Drumbeat: July 7, 2010
Posted by Leanan on July 7, 2010 - 10:25am
The U.S. Energy Department reduced its crude oil price forecast for 2010 on concern that global economic growth may slow and on ample U.S. stockpiles.
West Texas Intermediate oil, the U.S. benchmark, will average $78.75 a barrel this year, down from last month’s forecast of $82.18, according to its monthly Short-Term Energy Outlook, released today. That’s 28 percent higher than the 2009 average of $61.66 a barrel.
Prices will climb 4.8 percent to average $82.50 a barrel in 2011, the report showed. The estimate for next year was down 3.5 percent from May’s report.
The European Union’s energy chief urged a ban on new offshore oil drilling until the causes of BP Plc’s spill in the Gulf of Mexico are known, citing the need for “utmost caution.”
The call by European Energy Commissioner Guenther Oettinger is directed at EU national governments, which are responsible for granting oil-exploration permits. The administration of President Barack Obama is fighting to reinstate a temporary ban on deep-water oil drilling that a judge threw out on June 22.
BEIJING - Energy-hungry China, once stung in its efforts to secure access to resources in North America, is making a more subtle push into Canada's oil sands, and the new approach is paying off, experts say.
MOSCOW (Reuters) - Chevron will take a roughly 30 percent stake in its Black Sea oil venture with Russia's largest oil producer, Rosneft, industry sources said.
"The ownership structure will be around one-third Chevron, two-thirds Rosneft," a source familiar with the details of project told Reuters.
Just two years ago, Flying J was the 16th-biggest privately held company in the U.S., according to Forbes magazine. What the overhauled Flying J will look like in the future is still hazy. Maggelet said the company won’t discuss that until sometime today.
Flying J, along with its Big West refining and Longhorn Pipeline subsidiaries, filed a voluntary petition for reorganization in December 2008.
The companies said a rapid plunge in oil prices and a sudden freeze in credit markets led to a shortage of cash it needed to run its business.
During his election campaign, the US President Barack Obama pledged to end “in 10 years” the country’s dependence on oil from politically unreliable sources.
In the western hemisphere the finger was pointed squarely at Venezuela, the president of which, Hugo Chavez, has often threatened to cut exports to the US in response to real or imagined threats from what he calls the “yanqui empire”.
Mr Obama’s ambitious goal looks even more of a stretch after the environmental disaster in the Gulf of Mexico, the source of expected growth in domestic production. The resulting six-month moratorium on fresh deepwater drilling may lead to a drop of 70,000 barrels per day (bpd) in production next year, the Energy Information Agency says.
Total E&P Canada, a Total subsidiary, has signed an agreement with UTS Energy Corporation (UTS) to acquire UTS Corporation with its main asset, a 20% interest in the Fort Hills mining project in the Athabasca region of the Canadian province of Alberta.
SINGAPORE (Reuters) - The Middle East crude market was firmed on Wednesday as a cut in Qatar's official selling prices (OSPs) for June spurred buying interest.
Traders waited for the release of OSPs from more Gulf producers and crude allocations from top oil exporter Saudi allocations to calculate their requirements for September trading.
Endeavour announced that a sixth appraisal well has been successfully drilled and tested in the Cygnus gas field further confirming the field as one of the largest ever discovered in the UK sector of the Southern North Sea. In addition, the Department of Energy and Climate Change has awarded Cygnus field participants interest in P1731 covering blocks 44/11b and 44/12b. This new license contains additional fault blocks forming a northerly extension of the Cygnus structure that are yet to be appraised by drilling.
LAHORE: A plan to import 1,000MW electricity from Iran is unlikely to address Pakistan’s immediate energy crisis as the whole process will take at least five years to materialise under the normal security conditions, government officials said on Monday.
While laying the groundwork for strategic relationship with Pakistan, the US is persuading Pakistan to scuttle the Iran-Pakistan gas pipeline project due to its serious reservations about Iran’s nuclear ambitions.
The US administration is sympathetic about the energy problem of Pakistan but opposes the pipeline because it involves Iran, a country US President Obama labels as a ‘rogue state’.
