 though February 2007, Cantarell
lost a staggering one-fifth of its production, with daily output falling to 1.6
million barrels from two million.
The oil industry was stunned. Cantarell, which
currently produces one of every 50 barrels of oil on the world market, is
fading so fast analysts believe
The continued deterioration of the world's
second-biggest field by output would also put pressure on prices on the global
oil market, where supplies are barely keeping up with growing demand as it is.
And it would leave the
The demise of Cantarell highlights a global issue:
Nearly a quarter of the world's daily oil output of 85 million barrels is
pumped from the biggest 20 fields, according to estimates from Wood Mackenzie,
a Scotland-based oil consulting firm. And many of those fields, discovered
decades ago, could soon follow in Cantarell's
footsteps.
It's widely believed that the world's biggest oil
fields have already been found. In the decades leading up to the 1970s, the
world discovered eight big fields that produced between 500,000 to one million
barrels a day, according to Matthew Simmons, a veteran oil industry banker.
During the 1970s and 1980s, only two were found. Since then, only one -- the Kashagan field in
Two decades ago, about a dozen fields produced more
than a million barrels a day. Now there are only four, one of which is
Cantarell. The future of two others, discovered more than 50 years ago, remains
in question. Some analysts speculate
**********************************************************************************************************