The Oil Drum - Discussions about Energy and Our Future

Metal Minerals Scarcity and the Elements of Hope

Rembrandt — Thu, 09 Jul 2009 10:53:29 -0400

This is a presentation by Dr. A. M. Diederen, given at the Oil Drum/ASPO Conference at Alcatraz, Italy in June 2009. It can be downloaded here: Global Resource Depletion: Metal minerals scarcity and the Elements of Hope, PDF 24 slides, 0.5 MB

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Slide 1
If policy does not change, the ongoing growth in global consumption of metals will cause shortages, aggravate energy scarcity and obstruct the transition towards a sustainable economy.

For my analysis the collective work presented by ASPO-members and at TheOilDrum has proven to be an invaluable source of information. I would like to especially mention the work of Prof. Ugo Bardi, because he has inspired me to look further into the issue of metal minerals depletion.

This presentation elaborates on my paper “”Metal minerals scarcity: A call for managed austerity and the elements of hope”, published at the website TheOilDrum.com on May 4, 2009 (http://europe.theoildrum.com/node/5239) and at the TNO website on June 24, 2009 (http://www.tno.nl/).

Slide 2
Metals scarcity is becoming one of the most urgent global problems, comparable with energy scarcity which is its root cause.

Slide 3
The underlying problem is exponential growth of the world’s population and associated consumption of natural resources. Earlier this year, the IMF (within the context of the current global crisis) stated that a “healthy” world economy grows each year with 3% or more. Sustained growth of 3% per year means a doubling time every 24 years. Compare this with the average growth of China’s economy during the last 15 years and associated growth in metals consumption: 10% or more per year, meaning a doubling time of 7 years (or shorter). This is of course nothing less than a Ponzi Scheme.

Slide 4
I would like to lend a phrase from the peak oil community and apply it to mineral resources as well: it’s not the size of the well that matters but the size of the tap. About a quarter of the earth’s crust consists of silicon, yet we are already short (for years) on pure enough silicon to make high efficiency solar cells. Of course we can purify the less favourable sources of silicon, but this takes (lots of) energy.

Slide 5
As with energy, also for metals one should not be misinterpreted as saying that we are running out (of metals). We are running out of “easy” metals, i.e. high ore grades at favourable locations.

Slide 6
This graph is the scariest graph I’ve seen in years if you think about its implications. It’s even worse than a zero sum game: even zero growth at one part of the globe will inevitable cause shrinkage at another part of the globe (until we have some other economic paradigm). Looking at our history, I find it hard to be optimistic about a future without serious conflicts.

Slide 7
A typical critique on stating that we are running into metals scarcity is the notion that you will find 300 times more ore as you lower the ore grade with a factor of 10. This misses the point that you need much more energy to keep extracting the same amount of metal. Even when the ore grade is more or less stable (example: copper over the last few decades), you still need increasingly more energy to extract the same amount of copper because you have to dig deeper and handle ever more quantities of solids to get to the ores. Of course lower ore grades aggravate the situation and increase energy expenditures much more because of the amounts of solids which have to be processed to keep up the production rate of concentrated metal.

Slide 8
Below the so-called mineralogical barrier (a certain low ore grade), essentially you should pull the source material (e.g. a piece of rock) chemically apart to extract the individual metals. Combined with the enormous amounts of low grade source materials required to maintain a certain production rate of metal, in an energy constrained world the vast majority of resources is out of our reach.

Slide 9
This graph could be valid for all non-abundant metal minerals and it shows that at lower ore grades the amounts of source materials first may tend to go down, not up. This may aggravate metal minerals scarcity.

Slide 10
The work of Bardi and Pagani in recent years showed the striking similarities between peak oil and peak minerals.

Slide 11
A typical critique on stating that we are running into metals scarcity is the notion that the free market (the laws of demand and supply) will upgrade parts of the resources or the resource base into reserves once reserves start to get tight. This has seemed to be true for decades when there was cheap and abundant energy available. However with energy scarcity, the big lower part of the graph in figure 11 is out of reach (red crossed lines). We should also let go of the notion that vast amounts of rich ore deposits lie waiting somewhere to be discovered (red crossed lines), see slide 12.

In short: it looks quite rational to focus on reserves instead of the huge amounts of resources and the vast resource base. Of course there are many cases to be made to argue that the boundaries of the reserves may be stretched in favour of larger quantities; however there are as many cases to be made to argue that with an energy crisis not even the currently stated reserves remain within our reach to be exploited (blue dotted lines).

Slide 12
In analogy with oil scarcity: it’s highly unlikely that we will find another “Saudi-Arabia” or another “North Sea” of rich mineral deposits.

Slides 13+14
Using the only consistent global database (from USGS) on metal mineral reserves and global production rates, one can paint a picture what it actually means if we focus on reserves. All data from USGS are converted (where necessary) into metal element content for consistency, see the paper ”Metal minerals scarcity: A call for managed austerity and the elements of hope”, published at the website TheOilDrum.com on May 4, 2009 (http://europe.theoildrum.com/node/5239) and at the TNO website on June 24, 2009 (http://www.tno.nl/).

Slide 15
Using a simple calculation, including sustained annual growth of only 2% (the IMF states 3% growth or more is needed for a healthy world economy), the bar chart in slide 15 can be drawn to give a feel for the urgency of metals scarcity. Of course in reality we do not experience a sustained global production growth until year “n” and a subsequent drop to zero production in year “n+1”. This is depicted in the graph in the lower left corner of slide 15: a production peak is reached years before the “lifetime” of the bar chart has been reached. Bardi and Pagani recently have published data on several metals which indeed already peaked.

Slide 16
To make things even worse, as with oil and gas, global (or average) metals scarcity will be preceded by spot shortages due to the non-linear distribution and depletion of metal mineral resources across the globe. The industrial revolution started in Europe and later the US became an industrial giant, so it comes as no big surprise that both Europe and the US have depleted a large part of their mineral resources.

Slide 17
The United States, although still an important primary producer of metals, is strongly dependent on imports of various strategic metals, often 100%. The situation for the European Union is even worse than the picture of slide 17.

Slide 18
Many important metals are produced for a large part in only one or a few countries. A striking example are the so-called rare earth metals (REM) for which China dominates world production. REM are required for various kinds of high-efficiency applications in technologies which are needed to make a transition towards a more sustainable economy, away from our dependence on fossil fuels. An example is neodymium, required for high-efficiency permanent-magnets needed for generators (wind mills) or motors (electric vehicles).

Slide 19
The consequences of metals scarcity will be serious. Not only various established sectors like machining and the chemical industries will be affected. Especially the promising “new” sectors will be hit hard. For example there are no satisfactory substitutes available yet for essential and already scarce metals for efficient and mass-produced solar cells, permanent-magnet drives/generators (wind mills, hybrid cars, electric cars), catalysts, fuel cells, batteries and various electronic devices (telecommunication, displays/ touch screens/ plasma screens, micro-electronics).
Without a shift from scarce to less scarce metals, a large-scale transition towards a more sustainable economy doesn’t stand a chance. Moreover metals scarcity aggravates energy scarcity because the energy sector is one of the largest metals consumers. This applies to the whole chain from exploration, production, storage and distribution up to conversion into the desired forms of energy.

Slide 20
There are six solution frameworks to diminish our dependence on scarce metals: using less, longer product lifetime, more intensive recycling, substitution with less scarce metals, a new product design philosophy and adapted inventory management.

Realization of these solution frameworks challenges people’s ingenuity and creativity and offers meaning and purpose. “Using less” requires nothing less than some form of managed austerity. Also technology can play an important role by enabling dematerialization (like film rolls which have been replaced by digital photos). A number of solution frameworks are facilitated by reducing complexity in order to enhance quality and diminish waste.

Slide 21
A particularly powerful solution framework is the substitution of scarce metal elements by the most abundant elements, the so-called Elements of Hope. This requires engineering sciences as well as disciplines like agriculture and biosciences. The scarcest metal elements are called the critical elements and these should be saved for essential applications where substitution with less scarce elements is not possible. The frugal elements are much less scarce, albeit scarcer than the Elements of Hope, and should be used predominantly for those applications for which there is not yet a substitute with current technology (example: chromium for stainless steel).

Slide 22
The Elements of Hope are potentially inherently environmentally friendly and sustainable as they contain all macronutrients of life and lack any heavy metal.

Slide 23
If policy does not change, the ongoing growth in global consumption of metals will cause shortages, aggravate energy scarcity and obstruct the transition towards a sustainable economy.

Technology alone is not going to save us. A holistic approach to the vast underlying problem of exponential growth and overconsumption requires involvement of various disciplines. “Using less” requires nothing less than some form of managed austerity and involves disciplines like psychology, philosophy, law, finance, economics, system dynamics and politics. Nate Hagens has explained during the discussion after this presentation that we need to understand and implement all that we know about human behaviour for any solution to stand a chance of becoming viable (see the recent excellent work by Nate Hagens).

Slide 24
The free market alone cannot solve these problems. Some form of government intervention for the sake of collective interest is required. How does a country like China approach these problems? Can we learn something from them?

DrumBeat: July 9, 2009

Leanan — Thu, 09 Jul 2009 09:58:12 -0400

Oil falls below $60

LONDON (Reuters) -- Oil reversed early gains and dropped below $60 a barrel on Thursday as a downturn in the stock market added to pressure from high oil inventories and persistent concerns about the timing of any economic recovery.
Light crude for August delivery fell 45 cents to $59.69 a barrel and was on course for the seventh straight day of declines.

Pay More, Drive Less, Save the Planet

What is the appropriate response to Secretary of Transportation Ray LaHood, who as General Motors prepared to file for Chapter 11 bankruptcy protection declared that he wants to "coerce people out of their cars"? One might be inclined to dismiss these words as overkill -- except for recently introduced legislation by some congressional heavy-hitters that would take us down this road.

Does Obama Want to Own the Airlines?

Only luck and falling oil prices saved Washington from having to face mass bankruptcy of the airline industry last year. Now the specter is rising again. Fuel prices are up. Traffic continues to plummet amid a global recession. United Airlines last week mortgaged its spare-parts inventory to raise cash at a usurious 17% interest rate.
Yet the Obama Justice Department has come out of the blocks trying to scuttle a promising experiment to stabilize the chronically unprofitable U.S. airline sector. The new administration seemingly won't let companies fail, and won't let them succeed either.

Eni declares force majeure after Nigeria attack

MILAN (Reuters) - Italian oil company Eni SpA has declared force majeure after rebels sabotaged oil pipelines in Nigeria, a spokesman said on Thursday.

