This week we feature predictions, which as the philosopher Yogi Berra once observed are tough to make, especially about the future:
Despite global declines in spending that have driven up oil prices in recent weeks, oil production in the U.S. is still rising, wrote Edward Morse, Citigroup’s global head of commodity research. Brazil and Russia are pumping oil at record levels, and Saudi Arabia, Iraq and Iran have been fighting to maintain their market share by cutting prices to Asia. The market is oversupplied, and storage tanks are topping out. A pullback in production isn’t likely until the third quarter, Morse said. In the meantime, West Texas Intermediate Crude, which currently trades at around US$52 a barrel, could fall to the $20 range “for a while”. The U.S. shale-oil revolution has broken OPEC’s ability to manipulate prices and maximize profits for oil-producing countries. “It looks exceedingly unlikely for OPEC to return to its old way of doing business,” Morse wrote. “While many analysts have seen in past market crises ’the end of OPEC,’ this time around might well be different.”
Financial Post: OPEC is going to make a massive comeback, BP predicts
One of the big stories of the past few years has been the boom in unconventional gas and oil extraction outside the traditional oil-producing countries. The explosion of fracking in the U.S. seemed as if it was dislodging the old oil-producing countries permanently. But that is not likely, according to BP’s latest 20-year outlook for the energy market. BP says the Organisation of Petroleum Exporting Countries (OPEC) isn’t going anywhere, and it will actually make a comeback. BP is forecasting “OPEC’s market share by the end of the Outlook is around 40%, similar to its average of the past 20 years.”
More on OPEC and oil below the fold, plus the growing Middle East nuclear (arms?) race, natural gas in Mexico, blackouts in Holland, the world dragging its feet on emissions reduction pledges, the Longannet closure, Scotland misses its emissions target again, problems with renewables in California and how climate change will force women into prostitution:
Yahoo Finance: How American frackers plan to beat OPEC
Gary Evans, CEO of Houston-based energy firm Magnum Hunter Resources (MHR), has a blunt message for OPEC oil ministers hoping to force down prices and drive American competitors out of business. “OPEC is making a huge mistake,” he says. “We made a lot of money with oil at $100 (per barrel), and we’ll become more efficient and make a lot of money at $50.” What the Saudis may not have counted on ….. is extreme cost-cutting underway at many drillers, which is making them far more efficient and pushing down the price at which they can turn a profit. The Saudis’ market-share move could even backfire, as U.S. frackers become more efficient competitors. “We will figure out how to operate in a lower price environment,” Evans says. “Anybody who thinks our costs are too high – that’s absolute bull crap.”
Yes the move down from $100 to $70-$80 or so was tied to the oversupply that was anticipated to come and has come mainly in the US. Beyond that, most oil industry executes would agree, as have various members of OPEC, that the decline from there was tied to media hysteria that created a negative environment to force an unwinding of long futures positions which ballooned to 5-8X higher than 2008. Post OPEC’s November decision, the media has been basically cheerleading oil down.
Marketwatch: Yemen has the power to rally oil prices
Yemen produces roughly 130,000 barrels of crude oil a day, but it still has the power the rally oil prices. It sits at the Bab el-Mandab Strait, a key chokepoint in international shipping—making it important in terms of international energy trade, according to the U.S. Energy Information Administration. About 3.8 million barrels of oil a day passed through Bab el-Mandeb in 2013, and a closure of the Strait would keep tankers in the Persian Gulf from reaching the Suez Canal and the SUMED Pipeline, forcing them around the tip of Africa, the EIA said. With Saudi Arabia and other Gulf nations having launched airstrikes against rebel forces in Yemen’s capital and across the country, there is potential for a closure of the Strait.