(Bloomberg) -- Hundreds of trucks and buses leave the main highway in northwest Pakistan each evening at sunset to wait out the overnight closure of a strategic tunnel. Taliban attacks there are raising the cost of supplying U.S. troops in Afghanistan and hurting the local economy.
Problems related to gasoline and diesel fuel shortages in the provinces intensified on Tuesday, as disputes and fights erupted between drivers and gas station owners.
In the Governorate of Assiut, gas stations ran out of supplies of 80- and 90-octane gasoline in addition to diesel fuel. Verbal confrontations developed between drivers and station owners after the owners announced they were out of fuel. Some of the drivers then took to the streets on foot hunting for fuel supplies.
Eskom has warned 11 Free State municipalities, representing more than 50 towns, that it would disconnect their power supply if they did not pay their electricity bills by July 20.
On Wednesday, Democratic Alliance deputy shadow minister for energy David Ross said the Free State government should intervene in the matter to prevent an energy crisis in the province.
HOUSTON (AP) — A former Pemex engineer in charge of deepwater drilling operations during a 1979 oil spill in the Gulf of Mexico says BP may need both relief wells it's drilling to contain the gusher in the Gulf.
A new study out today by the Energy Efficiency Council of Australia finds that, "energy efficiency will deliver 65 per cent of worldwide carbon cuts in the energy sector by 2020, and 54 per cent by 2030. This means that in 2020 energy efficiency could have almost twice the impact of renewable energy, nuclear power and clean coal combined."
NEW YORK (CNNMoney.com) -- General Motors is set to begin sales of the Chevrolet Volt electric car by the end of this year. But if you have your heart set on buying one, you'd better cool your heels.
GM plans to build only 10,000 Volts in 2011.
NEW YORK (CNNMoney.com) -- Shares of Tesla Motors sank below their initial public offering price Tuesday and continued to remain depressed Wednesday.
Oilbama and what passes for a green movement talk breezily of “clean energy,” as if the only thing blocking a rapid and thorough transition to an alt-energy economy is oil-industry corruption and political indecision.
In the misleading verbiage of such false prophets, you never get any details. Why not? Because the facts are entirely contrary to the promises.
If it sounds like the stuff of science fiction … well, it has been. In his short story "The Roads Must Roll," Robert Heinlein imagined the United States — facing a war-strained petroleum shortage that meant the "end of the automobile era was in sight" — shifting to a series of massive commuter moving walkways. Of the first "mechanized road," built between Cincinnati and Cleveland, Heinlein writes: "It was, as one would expect, comparatively primitive in design, being based on the ore belt conveyors of ten years earlier. The fastest strip moved only thirty miles per hour, and was quite narrow, for no one had thought of the possibility of locating retail trade on the strips themselves."
Buried inside the USDA’s Biofuels Strategic Production Report is a startling prediction from both EPA and USDA: if the Renewable Fuel Standard targets are to be met by 2022, there will be a wholesale change in US crop usage.
However, doomsayers who have been predicting an inevitable conflict between food and fuel appear to have been completely off the mark.
Rather than a shortage of food, the increased pace of biotechnology innovation associated with bioenergy is set to usher in a period of food abundance so intense that US food policy may have to move back towards crop subsidies, because there will be far more food available than the world will know what to do with.
Johannesburg — THE pebble bed modular reactor (PBMR) technology is unlikely to solve SA's energy shortage in a cost-effective way, according to an Institute of Security Studies paper on the project.
Recently a narrative has sprung up, on the “crunchy” right as well as on the left, that argues that Carter was prescient rather than over-pessimistic, and that America would be better off today if we’d heeded his indictment of consumerism and self-indulgence, rather than spurning him for the go-go optimism of Ronald Reagan.
There is a close relationship between peak oil and population. Since the 1950s there have been many estimates of the rise and fall of global oil production, but it was perhaps inevitable that the shift has been from optimistic to realistic. After all, it is better for one’s reputation to make errors on the side of caution than to look like foolish by announcing a catastrophe that does not occur. With increasing studies, however, and with increasing proximity to the critical events, realism at last takes over.
