In 2011, renewable energy investment hit a new record of $257 billion, according to “Global Trends in Renewable Energy Investment,” which was released Monday by the United Nations Environment Programme (UNEP).  That brings the total investment in the sector over the past five years to nearly a trillion dollars. From 2006 to 2011, annual investments nearly doubled

Continue reading: After Record Growth, Renewable Energy to Face “Very Difficult” Year

“I think the Fukushima event was a wake-up call, hopefully for everyone,” Jaczko said in a news conference today, referring to the earthquake- and tsunami-triggered nuclear plant accident in Japan on March 11, 2011

Continue reading: Top U.S. Nuclear Regulator’s Parting Message: Fukushima Was “A Wake-Up Call”

Also, the prospects for finding more oil are getting dimmer, at the same time the outlook for natural gas is getting brighter, according to the assessment

Continue reading: New Survey of Undiscovered Oil Shows Shift Away from Middle East, Russia

(For more on Chesapeake, check out Jeff Goodell’s excellent feature in Rolling Stone, “The Big Fracking Bubble,” that delves into the company’s land deals, and Christopher Helman’s earlier profile of McClendon in Forbes that tries to make sense of the company’s beguilingly complex financial arrangements.)

In light of all this, I thought people would be interested in this view from within Chesapeake’s board, from a book that is probably little-read, called Peak Oil Personalities, in a chapter by Charles T. Maxwell, an oil industry analyst and investor who has been on Chesapeake’s board since 2002—before the shale boom really took off.

In 2002, I was invited to join the board of Chesapeake Energy Corporation… I came to the job full of traditional conventions about analytically correct balance sheet ratios, and so on. But in the first several years I was confronted by a riveting problem.

The problem, as Maxwell explains, was that fracking had opened up new areas to production, and it was all sufficiently new that it was hard to know what to expect—so his “traditional conventions” didn’t fly. But also, McClendon didn’t want to stick with traditional ways of financing the operation, as Maxwell explains.

Now a page was being turned, and a new chapter was beginning. How large could this play become? How long would typical shale production keep going at economic rates of output? What would be the additional stimulation costs of this technology? Would the costs attendant on a shale-based drilling programme doom shale gas production to the bottom rung of returns on capital? Could the company afford the land position and drilling obligations required to dominate this play in acreage close to the sweet spots?

All these questions, it seems, were difficult to grapple with, because there was so little experience with fracking shale to unlock shale gas.

McClendon brought in the evidence from the field, and we debated it with him on many separate levels and with different top personnel. In the end, he wanted to seize the once-in-a-generation opportunity to pioneer a vast new play in land and reserves. That would involve tolerance of increased leverage on the balance sheet. What was the trade-off here? Such an assemblage of superior oil shale lands, the board well understood, would not likely be presented again. But, it would be an expensive endeavor. There was only a narrow window of time to make many concerted decisions.

The board backed the management’s plan, and Chesapeake eventually took a dominant position in virtually all of the US natural gas and oil shale plays that have been found so far.

This felt like the beginning of a whole new industry.

As others began to agree, they wanted a piece of the action as well. This allowed Chesapeake to continue acquiring more leases, to drill not only in the “superior” shale lands, but also elsewhere.

… the board members continued to give the go-ahead to McClendon and the management team, and the company went on to obtain solid land positions in other less familiar shale plays. Then, under McClendon’s strategy, Chesapeake laid off a good portion of the eventual costs of these deals via minority joint-venture ownerships and earned drilling arrangements with those late-to-the-party guests that still needed positions in active plays. Financial and operational risks were thus substantially reduced by these moves, and solid values in acreage and expected reserves were obtained at relatively low-cost.

Only time will tell how these shale plays turn out in terms of total volumes and in terms of financial returns.

None of this information is totally new, but it’s fascinating to see it laid out clearly by someone who saw it develop from the inside—and helped approve the strategy. Now, though, the board is pulling back the reins on McClendon.

In just the past couple of days, Fitch and Standard & Poor’s have cut their ratings of Chesapeake’s stock. S&P explained it was because of the revelations about McClendon’s attempted billion dollar borrowing to get a share of profit from wells. “Turmoil resulting from these developments—and from potential revelations resulting from the board investigation—could hamper Chesapeake’s ability to meet the massive external funding requirements stemming from its currently weak operating cash flow and aggressive capital spending.” An analysis by Reuters chimes in: “investors should also be wary of the company’s monstrous complexity. It has convoluted off-balance sheet liabilities thanks to convoluted partnerships; hedging gains have dwarfed profit since 2006; and cash flow is consistently negative.” It doesn’t sound good for them.

By the way, Maxwell is an industry veteran who is deeply worried about peak oil—hence his showing up as one of a few dozen experts in Peak Oil Personalities. In the book, in addition to talking about Chesapeake (and much more), he gives his own oil forecast. I wish he’d gone into his reasons for this outlook as much as he went into the details on Chesapeake, but in any case, here’s what he says:

… oil (sometimes called hydrocarbon liquids) may reach a peak of production in the period 2015-2020. I’m betting this will look more like a rough plateau. Then, after 2020, I would expect oil output to begin to gently sink… there will be public pain attached to any combination of solutions.

We’re running out of time to achieve any kind of easy transition, Maxwell argues, so prices will likely soar, pushing people to find solutions of one kind or another. “This is an outcome many will protest. But this late in the game, I see no other way out.”

