Blowout week 14

Russia goes her own way: Sanctions busting deal with Iran; Lukoil brings on 120,000 bpd in Iraq; raises gas price for Ukraine; attacks petro $ system?

UK: Gas prices plunge; vast submarine coal resources in focus; coal mines to close; Big Brother tightens grip on BBC; offshore wind gets £460 million; onshore wind under pressure.

UK: Newly Discovered North Sea Coal ‘Could Power Britain for Centuries’

Scientists have discovered huge coal deposits under the North Sea that could power Britain for centuries.

Data from North Sea oil and gas exploration has been used to build a picture of the large coal deposits.

“We think there are between three trillion and 23 trillion tonnes of coal buried under the North Sea,” Dermot Roddy, former professor of energy at Newcastle University, told the Sunday Times.

26 more stories below the fold.

World: Old Math Casts Doubt on Accuracy of Oil Reserve Estimates

Things could turn out more pessimistic than people project,” said Lee. “The long-term production of some of those oil-rich wells may be overstated.

World: Iran, Russia working to seal $20 bln oil-for-goods deal – sources

Iran and Russia have made progress towards an oil-for-goods deal sources said would be worth up to $20 billion, which would enable Tehran to boost vital energy exports in defiance of Western sanctions, people familiar with the negotiations told Reuters.

World: Russia raises gas prices for Ukraine by 80 percent

Russia raised the gas price for Ukraine on Thursday for the second time this week, almost doubling it in three days and piling pressure on a neighbour on the brink of bankruptcy in the crisis over Crimea.

World: Petrobras setbacks threaten 2014 oil, gas production goals

Brazilian state-run oil company Petroleo Brasileiro SA suffered another setback in its effort to boost oil output last month when Italian contractor Saipem SpA dropped a 2.3 km steel pipe into the Atlantic Ocean.

On March 16, the rigging used to wrangle the pipe into position on a floating oil platform failed, and the high-grade, metal-alloy tubes plunged about 1,800 meters (5,900 feet) to the seabed, a total, crumpled loss.

World: US Wind Energy Output Breaks Records

Last week, a new record was set on the main Texas grid, the Electric Reliability Council of Texas (ERCOT), reaching over 10,000 MW of wind. This was the most ever for a U.S. power system, the equivalent of powering more than five million average Texas homes. In two previously unreported records, wind energy supplied a record 39.7 percent of total ERCOT electricity demand this past Monday, March 31, and two weeks ago the Southwest Power Pool region just to the north of Texas set a new wind record with 7,202 MW of wind production.

UK: Warm Weather Pushes U.K. Gas to Biggest Weekly Loss Since 2009

U.K. natural gas had the worst weekly loss in more than four years as warmer-than-usual weather hit most of northern and central Europe, helping reduce demand for the fuel used in heating.

Europe: European Union Gets 23.4% of Electricity From Renewables

According to official statistics from Eurobserv’ER, 23.4 percent of the electricity in the European Union came from renewable energy sources in 2012. The total output for 2012 has been estimated at 763.5 TW. This represents an important increase from 2011, when these energy sources brought “only” 20.4 percent of total electricity.

Regarding gross final energy consumption, renewables brought 14 percent of the total in 2012, up from 12.9 percent in 2011.

UK: Vote No, Amec urges Scots amid worries over North Sea

The chief executive of engineering giant, Amec, has become the latest business leader to urge voters to reject Alex Salmond’s dreams of an independent Scotland.
Samir Brikho said a Yes vote in the referendum in September would create uncertainty for business at a time when the North Sea required “billions of pounds” of investment to maximise oil and gas production from its fields and also faced similar costs to dismantle rigs coming to the end of their lives.

UK: Firm to drill for gas in coal seams under the North Sea

Work on a revolutionary new energy project to produce gas from coal locked in seams under the seabed off the coast of the north east of England could begin within months.

World: How did the IPCC’s alarmism take everyone in for so long?

