Blowout week 18

Germany: Energiewende kaput?

Big oil in trouble: Shell production down, profits down 45%; Exxon Mobil production down, profits down 4%; BP production and profits down. Russia, production down.

Ukraine / Russia: Ukraine raises domestic gas prices by 50%; Russia tightens the screws; chunk of Russia’s military industrial complex in E Ukraine.

Germany: Angela Merkel’s Vice Chancellor Stuns, Declares Germany’s ‘Energiewende’ To Be On ‘The Verge Of Failure’!

“The truth is that in all fields we under-estimated the complexity of the Energiewende.”

“The complete exemption from paying feed-in tariffs is a model that is wonderful for you as a business model, but is one that is a problem for everyone else.”

25 stories this week in an action packed Blowout.

UK: Scottish independence: Scotland ‘committed’ to EU, says Salmond

He said: “Scotland’s vast natural resources and human talent make it one of the lynchpins of the European Union. We have a key role to play in providing energy security for Europe.

USA: Economists back increased US oil and gas exports

Whether to allow more exports of U.S. oil and natural gas has become a matter of political debate in Washington. But to economists, the answer is clear: The nation would benefit.

[Editor: The US is a small net importer of natural gas and remains a vey large importer of crude oil 😉 ]

USA: Biggest Buyout Gone Bust in Energy Future Dims Megadeals

The Dallas-based utility’s bankruptcy yesterday ended the biggest leveraged buyout on record and will wipe out most of the $8.3 billion of equity that investors led by three of the world’s largest private-equity firms sank into the company.

Ukraine: Gas rates for Ukrainians will jump over 50 percent as of May 1

New retail rates of natural gas for households are coming into force in Ukraine as of May 1. The hike exceeds 50 percent.

Ukraine: Ukraine agrees to 50% gas price hike amid IMF talks

Ukraine’s interim government says it will raise gas prices for domestic consumers by 50% in an effort to secure an International Monetary Fund (IMF) aid package. An official at Ukraine’s Naftogaz state energy company said the price rise would take effect on 1 May, and further rises would be scheduled until 2018.

UK: Cuadrilla gets green light for oil test at Balcombe

UK shale gas exploration company Cuadrilla has been given the green light to test oil extraction in Balcombe, the West Sussex village that saw major anti-fracking protests last summer. At a planning committee meeting that had to be adjourned at one point due to people disrupting it, West Sussex county council approved the company’s application to undertake tests to see how fast oil would flow at a site on the outskirts of the village.

[Editor: Cuadrilla’s Balcombe well is a conventional oil well where no fracking has ever been planned.]

USA: Shale Drillers Feast on Junk Debt to Stay on Treadmill

Rice Energy Inc. (RICE), a natural gas producer with risky credit, raised $900 million in three days this month, $150 million more than it originally sought. Not bad for the Canonsburg, Pennsylvania-based company’s first bond issue after going public in January. Especially since it has lost money three years in a row, has drilled fewer than 50 wells — most named after superheroes and monster trucks — and said it will spend $4.09 for every $1 it earns in 2014.

Technology: Why Wave Power Has Lagged Far Behind as Energy Source

Researchers have long contended that power from ocean waves could make a major contribution as a renewable energy source. But a host of challenges, including the difficulty of designing a device to capture the energy of waves, have stymied efforts to generate electricity from the sea.

World: Shell Profit Falls 45 Percent as Oil Production Drops

The European oil giant Royal Dutch Shell reported Wednesday a 45 percent decline in first-quarter earnings compared with a year earlier, as production fell sharply and the company took a large write-off in its refining business.

World: Exxon earnings slip on lower production, refining

Exxon Mobil said Thursday that its net income fell 4 percent in the fourth quarter as it produced less oil and natural gas and posted weaker refining results.

World: BP 1QFY14 Profits Drop On Lower Production

BP plc (ADR) (BP) reported its financial results for the first quarter of its fiscal 2014 (1QFY14; ended March 31, 2014) before the opening bell today. The company reported declining profits and missed analysts’ estimates for revenues, with earnings falling in line.

Russia: Russian Oil Output Down for Fourth Month in a Row

Russian oil output, the world’s largest, slipped by 0.2 percent to 10.54 million barrels per day in April, declining for the fourth month in a row as production from new fields failed to offset a slowdown from mature deposits.

