Daily Archives: November 11, 2009

Kate Mackenzie

On FT Energy Source:

Opec gloomy on demand destruction

Shell drinks the Anadarko/Tullow Kool-Aid

Why the US might (not) pressure the IEA

The perils of forecasting

Why CO2 prices have to go much higher

Next-generation biofuels update

European long-distance grid breakthrough in Spot news

Further reading:

Peak demand or peak consumption? (The Oil Drum)

A landmark in Chinese oil refining (Michael Economides)

Abu Dhabi may use oil at power plant (The National)

Green NIMBYism (CNet)

The way we drive now (Energy Outlook)

Will talking change anyone’s mind about climate change? (Bright Green Blog/Christian Science Monitor)

Will rising oil prices derail the economy? (Econbrowser)

Kenya’s wind power project snagged (AFP)

Why Gazprom should fear a gas glut (Environmental Capital/WSJ)

Kate Mackenzie

We’ve heard a lot about how OECD oil demand has peaked and was hit particularly hard by the recession, with most forecasts of growth coming solely from the developing world.

Stil, it’s stark to see how steep this year’s plunge has been. From Opec’s latest Monthly Oil Market Report:

Opec

Source: Opec

The oil producers’ cartel tends to be restrained in its demand forecasts anyway, but it’s sounding particularly gloomy about the prospects for some of this lost demand ever coming back:

Moreover, even if the expected economic recovery materializes, it remains to be seen whether demand would be able to return to pre-crisis levels. Energy policies and behavioural changes are bound to have some impact on consumption and this will gradually feed into overall demand patterns, especially in key sectors such as transportation. However, it is still premature to assess the full effect of these changes.

Related links:

Oil demand peaksin the developed world, but natural gas comes into play (FT Energy Source, 27/10/09)
More gloom about oil prices and the recovery (FT Energy Source, 27/10/09)
Opec still has storage concerns (FT Energy Source)

Carola Hoyos

Tullow Oil

Source: Tullow Oil

Royal Dutch Shell is moving into French Guyana. On the surface, western Europe’s biggest energy group buying into an exploration block is nothing terribly interesting. But, as with oil itself, the answer lies not at the surface, but deep below it.

By buying a 33 per cent interest Tullow’s Guyane Maritime Permit, Shell is buying into 32,000 square kilometres of rock in waters 2,000-3,000 metres deep off the coast off French Guyana, a small French colony north of Brazil. Shell is also buying into the idea that those rocks are similar to the ones in Ghana, that house the giant Jubilee field.

Anadarko, the US independent oil company, and Tullow, listed in the UK, are both partners in the Jubilee field and the ambassadors of the theory that a pattern of rocks rich in oil stretches all along the west African coast, past the Cote D’Ivoire, Liberia and Sierra Leone and then heads out straight across the deep waters of the North Atlantic to the small French prefecture of Guiana on the northeast coast of Latin America.

Kate Mackenzie

A Lex note yesterday, for those who missed it, looks at the WEO and praises the International Energy Agency’s data. But it adds:

Like many forecasts, though, it makes the mistake of extrapolating recent trends too freely. For example, the IEA expects global oil production to rise from last year’s 85m barrels to 105m by 2030 while acknowledging that about two-thirds of this will come from fields yet to be found or developed. But at what cost?

It adds:

Living with $300 crude is no more outlandish than suggesting a decade ago that $80 would be the new normal.

Energy markets, it says, have so many moving parts that long term forecasts are a mug’s game.

James Fontanella-Khan

Lex: World Energy Outlook
Forecasters may be underestimating how we will react to rising oil prices (FT)

IEA warns carbon price must double
Move to make high-tech solutions economically attractive (FT)

Shell says 2010 global investments down to $28bn
Ceo Peter Voser said He added that demand for oil is slowly improving (Reuters)

Venture capitalist to lead energy loan programs
Obama has hired VC to speed efforts to choose alternative-energy companies (WSJ)

Eon agrees €1.1bn long-distance grid sale
Decision signals a further move away from tightly regulated markets (FT)

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