Blowout week 46

Telegraph:  Oil price slump to trigger new US debt default crisis as Opec waits

Based on recent stress tests of subprime borrowers in the energy sector in the US produced by Deutsche Bank, should the price of US crude fall by a further 20pc to $60 per barrel, it could result in up to a 30pc default rate among B and CCC rated high-yield US borrowers in the industry. West Texas Intermediate crude is currently trading at multi-year lows of around $75 per barrel, down from $107 per barrel in June.

The main stream media is full of low oil price stories this week and is suitably alert to the risks this poses to the oil industry and global economy. Normally low oil price would be viewed as a positive thing, but on the back side of Hubbert’s peak things work differently. There is also a story on oil exploration in the Canary Islands and how this fits with their vision of sustainability. Also in the news is early harsh winter weather in N America and Siberia and some interesting sanction busting energy news from Russia. Roger’s focus is on the US-China climate deal. The Republican view:

“I read the agreement – requires the Chinese to do nothing at all for 16 years while these carbon emission regulations are creating havoc in my state and other states around the country”

Telegraph:  Low oil prices are burying all hope of future Scottish independence

Since June this year, the oil price as measured by the Brent benchmark has collapsed from $115 to just $78 today, a fall of nearly a third. This doesn’t quite translate to a reduction in North Sea tax revenues of the same order of magnitude, but there is no doubt that they are going to take a big hit.

Bloomberg:  Russia Braces for ‘Catastrophic’ Drop in Oil Prices

President Vladimir Putin said Russia’s economy, battered by sanctions and a collapsing currency, faces a potential “catastrophic” slump in oil prices.

Such a scenario is “entirely possible, and we admit it,” Putin told the state-run Tass news service before attending this weekend’s Group of 20 summit in Brisbane, Australia.

CBS:  Get ready for “Polar Vortex, The Sequel”

Prepare yourself for an invasion from the north. A blast of polar air is about to send temperatures plunging in the heart of America.

It’s the return of the polar vortex that brought misery a year ago. A mass of whirling cold air will dip southward this weekend, sending the mercury plunging.

Bloomberg:  Harsh Winter Outlook Made a Bit More Dire by Siberia Snow

Remember how evidence was mounting last month that early snowfall was accumulating across Siberia? And remember how there’s a theory that says this snowfall signals a cold winter?

So in the two and a half weeks since, the news for the winter-haters has, unfortunately, only gotten worse.

Telegrpah:  Wind farms paid £43m to switch off

Wind farms have been paid a record £43 million to switch off turbines so far this year, after Britain’s electricity network was unable to cope with the power they produced.
The rising total of so-called “constraint payments” to wind is already a third higher than the entire 2013 total, with two months of the year still to go.

Guardian:  Angry Canary Islanders brace for an unwanted guest – the oil industry

“Our wealth is in our climate, our sky, our sea and the archipelago’s extraordinary biodiversity and landscape,” the Canary Islands president, Paulino Rivero, said. “Its value is that it’s natural and this is what attracts tourism. Oil is incompatible with tourism and a sustainable economy.”

Bloomberg:  Fukushima Radiation Found in Pacific Off California’s Coast

Oceanographers have detected isotopes linked to Japan’s wrecked Fukushima nuclear plant off California’s coast, though at levels far below those that could pose a measurable health risk.

CNBC:  Energy is Europe’s ‘big disadvantage’: Deutsche co-CEO

High energy prices and resistance to fracking are two key reasons why Europe’s economic recovery has lagged the U.S., the joint head of Germany’s largest bank by assets told CNBC.

Jürgen Fitschen, co-chief executive of Deutsche Bank, said bureaucracy, education and productivity partially explained Europe’s difficulties, but laid much of the blame on the cost of energy in the region.

Guardian:  Rich countries subsidising oil, gas and coal companies by $88bn a year

Rich countries are subsidising oil, gas and coal companies by about $88bn (£55.4bn) a year to explore for new reserves, despite evidence that most fossil fuels must be left in the ground if the world is to avoid dangerous climate change.

The most detailed breakdown yet of global fossil fuel subsidies has found that the US government provided companies with $5.2bn for fossil fuel exploration in 2013, Australia spent $3.5bn, Russia $2.4bn and the UK $1.2bn. Most of the support was in the form of tax breaks for exploration in deep offshore fields.

Guardian:  The real story of US coal: inside the world’s biggest coalmine

In the world’s biggest coalmine, even a 400 tonne truck looks like a toy. Everything about the scale of Peabody Energy’s operations in the Powder River Basin of Wyoming is big and the mines are only going to get bigger – despite new warnings from the United Nations on the dangerous burning of fossil fuels, despite Barack Obama’s promises to fight climate change, and despite reports that coal is in its death throes.

Bloomberg:  Fossil Fuels With $550 Billion Subsidies Hurt Renewables

Fossil fuels are reaping $550 billion a year in subsidies and holding back investment in cleaner forms of energy, the International Energy Agency said.