World: Guest blog post: more debate on the future of international oil companies

In my last Barrel post, I threw down the gauntlet to those casually predicting a collapse in oil prices, as such a collapse would effectively kill the oil business at the major oil companies. We will know, I wrote, that such forecasters are serious when they declare the international oil companies (IOCs) “to be the walking dead.”

UK: Substation fault caused huge north Scotland power cut

A fault at a substation was the cause of a power outage which affected more than 200,000 properties across the north of Scotland last week.

World: Citi vs. Chevron: The Oil Price Controversy

The direction of oil prices is once again a hot topic. In a recent Barron’s article, Ed Morse, Citigroup’s head of global commodity research, forecasts a collapse in global oil prices to $75 /b over the next three to five years. By contrast, Chevron has announced that it is budgeting with $110/b oil for 2017, with the company’s CEO John Watson stating, “There is a new reality in our business… $100/bbl is becoming the new $20/bbl in our business… costs have caught up to revenues for many classes of projects.” And for good measure, he adds, “If $100 is the new $20, consumers will pay more for oil.”

USA: U.S. electricity prices may be going up for good

As temperatures plunged to 16 below zero in Chicago in early January and set record lows across the eastern U.S., electrical system managers implored the public to turn off stoves, dryers and even lights or risk blackouts. A fifth of all power-generating capacity in a grid serving 60 million people went suddenly offline, as coal piles froze, sensitive electrical equipment went haywire and utility operators had trouble finding enough natural gas to keep power plants running.

UK: Aberdeen electricity supplies restored

Much of Aberdeen city centre and areas to the north of the city have been affected by a power cut. A statement from Scottish Hydro said the AB24 and AB16 postcode areas were without electricity this morning. By 14:30, the company said all of the properties affected had power restored to them. In total, 1200 customers are thought to have been affected.

UK: Nigg Energy Park could get work from Moray Firth wind farm

A fabrication yard in Easter Ross could play a part in the construction of an offshore wind farm in the Moray Firth.

UK: Political pressure means Centrica could lose credit rating

Centrica faces losing its “A”-grade credit rating for the first time as political pressure takes its toll on the embattled utility. Moody’s has placed the British Gas owner on review for downgrade, in a move that illustrates how political intervention in the energy sector risks pushing up the cost of doing business for Britain’s biggest energy supplier.

UK: Thousands could be hit by ‘back door’ energy cutoffs

Tens of thousands of vulnerable gas and electricity customers could be going without power for up to three months, despite promises from the big six companies that no one will knowingly be cut off. The Labour party argues that an unacceptable “disconnection by the back door” has taken hold because many on prepayment meters are not receiving early help from suppliers.

My selection of stories posted by Luis de Sousa At The Edge of Time. Luis’ focus remains on Russia / Ukraine and Iraq.

Ukraine: Ukraine: Russia’s Gazprom issues May 7 ultimatum over gas supplies

Russian state-controlled energy giant Gazprom has ratcheted up the pressure on Ukraine, issuing a May 7 ultimatum to settle $3.5bn unpaid debts or start paying in advance for its gas.

Russia:  Why The War Party Is Playing With Fire: Much Of Putin’s Military-Industrial Complex Is In Eastern Ukraine!

However, it turns out that there is something else that makes the Ukraine’s East especially important – for Russia. Back when the Ukraine split from the Soviet Union, it took some 30% of the country’s industry with it – inter alia a big chunk of its defense industry.

Iraq: Militants Pose Threat on Eve of National Elections in Iraq

BAGHDAD — Snipers line the rooftops across Falluja, waiting for a chance to shoot at government soldiers, should they try to invade. Homes have been wired to explode, too, just in case the government rushes the city. And roads have been studded with countless steel-plated bombs, of the type that killed so many American soldiers here.

USA: Is This Issue About to Explode for Big Oil?

That means oil producers need to flare any gas produced alongside oil output. Burning off the stuff because there simply isn’t a way to get it to market. But this month two regional governments have said that gas flaring needs to stop.


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12 Responses to Blowout week 18

  1. Glen Mcmillian says:

    A quick glance at these articles reminds me of an old Chinese curse. It seems we are doomed to live in interesting times.

  2. Joe Public says:

    “UK: Thousands could be hit by ‘back door’ energy cutoffs”

    Only the Grauniad could whinge at energy user’s making their own spending choices, and using that as an excuse to slap-down energy suppliers.

