Blowout Week 57

This week we refocus attention on the price of a barrel of crude oil:

Has it bottomed out?

Reuters:  OPEC’s Badri says oil may have hit floor

Oil prices at current levels may have reached a floor and could move higher very soon, OPEC’s secretary-general said on Monday. Abdulla al-Badri also warned of a risk of a future price spike to $200 a barrel if investment in new supply capacity is too low. “Now the prices are around $45-$50 and I think maybe they reached the bottom and will see some rebound very soon,” Badri told Reuters on the sidelines of a conference at Chatham House.

Or hasn’t it?

Reuters:   Oil price will average less in 2015 than during financial crisis

Crude oil will likely continue falling before posting only a mild recovery in the second half of this year, a Reuters survey of analysts showed on Friday. The survey of 33 economists and analysts forecast North Sea Brent crude would average $58.30 a barrel in 2015, down $15.70 from last month’s poll, in the biggest month-on-month forecast revision since prices last collapsed in 2008-2009.

The usual mix below the fold, including increased oil production from OPEC, decreased coal production from China, nuclear-free Austria, sustainable street lights, Keystone XL, a new UK biomass plant, the US pins its hopes on the Pope and how climate change causes  volcanic eruptions.

North Jersey:  Crude prices advance, rig counts retreats

Crude in New York advanced the most since June 2012 after a drop in the U.S. rig count signaled the slump in prices over the past seven months will curb output. Oil capped the biggest weekly gain since July 2013 after Baker Hughes Inc. reported the oil rig count fell to a three-year low of 1,223. Chevron Corp. on Friday became the latest oil company to cut spending in response to free-falling prices. “We’ve reached a point where prices have fallen well below the cost of drilling in some places,” Matt Sallee, who helps manage $17.7 billion in oil-related assets at Tortoise Capital Advisors in Leawood, Kansas, said by phone. “This is going to squeeze out some existing production.”

Reuters:  OPEC oil output rises in January as key members stand firm

OPEC’s oil supply has risen this month due to more Angolan exports and steady to higher output in Saudi Arabia and other Gulf producers, a Reuters survey showed, a sign key members are standing firm in refusing to prop up prices. Supply from OPEC has averaged 30.37 million barrels per day (bpd) in January, up from a revised 30.24 million bpd in December, according to the survey based on shipping data and information from sources at oil companies, OPEC and consultants.

WSJ:  Oil price slide hits LNG markets

The collapse in oil markets in recent months is now being mirrored in Asian liquefied natural gas markets, where prices have nearly halved in the last four months. The price of LNG, a key fuel source for power generation particularly in northern Asia’s economic powerhouses, fell to $7.45 per million metric British thermal units on January 28, according to the Japan/Korea Marker published by Platts, its lowest level since June 2010. Just a year ago LNG was trading at around $20 a mmBtu in Asia. As recently as October it was trading at around $14 a mmBtu.

Deutsche Welle:  Low oil prices hit German exports to OPEC

Falling oil prices are a boon for the German economy as they cut companies’ energy bills, thus making production cheaper. However, as crude prices have almost halved in the past six months, this is showing some negative repercussions on German trade, too, says Volker Treier, deputy managing director of the German Chambers for Industry and Commerce (DIHK). “The slump in oil prices is beginning to dampen our exports to resource-rich countries,” he told the news agency Reuters on Tuesday. “As they are short of billions in oil revenue, many oil-producing countries and companies there have postponed investments.”

NYT:  Senate Approves Keystone XL Pipeline Bill

The Senate passed a bill on Thursday to force approval of the Keystone XL oil pipeline. The White House promptly said that Mr. Obama would veto the measure, which would force the approval of a proposed 1,179-mile oil pipeline from Canada to the Gulf of Mexico. The Senate voted 62 to 36 in favor of building the pipeline. Nine Democrats joined 53 Republicans in passing the bill. The passage sends the measure back to the House, which passed a largely similar bill this month

Breaking Energy:  Senate Amendment to Repeal Corn Ethanol Mandate

On January 16, 2015, Sens. Dianne Feinstein (D-CA) and Pat Toomey (R-PA) introduced the “Corn Ethanol Mandate Elimination Act of 2015” as an amendment to the Keystone XL Pipeline Act (S1) introduced on January 6. The amendment would abolish the corn ethanol mandate in the Renewable Fuel Standard (RFS), which requires blending increasing volumes of renewable fuels into the U.S. transportation fuel supply.

Huffington Post:  China’s great coal boom grinding to a halt

China’s great coal boom is grinding to a halt, and the consequences for both the global climate and hundreds of millions of Chinese factory workers could be dramatic. Three trends have dominated the debate over China and climate change for the past decade: China’s economy will grow by double digits, the country will burn more coal every year, and global emissions will continue to climb with no end in sight. China has grown to be the world’s second largest economy and the No. 1 emitter of greenhouse gases, consuming nearly as much coal as the rest of the world combined. But preliminary data from 2014 show that China’s coal production just declined 2.5 percent, the first drop since the year 2000. Analysts are now predicting what was almost unimaginable just a few years ago: China’s coal use could peak and begin to decline by 2020.