Oil, coal and gas received more than four times the $120 billion paid out in incentives for renewables including wind, solar and biofuels, the Paris-based institution said today in its annual World Energy Outlook.

My post tomorrow is titled “The Appalling Truth about Energy Subsidies”. Everything here is very far from how it may seam.

E&TW:  Renewables Britain: why the UK isn’t green enough

With only 5 per cent of our energy coming from renewable sources, Britain is falling way behind its international neighbours. Why isn’t the renewable energy sector delivering what we need to keep the lights on and make us more sustainable?

Times:  SNP plan for green power is ‘nonsense’ says expert

Alex Salmond’s vision of a Scotland powered entirely by renewable energy by 2020 has been dismissed as “nonsense” by one of the UK’s leading energy economists.
In an interview with The Times Dieter Helm, professor of energy policy at the University of Oxford, insisted it did not make economic sense for Scotland to be reliant on renewable energy — and nor would it help in the battle against climate change.

BBC:  Energy security threatened by rising tensions, says IEA report

The US shale gas boom is disguising serious risks to the security of global energy supplies, according to one of the industry’s leading consultancies.

The International Energy Agency’s latest World Energy Outlook says the increased market turmoil comes as global energy demand is set to soar.

National Grid:  National Grid secures £1.5 billon loan from the European Investment

National Grid has secured a £1.5 billion loan from the European Investment Bank (EIB). The EIB loan is the largest ever granted by the bank and will be used to invest in the electricity grid and to connect more renewables. It will finance projects such as the £1 billion London Power tunnels project, which will supply the city for generations to come.

Scotsman:  Renewable energy still needs a hand

Amidst the furore that has flared up over the plan to turn coal deep under the Forth Estuary into gas that can be used to generate electricity and to supply the petrochemicals industry, there is a hard truth that Scotland must consider.

It is that even if renewable energy generating capacity was to increase to a level sufficient to supply Scotland’s electricity consumption, fossil fuel generation (in the absence of nuclear capacity) would still be needed.

BBC:  ‘Major’ coal find under Firth of Forth

An energy firm has announced plans to extract gas from under the waters of the Firth of Forth following a major coal find.

Cluff Natural Resources said a report by independent assessors estimated there were up to 335 million tonnes of coal under the seabed.

It now plans to build the UK’s first deep offshore underground coal gasification (UGC) plant.

Scotsman:  North Sea oil puts finances on slippery slope

The oil price has not just dipped, it has swooned – by $32 or 28 per cent to a four-year low from its summer peak of $115. Barring a miraculous turnaround in the price, we face a slump in North Sea capital investment and a contraction across the wider oil services industry. Last week the North Sea oil industry group Oil & Gas UK warned that capital investment in the North Sea could halve by 2017 unless there is urgent reform of the tax regime.

Daily Record:  Top energy economist slams Scottish Government’s 100% renewables plan as ‘nonsense’

Dieter Helm, professor of energy policy at the University of Oxford, said it did not make economic sense for Scotland to be reliant on renewable energy, such as wind and wave farms.

Roger’s links:

CNN:  US and China reach historic climate change deal, vow to cut emissions

In a historic climate change deal, U.S. President Barack Obama and Chinese President Xi Jinping announced both countries will curb their greenhouse gas emissions over the next two decades.
Under the agreement, the United States would cut its 2005 level of carbon emissions by 26-28% before the year 2025. China would peak its carbon emissions by 2030 and will also aim to get 20% of its energy from zero-carbon emission sources by the same year.

CNN:  Top Congressional Republicans slam U.S.-China climate deal

“I read the agreement – requires the Chinese to do nothing at all for 16 years while these carbon emission regulations are creating havoc in my state and other states around the country,” McConnell, who hails from the coal state of Kentucky, said on Capitol Hill.

NY Times:  U.S. to Give $3 Billion to Climate Fund to Help Poor Nations, and Spur Rich Ones

President Obama announced on Saturday that the United States will contribute $3 billion to a new international fund intended to help the world’s poorest countries address the effects of climate change.


The Climate Prediction Center lowered the chance for an El Nino event this season to 58%. Even though current conditions are considered “borderline El Nino,” this continues the gradual decline in confidence of an El Nino event this winter from a peak of 80% at the start of the summer. Alert status remains at “El Nino Watch,” signifying El Nino conditions are favorable within the next six months.

Daily Finance:  Air Apparent: America Outpaces China, Germany in Wind Power

Climate-conscious Americans have long glanced enviously across the Pacific to China and its ever-growing number of often-gargantuan wind farms.

It turns out that they have less to be jealous about than previously thought: The United States has more wind energy powering its grid than any other country in the world, says a report by EDF Renewable Energy, the largest third-party provider of operations and maintenance for wind renewable-energy projects in the country.

IB Times:  UFO Sighting: UFO Flies Over Laguna Verde Nuclear Plant In Mexico

According to UFO Sightings Daily, the object was seen above the Laguna Verde Nuclear Power Station, and it is the second video of a UFO that has come out from Mexico in a span of two years. Both videos are of UFOs that were spotted over a nuclear power plant.