We begin with two basic facts. The first is that the world’s present annual consumption of oil is nearly 30 billion barrels. The second is that the world’s present population is nearly 7 billion. From there we can add some reasonable estimates of both oil decline and population decline.
NEW ORLEANS (AP) -- Where would Jesus drill?
Religious leaders who consider environmental protection a godly mission are making the Gulf of Mexico oil spill a rallying cry, hoping it inspires people of faith to support cleaner energy while changing their personal lives to consume less and contemplate more.
My “standard of living” is a fraction of what it formerly was, but my quality of life has never been higher. We live in a house less than half the size of our former house, my beloved boat is gone, and we have a garden and chickens in the backyard.
Peering in from the outside someone might conclude that our family had fallen off the back of the American dream truck with a thud. But from the inside they would observe a tight, comfortable, confident, and grounded family. We owe much of our current state of unity to the fact that we embarked on a journey of becoming more self-sufficient and discovered the importance of resilience and community along the way.
Anyone can do the same. But first, we must lay some groundwork and address the question, “Why prepare?”
The Long Energency, by James Howard Kunstler. In The Geography of Nowhere, Kunstler offered the most trenchant analysis of the downside of American suburbia and car culture. This 2006 book, published at the height of the boom, looks at how the misallocation of resources into sprawl (and its financing), global competition for more scarce energy resources and climate change will make a future for which few Americans are prepared even now. Essential reading for optimists who worry and other realists.
A hardcore Plan C advocate can be aggressively unimpressed with conventional measures to conserve energy or use alternatives. The numbers themselves, can be disheartening: if we achieved optimistic projections for the amount of energy that solar and wind could provide by 2020, we are only up to, what, 2% of world BOE usage?
For someone who has invested considerable time, energy, and optimism into solar energy, into electric cars, or into getting 100 mpg from their Prius, Plan C may seem to treat their small measures or first steps, perhaps gained with considerable struggle, with contemptuous disregard: “yes, your electric scooter is cute, but where are we going to come up with the other 219 Million Barrels of Oil Equivalent per day once we are all riding those?”
Roughead said that the melting Arctic creates all kinds of issues as more water is freed up for fishing, shipping and mineral exploration. The United States, Canada, Russia, Norway and Denmark (via Greenland) have made new claims for territory, prompting Chinese naval Rear Admiral Yin Zhuo to say four months ago, according to the China News Service, “The Arctic belongs to all the people around the world as no nation has sovereignty over it . . . China must play an indispensable role in Arctic exploration as we have one-fifth of the world’s population.’’
For Roughead, that means that the United States needs to become an indispensable player in the global marine legal arena. The first step, he said, is for Congress to finally approve the UN Law of the Sea Convention. The convention has 160 signatories, but not the United States. It creates a global structure for using the oceans. The Obama administration and the preceding Bush administration, as well as other military leaders, support the treaty. But hard-line conservatives and some business interests have blocked passage in the Senate, saying the United States would cede too much to the UN in territorial sovereignty and resource rights.
Matthew Simmons is very unlikely to win his $10,000 bet with NYT columnist John Tierney that the average price of oil in 2010 would be more than $200 a barrel. Of course that was true before 2010 even started, but it's quadruply true now that 2010 is half-over and oil is $73. Simmons needs oil to go well over $300 for the rest of the year.
(Reuters) - India's junior oil minister Jitin Prasada said on Wednesday he had urged the farm ministry to raise the price at which government buys grains from local farmers to offset the hike in diesel prices.
Romania granted 20 oilexploration licenses in July, including five in the Black Sea, to companies including Russia's Lukoil, Hungarian Mol and US supermajor Chevron the national agency for mineral resources said.
China Gas Holdings Ltd., the supplier of the fuel to homes and business on the mainland, said profit increased more than sevenfold on higher sales and gains in derivatives contracts.
ConocoPhillips, the third-largest US oil company by market value, has said it could get more than $10 billion from asset sale over the next two years and use the proceeds to reduce debt.
