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Drumbeat: September 1, 2009
Posted by Leanan on September 1, 2009
Recession may push North Sea oil and gas production into a much steeper decline than previously forecast due to the difficulties faced by smaller oil companies in getting finance to pay for exploration and oilfield development.
Industry leaders warned in Aberdeen yesterday at a media briefing that up to a quarter of the 20 billion barrels of oil known to be still recoverable from the North Sea may stay in the ground because of the contraction in the lending capacity of the banks and other financial institutions.
CAMBRIDGE, England — A few centuries ago, the developing world got most of its energy from windmills, from water mills, from whales and from plants. Plants contributed both wood for making heat and biofuels to power the labor of humans and other animals.
Nowadays, the “developed” world gets most of its energy from fossil fuels — coal, oil and natural gas — along with nuclear power and hydroelectric dams.
But this era of easily accessible fossil fuels is likely to be but a brief blip in the history of humanity. The peaks of oil and gas production are expected to be reached within the next 50 years, and coal production is likely to peak about the end of this century, if business continues as usual.
The publication of my op-ed on peak oil in the New York Times brought forth the usual tidal wave of criticism. The Oil Drum went so far as to put up a separate page for comments, and Joseph Romm issued a ‘challenge’ to me to wager on oil prices. (For an executed bet coming due next year, see the appendix below.)
Responding to each and every comment, or even the main ones, would be a Herculean (and Sisyphean) task, so I will (here) make some hopefully useful observations.
In 1971 a deal was struck between OPEC and the United States in which every barrel of oil purchased in the global marketplace would be bought with U.S. dollars. Any country, therefore, wanting to buy oil must have first exchanged its currency for U.S. currency. This “petrodollar” system has created an artificial demand for the dollar as global oil demand has increased.
Today several countries are moving their oil purchases into other currencies, in spite of this agreement. When OPEC officially decides to denominate oil sales in other currencies, the value of the U.S. dollar will decrease rapidly, leading to massive inflationary pressures on the U.S. economy.
Everybody believes that the moment oil sands proponents have been waiting for is nearly upon us. The reasons?: the rapid depletion of easier-to-get-at oil from cheaper and more conventional sources (seven of the world’s top 10 oil fields are past peak, and 400 conventional wells become extinct every day); the United States’ objective to wean itself from politically troublesome Middle East oil; and the burgeoning markets for oil in places like India and China.
Together, these forces are bringing us rapidly closer to what experts refer to as “peak oil,” the point at which we will have used up half of the Earth’s known supplies of oil and will face a future of increasing scarcity. Alberta oil sands and their potential 173 billion barrels of recoverable oil are poised to become a major supplier in the world market.
On the subject of peak oil and alternative energy, Mr Corson agrees that “oil and gas are limited reserves and other energy will play a growing role.”
“But for the foreseeable future, oil and gas will play a big role. There are substantial resources left to be recovered,” he said.
HUNDREDS of Borneo tribes men armed with blowpipes are blockading roads in protest against companies they accuse of destroying their rainforests to grow oil palms for “green” biofuel, cooking oil, soap and margarine.
For China, the cost of oil and gas has just doubled. You will not find this new oil price quoted anywhere, but its burden will weigh heavily on the leadership in Beijing.
It is not an oil price that can be measured in dollars per barrel on the New York Mercantile Exchange. There has been no cutback by Opec, nor has a hurricane toppled offshore platforms in the Gulf of Mexico. It is China’s oil price; the cost of oil for the People’s Republic is now measured in refugees, in tens of thousands of people fleeing Burma into China.
(Bloomberg) -- Mexican President Felipe Calderon must create new sources of revenue to offset declining oil income if the country is to avoid a downgrade of its debt rating, Standard & Poor’s analyst Lisa Schineller said.
S&P may cut Mexico’s BBB+ status before the end of the year, depending on how Calderon and legislators address ways to boost tax collection when they discuss the 2010 budget next week, Schineller said in an interview.
CARACAS (Reuters) - Venezuela's state oil company PDVSA has been progressively selling off "nonessential" assets belonging to its U.S. refining unit Citgo.
A draft of Citgo's 2008 audited financial results, which have not been released to the public but were seen by Reuters, lists the value of the assets the company has sold in recent years.
Opec oil supply rose in August for a fourth consecutive month due to higher output from top exporter Saudi Arabia, Nigeria and Venezuela, a Reuters survey showed yesterday. Supply from the 11 members of the Organisation of the Petroleum Exporting Countries with output targets rose to 26.20mn barrels per day (bpd) from 26.11mn bpd in July, the survey of oil firms, Opec officials and analysts found.
In this age of economic uncertainty, some people have found that cutting back on air conditioning, especially during a relatively mild summer, makes good financial sense. Others do it because it's the environmentally conscious thing to do.
DUBAI, United Arab Emirates—Government-backed investors bankrolled by Persian Gulf oil wealth are back on the prowl for deals in the West after mostly sitting out the past year's turbulence.
Public hearings on Gazprom Neft’s controversial Okhta Center in St. Petersburg became heated Tuesday, with several opposition activists detained and advocates of the project insisting that the tower needed to be 400 meters high to protect against suicide bombers.
Global warming is expanding the deserts, melting the icecaps, drying up rivers, and destroying water reserves. It is reducing agricultural productivity and crop yields. Alongside this there is the approach of peak oil. The effects of this on any process of ‘recovery’ are already clear. As soon as governments start to talk up so-called ‘green shoots’ the price of oil starts to rise.
Even if they dont know what is happening to their real economies, G20 leaders and their science advisers are sure and certain that world climate is changing for the worse, remedial action is urgent, and spending must be large. The closely linked stalking horse of Peak Oil does not openly figure in the rationale and reasoning offered for ever-rising, increasingly massive spending, and muscular legislation to force energy transition away from the fossil fuels, but surely adds yet more impetus to what will be huge long-term intervention in the economy.
Discussing the end of population growth is as politically incorrect as saying the simplest solution to peak oil and climate change is to use less fossil energy, starting with the most oil and fossil energy intense economies and societies.
If you happened to walk into the Temple of Earth in Beijing — the nearly 500-year-old monument where Chinese emperors once prayed for good harvests — on Aug. 28, you would have noticed a steady drip. The environmental group Greenpeace placed ice sculptures of 100 children — made of the glacial meltwater that feeds China's great rivers — inside the temple to symbolize the risk that climate change and disappearing ice poses to the 1 billion–plus people in Asia who are threatened by water shortages.
To make it easier for children to eat healthfully and move more, local governments in towns and cities across the country need to help create a better environment, a new report says.Link: http://www.theoildrum.com/node/5736
Children and their families should have access to grocery stores that offer plenty of healthful food such as fruits and vegetables, and schools shouldn't be surrounded by fast-food restaurants. Children should be able to ride their bikes or walk safely to school, and they should have safe places to play afterward, says the report out today from the Institute of Medicine (IOM) and National Research Council.