Blowout week 153

There are two major stories this week. First, the agreement within OPEC to cut production in concert with some non-OPEC countries, notably Russia sent the oil price soaring, but it has so far failed to break resistance at $54. Second, 50% of the 2 GW England-France inter-connector was severed by a dragged anchor during storm Angus.

Roger will be away for a couple of weeks, hence this abridged blowout from Euan. Chart courtesy Oilprice.com.

Bloomberg:  OPEC Confounds Skeptics, Agrees to First Oil Cuts in 8 Years

OPEC confounded its doubters and sent crude oil prices soaring by agreeing to its first production cuts in eight years.

The deal, designed to drain record global oil inventories, overcame disagreements between the group’s three largest producers — Saudi Arabia, Iran and Iraq — and ended a flirtation with free markets that started in 2014. It was also broader than many had expected, extending beyond OPEC. Most strikingly, Russia agreed to unprecedented cuts to its own output.

Here are the bones of the deal:

OPEC to reduce production by 1.2 Mbpd by January
Nigeria and Libya exempted
Iran to raise production to 3.8 Mbpd from 3.72 Mbpd in October (IEA)
Saudi Arabia to cut 486,000 Bpd
Iraq to cut 210,000 bpd
UAE to cut 139,000 bpd
Kuwait to cut 131,000 bpd
Other OPEC to cut 297,000

Russia to cut 300,000 bpd

Total OPEC cuts = 1.263 Mbpd allowing Iran to increase by 63,000 bpd if it can.

For the first time Russia is involved with an OPEC deal and exempting Iran is a generous gesture from Gulf neighbours. With 1.5 Mbpd scheduled to be removed from supply, if the cuts are made, we can expect a serious rally in the oil price.

The Economist: OPEC reaches a deal to cut production

EXACTLY two years after Saudi Arabia coaxed its fellow OPEC members into letting market forces set the oil price, it has performed a nifty half-pirouette. On November 30th it led members of the oil producers’ cartel in a pledge to remove 1.2m barrels a day (b/d) from global oil production, if non-OPEC countries such as Russia chip in with a further 600,000 b/d. That would amount to almost 2% of global production, far more than markets expected. It showed that OPEC is not dead yet.

Moneycontrol: OPEC cuts add to India’s economic stress after demonetisation

While analysts are expecting oil prices to trade in the USD 50-USD 60 per barrel mark, OPEC members are looking at a figure of USD 70. Venezuelan Oil Minister Eulogio del Pino said that within nine months, OPEC’s deal should bring inventories closer to normal levels and potentially lift crude prices as high as USD 70 a barrel. For India, either case does not augur well. India is not only affected by rising oil prices but also by falling rupee against the dollar. These factors will add to the economic stress being felt due to demonetisation, even if that is a temporary phenomenon. India imports oil at the rate of 4.29 million barrels per day. Every dollar rise in oil prices results in USD 128 million to the oil import bill every month or USD 1.54 billion every year. If crude oil touches USD 60 then oil import bill can rise by over USD 15 billion a year.

Power Engineering Int: Capacity problem looms as main UK interconnector damaged

“We experienced a trip of the IFA interconnector on the morning of Sunday 20 November,” National Grid said in a statement. “After further investigation, the fault has been identified and we can confirm that four of IFA’s eight cables have been damaged. This will result in a reduction of IFA’s maximum capacity to 1000MW until the end of February 2017.

The Telegraph: Winter power crunch fears as UK-France cables severed during storm

Britain’s main power link to France was partially severed during Storm Angus and will not be fixed until February, National Grid has revealed, exacerbating fears of a power crunch this winter.

The Interconnexion France-Angleterre (IFA) link between Folkestone and Calais is Britain’s biggest interconnector, allowing it to import up to 2 gigawatts of power from the continent to help keep the lights on when UK supplies run low.

A fault developed on the interconnector on the morning of Sunday November 20th, as Storm Angus battered the UK.

The Guardian: French nuclear power in ‘worst situation ever’, says former EDF director

The French nuclear industry is in its “worst situation ever” because of a spate of plant closures in France and the complexities it faces with the UK’s Hinkley Point C power station, according to a former Électricité de France director.

Gérard Magnin, who called Hinkley “very risky” when he resigned as a board member over the project in July, told the Guardian that with more than a dozen French reactors closed over safety checks and routine maintenance, circumstances for the state-owned EDF had deteriorated since he stepped down.

The closures have seen Britain this week exporting electricity to France for the first time in four years. An industry report on Tuesday also warned that the offline reactors could lead to a “tense situation” for energy supply in France, in the event of a cold snap this winter.

The Guardian: New blow for Hinkley Point contractor EDF after French safety checks

The company building the UK’s first new nuclear power station for decades is facing questions over the health of its fleet of French nuclear plants after an investigation which has left the country with the lowest level of nuclear power for 10 years and the prospect of power cuts during a cold snap.

Thirteen of Électricité de France’s (EDF) 58 atomic plants are offline, some due to planned maintenance, but most for safety checks ordered by the regulator over anomalies discovered in reactor parts.