Power struggle: The battle to create America’s biggest electricity generator continues

IT IS not so much a takeover battle as a war of attrition. It was back in October that Exelon, America’s biggest owner of nuclear-power stations, first offered to buy NRG Energy, a big generator which focuses on Texas and relies mainly on coal and natural gas. Exelon wants to create America’s biggest electricity generator, with a capacity of more than 47,000 megawatts, enough to power 45m homes. But NRG’s management rebuffed the all-stock deal, and its shareholders, at first enthusiastic, got cold feet as NRG’s rising share price made the terms less generous. Earlier this month Exelon raised its offer by 12%, but NRG’s management rejected the sweetened deal, now worth about $7 billion, on July 8th. The next skirmish will come at NRG’s annual meeting on July 21st.

Study: Bad roads push up crash-fatality rate

A new study by the Pacific Institute for Research and Evaluation (PIRE) claims that more than half of U.S. highway fatalities are related to deficient roadway conditions – and that poor roads are a substantially more lethal factor than drunk driving, speeding or non-use of safety belts.

Panama Canal Project Opens a Tropical Window

The Panamanian government initiated the project for purely economic reasons. In its current configuration, the 51-mile shortcut between the Pacific and Atlantic Oceans can grant passage only to boats carrying up to 65,000 tons of cargo. But many international shipping companies increasingly prefer to use mega-freighters that can haul up to 300,000 tons.
As a result, the Panama Canal has been losing business to other transoceanic routes; and with canal tolls amounting to close to $100,000 per ship per one-way crossing, and potentially more for the giant freighters, the government decided it had no choice but to widen and straighten the canal to make room for the S.U.V.’s of the seas.

Wind turbine maker gets loan to expand Idaho plant

Nordic Windpower USA, Inc. says it's gotten conditional U.S. Department of Energy commitment for a $16 million loan guarantee that will help it expand its plant in southeastern Idaho.
The Berkeley, Calif.-based company is hoping to use the low-interest loans enabled by the federal guarantee to expand its Pocatello assembly facility.
Nordic makes two-bladed, utility-scale wind turbines that flex to mitigate negative effects of turbulent winds before they can damage the drive train.

Hedge fund transparency key to curb oil spikes: IEA

"Transparency in the futures market is certainly the issue: who is trading, is it a commercial trade or a non-commercial trade. We need more transparency," Tanaka told Reuters in an interview on the sidelines of an expanded G8 summit in Italy.
"But we think still that (market) fundamentals are more important to determine the direction of the oil price: speculation is amplifying the movement upwards or downwards but not necessarily determining the price of oil," Tanaka said.
He warned that oil markets could be "really tight" by 2014-2015 unless there was an increase in production and exploration investment. He compared the scenario to last year's market, when oil prices spiked to $147 a barrel.

China Car Sales Jump 48% on Economic Stimulus, Most Since 2006

(Bloomberg) -- China’s passenger-vehicle sales rose 48 percent in June, the biggest jump since February 2006, as government stimulus spending spurred a revival in the world’s third-largest economy.
Chinese motorists bought 872,900 cars, sport-utility vehicles and other passenger vehicles last month, the China Association of Automobile Manufacturers said in a statement today. Overall auto sales, including buses and trucks, rose 36 percent from a year earlier to 1.14 million.

Iranian protesters defy crackdown

More than 700 people defied government orders in Tehran and took to the streets on Thursday in renewed protest over the results of Iran's presidential elections.
The pro-reform demonstrators chanted "death to the dictator" as baton-wielding police attempted to chase them away and eventually fired tear gas to break up the rally, according to eyewitness accounts.
It was the first public protest in Tehran in 11 days and coincided with the anniversary of a 1999 attack by Basij militia on a Tehran University dorm to stop protests in which one student was killed.

G-8 Climate-Change Agreement Falls Short

L'AQUILA, Italy -- The Group of Eight leading nations agreed Wednesday to cut their emissions of heat-trapping gases 80% by 2050, but failed to reach an accord on shorter-term targets -- a setback that could have repercussions for a major meeting on climate change in Copenhagen later this year.

Forget gas, batteries — pee is new power source

Urine-powered cars, homes and personal electronic devices could be available in six months with new technology developed by scientists from Ohio University.
Using a nickel-based electrode, the scientists can create large amounts of cheap hydrogen from urine that could be burned or used in fuel cells. "One cow can provide enough energy to supply hot water for 19 houses," said Gerardine Botte, a professor at Ohio University developing the technology. "Soldiers in the field could carry their own fuel."

Swimming in Diesel: Huge Oil Stocks Show No Recovery in Sight

More than any other fuel, diesel reflects the current state of the economy because it is used by truckers to deliver goods and by factories to make products. It’s also a good gauge on the global economy: Unlike gasoline, the bulk of which is consumed in the U.S., diesel is used all over the world.
And what diesel demand is saying is that the economy is still in a sickly state. U.S. diesel consumption, which has been dismal for most of the year, was down an average 12.3% over the past four weeks. In the futures market, prices for heating oil, a proxy for diesel, tumbled more than 60% from their peak in July of last year. That’s a bigger drop than those of gasoline and crude prices, which have fallen 52% and 57% respectively since that time.

Developing World Consuming More Energy than Developed World. Price, Climate Will Suffer

The tectonic changes in the world’s population and urbanization the last twenty years now begs a question. Is it possible that instead of the developing world ever reaching the living standards of the developed world, as many had once thought–is it possible that the developed, OECD nations are rather now on a course to meet the developing world somewhere in the middle? If that’s the case, it is very bad news for those concerned with climate change. Because in that middle place, where the new and the old world may be set to merge, it’s likely that the primary sources of energy will be wood, and coal.

We are in the midst of the great baby-boomers economic stagnation of 2007-2017

Indeed, the era of excessive spending and of excessive debt is over. The era of excessive government economic disengagement and of financial deregulation is over. The era of irresponsible Ponzi-scheme finance is over. The era of unregulated derivatives is over. The era of greed as an ideology is over. The era of wild and predatory capitalism is over. The era of cheap oil, of cheap transportation, of cheap commodities and of cheap food is over. The era of excessive concentration of wealth and income is also over. However, the age of political corruption, of incompetent politicians and of destructive wars of aggression is not over. What has arrived is the age of hyperstagflation.

John Michael Greer: The wealth of nature

Let’s take a closer look at the land whose value Ricardo considered “indestructible.” He was talking primarily about land as an economic factor in agriculture, and so shall we. What he apparently did not realize, but ecologists have shown in exact detail since his time, is that fertile land suitable for growing crops does not simply happen. Like anything else of value, it must be made, and once made, it must be maintained; the only difference is that the laborers that make and maintain it do not happen to be human beings.

Foster Wheeler JV wins Aramco Shaybah contract

A joint venture between US oil and gas contractor Foster Wheeler and Saudi Arabian firm Sofcon has been awarded the pre-front end engineering and design (FEED) study for the development of gas supplies from the Shaybah field by the state-owned hydrocarbons giant Saudi Aramco.
The field, located in Saudi Arabia’s Empty Quarter, has already undergone a huge US$3 billion expansion to increase its oil capacity by 250,000 barrels per day (bpd) to 750,000.

Ghana: Chaos Over Fuel Shortage

There were chaotic scenes at some filling stations in Accra yesterday as motorists, especially commercial drivers, suffer the pangs of a biting fuel shortage in the country.
While some filling stations had anxious motorists lounging due to the winding queues, others were bereft of vehicles as prominent “no petrol” signboards stood ominously.
Long queues stretched out onto the streets, scenes which many Ghanaians could not remember witnessing in the past eight years.

Opinion: US Should Consider Exploring in Cuban Waters

The Cuban government is not only sitting on a potential oil bonanza but it has already awarded oil and gas exploration leases to companies from Canada, China, Spain, India, Venezuela and Norway. And Cuba is negotiating with Brazil's Petrobras, a company with years of experience in deepwater drilling.
If U.S. firms are forbidden by their own government to drill for oil and gas in Cuban waters, then the national oil companies of other countries will benefit while our investor-owned companies watch from the sidelines.

Our thirst for oil shouldn't trump fairness as the major reason for ending embargo

COLUMBUS, Ohio -- Oil may soon trump politics in our relations with Cuba. Estimates of Cuban offshore oil reserves as recently disclosed by the Cuban government hover around 20 billion barrels. That would approximate known U.S. oil reserves.

Loss of Production Even More Dangerous in Times of Low Oil Prices

The 4th Annual Security for Energy Infrastructure Summit, taking place on 18-21 October 2009 in Abu Dhabi, is the preferred platform for Middle East security experts to share innovative solutions that counter the spectrum of threats currently facing critical energy infrastructure.

‘Twin calamities’ led to bankruptcy

The privately held parent of chemical giant LyondellBasell “genuinely believed” its $12.7 billion buyout of Houston’s Lyondell Chemical Co. in 2007 would work or it would not have committed billions in equity toward the deal, the company said in documents filed with a New York bankruptcy court.
But the “unforeseeable twin calamities” of a global economic crisis and volatility in commodity markets tipped LyondellBasell into bankruptcy a year later, Access Industries said in the filing, dismissing as “economically irrational” the accusations that the company was deliberately set up to fail.

Cap and Trade Shenanigans

Each year, the government will hand out fewer and fewer emissions indulgences. Meaning there will be fewer credits to trade. And we commodity buffs know that the less there is of something, the higher the price rockets.
And the Chicago Climate Exchange will score larger and larger sums from the corporate carbon largesse. Goldman and company have everything to gain from this.
And you’ve got to ask: What exotic new derivatives can come out of this? Will institutional investors bet on futures of how much the government will lower the cap in 2025…2030? Wait, there already is a Chicago Climate Futures Exchange. Of course, it’s the wholly owned subsidiary of the Chicago Climate Exchange.

Nuclear proponents address Saskatoon business leaders

Promoters of Canada's nuclear industry made a direct pitch to Saskatoon business people on Tuesday, as the province continues to ponder the future of its uranium resources.
Neil Alexander, president of the Organization of CANDU Industries, told a lunchtime audience of the Greater Saskatoon Chamber of Commerce that a nuclear power plant in Saskatchewan would create jobs and generate other economic benefits.

Scientist shortage? Maybe not

As the push to train more young people in STEM — science, technology, engineering and math — careers gains steam, a few prominent skeptics are warning that it may be misguided — and that rhetoric about the USA losing its world pre-eminence in science, math and technology may be a stretch.
One example: Numbers from the U.S. Labor Department's Bureau of Labor Statistics issued Tuesday showed the unemployment rate for electrical engineers hit a record high, 8.6%, in the second quarter, more than doubling from 4.1% in the first quarter.

