The Weekender
On FT Energy Source this week:
- Wind power‘s 2009 growth and 2010 outlook
- Oil majors come under cyber attack
- Energy lessons from the Carter administration
- iPad emissions!
- Barnett Shale health problems
- CO2 slump dump fears
- The death of US coal
- What happened to oil markets in 2002-09?
- China, setting the world’s oil prices
The Source: Oil markets examined; Embedded carbon; Peak oil at Davos
On FT Energy Source:
- The oil price problem
- Peak oil at Davos
- Industry isn’t giving up on fossil fuels
- The embedded carbon dilemma redux
- Energy and climate in Obama’s SOTU speech
- The Copenhagen January 31 countdown in Energy headlines
- More signs of a grim future for refining
Further reading:
- Can Obama re-energise climate?
- And the high speed rail cash goes to…
- Japan’s LNG demand could be poised for recovery
- Climate sceptics bask in warmth of bad news
- Green groups played an exceptionally destructive role at Copenhagen
- Californian cap and trade and public finance
- The price of energy
Peak oil: Oh yes it is. Oh no it isn’t. Etc.
A few quotes have been flying around from an energy security panel at Davos featuring some of the world’s biggest oil and gas players.
None of the comments were a big departure from what these people have said previously. Saudi Aramco chief executive Khalid al-Falih said peak oil concerns had been ‘pushed behind’ and blamed peak oil fears for some of the recent oil price volatility. Thierry Desmarest, chairman of Total (which is probably the most peak oil-friendly of the majors) maintained it was still a problem. BP’s Tony Hayward talked about the prospects for Iraq. Daniel Yergin of CERA chaired.
Desmarest of Total later told AFP:
Pour le président du groupe français Total, Thierry Desmarest, qui participait au même débat, “le +peak oil+ reste un problème”. On atteindra “le +peak oil+ dans une dizaine d’années. On n’y est pas aujourd’hui”, a-t-il dit à l’AFP.
Which roughly translates as: peak oil is still a problem; it will be reached in “about 10 years”, [but] not today. This is probably a reference to his belief that production will never exceed 95m barrels per day (which he talks about from about 34 minutes in, saying “it’s not that we lack reserves… a lot of it is difficult to be produced”.)
The full video is below. Falih’s comments begin about 12 minutes in:
Related links:
Plentiful supply trumps ‘peak oil’ (Dow Jones)
Energy industry isn’t giving up on fossil fuels
In further evidence that the energy industry is not about to let oil production peak, GE Energy Services is moving toward boosting oil and natural gas production from reservoirs unreachable with current technology, which begins to break down at the higher temperatures at greater depths. In 2008, GE Energy asked the US Department of Energy to support its program to develop high temperature electronics required for oilfield and geothermal drilling.
The DOE agreed to fund the program to enable deep well drilling applications for discovering hard-to-reach oil and gas reserves and toward the development of geothermal energy.
Energy and climate in Obama’s SOTU speech
There were fears that energy and climate change might not even get a mention in last night’s State of the Union address, but President Obama did in fact remark on it a few times. Critics though could (and do) argue that the subject appeared only in fairly mild terms. And, crucially for the climate bills currently before Congress, cap-and-trade was never mentioned.
That could simply be a reflection of the fact that cap-and-trade, for most voters, is political poison (even if that’s partly because few understand it). But if it was entirely opinion-poll driven, it’s notable that energy was mentioned almost solely in the context of jobs and winning the clean tech race. Energy security, another argument popular with all kinds of voters – didn’t get a look-in.
Energy headlines
Commodity trading houses set to slip under Volcker net (FT)
Study finds banks cool on green ideas (FT)
Trust claims UK carbon footprint a third bigger than thought (FT)
EU agrees conditional target for Copenhagen Accord (Argus)
Ukraine to push for gas ties with Russia (FT)
China overtakes US as Saudi Aramco’s biggest customer (Bloomberg)
Brazil says Devon must keep using $473,000-a-day rig (Bloomberg)
RWE considers UK gas-fired generator (Argus)
Audits downgrade UK biofuels sustainability credentials (Argus)
Total says Venezuelan taxes make Orinoco auction ‘difficult’ (Bloomberg)
Morgan Stanley said to ship jet fuel across biggest ocean (Bloomberg)
US cap and trade must take a back seat: Executives (Reuters)
Kerry vows tough GHG limits (Argus)
China XD Electric flops on Shanghai debut (FT)
Green investors should go geothermal, says VCH (Reuters)
Oil demand has peaked in developed world, says IEA (Reuters)
BHP Billiton buys Athabasca Potash (FT)
Iberdrola to invest $20bn in the US (Bloomberg)
Efficiency company Eaga confident of market position (FT)
NIssan, US to close $1.4bn electric car loan (Bloomberg)
Industry results underline grim future for refining
Weakness in the refining sector hit oil company earnings in 2009, with Valero, the US’ biggest refiner, widening its full-year net loss to $1.98bn, from a net loss of $1.13bn in 2008. ConocoPhillips, the US’ third biggest oil company, reported its worldwide refining crude oil capacity utilization rate was 76 per cent in the fourth quarter, and it had deferred a planned upgrade project at its Wilhelmshaven, Germany, refinery.
Its refining and marketing division reported a fourth-quarter loss of $215m, swinging from a profit of $289m in the 2008 quarter, and a full-year profit of $37m, plunging from $2.3bn in profit in full-year 2008. Nonetheless, Conoco also has an exploration and production division, which offset the drop in demand for refined goods brought on by the economic downturn and a move toward energy efficiency and renewables. And a year spent restructuring, when the downturn exposed weaknesses in its portfolio, resulted in full-year 2009 earnings of $4.9bn, compared with a loss of $17bn in 2008.
The oil price problem
Is the argument over who caused crude prices to spike – speculators or market supply-and-demand fundamentals – too simplistic? The Oxford Energy Studies Institute has published a lengthy paper by Bassam Fattouh arguing that it is. The paper is for the meeting of the world’s energy ministers taking place in Cancun in March, but all 60-odd pages are available online now.
Fattouh notes that despite numerous attempts, there’s little conclusive evidence on the culpability of speculators on crude prices. He points also to problems in the physical market, which he says is relatively illiquid, lacking in transparency and dominated by a few players. The futures markets meanwhile are “more transparent, highly liquid and characterised by a large number of players with diverse expectations”.
The Source: Energy lessons; Barnett Shale pollution; iPad emissions
On FT Energy Source:
- Energy lessons for the Obama administration
- Chinese electric vehicles
- Barnett Shale health report
- The iPad-emissions post
- Areva, Conoco and Valero in Energy headlines
Further reading:
- Is clean tech China’s moon shoot?
- Storing energy as ice
- Why Daniel Yergin can expect a good welcome at Davos
- The energy security-as-racism problem emerges
- A chance at redemption for ethanol
- Reconfiguring Nabucco
- Air quality improvements offset climate policy costs
- The carbon-trading shell game
Energy Source is no longer updated but it remains open as an archive.
Insight into the financial, economic and policy aspects of energy and the environment.
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