ODAC News

Sunday 15 April

The Oil Depletion Analysis Centre

1a/  Gas crunch likely as Mideast races to meet local needs         (Gulf News [Reuters], Sat 07 Apr)

1b/ Burj Dubai sets world record (Arabian Business, Sun 08 Apr)

1c/ Emirates Road to be expanded to 12 lanes    (Arabian Business, Sat 07 Apr)

2/   ‘Gas Opec’ least of consumers’ worries          (Gulf Times, Sun 08 Apr)

3/   UK gas price weakness likely to continue to decade-end: Citigroup      (Platts, Wed 28 Mar)

4/   For the Oil Companies, Public Rhetoric = Big Profits [anti-Peak Oil article]       (Energy Tribune, Mon 09 Apr)

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1a/        Gas crunch likely as Mideast races to meet local needs     (Gulf News [Reuters], Sat 07 Apr)

http://archive.gulfnews.com/articles/07/04/07/10116507.html

Comment:    A shortage of natural gas in the Middle East has been a recurrent theme in ODAC News over the past year. This article suggests that the shortages will get worse over the coming years ("In ten years' time, you could easily be looking at a deficit of 1.5 billion cubic feet per day in the UAE," said an oil and gas executive... BP estimates the gas supply deficit to Gulf countries could reach seven billion cubic feet per day by 2015.), and therefore implies that the rest of the world should not be relying on the Middle East to provide large amounts of new gas supplies. The article hints that there will be an increase in Qatari gas exports, after the current round of LNG projects is complete about 2010. This is unlikely, unless Qatar abandons its aim to be producing a steady output of natural gas until the end of this century. Qatar has cancelled all new natural gas projects , i.e. new projects not already committed under contract, until it has completed its analysis of North Field, now due by 2012. Of course they might change their minds. To summarise, the natural gas supply situation for Kuwait and the UAE (Dubai) is bad, and according to this article likely to get worse over the next 10 years or so. A contact in the Middle East writes:

<<As I have been mentioning for several years I believe even the Energy Rich Arab Gulf is about to "Run out of Gas" and the earliest article forecasting this was in about 1997 but in an oil and gas magazine. It is now going to mainstream media and due to far greater growth rate particularly of tourism, construction and industry the situation look as if it may become precarious soon.

Power cuts in summer would do untold damage to local economies not to mention the dangers to people exposed to +50C in their recently built "Glass Clad vertical Solar Ovens"

A couple of days ago I was up in a tethered helium balloon above Dubai and the yellow pollution haze was very noticeable. Skyline was a forest of "tower cranes".>>

Article:    Flush with cash from record oil revenues, Middle East crude producers have spent billions on economic development and now find themselves short of another energy source needed for growth - gas.

The Middle East holds around 40 per cent of the world's gas reserves, but produces only around 10 per cent of global supply.

The gap points to the potential for a jump in future production that the US and consuming countries in Asia and Europe hope would mean higher exports.

But regional demand growth of up to 10 per cent per year is eating into export potential. Widening supply deficits are forcing governments to emphasise meeting domestic needs.

"Demand growth in the region for natural gas is unprecedented anywhere else in the world," said Rajnish Goswami, gas and power consultant for Wood Mackenzie. "Governments are quite rightly prioritising the domestic sector before anything else."

... Qatar's liquefied natural gas (LNG) export plans are not under threat. The tiny country is the world's largest LNG exporter and has projects under way to boost shipments to 77 million tonnes a year in 2010 from 31 million tonnes this year.

But domestic and regional demand will likely be the focus of any later Qatari output increase, experts say. "There will still be export projects," said Giacomo Luciani, senior consultant at the Gulf Research Centre. "But the regional gas market makes much more sense than say exporting LNG to the US."

The UAE and Kuwait are two of the states in the Gulf Arab region struggling with the largest gas deficits. The UAE's gas demand is growing at around 10 per cent per year. It will begin importing supplies from Qatar through the Dolphin pipeline this summer, and is also hoping for supplies from Iran's offshore Salman gas field this year.

Even with these import projects and plans to boost domestic supply, the UAE will still be short. "In ten years' time, you could easily be looking at a deficit of 1.5 billion cubic feet per day in the UAE," said an oil and gas executive.

... BP estimates the gas supply deficit to Gulf countries could reach seven billion cubic feet per day by 2015.

