This week in Blowout:
UK: The argument over high energy prices rumbles on. The government contemplates reducing support for energy efficiency targets – which in my opinion seems to be the exact wrong course to take. Oil companies contemplate delaying or cancelling new North Sea projects. RWE cancels large offshore wind farm.
World: Energy companies making record investments for diminishing returns. IEA turns pessimistic on shale and sees oil prices heading higher. Power play in The Middle East as Saudi Arabia threatens Iran whilst contemplating its own fleet of nuclear reactors. 21 stories below the fold.
Over the past decade, the oil and gas industry’s upstream investments have registered an astronomical increase, but these ever higher levels of capital expenditure have yielded ever smaller increases in the global oil supply. Even these have only been made possible by record high oil prices. This should be a reality check for those now hyping a new age of global oil abundance…. according to the FT
OSLO, Nov 22 (Reuters) – Norwegian oil and gas firm Statoil (Berlin: DNQ.BE – news) has delayed the field development decision on its Bressay heavy oil field in the UK sector of the North Sea, hoping to simplify the project and reduce cost, a spokesman said on Friday.
The International Energy Agency (IEA) has toned down previous estimates of the impact of North American shale fields on oil prices, suggesting oil will rise steadily to $145 per barrel (pb) by 2035.
Britain faces difficult choices about its future energy supplies yet every proposal meets strenuous, sometimes hostile, objections. For The Editors, a programme that sets out to ask challenging questions, I wanted to find out why everyone was so angry about energy.
WILLIAMSPORT, Pa. (AP) — The Marcellus Shale industry, which arrived in this northern Pennsylvania city five years ago and turned Williamsport into the seventh-fastest-growing area in the nation, appears to have lost some momentum.
Economic activity in this city affectionately known as “Billtown” has subsided noticeably in the last year as the pace of drilling natural gas wells slowed in response to low gas prices.
The outlook for BHP Billiton Ltd’s US shale gas cashflow output has improved significantly, with free cashflow over the next few years possibly beating expectations by $US1 billion, according to The Australian.
EU member states would have to ensure that specified numbers of publicly-available electric vehicle recharging points and hydrogen and natural gas stations are built by 2020, under a draft directive endorsed by the Transport and Tourism Committee of the European Parliament on Tuesday.
The developer of a proposed £4bn wind farm off the north Devon coast has withdrawn from the project, saying that it would have been uneconomic to proceed.
Coming just days after the prime minister allegedly described levies to boost renewable energy generation as “green crap”, blaming RWE’s decision to pull the plug on the UK’s largest offshore wind farm on government indecision would be easy.
Particularly so given the widespread questioning within the coalition of green subsidies that power companies argue are a major factor behind recent rises in energy bills.
A free home insulation scheme for poorer households will be kept but implemented more slowly as part of a package of measures to cut fuel bills, the BBC has learned.
Not quite destroys. But Angolan crude has certainly been downgraded. Platts reports that the country’s benchmark Nemba crude is trading at a four-month low. For reasons of chemistry. The change comes after major Angolan operator Chevron began blending Nemba crude with oil from its Kuito field. The problem is that Kuito crude is quite different from that of Nemba. For one, it’s more heavy. Kuito’s oil rates at 22 API, as opposed to Nemba’s 38.6 API.
Reporting its third quarter results, Cabot Oil & Gas (COG) delivered a fresh crop of “monster” Marcellus wells that further reinforce the productivity and consistency of the play’s dry gas sweet spot in Northeast Pennsylvania. The results for the quarter also highlight a steady trend towards higher EURs per well.
The government has denied reports it is seeking a commitment from energy firms to hold their prices down until 2015.
The companies told BBC News ministers had asked them to keep bills on hold so long as there is no significant move in global wholesale energy prices.
Government sources deny this, and say they are focusing instead on boosting competition and reducing green levies to cut annual bills by about £50.
Labour, which wants prices frozen, said government policy was a “shambles”.