The outages have prompted warnings of potential planned power cuts and pushed up wholesale power prices, boosting coal and gas operators but squeezing small energy suppliers. Carbon emissions will possibly rise too as France, which last year forged a historic climate change deal in Paris, has to import more fossil fuel power.

AEMO: MEDIA STATEMENT – SOUTH AUSTRALIA

The Australian Energy Market Operator (AEMO) can confirm that at 01:16 AEDT on 1 December 2016, the South Australian power system separated from Victoria, resulting in localised outages in the state for up to an hour, together with the disconnection of the Portland smelter in Victoria.

The separation of South Australia was due to an issue on the Victorian transmission network, impacting the flow via the Heywood Interconnector to South Australia, with the root cause still under investigation.

Approximately 220 megawatts (MW) was lost in South Australia (equating to approximately 200,000 customers) due to the need to balance the frequency of the network. South Australian customers had power restored at 02:45 AEDT. A Victorian smelter was also disconnected from electricity supply as a result of this fault, with power being restored to the smelter from 04:30 AEDT.

The Guardian: BHP Billiton raises ‘power security’ fears after latest South Australia blackout

Federal and state governments must make power security a priority after South Australia suffered another widespread blackout, the boss of mining company BHP Billiton has warned.

Andrew Mackenzie said problems which cut power to 200,000 properties on Wednesday night showed that investment and jobs were being placed in peril by the failure of policy to both reduce emissions and secure affordable and uninterrupted power.

“The challenge to reduce emissions and grow the economy cannot fall to renewables alone,” Mackenzie said.

Engineering and Technology: New open-cast coal mine could open in the UK as coal price soars

The soaring price of coal has boosted plans to open a new open cast coal mine in Northumberland, despite the UK’s pledge to phase out the use of coal by 2025.

Up to three million tonnes of coal could be extracted at a site near Druridge Bay, according to plans pursued by the Banks Group and supported by Northumberland County Council. A public enquiry into the project has now been called, just over one year after the UK has closed its last deep coal mine.

Engineering and Technology: Power infrastructure projects around the world go over budget by an average of 35 per cent

Large power infrastructure and utility projects are delivered with a 35 per cent cost overrun and a two-year delay on average, a study by Ernst and Young has found.

Professional services firm Ernst and Young conducted an analysis of the performance of 100 of the world’s largest megaprojects, including nuclear power plants, hydropower projects and offshore and onshore wind farms. It found that the majority of them were running wildly over budget, with the average value being $2bn. The analysis included all phases of the projects’ lifespan, from pre-financing to decommissioning.

Calgary Herald: Alberta reaches $1.36B deal to shut down coal plants

The Alberta government will pay three coal power producers more than $1 billion over the next 14 years to compensate them for shutting down their plants early as part of its climate change agenda.

The province said it is also nearing the end of negotiations over power contract disputes that led to a controversial lawsuit, having reached three agreements with companies, though two are tentative.

Talks with a fourth player, Calgary-based public utility Enmax, are ongoing.The deals are the latest in a series of changes the NDP government has made to Alberta’s energy landscape to cut greenhouse gas emissions and produce cleaner power.

The deals are the latest in a series of changes the NDP government has made to Alberta’s energy landscape to cut greenhouse gas emissions and produce cleaner power.

New Scientist: Europe’s green energy policy is a disaster for the environment

The European Union’s proposals for revising its renewable energy policies are greenwashing and don’t solve the serious flaws, say environmental groups.

The EU gets 65 per cent of its renewable energy from biofuels – mainly wood – but it is failing to ensure this bioenergy comes from sustainable sources, and results in less emissions than burning fossil fuels. Its policies in some cases are leading to deforestation, biodiversity loss and putting more carbon dioxide in the atmosphere than burning coal.

Nature: Secondary migration and leakage of methane from a major tight-gas system

Tight-gas and shale-gas systems can undergo significant depressurization during basin uplift and erosion of overburden due primarily to the natural leakage of hydrocarbon fluids. To date, geologic factors governing hydrocarbon leakage from such systems are poorly documented and understood. Here we show, in a study of produced natural gas from 1,907 petroleum wells drilled into a Triassic tight-gas system in western Canada, that hydrocarbon fluid loss is focused along distinct curvilinear pathways controlled by stratigraphic trends with superior matrix permeability and likely also structural trends with enhanced fracture permeability. Natural gas along these pathways is preferentially enriched in methane because of selective secondary migration and phase separation processes. The leakage and secondary migration of thermogenic methane to surficial strata is part of an ongoing carbon cycle in which organic carbon in the deep sedimentary basin transforms into methane, and ultimately reaches the near-surface groundwater and atmosphere.

Science Direct: Solar-PV energy payback and net energy: Meta-assessment of study quality, reproducibility, and results harmonization

Numerous analyses of mono- and polysilicon Solar-Photovoltaic (PV) modules provide an Energy Payback Time (EPT) or Net Energy Ratio (NER) value. Few are directly comparable due to differences in annual solar radiation, supply-chain technologies, life-cycle boundaries, and system specifications. The purpose of this paper is to reproduce and harmonize twenty-nine studies, and to examine the influence of data age, system boundaries, and technological configurations.