Saudi Arabia will not rule out building or acquiring nuclear weapons, the country’s ambassador to the United States has indicated. Asked whether Saudi Arabia would ever build nuclear weapons in an interview with US news channel CNN, Adel Al-Jubeir said the subject was “not something we would discuss publicly”. The ambassador’s reticence to rule out a military nuclear programme may reignite concerns that the autocratic monarchy has its eye on a nuclear arsenal. In 2012 the Saudi Arabian government threatened to acquire nuclear weapons were neighbouring regional power Iran ever to do so. The Saudi Arabian regime also already possesses medium-range ballistic missiles in the form of the Royal Saudi Strategic Missile Force. Western intelligence agencies believe that the Saudi monarchy paid for up to 60% of Pakistan’s nuclear programme in return for the ability to buy warheads for itself at short notice, the Guardian newspaper reported in 2010.
One of the most important reasons why the U.S. is trying to conclude a nuclear deal with Iran is to prevent an Iranian bomb from triggering a nuclear race in the Middle East. Yet even as talks continue now in Switzerland, Tehran’s regional rivals have already begun quietly acting on their own atomic ambitions. Nuclear power may be on the wane almost everywhere else in the world, but it’s all the rage in the place with all that oil. With the exception of Israel, which has never publicly acknowledged its widely known nuclear arsenal, no Middle Eastern country beyond Iran had a nuclear program — peaceful or otherwise — until the wealthy United Arab Emirates began building a reactor in July 2012 (due for completion in 2017). The list now includes, in addition to Egypt, Turkey, Jordan and Saudi Arabia — the last Iran’s archrival, and which last year revealed plans to build 16 nuclear plants over the next two decades.
San Antonio News: Mexico signs second pipeline deal to import Eagle Ford natural gas
Mexico’s national oil company PEMEX has signed a deal with U.S.-based investment firms BlackRock and First Reserve to begin the second phase of a pipeline that will bring natural gas from the Eagle Ford shale to cities hundreds of miles south of the border. Under the 25-year deal, BlackRock is investing $4.6 billion and First Reserve is investing $30 million in the Los Ramones II natural gas pipeline, earning them a combined 45 percent control of the ambitious energy project. The 462-mile pipeline is part of Mexico’s historic energy reforms and will run from Los Ramones, Nuevo Leon to the State of Guanajuato where a number of maquiladoras and automobile factories will use the natural gas as a clean source of power.
Large areas of the Netherlands have been left without electricity. The north of the country has been mainly affected, with the Dutch electricity network operator saying the outage has been caused by a power grid overload. The capital Amsterdam has been hit, along with the area around Schiphol Airport. Twitter has reported that some hospitals in Amsterdam have been left without power, while the tram and metro networks are also not running in the capital. Thousands of people have been stuck on public transport because the doors will not open as they are controlled electronically. The outage was caused due to a defect at a substation in Diemen, according to TenneT, the company which is responsible for supplying power in the Netherlands.
Scottish Power retail and generation chef executive Neil Clitheroe said: “We are extremely disappointed with National Grid’s decision as Scottish Power submitted a competitive bid that reflected our commitment to protecting the immediate future of Longannet Power Station. “As we have said previously, today’s decision by National Grid means that, in all likelihood, we will be forced to announce the closure of Longannet by March 2016. The issue regarding punitive transmission charges has not changed, and this still negatively impacts the future of the station. Beyond that, the current transmission charging regime is a major barrier to any future investment in flexible thermal power generation in Scotland.” He added: “In any future scenario for Scotland, it is vital that the network here is supported by flexible generation to complement renewables.”
Scottish politicians should consider congestion charges, reducing speed limits and rethink plans to cut air passenger duty after Scotland again missed its climate targets, an influential advisory committee has said. The committee on climate change, the Scottish government’s official advisers, said far-reaching action was needed to reduce CO2 emissions after the reduction targets were missed for the third time by some 4.5%. While the figures for 2012 showed Scotland’s emissions were better overall than the UK’s and it has been faster on installing renewables, the CCC said it needed to do far more on cutting transport emissions – which are not falling – tackling home fuel use, and that it would require deeper cuts from the wider public sector.
