Blowout week 49

UK: UK energy news this week is dominated by The Government move to adjust subsidies for wind from expensive onshore to even more expensive offshore developments. There is a blistering attack of Government Energy policy by Simon Jenkins writing in The Guardian below.

Europe: EU Commission may hinder nuclear at Hinkley and South Stream gas pipeline. Storms bring energy bounty to Germany.

World: The main story to catch my eye on the World stage this week comes from North Dakota where extreme cold winter weather is reported to be interfering with drilling and fracking operations that may impact oil production from The Bakken shale oil play (top story below the fold).

Wind turbines trash the landscape for the benefit of billionaires

Is it fair for the chancellor to cut pensions for the poor while offering a million pounds a year to the Duke of Roxburghe for letting the wind blow? Is it fair to offer half a million to the Earl of Moray, a third of a million to the Earl of Glasgow, and a quarter of a million to the Duke of Beaufort, Sir Alastair Gordon Cumming and Sir Reginald Sheffield, the prime minister’s father-in-law? Is it fair to promise a reported £1bn to Charles Connell over the next 25 years?

Never in the history of public subsidy can so much have been paid by so many to so few…Simon Jenkins writing in The Guardian

World: Snow, cold temps slow oil production

Even booming Bakken oil production can’t stand up to North Dakota’s crippling winters.

By hindering transportation to wells and slowing the hydraulic fracturing process, severe winter weather slows production.

The No. 1 cause of the slowdown in winter months is difficulties for fracking, North Dakota Department of Mineral Resources Director Lynn Helms said. Ice and snow make it harder to get water to a site, it takes longer to heat fluids and keep them warm, and flowback water can freeze and delay the process, he said.

UK: Government warned not to drop energy commitments to poor households

In a report published by the Environmental Audit Committee, the Government has been warned not to weaken its commitment to ‘eliminate’ fuel poverty, as it prepares to make changes to ‘green levies’ that fund energy efficiency improvements for the poorest bill payers

UK: So how much will energy bills rise?

Well if you take the average 9% increase in dual fuel bills announced by the biggest supplier British Gas, owned by Centrica, that increase will be cut to circa 6%, and there will be a £12 rebate on top – so the 9% increase in effect becomes 5%.

UK: Hinkley Point deal under threat from EU ruling

The European Commission is close to concluding that Britain’s nuclear programme at Hinkley Point breaches EU state aid rules and may have to be revised, a move that could lead to long delays and even cause the complex deal to unravel.

UK: The amount of electricity we use is a luxury, says energy boss

A power boss sparked uproar yesterday by saying the amount of electricity families in Britain use is a ‘luxury’.

Europe: Deutsche Bank slashes commodity trading operations

Deutsche Bank is pulling out of the bulk of its commodities business in a cost-cutting drive that will shrink the lender’s balance sheet further.

World: World Bank says no money for nuclear power

The World Bank and United Nations on Wednesday appealed for billions of dollars to provide electricity for the poorest nations but said there would be no investment in nuclear power.

“We don’t do nuclear energy,” said World Bank president Jim Yong Kim as he and UN leader Ban Ki-moon outlined efforts to make sure all people have access to electricity by 2030.

UK: US shale gas plan to make Grangemouth profitable

Britain is to see its first deliveries of US shale-derived gas in 2016 when Ineos completes a £300m investment programme at its Grangemouth plant in Scotland.

UK: Record investments of £40 billion in renewable electricity to bring green jobs and growth to the UK

Additional investments of around £40 billion are expected in renewable electricity generation projects up to 2020, following updated contract terms and strike prices published today and wider reforms to the electricity market.

UK: UK energy mix: Where does our power come from?

The energy we produce underpins pretty much everything we do.

Without it, there would be no artificial light, no long-distance communication, no mass transport or large-scale manufacturing. Facebook and Twitter would not even exist.

But how much of it do we use, and where does it come from?