The results include:

The study harmonization yielded a mean EPT for mono- and polysilicon solar-PV of 3.9 and 2.9 years, and a mean NER of 8.6 and 9.2 times, as expressed in solar energy output gain per unit of energy input, respectively.

Watt Logic: A new UK Energy Blog

Roy Spencer: 2016 on course to be warmest year evah

It should be pointed out that 2016 will end up being 0.03-0.04 deg. C warmer than 1998, which is probably not a statistically significant difference given the uncertainties in the satellite dataset adjustments.

The NOAA SSTs show that the La Niña has yet to fully materialise.

 

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16 Responses to Blowout week 153

  1. Javier says:

    Euan,

    Thanks for taking on Roger’s work in delivering our weekly dose of pre-selected news.

    “Europe’s green energy policy is a disaster for the environment”

    The wood-pellet disaster is the third after the diesel disaster and the bio-diesel disaster. Clearly we don’t learn the important lesson that Green/Climate energy policies are leading us the wrong way and have not been carefully evaluated in an unbiased way. They will have to deal with the public outrage once these policies result in more expensive, unreliable power supply.

  2. Anna Mac says:

    Remember, the U.S. has any kind of coal you want and the rail infrastructure to move unit trains (135 cars @ 238k lbs. per) to coastal ports. UP RR is waiting for your call.

    • A C Osborn says:

      We have our own thanks, but our MPs are too stupid to use it, they would rather pay the Miners and all there “of working age” children to be on the dole.

    • Alistair Buckoke says:

      Well yes, 400 MW apparently, but the article says nothing about how long for. Six hours? A day?

  3. climanrecon says:

    Good news for South Australian wind power, it did not cause the recent blackout (1st December):

    https://climanrecon.wordpress.com/2016/12/03/south-australia-blackout-dec-01-2016/

    Bad news for South Australian wind power, it will be as useful as a chocolate teapot in the event of major equipment failure during heatwaves:

    https://climanrecon.wordpress.com/2016/12/02/south-australia-blackout-risk/

    OK, nobody sensible says that wind power can retire conventional generators, but the industry is happy for that to be implied by the marketing hype about energy transitions.

  4. Javier says:

    With 1.5 Mbpd scheduled to be removed from supply, if the cuts are made, we can expect a serious rally in the oil price.

    I said two years ago that 2015 was going to be the year of Peak Oil. It continues to look like a good call. A lot better if those cuts are realized. As depletion marches on and discoveries diminish, production will be a lot harder to recover in a few years even with high oil prices.

    Who would have thought a few years ago that Peak Oil would take place because of too much oil in the market? In retrospect it is obvious that Peak Oil should take place from the demand side with depressed prices, because high demand and prices always increase production.

    What a serious rally in the oil price would do to the global economy remains to be seen. We have had anemic recovery, that improved a little when oil became relatively affordable at $40/barrel.

  5. robertok06 says:

    Nuclear news:

    up to 19 billion Euros in possible damages to be awarded to 3 of 4 electricity companies in Germany, after the decision from the supreme court against the decision of Merkel’s govenrment in April 2011. 19 billion additional Euros is less than one year of “subsidies” to the German renewable industry, all technologies included (23 BEuros/year, I think)… not much, not enough:

    http://www.world-nuclear-news.org/NP-Court-backs-German-utilities-compensation-claim-0612144.html
    —–

    Other news, all 10 of the 920 MWe frrrrench reactors which have been stopped for safety checks are going to be cleared for re-start (be ready for armageddon, of course).. the two 1450 MWe ones next in line:

    http://www.world-nuclear-news.org/RS-EDF-reactors-move-closer-to-restart-0612145.html
    ——

    Other nuclear news, also on world-nuclearnews is that the latest compilation of uranium reserves data indicates that a possible future bottleneck is going to be the time to set up new uranium enrichment/fuel facilities, rather than the lack of U mineral, which is estimated at >100 years present consumption at more than reasonable prices… another blow in my friend’s Michael Dittimar silly theory:

    http://www.world-nuclear-news.org/UF-Red-Book-sees-production-capacity-as-future-uranium-challenge-0512167.html
    —–

    Well… I’ll drink to all of 3 of them… right now. 🙂

    Cheers.

    • Stuart Brown says:

      Cento di questi giorni! One of those apparently unreliable Belgian reactors, Doel3 looks like it’s back working as well.

  6. Stuart Brown says:

    https://www.sciencedaily.com/releases/2016/12/161209111719.htm

    Maybe a candidate for blowout 154. ‘Wind turbines may have beneficial effects for crops, research suggests…’

    ‘The turbulence, and the associated changes in air pressure at ground level, also may enrich the carbon dioxide content in the air surrounding crops, which could make the plants grow more efficiently,’

    Without taking any sides in the religious debate, it made me laugh!

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