When future generations come to look back on the alarm over global warming that seized the world towards the end of the 20th century, much will puzzle them as to how such a scare could have arisen. They will wonder why there was such a panic over a 0.4 per cent rise in global temperatures between 1975 and 1998, when similar rises between 1860 and 1880 and 1910 and 1940 had given no cause for concern.

UK: Shetland sets sail for new horizons

Shetland’s tourism sector is rather niche. It’s for people who like going a long way off the beaten track, and don’t mind uncertain weather or the risk of being fogbound.

There’s another problem this year. Shetland’s very busy. I’ve just been there, and a hotel room costs much the same as a rather more modern room in central London.

UK: UK Coal closures ‘disastrous’ for energy prices and security

The closure of two UK Coal collieries would be “disastrous” for energy security and energy prices in the UK, according to the chief executive of Eggborough.

Neil O’Hara said that if the government is not able to rescue UK Coal, which announced the closure of the Kellingley Colliery in Yorkshire and Thoresby Colliery in Nottinghamshire in the next 18 months, the UK’s energy security and current prices would be “potentially threatened”.

UK: UK Coal mines face closures as insolvency threatens

UK Coal is likely to close two of the last three deep mines in Britain as it battles to stave off insolvency.

The UK’s largest coal producer is consulting on plans to shut Kellingley in Yorkshire, and Thoresby in Nottinghamshire, affecting a total of 1,300 workers.

UK: Tories plan new attack on windfarms

David Cameron is considering whether to go into the general election promising new restrictions on onshore windfarms as influential Tories launch an attempt to rid the countryside of turbines, a senior source close to the prime minister said.

UK: MPs criticise BBC over climate change reporting

The BBC has to adopt “clear editorial guidelines” for its reporting on the issue of climate change, MPs have said.

The Science and Technology Committee said the organisation played a “central” role in informing the public.

But some editors were “poor” at determining viewers’ and listeners’ level of expertise and sometimes pitted lobbyists against “top scientists” as if their views had “equal weight”.

World: Gazprom hikes Ukraine gas price by a third

The Russian energy company, Gazprom has raised the price it charges Ukraine for gas by more than a third.

The company’s chief executive Alexei Miller says the change was because Kiev has failed to pay its bills.

He said its current debt to Russia stood at just over $1.7bn (£1.02bn).

UK: UK seen saving 1 bln pounds/year if imports more European power

Britain could save 1 billion pounds ($1.7 billion) a year in electricity costs by 2020 by doubling its interconnector capacity with Europe, network operator National Grid said on Monday.

Its report came days after an outcry over soaring bills prompted a review of competition in Britain’s electricity sector and as politicians have focussed on how to keep a lid on costs for consumers.

UK: Green Bank buys £461m stake in wind farms

Offshore wind has been given a boost with news of investment worth £461m in two projects aimed at generating power for hundreds of thousands of homes.
The Green Investment Bank said it was buying a 50pc stake in the Westermost Rough wind farm off the coast of East Yorkshire and a 10pc stake in the Gwynt y Mor project off the coast of North Wales.

UK:  £460m boost for Gwynt y Mor and Westermost Rough wind farms

Two wind farm projects off the coasts of north Wales and Yorkshire have received more than £460m in investment.

The Green Investment Bank is buying a 10% stake in Gwynt y Mor near Llandudno in Conwy and a 50% stake in Westermost Rough five miles offshore from Hull.

UK: Trading standards warning on ‘green energy’ deals

Trading standards is warning consumers to be wary of building companies and contractors who cold-call them and offer a ‘Green Deal’ (or similar scheme) to improve their home energy efficiency.

The Green Deal is a Scottish Government initiative aimed at making the country more energy efficient and allows individuals to pay for energy improvements using the savings from their bills to finance them.

My selection of stories posted by Luis de Sousa At The Edge of Time. Luis’ focus this week is on Iraq and Ukraine.

World: Lukoil Starting New Iraq Oilfield as Output Reaches 35-Year High

OAO Lukoil (LKOH) will start pumping crude from Iraq’s second-largest oilfield tomorrow as the nation boosts output to levels last seen more than three decades ago.