World: Statoil Explains why Arctic Oil Production is Decades Away

Environmentalists that are worried by Arctic oil exploration and the apparent eagerness that most countries and oil companies show in tapping into the regions 90 billion barrels of oil reserves, according to the US Geological Survey, may breathe a little easier in the knowledge that such activity in the Arctic is not likely to be realised for decades to come.

Europe: South Stream bilateral deals breach EU law, Commission says

The bilateral agreements for the construction of the Gazprom-favoured South Stream gas pipeline – concluded between Russia, Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia and Austria – are all in breach of EU law and need to be renegotiated from scratch, the European Commission said today (4 December).

UK: Is Scotland better off going it alone on energy?

Scotland could be better off going it alone when it comes to electricity, a new report has found.
The study was written by a group of five academics from universities across the UK as part of the Delivering Renewable Energy Under Devolution (DREUD) project.

UK: Changes to renewable energy subsidies

Energy Minister Fergus Ewing said: “Today’s announcement falls short in several vital respects.
“Firstly Scotland’s islands are rich in renewable energy resources and I am deeply concerned about the island proposals.

UK: Offshore wind is too expensive, and that’s unlikely to change

The government has announced that the final prices paid to generators of solar, onshore and offshore wind would change to favour offshore wind at the expense of the others. While the difference is fairly slight – a fiver off here, a fiver added there – it reveals a favour that ignores the industry’s struggles to make offshore wind development economically viable.

UK: Drax surges on biomass subsidy news despite uncertain markets

Drax, the power station owner, surged 59p or nearly 9% to 743p after the UK government set its subsidy prices for renewable energy projects. The company is aiming to convert three of its six generating plants to produce energy from biomass rather than coal, and the government confirmed a strike price of £105 per megawatt hour from 2015 for biomass generation. This is in line with a provisional announcement, but there had been some suggestions it could be scaled back.

Europe: Storm lifts Germany’s renewable energy share above 2020 goal – for a day

Record output from wind farms lifted Germany’s share of renewable electricity production above its 2020 target of 35 per cent on Thursday as a storm from Scandinavia battered the nation’s northern coast.


Hier können Sie Grafiken über Stromerzeugung und -verbrauch für einen selbstgewählten Zeitraum erstellen. Bitte beachten Sie, dass das erste mögliche Anfangsdatum der 01.12.2012 ist (weiter zurück­liegende Daten werden in Zukunft noch eingepflegt) und dass die Erstellung des Graphen einige Sekunden dauern kann. But there are some nice charts:-)

UK: Wind turbines policy is all at sea

It has long been obvious that by far the most delusional element in the Government’s shambles of an energy policy is how it subordinates all else to an obsession with building thousands of hopelessly inefficient and absurdly oversubsidised windmills.

UK: Sir Roger Carr: the Punch and Judy politics on energy must stop

Sir Roger Carr, the chairman of Centrica, has turned on the critics of the “Big Six” energy companies, saying that ill-judged attacks will put off investors and that it was time to end the “Punch and Judy” debate.
As new figures revealed that up to £11bn had been wiped off the value of energy stocks in the past two months

My selection from The Edge of Time

World: Black, black Friday in Iraq: 50+ people dead in cross-country attacks and kidnappings

At least 51 people were killed in Iraq on Friday as the country continues to slip into sectarian violence while the year’s death toll, already in the thousands, continues to spiral upwards.

World: Iraq Nears Deal on Oil Output Targets

Iraq’s oil minister said Tuesday the country is close to agreeing to sharp cuts with major Western oil companies in production targets set out for them at some of its largest oil fields, casting doubts over Iraq’s ambitious oil output targets.

World: Is Oil in These Out-of-The-Way Places The Next Big Play?

Very odd news in the international crude markets this week.

Reports confirm a first-of-a-kind event in this space. Oil consumers in India buying crude from a far-away place: Eastern Canada.

Indian Oil Corp. reportedly purchased a cargo of White Rose crude. Coming all the way from offshore Newfoundland.

The buy seems to suggest structural changes afoot in the global oil markets. Never before have Indian users gone so far afield to secure supply.