The company could sell closer to $15 billion worth of assets since the sale to date have generated higher premiums than he expected, Deutsche Bank analyst Paul Sankey said to Reuters.
The cost of protecting against a default by Petroleo Brasileiro SA, the largest oil producer in waters below 1,000 feet, is surging relative to Petroleos Mexicanos on concern that deep-water drilling costs will jump.
Credit default swaps that protect against non-payment by Petrobras, as the Rio de Janeiro-based company is known, over five years cost 187 basis points, or 36 more than its Mexican counterpart, which has no production deeper than 1,000 feet (305 meters), according to prices compiled by CMA DataVision. The gap reached a 17-month high of 47 basis points, or 0.47 percentage point, on June 30, up from 19 on April 20, when BP Plc’s rig explosion in the Gulf of Mexico sent oil spewing into the ocean.
(CNN) -- Interfaith leaders prayed for restoration and renewal for the Gulf of Mexico as they prepared for a tour of the oil-soaked marshes, wetlands and rookeries of the Louisiana coast Wednesday.
The Gulf of Mexico is packed with abandoned oil wells from a host of companies including BP, according to an investigation by Associated Press, which describes the area as "an environmental minefield that has been ignored for decades".
(AP) The largest U.S. oil refinery violated federal air pollution laws thousands of times during the last five years, releasing 10 million pounds of illegal pollution, including cancer-causing toxins, without facing proper fines or being forced to fix equipment, environmental groups claim.
The King, reports the Gazette, told the story of a meeting of his cabinet during which he asked his advisors to pray with him, “May Allah prolong its life,” without saying what “it” was. When asked to clear up the mystery the King said he said, “It is the oil wealth. Just leave the underground wealth for our sons and their sons.” Saudi leaders have well-earned reputations for using only the most optimistic language to describe the state of the kingdom’s oil. To concede, even in the most unstructured environments, for the most benign purposes, that Peak Oil is something to be reckoned with is to cede significant ground.
King Abdullah’s remarks, even after efforts to walk them back by other Saudi officials, are simply the latest reminder that cheap oil is a thing of the past. We’re going to extreme depths, at exorbitant cost, to find and produce crude reserves, which is necessary right now because there is no alternative or alternatives that alone or in combination can replace fossil fuels, still the cheapest way to power cars, cool homes and otherwise light up our lives.
A ban on councils selling green electricity into the national grid is to be overturned, Climate Change Secretary Chris Huhne announced today as the carbon footprint of every local council in England was published.
In a speech to today’s Local Government Association annual conference, Mr Huhne will say that he wants local councils to be allowed to sell electricity they produce from renewables to the national electricity grid.
The European Union decided to make suppliers of timber to Europe guard against illegal logging, bolstering a push to fight climate change through worldwide forest protection.
The European Parliament voted to force companies to use a system of due diligence to ascertain that the timber they sell in the 27-nation EU was harvested legally. A fifth of EU timber imports may come from illegal sources, according to the European Commission, the bloc’s regulatory arm, which proposed the legislation in October 2008.
LIMA, Peru – A British religious activist is fighting an expulsion order from Peru's government for allegedly inciting unrest among indigenous peoples protesting environmental damage from oil drilling in the Amazon rainforest.
The post-WWII boom was based on cheap oil. But oil is nonrenewable, polluting, and causes global warming. It was "cheap" because the capitalists did not pay to prepare for the day when it would be harder to access oil. We have reached that day, which is one aspect of the worldwide crisis of the return to the epoch of capitalist decay.
VICTORIA, British Columbia — Rare are the homeowners who welcome a sewage treatment plant in their backyards. But at Dockside Green, a 15-acre mixed-use development being built just north of this city’s downtown harbor, neighborhood utilities are less a cause for alarm than part of the amenity package.
“These are our best-selling units,” said Joe Van Belleghem, a local developer who won a city-sponsored competition in 2004 to develop Dockside Green. On a recent Friday afternoon, Mr. Van Belleghem was on site, pointing to ground-floor condominiums with decks jutting over a network of ponds and waterways containing native plants, otters and ducks.