Hawaii Public Raido:  Solar Bike Path Opens This Week In The Netherlands

A Dutch project that integrates solar panels into a bike commuter path will officially open this week, on a special roadway outside Amsterdam. Power generated by the SolaRoad’s panels will be funneled into the national energy grid.

A few energy stories from Russia, h/t Syndroma

RT:  Giant Russian hydroelectric plant relaunched at full capacity after 2009 catastrophe

Russia’s Sayano-Shushenskaya hydroelectric power plant, one of the world’s most powerful, has resumed operations at planned capacity after completion of repairs and will provide stable energy supplies across Siberia for at least the next 40 years.

The last of the 10 generators at the Sayano-Shushenskaya hydroelectric power plant destroyed five years ago, was brought online Wednesday. Russian President Vladimir Putin set the generator going via videoconference from Vladivostok. The plant on the Yenisei River in Russia’s Khakassia Region is the most powerful in Russia.

On August 17, 2009, torrents of water tore off the roof of the power generating hall flooding the 10 generators at the station. The tragedy killed 75 people, and was the worst in the history of Russian hydroelectricity.

A truly amazing series of pictures.

RT:  Russia, Iran sign nuclear construction deal for 8 units

Russia is to build eight nuclear power units in Iran, as a new partnership agreement, guaranteed by the IAEA, was signed in Moscow on Tuesday.

The head of the Rosatom, Sergey Kirienko, and the chief of the Atomic Energy Agency of Iran, Ali Akbar Salehi, signed a series of documents, promoting the links in the field of peaceful application of atomic energy between the countries, RIA Novosti reports.

Rostec:  Rostec, GE and Inter RAO Open a New Russian Gas Turbines Plant

Russian Gas Turbines LLC, a joint venture of GE (NYSE: GE), Inter RAO and United Engine Corporation (UEC, a Rostec subsidiary), opened a manufacturing facility in Rybinsk, a city in the Yaroslavl Region, to produce, sell and service 6FA-type (6F.03) gas turbines. The first two turbines intended for subsidiaries of Russian oil major Rosneft will be assembled as early as in 2015. The new plant has an annual capacity of up to 20 gas turbines a year, which should satisfy the demand for high-efficiency generators for combined heat and power generators.

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4 Responses to Blowout week 46

  1. jacobress says:

    “Oil, coal and gas received more than four times the $120 billion paid out in incentives for renewables including wind, solar and biofuels,”

    And they produced more than 95% of the energy needed.

  2. It seems that the Canary Island Greens are just as confused as the Greens everywhere else:

    “Our wealth is in our climate, our sky, our sea and the archipelago’s extraordinary biodiversity and landscape,” the Canary Islands president, Paulino Rivero, said. “Its value is that it’s natural and this is what attracts tourism. Oil is incompatible with tourism and a sustainable economy.”

    The Canary Islands get almost all of their energy from imported petroleum products and much of this energy goes to support tourism, which is what sustains the economy. In other words, no oil, no tourism, no economy. Canarias muertas.

    If the Canaries really want to move towards a bright green future they should ban tourism, not oil. According to my rough calculations this would cut the Islands’ CO2 emissions by about 10 million tonnes annually. A further 2 million tonnes would be saved by not having 12 million tourists a year flying to and from the islands in fuel-guzzling jetliners.

    • Euan Mearns says:

      Roger, Much as I love the Canary Islands, they have one of the least Green and unsustainable economic models on the planet. The hypocrisy / ignorance present in the islands propaganda is breathtaking. Their focus should be on preservation of island habitats so that N Europeans can still enjoy them in 50 years time.

  3. brent says:

    Oil Price Blues (Read: Dangers) for Some
    If oil prices stay below $90 per barrel for any length of time, we will witness massive fiscal squeezes and regime changes in one or more of the following countries: Iran, Bahrain, Ecuador, Venezuela, Algeria, Nigeria, Iraq, or Libya. It will be a movie we have seen before.

    Steve Hanke can be an interesting commentator who is well aware how financial war can be waged

    On the Fall of the Rupiah and Suharto
    Why all the fuss over a currency board for Indonesia? Merton Miller understood the great game immediately. As he wrote when Mrs. Hanke and I were in residence at the Shangri-La Hotel in Jakarta, the Clinton administration’s objection to the currency board was “not that it wouldn’t work but that it would, and if it worked, they would be stuck with Suharto.” Much the same argument was articulated by Australia’s former Prime Minister Paul Keating: “The United States Treasury quite deliberately used the economic collapse as a means of bringing about the ouster of President Suharto.” Former U.S. Secretary of State Lawrence Eagleberger weighed in with a similar diagnosis: “We were fairly clever in that we supported the IMF as it overthrew [Suharto]. Whether that was a wise way to proceed is another question. I’m not saying Mr. Suharto should have stayed, but I kind of wish he had left on terms other than because the IMF pushed him out.” Even Michel Camdessus could not find fault with these assessments. On the occasion of his retirement, he proudly proclaimed: “We created the conditions that obliged President Suharto to leave his job.

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