Blundering officials at the Department of Energy and Climate Change (DECC) have admitted their Feed-in-Tariff cost forecasts were wrong by over a third-of-a-billion pounds, according to a new report from the National Audit Office (NAO).
Climate-change policies are expected to cost Britain more than £80 billion by the end of the decade, as critics warn that the global-warming industry is spiralling out of control.
Vast sums are being spent on initiatives ranging from climate-change officers in local councils to the funding of “low carbon” agriculture in Colombia at a cost of £15 million alone. Billions of pounds are also being added to fuel bills to pay for green policies.
I have written before about the rapid rise in the price of energy: gas, up 21%; electricity, up 25%; road fuels, up 29%. They have accounted for the majority of the rise in the UK’s consumer prices of 14% in the past four years.
The Office for National Statistics estimates that the share of household income going on ‘essentials’ is up from 28% in 2003 to 36% now.
One cause is the cost of natural gas. Gas overtook petroleum as the largest single source of UK energy in 1996, and is used to produce much of our electricity.
A senior advisor to the Saudi royal family has accused its Western allies of deceiving the oil rich kingdom in striking the nuclear accord with Iran and said Riyadh would follow an independent foreign policy.
Nawaf Obaid told a think tank meeting in London that Saudi Arabia was determined to pursue its own foreign and policy goals. Having in the past been reactive to events, the leading Sunni Muslim nation was determined to be pro-active in future.
Mr Obaid said that while Saudi Arabia knew that the US was talking directly to Iran through a channel in the Gulf state of Oman, Washington had not directly briefed its ally.
“We were lied to, things were hidden from us,” he said. “The problem is not with the deal struck in Geneva but how it was done.”
An Iranian deputy oil minister called on India to join an under-construction pipeline projected to carry natural gas from Iran to Pakistan.
Ali Majedi, who is a deputy minister for international and commercial affairs, said Iran expects India to overcome its doubts and join the pipeline, previously known as Peace Pipeline, reported FARS news agency. “If India joins the pipeline, the interests of all three countries – Pakistan, India and Iran – will be guaranteed,” he said.
“Given the initial design of the Peace Pipeline, even China can join this pipeline,” he said. Energy-thirsty India has already voiced its interest in the pipeline, but it has been dragging its heels on joining the project due to security concerns over the section of the pipeline cutting through Pakistan.
Saudi Arabia, the world’s biggest oil producer, is pressing ahead with an ambitious plan to build a chain of nuclear power plants to boost its electricity-generating capacity to free crude oil production for export and Westinghouse Electric says it’s got its eye on the kingdom’s program.
Riyadh is expected to seek preliminary bids in early 2014 for the first of the 16 nuclear reactors it plans to construct by 2030 at an estimated cost of $100 billion.
The Saudis plan to add 18 gigawatts of electricity from the nuclear plants to add to a planned 54 gigawatts of renewable energy in the next 10 years.
U.S. oil firm Chevron said on Friday the development of its North Sea Rosebank project was not currently economically attractive, raising doubts about a resurgence of the North Sea as fears rise over costs.
Chevron said Rosebank, which is located west of Shetland in the UK North Sea, “does not currently offer an economic value proposition that justifies proceeding with an investment of this magnitude.”
Statoil sold its stake in the oil and gas development earlier this year to OMV of Austria.
Islamist rebels led by al Qaeda-linked fighters seized Syria’s largest oilfield on Saturday, cutting off President Bashar al-Assad’s access to almost all local crude reserves, activists said.
There was no immediate comment from the government and it was not possible to verify the reports of the capture independently.
But the loss of the al-Omar oil field in the eastern Deir al-Zor province, if confirmed, could leave Assad’s forces almost completely reliant on imported oil in their highly mechanized military campaign to put down a 2-1/2-year uprising.
“Now, nearly all of Syria’s usable oil reserves are in the hands of the Nusra Front and other Islamist units … The regime’s neck is now in Nusra’s hands,” said Rami Abdelrahman, head of the pro-opposition Syrian Observatory for Human Rights.