BEIJING (AFP) – Energy-hungry China, once stung in its efforts to secure access to resources in North America, is making a more subtle push into Canada's oil sands, and the new approach is paying off, experts say.
Chinese firms seeking a toehold in the largest known crude deposit outside the Middle East have opted for joint ventures and partial stakes to avoid the kind of political uproar sparked when CNOOC tried to take over US oil group Unocal in 2005.
"They are tiptoeing around the edge, not challenging anybody, not getting in any American Senators' faces -- just very quietly taking a position," said David Hewitt, regional head of oil and gas research at CLSA in Hong Kong.
Crude oil traded near a one-month low in New York as equity markets declined, fanning concern that the economic recovery may falter and impede fuel demand.
Of late, the major Western European economies have hardly grown at all, and even those economies that have seen a modest recovery, like the U.S.’s, now show widespread signs of weakness, just as many of President Obama’s stimulus measures are about to run out of gas.
Energy- and resource-rich member states like Russia and Canada are the exceptions, benefitting from the ongoing industrial revolutions in China and India, and the lift they give to commodity prices. (If the OECD still accounted for three quarters of world oil consumption, as it did in the mid-1990s, would oil still be trading at over $70 per barrel?)
China Petroleum & Chemical Corp., the nation’s largest oil refiner, cut crude processing volume at its Yangzi oil refinery in the eastern Jiangsu province on refining losses and weaker demand, a plant official said.
China plans to impose a new tax on coal, oil and gas extraction in western provinces, raising funds to develop its most restive region in a move that will reduce profits for PetroChina Co. and rival resource producers.
The hottest U.S. summer in three years and the start of hurricane season means analysts are forecasting the biggest gains in natural-gas futures since 2005 for the six months ending in September.
Gas may climb 27 percent from the first quarter to $4.90 per million British thermal units, according to the median of 13 analyst forecasts in a Bloomberg survey, extending a 19 percent gain in the three months through June 30. The estimates ranged from $4 to $5.50. August-delivery gas was little changed at $4.682 per million Btu yesterday on the New York Mercantile Exchange.
Commodities may extend the worst slump since 2008 this quarter after an advance in June proved short-lived, Barclays Capital said, citing trading patterns.
To the list of Big Oil companies with p.r. problems add two more: Chevron and French energy giant Total. In a report published on Monday, the NGO EarthRights International accuses the firms of being implicated in human-rights violations in Burma, claiming that soldiers guarding Chevron and Total's natural-gas pipeline in the country have murdered locals and forced others to do backbreaking, unpaid labor in order to keep the gas exports flowing smoothly. The report also holds that the revenues from the operation have been propping up the country's oppressive military government for more than a decade, thus fostering harmful political outcomes that affect the entire country.
Despite the best intentions of energy icon T. Boone Pickens and regardless of the controversy over deepwater exploration in the Gulf of Mexico, onshore natural gas operations in the United States face a serious and distracting problem.
Hydraulic fracturing — the now common industry process of injecting water and chemicals into reservoirs to fracture rock and free up gas and oil — is in the cross hairs of shareholders and environmental groups, and is drawing scrutiny from Congress, which is considering increased regulation.
LONDON — BP PLC confirmed Wednesday that it received a demand from U.S. authorities for advance notice of any asset sales or significant cash transfers.
The Financial Times reported that U.S. Assistant Attorney General Tony West, who heads the Civil Division of the U.S. Department of Justice, wrote to Rupert Bondy, BP's general counsel, on June 23. Normally the U.S. Justice Department does not require advance notice of such deals.
ABU DHABI/HOUSTON (Reuters) – BP's boss met officials from an Abu Dhabi state fund on Wednesday as hopes for fresh investment and progress toward closing a leaking U.S. oil well lifted the company's battered shares.
As the gulf oil spill enters its third month, Louisiana officials have grown increasingly enamored of large-scale engineering projects, like sand berms and rock walls, to keep the oil off their coast. But these projects, which demand the swift restructuring of eastern Louisiana’s dynamic and fragile coast, have brought the desires of state and local officials into sharp conflict not only with a complicated federal bureaucracy charged with protecting wetlands and estuaries, but also with an experienced and highly vocal community of local coastal scientists.
