When most everyone suspected US president George W Bush was determined to launch a military attack on Iraq in late 2002/early 2003 and the official White House line was still “no final decision has been made,” tell tale signs of an imminent invasion began to appear. Charities that knew the region and the issue of refugees were asked by high level US army officials to provide analysis on how to prepare for such human tragedy. Similar signs are appearing about the imminent invasion of international oil companies who have signed oil deals to help develop Iraq’s massive, but dilapidated oil fields.
When Richard Branson starts talking about peak oil, it would be only natural to react with suspicion. He has no qualifications in this area, and his principal business depends on burning huge volumes of oil-based fuel.
As my colleague Kate Mackenzie observes, if you believe we are facing an “oil crunch”, should you really be investing a lot of money into space tourism? (The Virgin Galactic space plane is a rocket, not a jet, but it needs to be launched from a aircraft, and the rocket fuel needs to be manufactured.)
Nevertheless, the UK Industry Task Force on Peak Oil report on the coming “oil crunch”, produced by a group of half a dozen British companies including Mr Branson’s Virgin, is not a bad bit of work.
The recent auctions for the rights to develop Iraq’s oil fields have had many onlookers baffled; the politics are complex, and the prices agreed seemed incredibly low at first glance. Meanwhile the question of whether Iraq’s large and easily-accessible fields can be brought to much higher production levels very quickly is a vexxing issue for energy watchers everywhere – it could have a significant impact on total world output in the next decade.
There’s a good comment on an Oil Drum post from last month (H/T Chris Nelder) from someone claiming to have extensive knowledge of the bidding process puts the arguments this way:
Can these production rates actually be achieved in Iraq? On the ‘yes’ side of this case are the following arguments:
- The IOCs had good information about these fields
- The Contractor’s remuneration fee is based on a per-barrel fee which creates an economic incentive to achieve the PPT
- The Contractors have a contractual obligation under the TSCs to reach the PPT. If they fail to do so, there are non-performance penalties under the TSC that grind down the already-modest remuneration fees, and other possible consequences
On FT Energy Source:
- Five big energy problems for the 21st century
- Peak oil warnings in strange places
- That $60bn China coal deal
- Are Gazprom’s Nord Stream and South Stream needed?
- Sudan’s oil solution and China’s ETF interests in Energy headlines
- The truth about climate science
- Despite millions in tax credits, wind-energy firms aren’t hiring
- Clean tech isn’t a one-winner race
- China report shows more pollution in water ways
- Why Exxon’s billions won’t help it access more oil
- Shale gas shenanigans in Dish, north Texas
- Think tanks take oil money and fund climate deniers
- Robert Stavin’s hopeful view on US cap-and-trade outlook
- Giant, bizarre fish filmed near BP’s Thunder Horse
It’s always intriguing to see how companies come out on the big – and often controversial – questions of energy future.
The UK Peak Oil Task Force, which launched a new report today, has a small membership: two engineering firms, an energy company, a rail operator, and Solar Century, whose founder Jeremy Leggett contributed to our Copenhagen experts’ panel. Another member is Virgin, which is also a train operator in the UK. Richard Branson however is another kettle of fish – how do his oil crunch warnings square with his planned space travel venture?
In any case, it is interesting to see that NRMA Motoring & Services, one of Australia’s biggest motoring organisations, is calling for government support of alternative fuels.
A piece by academic and author Vaclav Smil in the OECD Observer (undated, unfortunately) paints a gloomy picture of energy transition this century:
An impartial examination of some basic principles reveals five factors that will make the transition to a non-fossil world far more difficult than is commonly realised. These are: the scale of the shift; the lower energy density of the replacement fuels; the substantially lower power density of renewable energy extraction; intermittency of renewable flows; and uneven distribution of renewable energy resources.
More on those points:
1. The shift of the scale: He compares the current era to 1850, just before the last large-scale shift of energy supplies. Then, Smil writes, most energy came from biomass (eg woodburning). Today, it comes mostly from fossil fuels. Today, he writes, “even if we were to replace only 50% of all fossil fuels by renewable energies during the coming decades, we would have to displace coal and hydrocarbons flows of about 6 TW”. The problem is, he says, there is no readily-available source of that scale of power.
Last weekend in Queensland, Australia, saw a big announcement: the country’s largest-ever export deal, with a Chinese company agreeing to pay $60bn over 20 years for supplies from an as-yet-undeveloped coal mine in the state’s west. A 490km train line to the coast and processing facilities would also be built.
The length of the contract and the amount of coal discussed – 30m tonnes per annum – is apparently agreed. The $60bn, however, turns out to have been an estimate.
It all began when China Power International Development Limited said it had never contacted Resourcehouse, the Australian company that announced the deal – much less negotiated a big deal. That was quickly cleared up: Resourcehouse had intended to name China International Power Holding, CPI’s unlisted parent company.