U.S. Moves to Shackle Oil Speculators

The solution to perceived market manipulation is overt market manipulation.
That's what federal regulators are saying with Tuesday's announcement that they will consider curtailing "excessive speculation" in energy markets. The move comes in response to last year's spike in oil prices, which soared to a record $145 a barrel a year ago next week and pushed gasoline prices above $4 at the pump in many parts of the country. Since the start of this year, crude prices have jumped 42 percent, even though the recession has crimped demand and storage tanks are full.
Speculators must be to blame.
No one seems upset about last fall, though, when those same speculators helped drive down prices by more than $111 a barrel in the last five months of the year.

Krugman: The Malthusian insult

What very few people realize is that Malthus was right about most of human history — indeed, he was right about roughly 58 out of 60 centuries of civilization: living standards basically did not improve from the era of the first Pharaohs to the age of Louis XIV, because any technological gains were swallowed up by population pressure. We only think Malthus got it wrong because the two centuries he was wrong about were the two centuries that followed the publication of his work.

The Import Land Model

Today I'd like to talk about another gimmick of the ELM. Veterans who have read a lot of Brown's writing will have noticed that he always focuses on a few carefully selected examples: Indonesia, the UK and of course "Export Land" (the fictional country he uses to illustrate the model). He never seems to bring it all together, and give a coherent picture of the net export situation for the entire world. There is a good reason for this. When you look at the big picture, the ELM "crisis" appears in a very different light.

Downturn dries up oil demand

Peak oil may have arrived in the developed world – but for the consumption of crude, rather than its production.
The recession has crushed demand across the globe, the Organization of Petroleum Exporting Countries said yesterday. It does not expect demand for production to return to pre-recession levels until 2013.
Consumption in the developed world will remain stagnant for many years to come, OPEC said, even as many economists believe the wealthy world's seemingly insatiable demand for oil may well have peaked permanently.

Oil rises above $61 despite uncertain demand

VIENNA – Oil prices rebounded to above $61 on Thursday, recouping some losses after tumbling 17 percent since last week.
But rising U.S. gasoline inventories suggested crude demand remains weak, fueling expectations that prices would resume their slide.

Crude Oil May Rise 35% in 2010, Morgan Stanley Says

(Bloomberg) -- Crude oil may average 35 percent higher in New York next year and rise to $85 a barrel in 2011 as spending by governments boosts global demand, Morgan Stanley said in a report.
Benchmark crude futures on the New York Mercantile Exchange will likely average $48 this year and $65 in 2010, according to the report dated yesterday. Next year will mark the beginning of a recovery as governments’ spending provide the stimulus to maintain the re-stocking phase of a new commodity cycle, it said.

Russia floats $70-80 oil as fair price at G8

L'AQUILA, Italy (Reuters) - Russian President Dmitry Medvedev told other G8 leaders on Wednesday that a poll of oil company executives showed they thought $70-80 was a fair price, according to his spokeswoman.

Trade body calls for tax breaks for oil and gas sector

The British government was accused today of putting too much focus on renewables and nuclear while taking "for granted" the oil and gas sector, which supplies two-thirds of the country's total energy needs.
The accusation from a top petroleum industry body came as a report showed there has been a 57% reduction in the amount of North Sea drilling over the last six months.
Oil & Gas UK said 50,000 jobs were at risk unless ministers improved tax incentives. It said government had missed a "massive opportunity" to put the oil and gas sector back on the path to recovery by making only the smallest changes in the last budget.

New U.S. Natural Gas Pipeline Displacing Canadian Gas

A new natural gas pipeline in the United States is allowing cheap gas from the Rockies to displace more than 10% of Canada’s gas exports to the Midwest US, forcing more Canadian gas into storage and lowering natural gas prices for Canadian producers.

U.S. Natural Gas Fund Grows to Record on Demand Surge

(Bloomberg) -- The United States Natural Gas Fund expanded today to the largest position in its 27-month history as investors snapped up the last of its shares and it awaited government approval to issue more units.
As of early today, the exchange-traded fund owned the equivalent of 124,926 natural gas futures contracts on the New York Mercantile Exchange. The number of shares outstanding reached a record yesterday, rising 14.5 percent to 322.3 million, more than 10 times the total at the start of the year, and worth $3.97 billion.

What (or When) Is Up with Natural Gas

The fact that there's a contango of such magnitude - at last look, the quarterly premium was 30% of the front-month price - should give bulls pause. A large contango for a storable commodity such as natural gas implies more-than-adequate supplies.
At the least, the current interest in natural gas seems premature given the commodity's inherent seasonality. Natural gas is primarily a heating fuel. Generally, gas is injected into storage during the nonheating season (between April and October). The fuel's then withdrawn from storage over the balance of the year; that is, in the heating season (November through March).

Saudi Aramco Cuts Heavy, Medium Oil Supplies to Asia

(Bloomberg) -- Saudi Aramco, the world’s largest state-owned oil company, deepened cuts in supplies of its Arab Heavy and Medium oil grades sold under term contracts to Asia in August, refinery officials said.
The oil company will reduce overall supplies, which include the Light and Extra Light grades, by as much as 20 percent from contractual volumes, according to a survey of officials at refineries in Japan, Singapore and South Korea.

Qatar Petroleum Raises Oil Prices to 9-Month High

(Bloomberg) -- Qatar Petroleum, which exports most of its crude oil production to Asia, raised June official selling prices to their highest in nine months.
Qatar Petroleum increased its June price of Qatar Land crude oil to $71.10 a barrel, up $11.50, or 19.3 percent, from May, the state-run Qatar News Agency said on its Web site today. The June price of Qatar Marine grade was raised by $11.80, or 20.2 percent, to $70.10 a barrel.

Kuwait Cuts Crude Oil Official Price for First Time in 3 Months

(Bloomberg) -- Kuwait Petroleum Corp. reduced its August crude oil official selling price for the first time in three months because of a lower profit in producing fuel oil.
The state-owned company cut its price to parity to the average of Persian Gulf benchmarks Oman and Dubai grades, from the July premium of 30 cents a barrel, said a trader who asked not to be identified because of company policy.

No impact on Shell production from Nembe attack

LONDON (Reuters) - Royal Dutch Shell said on Thursday there were no injuries or impact on its crude oil production from attacks on an oil pipeline in Nigeria. The trunkline attacked was in Nembe Creek in Bayelsa state, Shell confirmed.

Nigeria wants Big Oil to cover amnesty

Nigeria's government has budgeted millions of dollars to an amnesty programme aimed at restoring peace in the Niger Delta, but has yet to receive any financial support from foreign oil companies, a senior minister said.

Shell May Close or Sell Montreal East Oil Refinery

(Bloomberg) -- Royal Dutch Shell Plc may close or sell its Montreal East refinery in Quebec, Canada, as Europe’s biggest oil company carries out a global review of assets.
Other options include converting the 130,000 barrel-a-day refinery into a terminal, establishing a joint venture or leaving the plant running, a Shell spokesman said today by telephone, declining to be identified in line with company policy. The review could take some months and no decisions have yet been taken, he said.

Indonesia says seeking to revive Iraq oil projects

JAKARTA (Reuters) - Indonesia's state oil firm Pertamina said on Thursday it was planning to revive oil projects it was involved in Iraq that were put on ice because of the security situation in the country.

Greenland May Mandate Carbon Capture, Petroleum Chief Says

(Bloomberg) -- Greenland’s government may require energy companies investing in oil and gas production to capture and store carbon emissions, Joern Skov Nielsen, director of the Greenland Bureau of Minerals and Petroleum, said.
“We will ask companies to develop carbon storage technology,” Nielsen said in a telephone interview from Nuuk, Greenland’s capital, yesterday. “It’s a requirement that you use the best available technology. If carbon storage is usable around the world, they will have to use it in Greenland.”

China Coal Cargo Rejection May Not Signal Market Turn, RBC Says

(Bloomberg) -- The reported cancellation by a Chinese buyer of an Australian coal cargo during shipment may not signal a slump in demand from power-plant operators in the Asian nation, RBC Capital Markets said.
An Australian cargo is being offered after a Chinese customer pulled out of a sale, Reuters reported yesterday, citing unnamed traders. The product appears to be coking coal used by steelmakers that has been marketed as thermal coal, RBC said today.
Chinese buying has almost single-handedly sustained the international coal trade and prices, RBC analyst David Haddad wrote in a note to clients. Early figures for June suggest Australian exports to China will be another record, he said.

Equatorial Guinea: Elites Hoarding Oil Revenues, Report Charges

The government of Equatorial Guinea has looted billions of dollars in oil revenue instead of improving the lives of its citizens, Human Rights Watch (HRW) said in a report released Thursday.
The report, "Well Oiled: Oil and Human Rights in Equatorial Guinea", details how the dictatorship under President Teodoro Obiang Nguema Mbasogo has used an oil boom to entrench and enrich itself further at the expense of the country's people.

Pakistan Imposes Fuel Levy After Court Suspends Tax

(Bloomberg) -- Pakistan’s President Asif Ali Zardari ordered a new fuels tax effective today to circumvent the Supreme Court’s suspension of an earlier levy and avoid a shortfall in government revenue.
The tax restores state-controlled fuel prices to where they were before the Supreme Court suspended a week-old carbon tax on July 7, according to a statement on the Oil & Gas Regulatory Authority’s Web site. The Supreme Court order forced the government to cut prices yesterday.

Simmons sees bright future for Midcoast Maine

Simmons still sees possibilities for the future of Rockland and the Midcoast. Referring to it as a potential "capital of the Silicon Valley for ocean energy," Simmons predicted that tens of thousands of people will be attracted to the region in the coming decades. He praised Maine's politicians and government for supporting exploration of ocean wind, tidal and other energy resources and said he believes the U.S. Department of Energy will soon put a research laboratory in the Gulf of Maine. "This wouldn't happen in Texas," he said.
Comparing Rockland to Aberdeen in Scotland, Simmons predicted that this burgeoning industry will combine with the high quality of life in the region to eventually provide at least 10,000 "fabulously high-paying jobs" in the Midcoast.

Areva’s European Wins Lift Chances in $1 Trillion Global Tussle

(Bloomberg) -- Areva SA, the largest builder of nuclear plants, is seeking to use a lead in its home European market over Toshiba Corp.’s Westinghouse Electric Co. to gain an edge in the $1.05 trillion of global contracts up for grabs.
Areva’s new model, the evolutionary power reactor, or EPR, has been chosen for at least 11 of the 41 new plants planned or under construction in the European Union. Westinghouse, which is pushing its AP1000 pressurized water reactor, hasn’t built a plant in the region for more than 20 years.