The U.S. government said a ban on deep-water oil drilling is a rational response under emergency circumstances and should be reinstated immediately.
Interior Secretary Kenneth Salazar said in documents filed with the U.S. Court of Appeals in New Orleans that his department acted responsibly by implementing the ban in response to “an unprecedented and ongoing disaster.”
KUWAIT CITY (AFP) – Kuwait has ruled out an increase in its stake in British oil giant BP, which is struggling to cap an oil spill disaster in the Gulf of Mexico, a sovereign wealth fund official told AFP on Wednesday.
"We are not currently considering increasing our stake in this company," the official said when asked about the possibility of new Kuwaiti investments in BP.
Thunderstorms moving west-northwest off Mexico’s Yucatan Peninsula in the Bay of Campeche have a 40 percent chance of forming into a tropical cyclone in the next day or so, the U.S. National Hurricane Center said.
The system moving at 10 to 15 miles per hour may become a tropical cyclone before it heads inland over Mexico or southern Texas, the hurricane center said on its Web site at 8 a.m. Miami time. The potential of formation rose from 30 percent yesterday.
NEW YORK — Electricity demand in the East surged Tuesday near levels not seen since the summer of 2006. The power grid has so far been up to the task.
With temperatures soaring above 100 degrees in cities from New York to Washington, utilities and grid operators saw power output close in on the records set in August 2006. No widespread outages have been reported, although electricity demand typically jumps between 5 and 6 o'clock.
The federal agency that oversees two government-chartered mortgage finance companies imposed new restrictions Tuesday on homeowners’ ability to take advantage of a program that allows them to repay the cost of installing solar panels and other energy improvements through an annual surcharge on their property taxes.
The new guidelines could also make it more difficult for homeowners to obtain mortgages even if they don’t participate in the programs, called Property Assessed Clean Energy, or PACE, but happen to live in an area where they are offered.
Engineers say that if the power grid becomes more reliant on renewable energy, a lot of new transmission lines will have to be built at some point or there will be unhappy consequences. Mostly this problem has been predicted rather than experienced. But the future may have arrived last month, when the Bonneville Power Administration, a federal agency that oversees power transmission in the Pacific Northwest, had more energy than it could comfortably use.
Soybeans and corn rose in Chicago as gains by crude-oil futures boosted the appeal of crops processed to make biofuels.
In 2005, Mr. Noble founded Envision Solar, now the country’s leading developer of solar carports. The company’s signature product is “solar groves,” 1,000-square-foot canopies that shade parking lots while generating clean power from an array of photovoltaic panels.
PAYERNE, Switzerland (AFP) – An experimental solar-powered aircraft took off from a Swiss airbase here shortly after daybreak on Wednesday in a historic bid to fly around the clock and prove the value of solar energy.
Bushmeat — animals like monkeys and especially antelope — has been a staple of the African diet for millennia. But it has never been consumed as much as now: at least 1.1 million tons each year in the Congo basin alone, according to the World Wildlife Fund. Other estimates put the figure at five times that.
The result: the forests still standing are growing emptier by the day.
Some have suffered 90 percent drops in wildlife, stripped so bare, hunters have been reduced to eating their own hunting dogs, says John Hart, an American conservationist who first lived among the Mbuti in the 1970s.
California's largest utility says it will oppose Proposition 23, the initiative that seeks to suspend the state's landmark global warming law.
Pacific Gas & Electric Company Chairman and CEO Peter Darbee said in a statement Tuesday that climate change could cost California's economy tens of billions of dollars a year, with losses to agriculture, tourism and other sectors.
Climate scientists at a top UK research unit have emerged from an inquiry with their reputations for honesty intact but with a lack of openness criticised.
The Independent Climate Change Email Review was set up by the University of East Anglia (UEA) after more than 1,000 e-mails were hacked from its servers.
Climate "sceptics" claimed the e-mails showed that UEA scientists manipulated and suppressed key climate data.
But these accusations are largely dismissed by the report.