Here’s what Hirsch told journalist Matthieu Auzanneau

Continue reading: “The Saudis have been lying about their oil reserves for a very long time.”

Continue reading: Air Pollution from Fracked Natural Gas Wells Will Be Regulated Under New U.S. Rules

At a time when people like Newt Gingrich are saying “There is no peak oil,” it’s great to have someone like Kaku saying “Yes, there is.”

Kaku says:

Now, why do I believe that oil prices will rise?  Because of something called Hubbert’s Peak.  Hubbert was a Shell Oil engineer way back in the 1960s who predicted that we would hit the halfway point for the production of oil in the United States and after that the bell-shaped curve would curve the other way and we would become an importer of oil.

Well, people laughed at him because they said that, “Well, wait a minute.  We have Alaska.  We have Texas.  We have lots of oil fields, and so we’re not going to hit the 50% point.  America will always export oil.”  Well, wrong.  Hubbert hit it right on the nose to within the year at which US oil supplies peaked and then it went to the other side of the bell-shaped curve.  That’s called Hubbert’s Peak, when we hit the 50% point.

While this is mostly right, Kaku gets a few things wrong. A couple are more minor, but one is crucial.

First, I’ll sweat the small stuff. Hubbert was not an engineer. He was a geologist—one of the top geologists of the twentieth century.

Also, Hubbert’s Peak—at least as Hubbert conceived it—was only for crude oil. He was well aware of other ways of creating liquid fuels—such as cooking down tar sands and oil shale—but his curve, as he drew it, is just for the crude oil, the liquid stuff. Roughly speaking, he was talking about the rise and fall of cheap oil. When Kaku talks about peak oil, he seems to be talking about “peak liquid fuels,” which we don’t seem to have reached quite yet.

Now, to the more important part: Kaku says that US peak oil was a turning point, and the country had to start importing oil. That’s wrong; the U.S. stopped exporting oil around 1948 (give or take a year), and from then on has been a net importer.

The issue about U.S. peak oil production was not about it having to start importing oil, but rather that it would become increasingly dependent on imports. It’s about switching from having more and more domestically produced each year, to then coping with less and less domestic oil each year. The U.S. was the world’s largest oil importer at the time it reached its own peak production in 1970. It’s true, though, that after 1970, U.S. oil imports really soared.

For the whole world, the situation is much different, since there are no imports or exports. We don’t trade oil with other planets; we only have this one globe to rely on.

Kaku gets it. In his new book, Physics of the Future, he points out that in a famous talk in 1956, Hubbert not only correctly predicted when U.S. oil production would peak, but also predicted that the world could reach its peak of production in about 50 years—that is, around 2006.

On global oil, Kaku says in his Big Think piece:

Now we know that Hubbert was right and the next big question is, are we hitting Hubbert’s Peak for world oil production? That is the $64,000 question. Many people that I’ve talked to, senior oil analysts, energy analysts, say that we are either at Hubbert’s Peak or within ten years of hitting Hubbert’s Peak.

Now some people say, “Well that’s stupid. We discover new oil deposits all the time. Look at Canada. We have tar sands of Canada, right?” Wrong. It turns out that we will always have oil. We will never run out of oil, except oil will become more expensive as we go down the other side of Hubbert’s Peak. We would have to discover a new Saudi Arabia every five to ten years in order for this curve to simply go on forever. That’s not going to happen. I don’t care how many tar sands you’re talking about in Canada. You’re not going to create a new Saudi Arabia, which produces very clean, very cheap oil, oil that is prized by the oil companies because it is relatively less polluting and has tremendous amounts of profits associated with it.

So we do know that oil prices will fluctuate because of politics, but on average it will start to rise because we will be hitting Hubbert’s Peak.

On oil prices, I agree—except that oil prices have already risen a lot over the past decade. So they won’t “start to rise”; they’ll keep rising, it seems—at least relative to people’s ability to purchase oil. (This seems to be an unfortunate slip of the tongue; in his book,

And, yes, in a sense we will always have oil. But I think that he has skipped over an important point, which is that after the peak, oil production will be generally declining—that is, the world will have to get by with less and less oil each decade.

I think it’s crucial to stress that actual production could soon go into a long decline, because otherwise it is easy for economists and others who usually focus on dollars to argue that the world can cope with expensive oil. It’s harder to argue that the world can cope with less and less oil each decade—unless we manage to make a Solar Revolution like Kaku hopes for.

“There are lots of reasons to like natural gas, but climate change isn’t one of them,” said physicist Nathan Myhrvold, lead author of the new study. “It’s worthless for [fighting] climate change, as far as we can tell.”

Continue reading: Natural Gas a Weak Weapon Against Climate Change, New Study Asserts

—International studies professor Bülent Gökay of Keele University, UK, quoted in the 2011 article “Peak oil – are we sleepwalking into disaster?” on Public Service Europe

A major reason for coal plants shutting has been public opposition to pollution from coal. Also, looming requirements by the U.S. Environmental Protection Agency (EPA) for stringent pollution controls could take a toll on the coal industry, while boosting the market for pollution control devices. One huge coal plant in New Mexico lost a legal battle with the EPA to avoid having to install a more effective type of pollution-control equipment

Continue reading: More than 100 Coal Plants Shutting—But How Much Difference Will It Make?