Vattenfall to Study Kruemmel Reactor After ‘Setback’

(Bloomberg) -- Vattenfall AB, the fourth-largest power supplier in Germany, will start a full inspection of its Kruemmel nuclear reactor in the country after the facility shut down due to the absence of a monitoring system.
The Swedish utility has appointed Stefan Dohler, who heads Vattenfall’s German power transmission operations, as special investigator for the plant, the Stockholm-based company said in an e-mailed statement today.

More Ethanol in Gasoline? Automakers say it will "Damage" Cars

Some 54 ethanol producers, grouped together under Growth Energy’s banner, are carrying the torch for dramatically increasing the amount of ethanol in pump gasoline from 10 to 15 percent. Will they succeed? There are technical and political arguments to be made on both sides, but for now the momentum seems to be against fast-tracking higher ethanol blends.

Nuclear dawn delayed in Finland

When it is finished, Finland's Olkiluoto 3 (OL3) nuclear reactor will be the biggest the world has ever seen, the excavation site alone is the size of 55 football fields.
It was to have been a pilot project for bigger, better, cleaner, Generation III reactors, which would lead the charge back to nuclear power in a continent which had gone cold on atomic energy after the accidents at Chernobyl and Thee Mile Island.
But hopes of an early nuclear dawn on the Baltic coast are fading - the May start up date came and went and the OL3 is now not expected to begin pumping out electricity until 2012 - three years later than planned and about $2.4bn dollars (1.7bn euros) over budget.

U.K. CO2 Auction Fetches First Premium to Prior Close

(Bloomberg) -- Britain, the European Union’s second- biggest economy, sold emission permits today at a higher price than yesterday’s close, the first such premium in the country’s four auctions over the past seven months.

In Major Economies, Many See Threat From Climate Change

Awareness is high, except in Indonesia, India, South Africa.

Global warming impacting Greenlanders' daily lives

NUUK (AFP) – From his trawler that motors along the Nuuk fjord, fisherman Johannes Heilmann has watched helplessly in recent years as climate change takes its toll on Greenland.
Global warming is occurring twice as fast in the Arctic as in the rest of the world.

G8 emissions pledge is 'scientifically illiterate'

It sounds big, but it just isn't enough. Leaders of the G8 industrial nations meeting in Italy this week are likely to agree that the world must cut greenhouse gas emissions by 50 per cent by 2050. That means cuts of 80 per cent among the rich nations.
They will say that this is essential to keep global warming below 2 °C - widely regarded as the tipping point beyond which scary global feedbacks could wreck the climate system that keeps us fed and watered.
Sorry, guys, but this is scientifically illiterate. We might be lucky: if the atmosphere is less sensitive to those gases than most scientists suppose, it could be enough to keep us below 2 degrees, for a while at least. But the best estimate is that the world needs at least 80 per cent cuts in global emissions, and probably more like 100 per cent, to stay below two degrees.

Warming Arctic could teem with life by 2030

"Teeming with life" may not be the description that springs to mind when thinking of the Arctic Ocean, but that could soon change as global warming removes the region's icy lid.
A study of what the Arctic looked like just before dinosaurs were wiped off the planet has provided a glimpse of what could be to come within decades.

G-8 Sets 2050 Emissions Goal, Developing World Delays

(Bloomberg) -- The Group of Eight agreed for the first time to cut greenhouse gases 80 percent by 2050, and developing nations led by China and India pledged to set a mid- century goal by December, a person familiar with the talks said.
The biggest developed countries issued their target in L’Aquila, Italy, in a statement that called on less-wealthy nations to accept a 50 percent global reduction goal. The G-8 also said warming since industrialization began should be limited to 2 degrees Celsius (3.6 Fahrenheit).

Obama broadens push for climate change pact

L'AQUILA, Italy – Rallying rich and developing nations alike, President Barack Obama wants the world's top polluters to keep driving toward a deal to halt global warming.

Global warming accord spells lifestyle changes

Leaders of the world's biggest — and dirtiest — economies have agreed for the first time to limit the warming of the earth to a relatively safe 2 degrees Celsius (3.6 Fahrenheit) — an important target in fighting climate change.
It sounds simple, but it implies a dramatic shift in the way we generate electricity, fuel our cars and build our homes and skyscrapers.

The Chicken Coop Refuge: Or How I Became a Bug Farmer

Jason Bradford — Wed, 08 Jul 2009 18:40:12 -0400

I spent about a dozen years as an academic biologist including some period teaching ecology to university students. Often I find this background useful in unexpected ways.

Take my chicken coop as an example. This is an enclosed area where five hens live. They will use their claws and beaks to eat nearly anything that’s edible, and while I feed them mixed seeds and kitchen scraps, various live animals much smaller than themselves tend to be preferred, when available.

After satisfying their foraging needs, hens are shown taking a group "dirt bath" during a winter dry spell in the garden. Behind them is a small "chicken tractor" that I use to confine them in places outside of their coop.

I know this because I sometimes let them out to roam the yard, watching to make sure they don’t destroy a newly planted patch of vegetable seedlings or poop on the steps of the back porch. Their enthusiasm for worms, and little arthropods makes it clear that they would like more of them in their diet and that the coop has a shortage.

This brings me around to basic ecology, where population models and experiments have demonstrated the importance of a “prey refuge” in preventing local extirpation of prey in the presence of predators. Marine reserves are a good example of the application of prey refuges for increasing the populations of both predators and prey, and reducing population volatility.

What I have done is create little faunal refuges in the chicken coop by placing scraps of wood, such as plywood, on the ground. The hens are unable to access anything underneath the wood and after some time a dense population of little critters develops.

Only a few seconds after being turned over, the hens are picking bugs off the board and newly exposed soil. Since it is so dry in CA during the summer, earwigs and pill bugs (known as the wood louse in Britain, and a member of the class Isopoda) are most abundant this time of year, and likely move out to forage at night while the hens sleep.

I haven’t done experiments, or even thought about it deeply, to say how these boards should be spatially arranged, how many to place, how large they should be, etc. to optimize my harvest of eggs. But I do enjoy turning a board over and watching the hens go after the hidden riches. And I also enjoy eating eggs for breakfast most days of the week.

This is a Campfire post and I would like our readers to learn from each other. Does my story remind you of some “discovery” of your own that has practical significance? Have you found yourself engaged in "lateral" thinking and problem solving where you've applied knowledge and experience gained in one capacity to a new situation?

Peak Oil Day - July 11

Gail the Actuary — Wed, 08 Jul 2009 10:42:17 -0400

This is a guest post by Richard Heinberg of the Post Carbon Institute. The original post can be found here. A petition to make July 11 Peak Oil Day can be found here. Please sign it.

On July 11, 2008, the price of a barrel of oil hit a record $147.27 in daily trading. That same month, world crude oil production achieved a record 74.8 million barrels per day.

For years prior to this, a growing legion of analysts had been arguing that world oil production would max out around the year 2010 and begin to decline for reasons having to do with geology (we have found and picked the world’s “low-hanging fruit” in terms of giant oilfields), as well as lack of drilling rigs and trained exploration geologists and engineers. “Peak Oil,” they insisted, would mark the end of the growth phase of industrial civilization, because economic expansion requires increasing amounts of high-quality energy.

During the period from 2005 to 2008, as oil’s price steadily rose, production remained stagnant. Though new sources of oil were coming on line, they barely made up for production declines in existing fields due to depletion. By mid-2008, as oil prices wafted to the stratosphere, every petroleum producer responded to the obvious incentive to pump every possible barrel. Production rates nudged upward for a couple of months, but then both prices and production fell as demand for oil collapsed.

Since then, with oil prices much lower, and with credit tight to unavailable, up to $150 billion of investments in the development of future petroleum production capacity have evaporated. This means that if a new record production level is to be achieved, further declines in production from existing fields have to be overcome, meaning that all of those canceled production projects, and many more in addition, will have to be quickly brought on-stream. It may not be physically possible to turn the tide at this point, given the fact that the new “plays” are technically demanding and therefore expensive to develop, and have limited productive potential.

On May 4 of this year, Raymond James Associates, a prominent brokerage specializing in energy investments, issued a report stating, “With OPEC oil production apparently having peaked in 1Q08, and non-OPEC even earlier in 2007, peak oil on a worldwide basis seems to have taken place in early 2008.” This conclusion is being echoed by a cadre of other analysts.

Maybe it’s a stretch to say that the production peak occurred at one identifiable moment, but attributing it to the day oil prices reached their high-water mark may be a useful way of fixing the event in our minds. So I suggest that we remember July 11, 2008 as Peak Oil Day.

We are now approaching the first-year anniversary of Peak Oil Day. Where are we now? The global economy is in tatters, yet oil prices have recovered somewhat (they’re now about half what they were in July 2008). World energy consumption is down, world trade is down, the airline industry is shrinking, and most of the world’s automakers are on life support.

It is too late to prepare for Peak Oil—a year too late, in fact. Now the name of the game is adaptation. We are in an entirely new economic environment, in which old assumptions about the inevitability of perpetual growth, and the usefulness of leveraging investments based on expectations of future growth, are crashing in flames. Even if economic activity picks up somewhat, this will occur in the context of an economy significantly smaller than the one that existed in July 2008, and energy scarcity will quickly cause most green shoots to wither.

It is impossible to say what will happen in the future with regard to oil prices. Clearly, very high prices kill demand by undercutting economic activity. Thus it is possible that the barrel price of petroleum may never break last year’s record. On the other hand, if the value of the dollar were to collapse, then the sky’s the limit for prices in dollars per barrel.

It is easier to forecast the oil supply trend: though we’ll see level-to-rising production temporarily from time to time, in general it’s down, down, downhill from now on.

Even though Peak Oil is now in the past, its annual commemoration on Peak Oil Day may serve an important purpose by reminding us why our economy is shrinking, and by focusing our thoughts on ways to facilitate the transition to a post-petroleum world.

What are some appropriate ways to commemorate Peak Oil Day? I’d suggest spending time in nature, engaging in a 24-hour oil fast, or organizing a neighborhood bicycle parade and solar-cooker bakeoff.

Mark your calendar. What will you be doing on July 11?

Help us "celebrate" Peak Oil Day by signing our petition.

CFTC - Futures Position Limits on Energy?