Subsidised domestic prices and a focus on oil mean the region has not developed its gas resources quickly enough to keep up with demand.

Those subsidies and low domestic gas prices will have to be removed if the region is to slow demand and encourage development of its gas resources.

"There is a problem here, and the next five years will be difficult," the oil executive said. "But there is also a solution. Higher prices and more gas development."

1b/        Burj Dubai sets world record      (Arabian Business, Sun 08 Apr)

http://www.arabianbusiness.com/index.php?option=com_content&view=article&id=10779:burj-dubai-sets-world-record-&Itemid=1

Comment:    The article shows a photo of the building so far. This has got to be close to the ultimate in non-sustainable building. Post-peak, it is easy to envision this being an empty building, a monument to the  era of oil.

Article: Emaar's Burj Dubai tower, already the tallest structure in the Middle East and Europe, has set a new global record for having more floors than any other building in the world.

Currently, at 120 storeys and 422.5m high, the iconic building is also one of the five tallest structures in the world. It is taller than the Empire State Building (381m) in New York City and the John Hancock Centre (344m) in Chicago, two of only five completed buildings in the world that reach 100 storeys or more.

The proposed height of the Burj Dubai tower has still not been officially revealed. But as ArabianBusiness.com revealed in January, it is thought that it will stand at 166 storeys high, topped with a 30-metre spire, upon completion. This would mark a final height of over 606 metres.

... To date, 304,800 cubic metres of reinforced concrete and 59,200 tonnes of reinforcing steel have been used in the construction of Burj Dubai.

... When completed, Burj Dubai will be the tallest building in the world in all four categories recognised by the Council on Tall Buildings and Urban Habitat (CTBUH), which compiles and ranks the world's tallest buildings. CTBUH ranks buildings on the basis of spire height, the highest occupied floor, roof height and pinnacle height.

... A mixed-use tower, Burj Dubai will have residences, commercial spaces, and the Armani Hotel Dubai, a luxury hotel developed by Emaar in association with haute couture major Giorgio Armani.

There will also be recreational facilities and entertainment venues including four luxurious pools and a cigar club, a library, exclusive residents' lounge, serviced residences, 15,000 sq ft of fitness facilities and an observatory.

1c/        Emirates Road to be expanded to 12 lanes    (Arabian Business, Sat 07 Apr)

http://www.arabianbusiness.com/index.php?option=com_content&view=article&id=10777:emirates-road-to-be-expanded-to-12-lanes&Itemid=1

Comment:    Post-Peak, how many lanes will the traditional/sustainable transport (camels) require?

Article:    An official at Dubai Roads and Transport Authority (RTA) has confirmed that Emirates Road will get an additional three lanes in both directions turning it into a 12-lane highway.

A 35km stretch of the highway between the Sharjah-Dubai border and the Arabian Ranches roundabout will be expanded from the existing three lanes to six lanes in each side. The RTA had earlier planned to expand the road to five-lanes.

"We have modified the project and now instead of having five lanes on each side, we will have six lanes in both directions in order to keep up with the increasing number of road users and the number of developments coming up along the road," he said.

The expansion work has been divided into two phases. Phase I will be from the Sharjah border to Al Awir Interchange (about 12.30km) and will be completed by the end of August including free right turns. Phase II from Al Awir Interchange to Arabian Ranches (About 22 Km) will be completed latest by April 2008.

... Meanwhile, construction on a three level interchange with 13 bridges is underway at the roundabout linking Dubailand, Autodrome and Arabian Ranches.

The interchange, deemed as the biggest in the UAE, is being built at a cost of $110 million is expected to be completed in June 2008.

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2/         ‘Gas Opec’ least of consumers’ worries          (Gulf Times, Sun 08 Apr)

http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=142544&version=1&template_id=48&parent_id=28

Comment:    Another article hinting that natural gas supply problems. This one quotes Jonathan Stern of Oxford Institute For Energy Studies, whose change in attitude towards natural gas supplies over the last year mirrors Matthew Simmons on oil over the last 5 years – a warning of potential supply problems in the future has become one of definite supply problems soon.

Article:    Rising equipment costs and labor shortages are hampering new gas developments all over the world.

“Delays in production and export projects continue,” said Dan Simmons, gas analyst at the IEA.

New production of liquefied natural gas - seen as the great hope for diversifying gas supplies in Europe and the US away from over-dependence on too few sources - have been particularly affected, Simmons said.