Russia’s biggest publicly traded oil producer will start producing 120,000 barrels a day at West Qurna-2 in the south. The field is expected to eventually yield 1.2 million barrels daily, or about a third of the nation’s current output.

World: In Kiev, Crushing IMF Austerity Defended as ‘Price of Independence’

The new Ukraine government in Kiev, currently led by interim Prime Minister Arseny Yatseniuk, continues to tell its people that the only path forward for the country is to submit to the demands of the international financial powers—specifically the International Monetary Fund—by meeting their demands to implement draconian cuts to social funding, pensions, and otherwise “liberalizing” the economy in exchange for billions of dollars in bailout loans.

World: Russia prepares to attack the petrodollar

The existence of “petrodollars” is one of the pillars of America’s economic might because it creates a significant external demand for American currency, allowing the US to accumulate enormous debts without defaulting. If a Japanese buyer want to buy a barrel of Saudi oil, he has to pay in dollars even if no American oil company ever touches the said barrel. Dollar has held a dominant position in global trading for such a long time that even Gazprom’s natural gas contracts for Europe are priced and paid for in US dollars. Until recently, a significant part of EU-China trade had been priced in dollars.

World: Solar costs to halve as gas prices surge

Another of the world’s leading solar PV manufacturing giants has underlined the potential for yet more substantial falls in the manufacturing cost of solar modules, even as the cost of fossil fuels – and gas in particular – surges in the opposite direction.

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9 Responses to Blowout week 14

  1. Hi Euan,

    As far as I can tell, roadway development has stopped for Kellingley Colliery and Thoresby Colliery as a condition of accepting government money. If that is correct, I think that means death within two years.

    For the remaining deep mine, Hatfield Colliery, development had stopped for a time last fall before the mine was sold to the employees. I have not seen a notice of whether development has restarted or not.


  2. Roger Andrews says:

    The “UK seen saving 1 bln pounds/year if imports more European power” article talks briefly about the IceLink interconnector proposal:

    “In 2012 Britain announced plans to investigate building an interconnector with Iceland to transport some of its geothermal and hydropower-generated power to British homes. The so-called IceLink could bring around 1.2 GW of capacity to Britain by 2023 and is expected to cost around 4 billion pounds.”

    Just a few problems. First, £4 billion for 1.2GW works out to £3,333.33 per kilowatt, which is close to what it would cost to build a 1.2GW nuclear plant and several times what it would cost to build 1.2GW of CCGT capacity. But with IceLink all you get for your money is an undersea transmission cable.

    Second, according to the Icelanders IceLink isn’t going to supply 1.2GW, it’s only going to supply 0.6GW (Iceland has only 0.6GW of generating capacity as it is). So up goes the capital cost to £6,666.67/kw.

    Third, IceLink power is projected to cost around £100/MWh, even more than Hinkley Point (£92.50/MWh).

    So why is the UK getting involved in IceLink? Because as the article heading says, the UK can save one billion pounds a year by importing more European power.

    • Euan Mearns says:

      Roger, it would make more sense to import cold water from Icelandic glacial outwash and use this for district heating schemes in the UK. We could use first deep ocean heat to warm the imported glacial water in the pipeline and then reverse osmosis to lift it that last 15˚C.

      • Roger Andrews says:

        Euan. Good idea. And once a month you can reverse the flow and pump money back the other way 🙂

  3. teo says:

    ” European Union Gets 23.4% of Electricity From Renewables”

    Very interesting story.
    When someone lumps together hydro power in the “renewables” story togther with biomass and wind power the intention is to create confusion.
    Of course we have plenty of hydro power and we had it for a long time.
    What is of interest now is what can wind and solar bring to our industrial societies in terms of usable flows of energy.

    The great “success stories” like Austria and Sweden tell nothing.
    Austria has mountains and plenty of rain and snow come down on those. Consequently , for a 100 years Austria had a steady supply of hydro power. Numbers – from BP site in toe – are 8.9 mil toe for hydro and 1.6 mil toe for other renewables, inclusing biomass ( you know, mountains have forests, you get the picture).