Green power from Norway will be powering hundreds of thousands of UK homes from 2021, National Grid has said. Energy will travel via the world’s longest sub-sea electricity interconnector. The €2bn (£1.4bn) project has been rubber stamped between National Grid and its Norwegian equivalent Statnett. The UK aims to import enough hydro-power from Norway to provide 14% of yearly household electricity needs. Alan Foster, director of European business development for National Grid, said: “Access to low-carbon energy from Norway hydro-power stations will help us meet the challenge of greener, affordable energy. It also adds to the diversity of energy sources for UK and potentially can reduce peak prices, with benefits for consumers and businesses.” Statnett chief executive Auke Lont said: “Not only is this a technically impressive project where we will set a new world record, it is also an important contribution to the increase of renewable energy production on both sides.”
British households used 14% less energy in 2014, as average temperatures rose to record highs and drove down demand for heating, according to government statistics released on Thursday. But bills continued to rise, with households paying £15 more for electricity on standard bills, which reached £592, an increase of 2.6% on 2013, and £23 more on gas bills, which rose 3.2% to £752. The contrast between falling use and rising bills, even as wholesale gas prices also fell, is likely to raise fresh questions over the profits of energy companies, and fuel poverty.
Christian Science Monitor: As world expands nuclear power, US grapples with decades of waste
A nuclear power renaissance is underway in much of the world, but in the US you would hardly notice. Shifting energy economics and public safety concerns have made new American nuclear reactors rare, even as China and others ramp up investment in the carbon-free power source. But now, the US government is seeking to stay relevant in an evolving global nuclear industry, in part by proposing new ways to confront a decades-old challenge: handling mounting nuclear waste. Ultimately, the friction over nuclear waste comes down to one proposed project: Yucca Mountain. The Nevada nuclear waste repository has been in limbo for 30 years and is opposed by Senate Minority Leader Harry Reid (D) of Nevada and President Obama.
Cato Institute: FEMA Tells Oklahoma to Do the Impossible … Or Else
Last fall, the Federal Emergency Management Agency issued a draft proposal that will require Oklahoma to do the impossible or face the loss of disaster relief funds. FEMA will require Oklahoma to “Provide a summary of the probability of future hazard events that includes projected changes in occurrence for each natural hazard in terms of location, extent, intensity, frequency, and/or duration. Probability must include … the effects of climate change on the identified hazards.” Anything one can say about climate change and future hazards, such as tornados, has to be based upon some kind of forecast model, and there are a lot out there. For example, in its most recent compendium on climate change the United Nations uses 107 different versions, all of which predict slightly different futures and none of which have been correct about the climate of the past two decades.
The Obama administration has proposed to change how it collects royalties on coal mined from federal land, a move that environmentalists hope, and the industry worries, will cut use of the fuel linked to climate change. “It’s time for an honest and open conversation about modernizing the federal coal program,” Interior Secretary Sally Jewell said in a speech last week to the Center for Strategic and International Studies in Washington. “How do we manage the program in a way that is consistent with our climate-change objectives?” “It’s a sneaky, underhanded backdoor approach to do something through regulation that they don’t have the authority to do,” said Richard Reavey, vice president for Cloud Peak Energy, a Gillette, Wyoming-based company with three mines on public lands in the Powder River Basin. “What they are saying is: ‘We want the coal to stay in the ground and here are all the ways we’re going to do it.’ ”
Los Angeles Times: California’s push for clean energy has a problem: no place to store it
On a quiet Sunday morning last April, power plants were pumping far more energy into California’s electricity grid than residents needed for their refrigerators, microwaves and television sets. So officials made an odd request in a state that prides itself on leadership in renewable energy: They asked wind and solar plants to cut back their output. For 90 minutes, clean energy production was slashed 1,142 megawatts, enough electricity for hundreds of thousands of homes, while dirtier power from less flexible sources stayed on to keep the system stable. It was the largest curtailment of green energy last year, according to grid operators, and it highlights a hurdle for Gov. Jerry Brown’s plan to increase the state’s reliance on renewable energy. Peak demand for electricity rarely coincides with the brightest sunshine or the strongest winds, so finding a way to store clean power and deliver it when needed will be critical as California relies more on renewable energy. The state requires three of California’s largest utilities to invest in hundreds of megawatts of storage over the next several years. But grid operators say that won’t be enough if the Legislature approves Brown’s proposal that half of the state’s power come from renewable sources by 2030, up from the current target of one-third in 2020.