Nate Hagens — Wed, 08 Jul 2009 10:41:52 -0400

Let's return to a central theme: that finite resources are being quantified by infinite money. Today the CFTC made some announcements regarding transparency in futures positions; also Congressional hearings began with intent to limit futures positions sizes , especially for energy speculators. Unfortunately, this 'speculation' issue is one of many red herrings that ignores the widening fundamental disconnect between financial and real assets. (PBS Nightly Business interviewed me on this topic -sound bite from 3:16-3:40). Below the fold is a brief summary of what I said in the longer interview followed by an open thread on the topic of the future of energy futures.

US lower 48 remaining recoverable oil** vs. US Treasury Debt

Our first hearing will focus on whether federal speculative limits should be set by the CFTC to all commodities of finite supply, in particular energy commodities, such as crude oil, heating oil, natural gas, gasoline and other energy products,”

Energy and natural resources are what we have to spend (or to marshal). Money is just a marker for these real assets, and the ever expanding definition of money - now extending to margin, credit, debt, on and off balance sheet derivatives, etc. - has caused an extreme, paradigm changing disconnect between financial assets, and what they were originally designed to represent. We need growth in order to pay back debt and need energy gain ((gross - costs)*scale) in order to grow.

Historical purchasing power of US dollar thru 2004 (American Institute for Economic Research)

The value of fiat currencies erodes over time, while remaining high quality energy increases in strategic value, even if not recognized in monetary terms. Historically, based of course on historic comparisons, commodities were the ugly stepchild in investment portfolios. As long as energy and resources were cheap, more long term gearing/profits were to be had from the vanilla 'derivatives': stocks and bonds (these are derivatives of our real capital: natural, built, social and human that underpins them), than from the commodities themselves. But as the world, in recent decades, was flooded not only with liquidity, but an order of magnitude (or more) increase in notional credit, relaxed oversight rules, relaxed lending standards, higher leverage, etc., those digits with the highest velocity have had to seek a home. Their doing so culminated in 2007-8 via a dramatic commodity market rally, (within which, oils kiss of $147 last July grabbed the most attention). What really happened in the ensuing 9 months was not a sharp drop in commodity demand, but a global margin call of epic proportions - all sorts of players were caught long and short (mostly long) had to pare down positions in almost all asset classes (US treasuries being notable exception). During the 5 years ended July 2008, the SP500 and crude oil had an R^2 of -.29, for the 7 months after: R^2 of .97! (Daily closes, graph here) The point of this is that oil was not in a speculative bubble, unless you amend that statement to: "oil was one of many instruments in a fiat liquidity bubble, but it was the most important commodity to the global economy so the media paid most attention to it". And to those who are adamant thatt speculators were responsible for oils rise last year: coal tripled in the same period and is not traded on the NYMEX....

Speculators are generally ignored unless either of the two unassailable American entitlements: rising stocks and cheap oil, are not on trend, and a witch-hunt for bad guys ensues. As we are mired in a deepening recession, the roots of which lie in the generation long replacement of tangible things with paper and digits, the logical human reaction to oil moving back from $40 to $70 is to blame someone, in order that it retreat some and not act as economic headwind. (The same thinking mans logic used to request temporary withdrawals from the national emergency Strategic Petroleum Reserve to reduce oil from $70.) The blame it seems, will again fall on speculators, (note: technically the majority of participants in our economic system should now be defined as speculators -we are buying/spending natural resources on margin with a downpayment of belief). As we have been writing on these pages for years, oil supply has maxed out, so any stabilization in demand will naturally result in rising prices. Couple that with many investors concerned about the inflationary impacts of quantitative easing, and there is a demand for ETFs, futures and derivatives representing real-not-derived-from-thin-air) assets, or the digital entries that legally control real assets. Recent liquidity dislocations arising from the linkage between the natural gas ETF, UNG, and natural gas futures have also heightened concern about position limits, and today UNGs administrator announced that no new shares will be created. In the end the demand for paper natural gas is higher than the demand for real natural gas. An odd situation, but the blame shouldn't be on the hedge funds, but on who designed the rules they follow. (On a deeper level, the blame is on all of us, for sleepwalking into this situation)

So what does this mean? Energy, particularly liquid fuel, is the hemoglobin of modern civilization. Price signals based on the marginal unit create long term distortions for utilities and energy policymakers. On the micro level, it is only a matter of time before a highly leveraged, underregulated hedge fund (think Amaranth, Ospraie, but bigger) causes dislocation in energy markets due to their size. On the macro level, depending on which estimates you trust, global notional derivatives are in excess of 1,000 trillion, while global GDP is only $55 trillion (and a decent chunk of that financial, aka questionable). If we accept the peak oil estimates of global remaining recoverable crude oil of around 1 trillion barrels, that equates to $62 trillion using todays closing NYMEX price. This is roughly equal to US treasury total debt (including unfunded Medicare, Social Security liabilities).

We have a monumental problem - a system whose claims on the future are higher than its real assets. This CFTC debate is a tiny microcosm of the greater social landscape.
Reducing positions sizes and increasing margin in energy futures is a step in the right direction to equilibriate paper markers with real wealth. But it will have immediate negative repurcussions (reducing liquidity, reducing confidence in system, increasing volatility etc.), which is why it ultimately won't happen. We will continue to borrow from all aspects of our socio-ecological system to keep the current paradigm intact (growth at all costs, marginal unit pricing, infinite substitutes, market will solve it, etc). Sooner, rather than later, a plan for re-linking scarce resources to what and how we execute social transactions is going to occur. Like M. King Hubbert, I am in favor of an energy based currency and no futures trading at all other than for producers and those taking delivery. But these ideas are so many steps beyond 'regulating oil futures in order to keep prices low' I expect I am wasting my breath. As debt increases, and resources deplete (especially the cheap ones), a reckoning lies ahead. One way or another we have to attack the fractional reserve banking system rules. Proactively or reactively and gradually or in one fell swoop are the main questions.

Previously on this topic:
A Closer Look at Oil Futures 9/2/2006
Natural Gas - A Tale of Two Markets 9/26/2006
At $100 Oil, What Can the Scientist Say to the Investor? 1/04/2008
Peak Oil and Reflexivity and Peak Oil 6/08/2008
CFTC - Speculation My A$$ 7.23.2008
Hurricanes, Hedge Funds and Energy Markets
No Naked Short Selling==>No Future Energy 9/19/2008
The Credit Markets, Financial Crisis, and Real Wealth (Guest post by Herman Daly 10/13/2008
comment on global margin call 10/25/08
Advice to Pres. Obama - Yes We Can But Will We 1/15/2009

**Remaining recoverable oil is based on Hubbert Linearization by Samuel Foucher here less actual production (consumption) - approx 25 GB recoverable left excluding GOM and Alaska.

DrumBeat: July 8, 2009

Leanan — Wed, 08 Jul 2009 10:15:02 -0400

Oil Shocks: Biden, Iran and Fears of Another Price Jump

Oil analysts are jittery this week following comments on Sunday by Vice President Joe Biden that were widely interpreted as a green light to Israel to bomb Iran's nuclear facilities. Many in the industry have long viewed such an attack as a prelude to a nightmare in global energy markets: Iran retaliating by sinking oil tankers in the Strait of Hormuz, blocking the route by which most Persian Gulf oil travels to world markets. "We will be in deep, deep trouble," says Leo Drollas, deputy director and chief economist of the Center for Global Energy Studies in London. "The market will go berserk."
The Obama Administration has hastened to correct the impression that Biden's comments represented a U.S. nod and wink to an Israeli air strike. The Vice President had said that while the U.S. believes that military action against Iran would serve neither American nor Israeli interests, Israel is a sovereign nation, and if it felt threatened by Iran, it would be "entitled to" launch an attack on the Islamic Republic "whether we agree or not." President Obama reiterated in Moscow on Monday that he opposes military action against Iran and instead wants a diplomatic solution to the nuclear standoff. But Prime Minister Benjamin Netanyahu has long maintained that Israel reserves the right to take matters into its own hands if U.S. diplomacy fails to deliver results.

Oil Falls for Sixth Day, Gasoline Tumbles on Fuel-Supply Gain

(Bloomberg) -- Crude oil fell for a sixth day, the longest losing streak since December, and gasoline tumbled after a government report showed a bigger-than-expected gain in U.S. fuel supplies as the recession curbed demand.
Gasoline stockpiles climbed 1.9 million barrels to 213.1 million in the week ended July 3, more than twice the increase forecast in a Bloomberg News survey, the Energy Department said. Inventories of distillate fuel, a category that includes heating oil and diesel, rose to the highest since 1985 as consumption dropped to a 10-year low.

Kuwait open to investing war reparations into Iraq

Kuwait is open to investing into Iraq some $25 billion still owed it in reparations from the 1990-1991 Gulf crisis, Iraq's parliament speaker said while visiting the oil rich emirate Wednesday.

Ecuador Jan-May Crude Oil Exports Down 63% At $1.82 Billion Vs Year Ago

QUITO -(Dow Jones)- Ecuador's crude oil export revenue totaled $1.82 billion between January and May, a 63% decrease from $4.97 billion in the same period of 2008, the central bank said.
Ecuador exported 50.65 million barrels in the first five months of 2009, down 9% from the 55.83 million barrels shipped one year earlier.

The Conspiracy Of Short-Sellers Is Driving Down Oil

At this point, the fall in oil prices is so severe that there can be only one explanation: market manipulation by short sellers. Just like what we saw in the financial stocks.

Tax Credit for Natural Gas-Fueled Cars May Be Doubled, Extended

(Bloomberg) -- Tax incentives for buying vehicles fueled by natural gas would be doubled in size and extended for a decade under legislation being introduced by U.S. Senate Majority Leader Harry Reid of Nevada.
The credits, which can be used to cover 80 percent of the added cost to buy natural gas-fueled vehicles over conventional automobiles, would jump to as high as $12,500 for passenger cars and light trucks and as much as $64,000 for higher weight-class vehicles, according to a summary of the legislation.

Korea's Hyundai Begins Its Hybrid Push

As Hyundai launches its first hybrid model in Korea, it begins its mission to take on Toyota and Honda in the global green car market.

Are you Ready for $20 Per Gallon Gas?

