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”
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.
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.
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.
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.
“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.”
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.
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.
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.
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.
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.
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?
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.
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 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.
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.
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.
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.
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.
“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.
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.
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
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.
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.
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.