The question is: why?

World: Shell Cancels US Gas-To-Liquids Plant As Costs Rise

Royal Dutch Shell said on Thursday it has canceled a proposed gas-to-liquids (GTL) plant in Louisiana less than two years after the plan surfaced as costs rose and the company reins in spending.

The project, which would have converted natural gas to diesel, jet fuel and other refined products, was expected to cost more than $20 billion, a Shell spokeswoman said, up from the minimum $12.5 billion price tag estimated in September.

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7 Responses to Blowout week 49

  1. ducdorleans says:

    Euan, you forgot Japan, where during the week some sanity returned, with their nuclear power plants planned to be coming back on line …

    • Euan Mearns says:

      Thanks for the heads up. There is this 4 days ago:

      Nuclear to remain key Japan energy source

      Japan should continue to use nuclear power as a key energy source despite the Fukushima power plant disaster, a government panel said Friday in a reversal of a phase-out plan by the previous government.

      The draft energy plan issued by the panel underscores Prime Minister Shinzo Abe’s push to restart as many nuclear reactors as possible under new, stricter safety requirements that took effect this past summer.

      Currently, all 50 of Japan’s reactors are offline for safety inspections or maintenance.

  2. Roger Andrews says:

    Here in Mexico the government is trying to open up Pemex, the state oil company, to foreign investment in an attempt to offset declining production from Cantarell and other fields by tapping into some of the deep water resources in the Gulf that Pemex doesn’t have the technology to develop.

    The problem, however, is that oil in Mexico belongs to the people and the people are very resistant to the concept of transferring ownership of any of it to foreigners. The Mexican government therefore has to tread with care, and probably the best it’s going to be able to offer is profit-sharing via exploration and production contracts. It can’t offer any ownership interest in the oil, which I guess would mean that a foreign company couldn’t “book” any Mexican reserves.

    I’d be interested in opinions as to how many oil companies with deep water capability would be interested in jumping into bed with Pemex on a deep water play under these conditions.

    • Euan Mearns says:

      Roger, production sharing contracts (PSCs) are very common in the developing world where The State wants to retain ownership and control but to tap into foreign expertise and capital. Under a PSC a company can book on a pro rata basis any reserves discovered. The strange thing with Mexico is that it is an OECD member. Pemex are widely viewed as highly inefficient compared to for example Americas peer Petrobras.

      The whole Cantarell – Ku-Maloob-Zaap N injection story is a fascinating one that I have already told on The Oil Drum. Mexicans need to decide if they want a smaller part of a much bigger cake, or no cake at all.

      But inefficiency in resource development is not necessarily a bad thing. Mexico still has its deep water oil. May produce it at a time when many others are running short.

  3. Roger Andrews says:


    Thanks. The Pemex reform looks a whole lot better if it allows foreign companies to book reserves.

    Yesterday the Mexican Senate voted 95-28 in favor of the energy reform package, so it looks like it’s going through. The House will vote on the issue just as soon as the opposition removes the padlocks and chains and lets the Deputies back into the Chamber. I don’t think the public will be allowed any input on this one apart from the inevitable street demonstrations.

    And I think you meant to say that Mexico is NOT an OPEC member?

    • Euan Mearns says:

      No, the curious thing is that Mexico is a member of the OECD, and yet has developing nation approach to resource exploitation. No criticism of Mexico implied or intended. In the OECD you’re supposed to say “come get girls” 😉

      • Roger Andrews says:

        Whoops, I misread OECD as OPEC. Apologies. Old age taking its toll again.

        Between the hours of 5.30 and 6.00am this morning approximately 300 bottle rockets, each one containing the explosive equivalent of about half a stick of dynamite, were let off outside my bedroom window to celebrate the day of the Virgin of Guadalupe, Mexico’s patron saint. So criticism of Mexico is currently permitted.

        I found a whole bunch of Oil Drum articles on Mexico and will shortly read them. Maybe more later.

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