    Only true new renewable “success stories” are in the North Sea – Germany – and in Spain.
    Spain can’t afford to pay for the show anymore. It was Spain supporting the renewable industry not the reverse.
    And the German sector:
    – created huge grid instability in the entire Central Europe, neighbours are planning to disconnect themselves from the German grid
    – blew the electricity price to almost unaffordable levels, and that is something because Germany is really wealthy
    – gravely affected profitability of the utilities operators, pushed them towards using cheap coal in order to at least partially compensate, increasing pollution
    – and all this led in 2012 – article talks about that great year – to spectacular numbers. In 2012 Germany used some 26 mil toe from renewables, out of 312 mil toe in total.
    – the ability of the German sector to make any significant increases is quite limited. Neither the grid nor the consumers or the utility operators can afford those mystical increases.

    Clearly, if Europe pours many many new tens of billions of euros in the renewable sector – meaning some people get to invoice those amounts – a great future awaits us. Because ….( noise , mirrors, smoke)….

    I especially like the logical connections. Plenty of hydro power available on the Alps.
    Conclusion: give us more money to play with wind power which has no connection to the snow from the Alps.
    We smart, you stupid, we invoice and make plenty of money. Mwahahahaha
    That is the essence of the article in my opinion.

    Some honest data here :
    Page 39.
    You can see only a few numbers of any significance, regarding the wind and solar power industries. Germany who can’t afford it any more and is going back to coal.
    Spain and Italy which are great economic success stories and will definitely have plenty of spare money to give to the very well politically connected renewable investors. Or not.

    • Euan Mearns says:

      teo, I had quite a lot of email discussion about this, “how much of this is hydro”. I had a quick look at BP data for Sweden electricity, enough to confirm that what you say here is correct, but the BP numbers for Sweden do not add up, and so it makes it difficult to get at the truth.

      The article you refer to is simply Green propaganda. I post these things for them to be shot down.

      • teo says:


        People who do not have energy to sell have invented something marvelous. You can make plenty of money selling green certificates.
        What you call Green propaganda is only smoke and mirrors to confuse the public.
        In a sense it is a good idea.
        You mix coal and green certificates. So you get more pollution ( irrelevant) and due to cost reductions by using coal, plenty of money remain for the Green lobby.
        It is quite funny to call them green. They are as Green as North Korea is democratic and popular.
        Coal promoters call themselves green and an absolutist monarchic dynasty calls itself popular democracy.
        Double speak at its best.

  4. Roger Andrews says:

    ”European Union Gets 23.4% of Electricity From Renewables”

    According to Eurostat data 20.7% of the EU27’s electricity in 2012 came from renewables if you include hydro and 9.0% if you don’t.

    “Regarding gross final energy consumption, renewables brought 14 percent of the total in 2012, up from 12.9 percent in 2011.”

    According to BP data renewables brought 10.1 percent of the total in 2012, up from 9.0 percent in 2011 if you include hydro and 5.7% in 2012, up from 4.9% in 2011 if you don’t.

    “(T)he European Union and its 27 country-members is only six percent away from one of its 2020 goals: 20 percent of renewable energy in the total energy consumption ….. By keeping that annual growth at 0.7 to 0.8 percent, the EU should succeed.”

    The EU27 is actually 10% away from its 20% target, not 6%, and another six years of 0.7 to 0.8% annual growth will still leave it over 5% short. But I’m sure the renewable energy statisticians will find a way of making it sound like a success.

    • teo says:

      “But I’m sure the renewable energy statisticians will find a way of making it sound like a success.”

      Oh, but it is a success. You are looking at the wrong metric.
      Honest deserving people with the right political connections invoiced hundreds of billions of Euro towards the governments and utility operators. Investment money were more or less zero, everything from the banks at ultra low interest rates or from govt grants.
      And their invoices were payed in full.
      That is the right metric.
      (I got payed for a connected activity. I’m on the invoicing side of the fence. :))

      It is a real success story. Of course, not much electricity came out of it. But that is irrelevant.
      Gazprom, Statoil and the coal mining companies take care of that aspect.

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