Bloomberg:  Coal prices to keep falling

Coal prices, already down 52 percent since 2011, are forecast to keep falling. The rout shows that exporters’ OPEC-like tactics of trying to squeeze out high-cost producers have been frustrated by the rising dollar. Miners from Colombia to Australia maintained output as prices fell for a fourth year in 2014 amid a global glut of seaborne coal that Deutsche Bank AG says is poised to triple this year. A 19 percent jump since July in the Intercontinental Exchange’s dollar index, which tracks the greenback against 10 major peers, has helped companies that extract the power-plant fuel whose costs are measured in local currencies.

Scientific American:  Doubling of nuclear needed to curb global warming

The International Energy Agency and the Nuclear Energy Agency suggest in a report released Thursday that nuclear will have such a significant role to play in climate strategy that nuclear power generation capacity will have to double by 2050 in order for the world to meet the international 2°C (3.6°F) warming goal. To accomplish the needed CO2 emissions cuts to keep warming no greater than 2°C, the IEA says global nuclear power generation capacity needs to increase to 930 gigawatts from 396 gigawatts by 2050. Globally, nuclear energy is already making a comeback with 72 nuclear reactors now under construction worldwide, mainly in Asia.

RE News:  Austria is 100 per cent nuclear-free

Starting in 2015, there is an obligation in Austria to demonstrate the origin of electricity. The sale of the ENTSOE mix, which theoretically includes a share of nuclear power, is no longer possible. We therefore also only offer our industry customers electricity with a certificate of origin (which then does not even theoretically contain any nuclear power).

PV Magazine:  Global installed renewable capacity to double by 2025

A new report from market research group Frost & Sullivan forecasts the global installed capacity of renewable energy to more than double from 1,566 GW in 2012 to 3,203 GW in 2025 at an average annual growth rate of 5.7%. Solar PV technology is expected to account for 33.4% of total renewable energy capacity additions over the 2012-2025 period. Wind follows closely at 32.7%, ahead of hydro power at 25.3%. Other renewable technologies will represent the remaining 8.6% of capacity additions.

Business Green:  Binding CCS targets for Europe

European countries should be given binding targets for installing technology to capture and store carbon emissions, according to a new report for the European commission. The UN’s climate science panel says such technology could have to account for over a fifth of the world’s carbon cuts by 2050 and the new paper, produced by consultants for the EC, says there is a “genuine and urgent” need for it in Europe. “An EU roadmap for CCS with binding targets for 2030 sends a clear signal of intent to members of the UNFCCC process that the EU’s CO2 ambitions will be realised, thus maintaining a leading position for the EU in the climate debate,” says the EU guideline report.

Wind Power Monthly:  Portfolio shake-up for Europe’s energy majors

The expansion of ever cheaper renewable electricity generation combined with some 60GW overcapacity of fossil and nuclear power stations in Europe is driving down the market price of power. Prices are now at a level that makes it increasingly difficult for conventional power stations to operate profitably. Europe’s major energy companies are reacting in different ways to the new challenges. Germany’s E.on has made the decision to split renewables from conventional activities, while CEZ of the Czech Republic is strengthening its focus on purely conventional generation. France’s EDF is to set up an asset management partnership to gather funds from institutional and private investors for renewables investment. A close look at energy companies’ development policies reveals that whether and how much they choose to turn to renewables depends heavily on their market circumstances and obligations.

BBC:  MPs want moratorium on fracking

The government’s drive for shale gas should be put on hold because it would lead to more reliance on fossil fuels, the Environmental Audit Committee said. The cross-party committee also warned there were “huge uncertainties” about the environmental impact of fracking. “Ultimately fracking cannot be compatible with our long-term commitments to cut climate-changing emissions unless full-scale carbon capture and storage technology is rolled out rapidly, which currently looks unlikely,” said committee chair Joan Walley MP. “There are also huge uncertainties around the impact that fracking could have on water supplies, air quality and public health.”

Ofgem:  Is looking for efficiency and flexibility

We have launched a new project to develop our strategy to enable and enhance the efficient provision and use of flexibility1 sources across the supply chain in the GB electricity system. The aim of this is to ensure the energy system becomes sustainable while continuing to deliver resilience and value for money as its operation changes … new sources of flexibility are likely to be required to deal with the changing operation of the system. These new sources may include demand-side response, energy storage and distributed generation.

UK Government:  Releases latest energy statistics

Highlights for the 3 month period September 2014 to November 2014, compared to the same period a year earlier include:
• Petrol and diesel prices down sharply, reflecting lower crude oil price
• Primary energy consumption in the UK fell by 7.5%
• Indigenous energy production fell by 3.4% with nuclear down 27% due to outages.
• Lower coal generation due to the closure of plants
• Wind generation by Major Power Producers down 9.0%, due to lower wind speeds, whilst overall renewables up 10.6% with growth in biomass
• Low carbon share of electricity generation by Major Power Producers down 2.4 percentage points to 31.6%, due to fall in nuclear generation.