Forget the classic road trip. Americans are abandoning afternoon drives and summer getaways, thanks to the recession and an unemployment rate that's hovering dangerously close to double digits. The American Automobile Association estimates that the number of drivers traveling over the Fourth of July weekend — that penultimate holiday weekend of the summer — dropped by 10.5 percent over the last two years. And, while gas prices have fallen since the record high of more than $4 a gallon in the summer of 2008, filling up the tank can still set people back considerably.
In his new book, $20 Per Gallon: How the Inevitable Rise in the Price of Gasoline Will Change Our Lives for the Better, Forbes writer Christopher Steiner argues that the increasing cost of fuel will radically change the way we live, from the cities we choose to call home to the way we grow food. NEWSWEEK'S Nancy Cook spoke to Steiner about why he thinks Americans will be forced to restrict plane travel to once a year at most, why solar panels will line the rooftops of apartments, and how gas prices will force suburbanites back into cities. Excerpts:

Global rig count up slightly in June - Baker Hughes

(Reuters) - The number of drilling rigs operating globally in June rose marginally for the first time this year, according to a closely watched data from Baker Hughes Inc.
The global rig count rose to 1,987 in June, from 1,983 in May signaling a slight recovery in energy demand, particularly in Canada.
Canada's rig count for June rose to 125, up 53 from 72 in May.
However, after it rose for the first time this year in May, the international rig count for June dropped by 26 to 967, from 993 counted in May.

Venezuela Oil, Gas Rig Count Falls to Five-Year Low on Billing

(Bloomberg) -- Venezuela oil drilling slowed to a five-year low in June after the country’s state oil company deferred payments to service companies, spurring rig shutdowns.
Oil rig use fell to 58 from 53 in the previous month, while natural-gas drillers kept using three rigs, according to figures released today by Baker Hughes Inc., the world’s third-largest oilfield-services company, which tracks drilling worldwide. The combined total is the lowest since October 2004.

It’s time to end a trade embargo that allow China to gobble up oil 45 miles off the U.S. Coast

FLINT, Mi. — The 47-year-old trade embargo against Cuba has been shaken by the revelation that drilling for oil and natural gas is about to take place less than 50 miles off the U.S. coast — in Cuban waters.
No one knows for sure just how much oil lies off the northwest coast of Cuba, but the consensus is that it’s sizable.
The U.S. Geological Survey initially came up with an estimate in 2004 of between 5-billion barrels and 10-billion barrels. But Cuba’s state oil company, Cubapetroleo, recently said the undersea geology was “very similar” to Mexico’s giant Cantarell oil field in the Bay of Campeche and that the Cuban field may contain 20-billion barrels, more than twice the previous estimate.

Cuban offshore oil drilling plans postponed again

HAVANA (Reuters) - Cuba and a consortium of foreign oil companies have once again postponed plans to drill for oil in the island's still-untapped fields in the Gulf of Mexico, diplomatic and industry sources said this week.
Cuba had announced the consortium, led by Spain's Repsol-YPF, would drill in June or July, but now it is uncertain when work will begin in the waters that Cuban oil experts say may contain 20 billion barrels of oil.

Curbing magic roundabout of oil trading

Rocketing oil prices are deeply inconvenient to motorists. While environmentalists may welcome more expensive fuel for the long term, the soaring cost has contributed to the collapse of Detroit's motor manufacturing industry, costing hundreds of thousands of blue-collar jobs. High energy prices also cause pain for some of the poorest in US society, often in rural communities, who use fuels such as propane to heat their homes.
But any action is going to face stiff resistance from the financial community. Michael Cosgrove, head of North American energy trading at GFI in New York, gave me a spirited defence of the commodities market in an interview today. He believes there's a very slim margin between production and demand - so any tiny change in either can cause a surplus or shortage, causing a seemingly broad lurch in the price.

OPEC Backs More Regulation of Oil Market as CFTC Plans Review

(Bloomberg) -- The Organization of Petroleum Exporting Countries called for more regulation of energy markets, saying record oil prices in the middle of 2008 weren’t justified by physical supply and demand.
“OPEC has repeatedly called for better regulation and increased transparency in these markets, for the benefit of both producers and consumers alike,” it said today in its World Oil Outlook as the U.S. prepares to review exemptions to energy- trading limits.

Goldman, Morgan Stanley Threatened by CFTC Review

(Bloomberg) -- Goldman Sachs Group Inc. and Morgan Stanley may never have the same leeway in commodities as they did when oil reached a record $147 a barrel last year.
The Commodities Futures Trading Commission will consider greater regulation of oil, gas and other energy markets at hearings this month. It plans to review exemptions to trading limits that since the 1990s allowed Goldman and Morgan to build multibillion-dollar ventures in futures, swaps and over-the- counter markets.

Oil in Downtrend, May Fall to $50: Technical Analysis

(Bloomberg) -- Crude oil is in a downtrend that may lead to prices falling as low as $50 a barrel, according to Schork Group Inc.
“Oil has indeed entered a bear channel,” said Stephen Schork, president of the Villanova, Pennsylvania-based consultant. “The market gapped lower, therefore that gap - in between $66.26 and $65.65 - is now the top of resistance.”

Detectives search oil firm Sibir Moscow offices - Ifax

MOSCOW (Reuters) - Russia's law enforcement agencies were conducting on Wednesday searches of the Moscow offices of oil firm Sibir Energy, Interfax news agency reported citing unnamed sources.

Oil companies warned against holding on to fuel

The government has issued a stern warning to oil companies to stop holding on to fuel.
It also dismissed reports by the National Procurement Committee, NPC, for oil companies of Zimbabwe that the nation’s reserves have run dry as a move to sabotage the country.

And the world's largest companies are...

Royal Dutch Shell knocks Wal-Mart out of the top slot. See which other global giants made the cut.

GM Running Out of Trucks and SUVs

General Motors is in trouble because it built too many trucks and SUVs, and neglected the fuel-efficient car market, right?
If so, the bankrupt automaker should have been well on its way to recovery by now. The company is running low on trucks and SUVs.

Lawmakers, businesses jockey for 'green' jobs

ELKHART, Ind.— In the empty factories and laid-off workers in this struggling section of the Rust Belt, entrepreneur Wil Cashen sees "unimaginable potential.”
Seeking to capitalize on the trend toward more-energy-efficient vehicles, Cashen has a plan to retrofit pickup trucks with electric motors at several of Elkhart County’s large, dormant manufacturing facilities and sell them to utility companies.

Coral no more

350 or 450? There's a split in scientific and political communities about which number—both represent parts per million of carbon dioxide in the atmosphere—is the tipping point into dangerous climate change. Actually, it goes sort of like this: Most scientists agree that 350 is the more realistic number, but most politicians say 450 is the best we can shoot for.

Greenpeace activists hijack Italian power stations

Four coal-fired power stations in several parts of Italy were today occupied by Greenpeace activists as G8 leaders met in L'Aquila to discuss issues including action on climate change. More than 100 Greenpeace activists from 18 countries took part in the protests, which hope to draw attention to the group's campaign for action by world leaders on cutting greenhouse gas emissions.

OPEC: World will need less of its crude

OPEC says the world will need less crude oil from the group in 2013 than it did last year as the lingering impact of recession crimps demand and rising biofuels supply makes up for shrinking production elsewhere.
The Organization of Petroleum Exporting Countries, whose members supply about 40 percent of the world’s oil, slashed its forecast for global oil consumption in 2013 by 5.7 million barrels to 87.9 million barrels a day. OPEC will have to produce 31 million barrels of crude daily in 2013 to satisfy demand, compared with 31.2 million barrels last year, it predicted in an annual report today.
“There is a growing perception that the economic slowdown will be U-shaped, that is the recovery will gather momentum only gradually,” the group’s Vienna-based secretariat said in its World Oil Outlook published today. OPEC sees demand for its crude “rising slowly over the medium term, returning back to 2008 levels by around 2013.”

Oil falls near $62 on recovery doubts

VIENNA – Oil prices slipped closer to the $62 a barrel mark Wednesday reflecting growing concerns over a slower-than-expected recovery in the global economy.
Prices were lower for the sixth straight day from a peak of above $73 last week, in tandem with continued weakness in Asian stock markets and a stronger U.S. dollar.

Does commute seem shorter? Report confirms less traffic

(CNN) -- Americans are spending less time stuck in traffic and wasting less gas, according to a new report.
Rising joblessness and stinging gas prices have put the brakes on worsening trends in traffic congestion, according to a study issued Wednesday by the Texas Transportation Institute, the nation's largest university-based transportation research facility.

U.S. Oil Fund Says It Didn’t Cause ‘Unusual’ Crude Price Swings

(Bloomberg) -- United States Oil Fund, the first exchange-traded fund for crude futures, said it didn’t cause the record high and subsequent collapse in oil prices last year.
U.S. trading regulators began an investigation of the fund in February in connection with a surge in the price difference between two crude-oil contracts. At one point early this year, the fund held 20 percent of outstanding March crude futures on the New York Mercantile Exchange.

Hit the Speculators and Oil Bets Are Off

The Commodity Futures Trading Commission's proposed crackdown on speculation in oil and natural gas, announced Tuesday, comes at an odd time. After all, the CFTC was largely dismissive about the impact of speculators on energy prices last fall, when crude still hovered around $100 a barrel. In the past week, Nymex crude has dropped 10% to about $63, in response to fears about the slow pace of economic recovery.
There is a strong argument to make that given the weak demand outlook and overflowing oil inventories, prices should be even lower. But market prices are set by competing "fundamental" views. There is a clear division between those who see economic "green shoots" and those who see weeds, just as there are "peak oil" aficionados set against less pessimistic opponents.

Insecurity tempers lure of Iraq's oil fields

Baghdad – International oil companies trying to get their foot in the door on some of the richest undeveloped oil fields in the world are grappling with a wide array of factors including lingering security fears and concerns that Iraq's climate for foreign oil investment is still shifting.

Why Iraq sees success in oil auction

Baghdad – Iraq is declaring a historic auction to develop some of the world's richest oil fields a success – despite a bidding process from which most international oil companies walked away emptyhanded – and is proceeding with plans for a second round of bidding at the end of the year.
"We showed the world two things – that the Iraqi oil industry is open for investment for the first time, and second, that the process was transparent," says Foreign Minister Hoshyar Zebari.

Natural Gas Fund Says It Has Run Out of New Shares

(Bloomberg) -- The United States Natural Gas Fund, the largest exchange-traded fund in the fuel, said today that it has run out of new shares as it awaits government approval to issue more units.
The fund applied with the U.S. Securities and Exchange Commission to register 1 billion new shares on June 5. The wait will temporarily halt the fund’s recent growth. Outstanding shares have increased to 281.4 million, more than eight times the level at the start of the year.

Nigerian militants attack Shell, Agip pipelines in Bayelsa state

LAGOS (Xinhua) -- Nigeria's major militant group in the oil rich Niger Delta region the Movement for the Emancipation of the Niger Delta (MEND) said on Wednesday it had attacked oil pipelines operated by Royal Dutch Shell and the Italian firm Agip in southeast Nigeria's Bayelsa State.