  3. Roger Andrews says:

    Interesting developments in Hawaii – arguably the world’s most isolated electricity market – which plans to generate 40% of its electricity from renewables by 2030. Hawaiian Electric, however, questions whether this is possible without energy storage, and has just issued an RFP for the installation of up to 100 MWh of storage capacity (batteries, flywheels, capacitors, compressed gas, pumped hydro, whatever works):

    Some quotes from the RFP:

    “(R)apid growth in variable renewable energy penetration to the electrical grid has become a challenge to manage. The intermittent nature of wind and solar generation requires that the existing thermal generation fleet continue to be available. This has led to inefficient utilization of the existing thermal generation fleet since it needs to manage the volatility of the variable generation. Voltage and frequency regulation on the grid are expected to become increasingly challenging with progressively higher levels of variable renewable generation.”

    “Hawaiian Electric is seeking energy storage system solutions to provide the opportunity for the continuing integration of increasing renewable energy generation.” (In other words, no storage, no renewables.)

    Refreshing stuff. It will be interesting to see what the bids look like.

    • Euan Mearns says:

      I’d have thought geothermal would be obvious choice on Hawaii.

      • Roger Andrews says:

        Hawaii, the Big Island, has almost all of the geothermal potential but only 10% of the people.

        The island of Oahu, 200 miles to the NW, has 75% of the people but no known geothermal potential.

        There are no undersea transmission lines linking the islands.

  4. Joe Public says:

    Surfers rate, well …………. the surf. Maybe time to resurrect a re-engineered Salter’s Duck?

    In the lab, the wave impact induced rotation of gyroscopes inside a pear-shaped “duck”, and an electrical generator converted this rotation into electricity with an overall efficiency of up to 90%. Sadly, it didn’t progress to ‘real’ field trials.

    Euan’s older readers may remember ‘Tomorrows World’ enthusing it was tomorrows answer.

    • Joe Public says:

      Ooops. Should have been a ‘Reply’ to Roger’s 7:01 posting.

    • Euan Mearns says:

      Joe, all high school physics students should get to do an experiment with the gravitational potential energy associated with a 5 m column of water and a dynamo and to compare that with what they can achieve with splashing around in a pond of mild alkali.

  5. kakatoa says:

    I came across an interesting post about a rebranding effort for CA’s energy efficiency efforts:

    “Ogilvy PR West began work in mid-February 2014 to provide public relations services to Energy Upgrade California for a re-branding assignment. A cross-practice Ogilvy PR team is helping transform Energy Upgrade California to become a comprehensive umbrella brand for energy management solutions, new energy saving behaviors and, importantly, enhance California’s leadership in helping to fight climate change and making the air clean and the environment healthy and sustainable.”

    “Energy Upgrade California’s new brand position will have a significant impact and generate understanding, engagement and behavior change in how Californians use and manage energy,” said Nathan Friedman, regional managing director, Ogilvy PR West. “We’re excited to partner with Energy Upgrade California and utilize the agency’s extensive background in energy, social marketing and public affairs to create lasting behavior change.”

    I take it that this is in response to folks not signing up for any improvements as noted here:

  6. Roger Andrews says:

    Top of the news this morning is the US govt’s just-released National Climate Assessment Report. Obama’s dedicated cadre of bright green spin doctors have really excelled themselves with this one. A few excerpts (and responses):

    “U.S. average temperature has increased by 1.3°F to 1.9°F since record keeping began in 1895.”

    (~1.5F of this 1.3-1.9F increase is manufactured by “adjustments” to the raw data.)

    “Heat waves have become more frequent and intense, especially in the West.”

    (Only when you add 1.5F of non-existent warming and ignore urban warming impacts.)

    “Cold waves have become less frequent and intense across the nation.”

    (Right, Like last winter.)

    “The intensity, frequency, and duration of North Atlantic hurricanes, as well as the frequency of the strongest (Category 4 and 5) hurricanes, have all increased since the early 1980s.”

    (It’s now 3,116 days and counting since the last major hurricane (Wilma, October 24, 2005) made landfall in the US, the longest landfalling hurricane drought on record.)

    “Other trends in severe storms, including the intensity and frequency of tornadoes … are uncertain and are being
    studied intensively”

    (Why the intensive study? Even the IPCC admits that damage from US tornadoes has decreased since 1950-70.)

    “Average U.S. precipitation has increased since 1900, but some areas have had increases greater than the national average, and some areas have had decreases.”

    (Well, duh.)

    Read the whole thing at

  7. Roger Andrews says:

    And now a blowout for Blowout week:

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