Less than a week before the United Nations deadline for countries to file greenhouse-gas pledges necessary to keep a global climate change deal on track, it looks like most of the world is missing in action. Ahead of the March 31 target, only the European Union and Switzerland have unveiled plans, representing about 10 per cent of global emissions. The United States has promised to hit the deadline. The rest of the world’s major economies, including China, India, Australia and Japan, are unlikely to complete submissions in time, according to environmental groups tracking U.N. climate talks. The proposals come in what the UN calls intended nationally determined contributions, or INDCs. They’re supposed to contain voluntary measures for each nation to pare back fossil-fuel use, accelerate renewable energy and adapt to rising seas and other measures. “It seems difficult to understand why a major economy would not be ready,” Franz Perrez, the Swiss climate envoy, said by email. “This would clearly undermine the trust in partners.”
Demand for this purportedly green form of energy is so robust that wood pellet exports from the United States nearly doubled from 2012 to 2013 and are expected to nearly double again to 5.7 million tons in 2015. This soaring production is driven by growing demand in the U.K. and Europe, which are using wood pellets to replace coal for electricity generation and heating. The European Union’s 2020 climate and energy program classifies wood pellets as a carbon-neutral form of renewable energy, and European companies have invested billions to convert coal plants to plants that can burn wood pellets. But as wood pellet manufacturing booms in the southeastern U.S., scientists and environmental groups are raising significant questions about just how green burning wood pellets really is. The wood pellet industry says that it overwhelmingly uses tree branches and other waste wood to manufacture pellets, making them a carbon-neutral form of energy. Critics contend that …. pellet manufacturers frequently harvest whole trees — including hardwoods from bottomland areas — that can take a long time to regrow, thus making the burning of wood pellets an overall source of CO2 emissions.
New Scientist: Keeping warming to 2 °C is not enough to save species
Is the world’s target of limiting global warming to 2 °C too high, or too low? Does it even make scientific sense? The consensus around the target, which was agreed at climate talks in Copenhagen in 2009, seems to be coming unstuck. Now the target has been denounced as “utterly inadequate”, by Petra Tschakert of Penn State University in University Park, who has been involved in a UN review of the target. She wants a 1.5 °C target instead. Writing in the journal Climate Change Responses, she says this lower limit is necessary if we want sea levels to rise less than a metre, to protect half of all coral reefs, and to still have some ice during Arctic summers. Tschakert is not alone. There was a groundswell of support for a revised 1.5 °C target at an expert meeting during the climate conference in Lima, Peru, last December, as part of the UN’s target review.
It has been argued that the amplified warming of the Arctic relative to lower latitudes in recent decades has weakened the polar jet stream, a strong wind current several kilometres high in the atmosphere driven by temperature differences between the warm tropics and cold polar regions. One hypothesis is that a weaker jet stream may become more wavy, leading to greater fluctuations in temperature in mid-latitudes. Through a wavier jet stream, it has been suggested, amplified Arctic warming may have contributed to the cold snaps that hit the eastern United States. Scientists at ETH Zurich and at the California Institute of Technology, led by Tapio Schneider, professor of climate dynamics at ETH Zurich, have come to a different conclusion. They used climate simulations and theoretical arguments to show that in most places, the range of temperature fluctuations will decrease as the climate warms. So not only will cold snaps become rarer simply because the climate is warming. Additionally, their frequency will be reduced because fluctuations about the warming mean temperature also become smaller.
On Wednesday, California Democrat Barbara Lee proposed a resolution in the House of Representatives that claims women will eventually be forced into prostitution in order to obtain life-sustaining food and water for their families. Lee introduced House Concurrent Resolution 29, warning that women will be forced into “transactional sex” to get enough food and clean water — all because global warming will create “conflict and instability” in the world. “Women will disproportionately face harmful impacts from climate change,” Lee’s resolution reads.