Russian auditors attack coal exporters over pricing

MOSCOW (Reuters) - Russia's budget is losing substantial revenues because the country's exporters ship coal overseas at artificially low prices through various offshore schemes, Russia's top auditing body said.
A report published on the Audit Chamber website said up to 80 percent of Russian coal exports were going through offshore firms at prices often 30 percent to 54 percent below market rates.
"As a result substantial funds raised from coal sales are accumulated on offshore firms' accounts while Russia's budget is losing a substantial part of tax revenues," the auditing chamber said in a statement.

South Korea courts Poland on nuclear, LNG projects

WARSAW (AFP) – South Korean President Lee Myung-Bak Tuesday signalled Korean firms were keen to build Poland's first atomic reactor and liquefied natural gas terminal, projects key to its energy diversification bid.
"I know that in the context of energy security and diversification Poland is planning to build a nuclear electricity plant and an LNG terminal. Korea has a very strong position in these areas and awaits greater cooperation with Poland on these matters," he told a Polish-Korean economic forum in Warsaw.

EU fines E.On and Gaz de France

Energy giants E.On and Gaz De France (GDF) Suez have been fined by European Commission competition regulators for carving up gas markets between them.
Both Germany's E.On and France's GDF Suez have been fined 553m euros ($770m; £477m) by the Commission.
The firms agreed in 1975 not to compete with each other in their national gas markets when they started to import gas through a pipeline from Russia.

Iconic skyscrapers find new luster by going green

NEW YORK – When owners of the Empire State Building decided to blanket its towering facade this year with thousands of insulating windows, they were only partly interested in saving energy. They also needed tenants.
After 78 years, Manhattan's signature office building had lost its sheen as one of the city's most desirable places to work. To get it back, the owners did what an increasing number of property owners have done — they went green, shelling out $120 million on a variety of environmental improvements, a move would have been considered a huge gamble a few years ago.

Why toilet paper belongs to America

Even as the markets boom in developing nations, toilet paper manufacturers find themselves needing to charge more per roll to make a profit. That's because production costs are rising. During the past few years, pulp has become more expensive, energy costs are rising, and even water is becoming scarce. As the climate continues to change, toilet paper companies may need to keep hiking up their prices. The question is, if toilet paper becomes a luxury item, can Americans live without it?
The truth is that we did live without it, for a very long time. And even now, a lot of people do.

Pickens’ energy campaign marches on: Texas oil man made a big splash, but has little to show for it

After spending millions on television commercials and a public relations tour that took him to 74 cities and 22 town halls, his plan has run into some sizeable hurdles, most notably a crash in energy prices. As prices plunged, the Texas billionaire's hedge funds lost billions of dollars. Pickens also scrapped plans for the world's biggest wind farm, and California voters rejected a natural gas initiative he backed.
"I do wonder how long that I can continue at the pace," Pickens, 81, said Tuesday in an interview with Associated Press reporters and editors. "I know my time is limited. I'm in a hurry. I want to get this done."

Terminal Absence of Leadership

The alleged goal of globalization, at least if the superficial tag lines are to be believed, is to elevate the standards of living for all. What the tagline can’t reveal, and what the economists who are tenured to the service of globalized corporate and government interests fail to convey, is that the resource base of the world cannot support anything approaching the utopian standard of living touted by that lot.

The Land Of Plenty

The American economy seems only dazed from its first impact with Peak Oil and oblivious to the unyielding wall it just hit. Those unacquainted with the topic may want to read Twilight in the Desert by oil investment banker Matt Simmons, The Long Emergency by James Howard Kunstler or the novel World Made By Hand.
American oil production has been in terminal decline since 1971. Worldwide production appears to have peaked in 2005. The current crude oil stockpiles and recent demand destruction are immaterial to this foreboding storm. In the geo-political scheme this issue is guiding many of the decisions from Washington to Moscow to Beijing and Tehran. The gold to oil ratio does matter. Many may take our complex oil powered systems, like food production and distribution, for granted.

Pope calls for 'God-centered' global economy

The "true world political authority" that Benedict calls for should keep solutions as simple and local as possible but still create solidarity for the common good.
Reese notes the "strong language here on the redistribution of wealth — not something people like to talk about in the USA. If the Catholic right is against the redistribution of wealth, they're against the pope. He doesn't believe an unregulated marketplace is going to solve all the problems of economy and poverty."

Solar for Dark Climates

Solar technology that generates both heat and electricity could make solar energy practical in places that aren't sunny.

World's first fuel cell aircraft takes off in Germany

HAMBURG, Germany (AFP) – The world's first piloted aircraft capable of taking to the air using only power from fuel cells took off in Germany Tuesday, producing zero carbon dioxide emissions, its makers said.
"We have improved the performance capabilities and efficiency of the fuel cell to such an extent that a piloted aircraft is now able to take off using it," said Johann-Dietrich Woerner from the German Aerospace Center (DLR).

Time-of-day pricing and solar panels are smart ideas under Hawaii's sun

Recent passage by the U.S. House of Representatives of the Clean Energy and Security Act is a reminder of the threat posed to Hawaii by climate change: more frequent, stronger tropical storms threaten to erode beaches, submerge beachfront properties, and alter Hawaii's tourism and agricultural economies. Fortunately, Hawaii can do its share to combat global warming and in the process, help ameliorate its dependence upon imported oil for electricity generation.

Clean Cars Are Coming

I got into an interesting online debate with Matthew DeBord, the car blogger from Slate, who thinks the electric-vehicle revolution will be a long time coming. He's unconvinced that we're about to go through a profound change in personal transportation.

Price Is EV’s ‘Elephant in the Room’

The electrification of the automobile has been called the auto industry’s “moon shot,” an analogy that works because of both the technology involved and the cost to develop it. Automakers are pouring hundreds of millions of dollars into the effort with no promise that it will lead to affordable battery-powered vehicles anytime soon — or any guarantee people will buy them once they’re available.

Obama makes nuclear compromise to pass clean energy bill

The Obama administration endorsed a revival of America's nuclear industry yesterday in an effort to build forward momentum for climate change legislation before the Senate.
The seal of approval for nuclear power – a cause embraced by Republican senators – came on day one of a full-on lobbying effort by the White House for one of Obama's signature issues

EEI Expo: Secretary Chu Describes Life in a Carbon-constrained World

Chu said that "sooner or later we will be living in a carbon constrained world." He listed five things that "we need to do to get where we need to be."

Despite Shift on Climate by U.S., Europe Is Wary

Angela Merkel, the German chancellor, said during a visit to Washington in late June that she had detected a “sea change” in Washington’s approach to climate change since Mr. Obama took office, raising the odds for a successful outcome to the treaty negotiations, to be held in Copenhagen in December.
But Europe is also unhappy with the Obama administration’s reluctance to accept aggressive near-term goals for cutting greenhouse gases and its refusal so far to formally accept language that would limit the rise in global temperatures to 2 degrees Celsius, or 3.6 degrees Fahrenheit, above pre-industrial levels.

US to accept 2-degree target on climate change, EU says

L'Aquila, Italy - The United States is ready to accept a Group of Eight (G8) goal of limiting global warming to within 2 degrees centigrade, European Union leaders said Wednesday as the annual G8 summit opened in L'Aquila, Italy. "One year ago it was not possible, our American partners did not accept (the targets), now they accept it. So there is progress," EU Commission President Jose Manuel Barroso told reporters.
Swedish Prime Minister Fredrik Reinfeldt, whose country currently holds the EU's rotating presidency, said US President Barack Obama had "made references to" the 2-degree target contained in the summit's draft conclusions.

Gore says climate deal needs more public pressure

OXFORD (Reuters) – Public awareness about the "catastrophe" of climate change is not high enough to pressure politicians into taking action, former Vice President Al Gore said on Tuesday.
Gore, who shared a Nobel Prize in 2007 for his environmental campaigning, said politicians will only do more once the people who elect them force the issue.

Senate tackles climate change

WASHINGTON — The Senate took up sweeping climate change legislation on Tuesday, with four Obama administration officials insisting that the measure is urgently needed to combat global warming, wean the U.S. off imported oil and revitalize the nation’s economy.
Energy Secretary Steven Chu told the Senate Environment and Public Works Committee that the United States “has the opportunity to lead a new industrial revolution of creating sustainable, clean energy.”

Senate Democrats Begin Drawing Road Map to 60 Votes on Climate Bill

When it comes to climate change legislation, Senate Democratic leaders find themselves in a similar spot to where their House counterparts stood a few months ago: pledging passage of a comprehensive bill without a clear path on how to get there.

Gov. Barbour Dives, Once More, Into the Climate Fray

The longtime Republican leader and possible 2012 presidential candidate starred as the key GOP witness at the first Senate hearing on the issue since the House narrowly passed a major global warming bill last month. Following the path of recent Republican vocalizers like former House Speaker Newt Gingrich of Georgia and ex-Sen. George Allen of Virginia, Barbour summed up the plan as an economic catastrophe.

Polluting Nations Drop Vow to Cut Gas Output 50%, Official Says

(Bloomberg) -- The world’s biggest polluting nations dropped a vow to cut their greenhouse-gas emissions 50 percent by 2050 after developing countries balked at the plan, according to a government official who attended a meeting on the matter.
Nations gathered in Italy this week had pledged in a draft declaration to halve emissions by 2050, with industrialized countries cutting 80 percent, said the person, who declined to be identified because talks haven’t ended.
Both numerical targets were stripped from the final document, to be released tomorrow, after representatives at the major economies forum scrambled to reach an agreement in Rome yesterday. The countries release about 80 percent of the world’s heat-trapping emissions blamed for climate change.

It can only get worse – so we must be prepared

Like most natural disasters, people give little thought to flooding until it occurs. Reaction is strong at the time, but apart from those seriously or personally affected, memories quickly fade and anxiety decreases until the next time. This is how it has always been – except now major flooding incidents are becoming increasingly common.
This is no surprise. In 2004 the Office of Science and Technology Foresight report on climate change, floods and coastal defence showed that we could expect the number of properties at risk from flooding to rise from 80,000 at present to 350,000 by 2050, with associated damage costs rising by a factor of seven. The report also concluded that the cost of managing flood risk would increase by a similar amount if present approaches to flood defence and drainage were continued.
Put bluntly, this is unaffordable, and we must find a new way to tackle flood risk in the future.

'There's something afoot in the Arctic'

Each year I guide ski expeditions across the pack ice to the North Geographic Pole and each year brings new surprises -- severe storms rarely seen in these parts, vast tracts of first-year ice where there should be years of accumulation, pack ice drifting faster and farther than ever before.
The veneer of fractured ice over the Arctic Ocean is changing, disintegrating before my eyes. Over the last twenty years more than 5000 kilometers of ice has passed beneath my skis during numerous expeditions to both poles, as well as treks across Greenland, Spitsbergen, Iceland, Ellesmere Island and the Patagonian Icecap. Add to this multiple voyages and flights to both Antarctica and the Arctic and I have come to feel part of the polar landscape. I've developed somewhat of a polar sense, and I sense there is something afoot that I don't much like.