Darlington and Stockton Times:  Renewable energy plant gets EU approval

The £600mTees Renewable Energy Plant has received crucial European Commission approval. The factory will be built at Teesport, between Redcar and Middlesbrough, and will be one of the world’s largest biomass power stations, providing electricity for 600,000 homes. Operated by MGT Teesside, a subsidiary of MGT Power, it is understood the plant will burn wood chips and pellets imported from the US, with heat generated also going to industrial and commercial customers. The factory should start sending power to the Grid by 2019.

Reuters:  U.S. EPA chief hopes Pope will spur concern on climate change

The head of the U.S. Environmental Protection Agency said on Friday she hoped Pope Francis’ upcoming message to his flock on the environment would help galvanize concern about climate change and convince skeptics that “the science is real”. EPA administrator Gina McCarthy, visiting the Vatican to discuss climate change, said U.S. President Barack Obama shared the pope’s belief that it was a moral issue because its effects would be felt most by the poorest and weakest nations. “The pope knows his own beliefs and I want him to know that the president is aligned with him on these issues,” she told reporters.

Time:  Climate change to cause more volcanic eruptions

“As the glaciers melt, the pressure on the underlying rocks decreases,” Compton said in an e-mail to TIME. “Rocks at very high temperatures may stay in their solid phase if the pressure is high enough. As you reduce the pressure, you effectively lower the melting temperature.” The result is a softer, more molten subsurface, which increases the amount of eruptive material lying around and makes it easier for more deeply buried magma chambers to escape their confinement and blow the whole mess through the surface.

Cleantechnica:  Autonomous renewable sustainable public lighting

The prototype is 10-meters high and is fitted with a solar panel, a wind turbine and a battery. The turbine runs at a speed of 10 to 200 revolutions per minute (rpm) and has a maximum output of 400 watts (W). The developers’ aim is to make the lighting system even more environmentally efficient, so work is being done on a second prototype generator that runs at a lower speed (10 to 60 rpm) and has a lower output (100 W). An electronic control system manages the flow of energy between the solar panel, the wind turbine, the battery and the light.

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11 Responses to Blowout Week 57

  1. Syndroma says:

    Gazpromneft drilled and fracked first two wells in Bazhenov oil shale.

    Rosatom starts mining uranium at Istochnoye ore field with estimated reserves of 2 mln tonnes.

  2. Hugh Sharman says:



    Roger and Euan,

    This is an excellent but somewhat overwhelming Blowout, filled with an impossible quantity of “must read” material. It is obviously a full time effort on your side to find, trace, read and edit Blowout alone, let alone post it.

    But it would also be a full time job to read and keep up with all these news stories, let alone comment intelligently and constructively.

    Energy Matters is the best in class but it is creating a real dilemma for me! I can not yet afford to contribute financially for this! But neither have I time to contribute usefully to the myriad excellent, scholarly articles!

    That old Presbyterian guilt is creeping in….

    I wonder whether your other readers feel the same way?

    • Hugh:

      Sorry, I didn’t plan to overwhelm you. But I’d rather overwhelm you than underwhelm you 😉

      Putting together Blowout is actually fairly easy. This one took me only a few hours from go to whoa, which is a good deal less than the time it takes me to put a post together. I also like to do it because it keeps me up to speed with what’s going on and it often gives Euan and I ideas for new posts that otherwise might not get written. But if you or anyone else has suggestions for improving the content or presentation then please let us know.

  3. Euan Mearns says:

    The oil price jumped 8% on Friday afternoon, I’m guessing on the Baker Hughes rig count.

  4. Euan Mearns says:

    Updated to 30 Jan – US drilling in free fall I’d say.

  5. Florian Schoepp says:

    again very interesting! Re Chinese coal boom coming to an end: I have been following this story for years, intrigued by Jevon´s “The Coal question” and have done some research and calculations as to when Chinese coal out put might peak. My estimate was a time frame from 2016 to 2019. Of course, not having studied geology, there is little weight in my estimates. But here is someone who comes closer to being an expert:
    2024 is also pretty soon. What has been greatly underestimated in my opinion, are the underground coal seam fires that have been burning for decades and are still increasing. Have a nice Sunday!

  6. Nador says:

    On nuclear free Austria

    How does this origin of electricity even work? I mean apart from the technicality that electrons are indistinguishable, I can hardly imagine how a grid operator could separate from which source to which consumer to send a “piece” of electricity as electricity doesn’t come in labelled packages.
    Or do they require the electricity trader not to have a contract with any nuclear power plant? I assume Austria occasionally uses its interconnects with Hungary, Slovakia, Czech Rep. and Germany. All these countries have nuclear plants. For example in Hungary the transmission operator is MAVIR, which while theoretically independent, is part of the vertically integrated MVM group (that also owns the Paks nuclear plant), as a consequence it is likely that Austrian utilities will have to trade with it. So will Austria have to stop trading electricity with Hungary?
    Or more likely they will ask MAVIR for a nice piece of paper that says they do not send electricity from Paks to Austria so that the Austrian consumers can sleep well.

    BTW, a few years ago I have seen people sell special plugs for power sockets that could “filter out” electricity from nuclear plants. That’s a bargain no conscientious environmentalist could miss :).

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