“Last year, we saw lower-than-anticipated production of LNG. There is also a slowdown in investment. Only one new LNG project has been sanctioned in the last year,” he said.

... Russia, which already supplies Europe with more than a quarter of its gas, is facing soaring gas demand at home and significant decline in production at its existing gas fields, said Stern.

With over a quarter of the world’s remaining reserves, Russia isn’t short of gas. Russian gas monopoly Gazprom has plans to develop massive new fields in the Yamal region of northwestern Siberia, but Stern said the development is large and technically challenging and its timetable for gas production to begin there in 2011 is very optimistic.

... “The sanctions regime that seems to be emerging is yet another nail in Iran’s gas export coffin because I just can’t see how anything is going to be financed by anybody,” said Stern. Most industry observers say Iran is a decade or more from becoming a significant gas exporter.

... Qatar declared a moratorium on new projects on the North Field in 2005 to study the impact that gas production is having on its performance. The extension of the study’s deadline to 2012 from 2007 is a sign that developing an optimum plan for production is proving much more complex than expected, Frisch said.

But perhaps the largest single constraint on future Middle East gas exports will be domestic consumption, which is growing rapidly. “It rivals China and India in terms of the rate of growth,” said Simmons.

... Looking further ahead, the International Energy Agency forecasts that Europe will get two-thirds of its gas from imports by 2030, the US will go from being self-sufficient to importing 16% of its gas, and demand in the emerging Asian economies will continue to grow.

The confluence of these factors may be that future gas supplies fall far short of expectations, regardless of the existence of an Opec-style group.

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3/         UK gas price weakness likely to continue to decade-end: Citigroup      (Platts, Wed 28 Mar)

http://www.platts.com/Natural%20Gas/News/8959651.xml?p=Natural%20Gas/News&sub=Natural%20Gas&src=energybulletin

Comment: UK wholesale natural gas prices have fallen considerably over the last year (but not retail prices) due to a combination of the Langeled pipeline opening last autumn bringing generous supplies of gas from Norway, and a drop in UK consumption of natural gas. At current rates of gas depletion, the gas from Langeled pipeline will keep the UK going for another three winters, according to this article, then we will be back to where we were winter of 2005/6 – not sure if there will be enough gas to get us thro without cutting off gas supplies to industry. Except that this article states winter of 2010/11 will be tighter than 2005/6.

Article: UK gas price weakness is likely to continue until the end of the decade, analysts at Citigroup said Wednesday. Post-2010, the outlook for the UK was "robust as the supply-demand balance rapidly tightens," said Mark Bloomfield in a research note.

"On capacity expansion alone the UK appears to be well supplied until 2010/11, although there remains a question mark over how much of the capacity, particularly on the LNG import side, will be filled," said Bloomfield, drawing on a discussion with Niall Trimble, a consultant with the Energy Contract Company.

This meant UK gas prices would likely remain weak until the end of the decade, he said, "with seemingly ample capacity to meet even peak-day needs." The weaker gas prices were driven by new pipeline import capacity into the UK, including the Langeled pipeline in October 2006 and the BBL line in late Q4, he added.

... But declines in domestic reduction, combined with a steady rise in demand, would move the market "back to balance" in winter 2010/11, he said. "Indeed, looking at maximum potential beach supply as a percentage of forecast Q1 demand it is expected that the situation rapidly becomes tighter than during the price spike of Winter 2005/6," he added...

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4/         For the Oil Companies, Public Rhetoric = Big Profits [anti-Peak Oil article]   (Energy Tribune, Mon 09 Apr)

http://www.energytribune.com/articles.cfm?aid=446

Comment:    Michael J. Economides is an active member of the anti-Peak Oil community. IEA Saudi Oil production profile for last 10 years.

Article:    … Reality: Peak oil will eventually happen, but it is perhaps 30 to 50 years away. But even then, we will not run out of oil. We have centuries left of commercial production, and the transition to other fuels or enabling technologies, such as nuclear, coal, and especially natural gas, may actually prevent the appearance of peak oil, at least in the bell-shaped curve implied by the theory. Saudi Arabia and Russia, with proper investment and management, can increase their current production by 50 percent, at least. Indeed, since the publication of a book claiming the country was in its oil twilight, Saudi Arabia has increased its production by 25 percent.

Rhetoric: “We are running out of oil,” “Twilight in the Desert,” “Hubbert’s Peak: The Impending World Oil Shortage.”

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