Photo: Petra Barnby

By Petra Barnby

‘They’re beautiful,’ breathed a bearded wind farm enthusiast as he spotted the shape of a turbine appear from the mist on the horizon.

A cloud of wispy grey lines easing out of the grey-blue sea mark the first sighting of the offshore wind farm. There is a rustle of excitement from onlookers as the scale slowly becomes clear - the diameter of the blades is 90 metres across, the towers rise 60 metres out of the sea and you could lie down along the width of a blade. The only noise as our boat draws up underneath a turbine is a very heavy sounding ‘wooph’ as the six ton blade swings round. Apart from that, a big silence surrounds this energy factory.

The 30 wind turbines at Kentish Flats off the Thames Estuary provide enough energy for 50,000 homes. They look surprisingly at home at sea - there is a serenity and peacefulness about their understated orbital business that fits in with the drab North Sea scape. Continue reading "UK offshore wind industry optimistic, despite the challenges"

Oil prices rose on Monday thanks to improving manufacturing data from China and reports that Opec monthly output fell in October for the first time since April.

Data from a Reuters survey showed that, because of lower output from Saudi Arabia, Iraq and Nigeria, supply from the 11-member Organisation of Petroleum Exporting Countries fell to 26.38m barrels per day from 26.4m b/d in September. Continue reading "Markets: Crude leads commodities rebound"

Is the battle for Ghana’s newfound oil riches about to become even more complicated?

ExxonMobil has agreed to buy private equity-owned Kosmos’ 23.5 per cent stake in the massive Jubilee offshore oilfield, which is believed to hold 1.8bn barrels, for more than $4bn. But the Ghanaian government wants the national oil company, GNPC, to get in on the deal, perhaps with China’s CNOOC. GNPC argues that the Kosmos-Exxon agreement took place after data was given out to 26 prospective bidders in a ‘breach’ by Kosmos, and any bidder for the company would need to remedy that breach. Kosmos sources say the Exxon deal is done, and it is binding.

So, just to muddy the deep waters further, is BP getting involved?

Oct. 22 (Bloomberg) — BP Plc, Europe’s second-biggest oil company, may bid for Kosmos Energy LLC’s stake in the Jubilee field off Ghana’s coast and has hired Goldman Sachs Group Inc. to advise it, two people familiar with the matter said.
BP has held talks with Ghana National Petroleum Corp. about a potential joint offer for Kosmos’s Ghanaian assets, though no decision has been made, the people said, asking not to be identified because the discussions are confidential.

BP is not commenting. But there are a few dots that could be attractively joined together. Continue reading "More Ghanaian oil excitement"

“This is the end of the 20th Century of Oil; we are entering the 21st Century of Electricity,” say analysts at Deutsche Bank in a major new report warning of high price volatility for both fuels as the leadership baton is passed.

“Obama’s environmental agenda, the bankruptcy of the US auto industry, the war in Iraq, and global oil supply challenges have dovetailed to spell the end of the oil era,” says Paul Sankey of Deutsche Bank.

Deutsche argues that “oil will never run out, rather we will become more efficient,” and predicts that hybrid and electric cars will have a far greater positive impact on oil efficiency than the market currently expects.

Deutsche’s analysis predicts that by 2020, global average MPG of newly purchased light vehicles will have increased by more than 50% compared to 2009, from roughly 29 mpg to about 44 mpg.

“The impact will be concentrated in US gasoline, the largest single element of global oil demand (12%), and will be dramatic enough in its own right to cause the peak of global oil demand around 2016. We forecast US gasoline demand to fall to 4.9mb/d – about 46% from its 2009 level – by 2030.” Continue reading "Deutsche: the end is nigh for the Age of Oil"

Energy Source has been taken out by illness today, but here are some highlights from the past couple of weeks:

Deepwater fever: BP’s ‘giant’ find, 11km deep

Deepwater fever II: Brazilian Santos well is also rather big - but how much oil is there?

Solar energy from space, anyone?

Comment: Searching in vain for the oil shock effect

Moral arguments become more heated ahead of Copenhagen

Oil demand is recovering, probably

Opec’s interest in the environment

The world’s most successful, but worst paid oil minister?

Japan’s new government pledges to reduce emissions

It’s not just developing countries that will suffer from climate change

Matt Simmons hits back on peak oil

The sobering news about geoengineering

Further reading:

Total CEO expects oil supply squeeze in 2014 (Bloomberg)

Environmental groups lose bid to halt Alberta Clipper oil pipeline (Law 360)

The politics of nuclear power in Germany (Economist)

Nicholas Stern says China should be helped to move to a low-carbon economy (Reuters)

Global warming make staple grain cassava toxic (Economic Times)

Shell could be first to liquify gas offshore (Houston Chronicle)

Study shows Australia has exceeded US for per-capita carbon emissions (AFP)

By Neil Dennis

Oil prices nudged higher on Wednesday, striking a firmer footing after a three day sell off that drove the main crude contracts below $68 a barrel.

Recent falls in equity markets have been driven by concerns that the nascent global recovery may be stalling. These fears have fed through to commodity exchanges, and on Tuesday, the S&P GSCI, a closely-followed index of commodity prices, fell to its lowest level since late July. Continue reading "Markets: Oil prices climb after sell-off"

In this guest post, economist Paul Segal argues that the now popular view that oil price spikes lead to recessions is largely unfounded.

Do high oil prices cause recessions? The US economist James Hamilton is famous for his 1983 finding that oil price spikes had preceded all but one post-war US recessions[1]. Hamilton recently claimed that the current recession can be fully accounted for by the high oil prices of 2007-08. But while oil prices are certainly an important macroeconomic variable, it is just not plausible that they have anything like the impact that Hamilton suggests.

Oil prices have a direct impact on output only to the extent that they lead to lower consumption of oil. In a standard competitive model of the economy, the decline in output is equal to the share of oil in GDP times the decline in consumption of oil. From a peak of 7.6bn barrels in 2005, US oil consumption declined by 6 per cent to 7.1bn in 2008. With oil consumption comprising 5 per cent of GDP in 2008, this can account for a decline of only 0.3 percent of GDP - which, alone, is not nearly enough to cause a recession. The largest decline in oil usage that has ever occurred in the US was over 1979-80, for which the same calculation implies a decline in GDP of 0.6 percentage points - again, not nearly enough, on its own, to explain the US recession of 1980.

A cottage industry has developed around the effort to find microeconomic mechanisms such as market frictions that could explain a larger role for oil than this standard model implies. Oil has a romantic place in the US imagination and some US economists cannot quite believe that it is just another commodity. But my own view[2] is that these mechanisms can explain only a small additional impact for the oil price. Continue reading "Comment: Searching in vain for the oil shock effect"

By Neil Dennis

Oil prices were down again on Thursday after a surprisingly large build up in US crude stockpiles announced by the government’s Energy Information Administration on Wednesday.

The EIA numbers showed an inventory gain of 200,000 barrels of crude, nowhere near the 4.3m barrels reported by the American Petroleum Institute on Tuesday, but the market had expected the EIA data to show a drop in crude stockpiles.

Crude prices have fallen 3.4 per cent since the API figures were released on Tuesday, in spite of some encouraging economic numbers, as new home sales and durable goods data both indicated increasing demand. Continue reading "Markets: Inventory gain leaves prices lower"