NASA data shows 'dramatically thinned' Arctic ice

WASHINGTON (AFP) – Arctic sea ice thinned dramatically between the winters of 2004 and 2008, with thick older ice shrinking by the equivalent of Alaska's land area, a study using data from a NASA satellite showed.
Using information from NASA's Ice, Cloud and Land Satellite (ICESat), scientists from the US space agency and the University of Washington in Seattle estimated both the thickness and volume of the Arctic Ocean's ice cover.

Peak Oil Update - July 2009: Production Forecasts and EIA Oil Production Numbers

Sam Foucher — Tue, 07 Jul 2009 10:05:22 -0400

An update on the latest production numbers from the EIA along with graphs/charts of different oil production forecasts.

World oil production (EIA Monthly) for crude oil + NGL. The median forecast is calculated from 15 models that are predicting a peak before 2020 (Bakhtiari, Smith, Staniford, Loglets, Shock model, GBM, ASPO-[70,58,45], Robelius Low/High, HSM,Duncan&Youngquist). 95% of the predictions sees a production peak between 2008 and 2010 at 77.5 - 85.0 mbpd (The 95% forecast variability area in yellow is computed using a bootstrap technique). The magenta area is the 95% confidence interval for the population-based model. Click to Enlarge.

Notations:

mbpd= Million of barrels per day

Gb= Billion of barrels (10⁹)

Tb= Trillion of barrels (10¹²)
NGPL= Natural Gas Plant Liquids
CO= Crude Oil + lease condensate
NGL= Natural Gas Liquids (lease condensate + NGPL)
URR= Ultimate Recoverable Resource

EIA Last Update (March)

Data sources for the production numbers:

Production data from BP Statistical Review of World Energy (Crude oil + NGL).
EIA data (monthly and annual productions up to March 2009) for crude oil and lease condensate (noted CO) on which I added the NGPL production (noted CO+NGL).

The all liquid peak is now July 2008 at 86.65 mbpd, the year to date average production value in 2009 (3 months) is down from 2008 for all the categories. The peak date for Crude Oil + Cond. is also July 2008 at 74.80 mbpd (see Table I below).

Fig 1.- World production (EIA data). Blue lines and pentagrams are indicating monthly maximum. Monthly data for CO from the EIA. Annual data for NGPL and Other Liquids from 1980 to 2001 have been upsampled to get monthly estimates.

Category	MAR 2009	MAR 2008	MAR 2007	12 MA¹	2009 (3 Months)	2008 (3 Months)	2007 (3 Months)	Share	Peak Date	Peak Value
All Liquids	83.75	85.98	84.25	84.93	83.60	85.48	84.42	100.00%	2008-07	86.65
Crude Oil + NGL	79.97	82.35	80.92	81.14	79.79	81.73	80.96	95.49%	2008-07	82.88
Other Liquids	3.78	3.63	3.33	3.79	3.81	3.75	3.45	4.51%	2008-11	3.89
NGPL	7.97	8.06	7.95	7.89	7.86	7.93	7.96	9.52%	2008-07	8.08
Crude Oil + Condensate	72.00	74.29	72.97	73.25	71.93	73.80	73.01	85.97%	2008-07	74.80
Canadian Tar Sands	1.26	1.19	1.26	1.22	1.24	1.20	1.19	1.50%	2007-08	1.35

Table I - Production estimate (in millions of barrels per day (mbpd)) up to March 2009 taken from the EIA website (International Petroleum Monthly). ¹Average on the last 12 months. Canadian tar sands production numbers are from the NEB and includes updagraded and non-upgraded bitumen.

Business as Usual

EIA's International Energy Outlook 2006, reference case (Table E4, World Oil Production by Region and Country, Reference Case).
IEA total liquid demand forecast for 2006 and 2007 (Table1.xls).
IEA World Energy Outlook 2008, see post here for details.
IEA World Energy Outlook 2006 : forecasts for All liquids, CO+NGL and Crude Oil (Table 3.2, p. 94).
IEA World Energy Outlook 2005 : forecast for All liquids (Table 3.5).
IEA World Energy Outlook 2004 : forecast for All liquids (Table 2.4).
A simple demographic model based on the observation that the oil produced per capita has been roughly constant for the last 26 years around 4.4496 barrels/capita/year (Crude Oil + NGL). The world population forecast employed is the UN 2004 Revision Population Database (medium variant).
CERA forecasts for conventional oil (Crude Oil + Condensate?) and all liquids, believed to be productive capacities (i.e. actual production + spare capacity). The numbers have been derived from Figure 1 in Dave's response to CERA.

Fig 4.- Production forecasts assuming no visible peak.

PeakOilers: Bottom-Up Analysis

Chris Skrebowski's megaprojects database (see discussion here).
The ASPO forecast from April newsletter (#76): I took the production numbers for 2000, 2005, 2010, 2015 and 2050 and then interpolated the data (spline) for the missing years. I added the previous forecast issued one year and two years ago (newsletter #58 and #46 respectively).
Rembrandt H. E. M. Koppelaar (Oil Supply Analysis 2006 - 2007): "Between 2006 and 2010 nearly 25 mbpd of new production is expected to come on-stream leading to a production (all liquids) level of 93-94 mbpd (91 mbpd for CO+NGL) in 2010 with the incorporation of a decline rate of 4% over present day production".
Koppelaar Oil Production Outlook 2005-2040 - Foundation Peak Oil Netherlands (November 2005 Edition).
The WOCAP model from Samsam Bakhtiari (2003). The forecast is for crude oil plus NGL.
Forecast by Michael Smith (was at the Energy Institute, now works for EnergyFiles) for CO+NGL, the data have been taken from this chart in this presentation (The Future for Global Oil Supply (1641Kb), November 2006.).
PhD thesis of Frederik Robelius (2007): Giant Oil Fields - The Highway to Oil: Giant Oil Fields and their Importance for Future Oil Production. The forecasts (low and high) are derived from this chart.
Forecast by TOD's contributor Ace, details can be found in this post.
The forecast by Duncan and Youngquist made in 1999, see also this post by Euan Mearns.

Fig 5.- Forecasts by PeakOilers based on bottom-up methodologies.

PeakOilers: Curve Fitting

The following results are based on a linear or non-linear fit of a parametric curve (most often a Logistic curve) directly on the observed production profile:

Professor Kenneth S. Deffeyes forecast (Beyond Oil: The View From Hubbert's Peak): Logistic curve fit applied on crude oil only (plus condensate and probably excluding tar sand production) with URR= 2013 Gb and peak date around November 24th, 2005.
Jean Lahèrrere (2005): Peak oil and other peaks, presentation to the CERN meeting, 2005.
Jean Lahèrrere (2006): When will oil production decline significantly? European Geosciences Union, Vienna, 2006.
Logistic curves derived from the application of Hubbert Linearization technique by Stuart Staniford (see this post for details).
Results of the Loglet analysis.
The Generalized Bass Model (GBM) proposed by Prof. Renato Guseo, I used his most recent paper (GUSEO, R. et al. (2006). World Oil Depletion Models: Price Effects Compared with Strategic or Technological Interventions ; Technological Forecasting and Social Change, (in press).). The GBM is a beautiful model that has been applied in finance and marketing science (see here for some background). The estimation in Guseo's article was based on BP data from 2004 (CO+NGL).
The so-called shock model proposed by TOD's poster WebHubbleTelescope . You can find a description of his approach on his blog here as well as a review on TOD. The current estimate was done in 2005 based on BP's data (CO+NGL).
The Hybrid Shock Model is a variant of the shock model described here. The forecast is based on EIA data (up to 2006) for crude oil + condensate, the ASPO backdated disovery curve and assumes no reserve growth and declining new discoveries.

Fig 6.- Forecasts by PeakOilers using curve fitting methodologies.

Forecast Performance

It is difficult to compare forecasts because they deal with different liquid category and have different baseline. The forecasts were evaluated using the Mean Asolute Scaled Error (MASE) proposed by Hyndman and Koehler [1]. A good forecast will have a MASE value less than 1 (i.e. better performance than a simple naive forecast). We can notice than some MASE curves are decreasing with time indicating that their predicted values are getting more accurate further in time.

Fig. 7. - MASE values as a function of the forecast horizon.

Forecast	Date	2006	2008	2009	2010	2015	MASE²	Peak Date	Peak Value
All Liquids
Observed (All Liquids)		84.54	85.48	83.60	NA	NA		2008-07	86.65
IEA (WEO)	2004	83.74	87.08	88.74	90.40	98.69	0.39	2030	121.30
IEA (WEO)	2005	85.85	89.35	90.98	92.50	99.11	0.64	2030	115.40
Koppelaar	2005	85.78	87.60	88.33	89.21	87.98	0.42	2011	89.58
Lahèrrere	2005	84.47	85.87	86.46	86.96	87.77	0.20	2014	87.84
EIA (IEO)	2006	84.50	88.23	90.00	91.60	98.30	0.65	2030	118.00
IEA (WEO)	2006	85.10	88.17	89.73	91.30	99.30	0.68	2030	116.30
CERA¹	2006	89.52	93.75	95.34	97.24	104.54	1.89	2035	130.00
Lahèrrere	2006	84.82	87.02	87.99	88.93	92.27	0.46	2018	92.99
Smith	2006	87.77	94.38	96.98	98.94	98.56	0.39	2012-05	99.83
IEA (WEO)	2008	83.15	85.51	86.80	88.15	94.40	0.63	2030	106.40
Crude Oil + NGL
Observed (EIA)		81.25	81.73	79.79	NA	NA		2008-07	82.88
Duncan & Youngquist	1999	83.93	83.55	82.90	81.65	73.47	0.11	2007-01	83.95
Population based	2004	79.73	81.58	82.50	83.42	88.01	0.33	2050	110.64
GBM	2003	76.27	76.20	75.87	75.30	67.79	0.17	2007-05	76.34
Bakhtiari	2003	80.89	80.24	78.94	77.64	69.51	0.17	2006	80.89
ASPO-46	2004	80.95	80.59	80.31	80.00	73.77	0.12	2005	81.00
ASPO-58	2005	82.03	84.05	84.74	85.00	79.18	0.53	2010	85.00
Staniford (High)	2005	77.92	78.63	78.86	79.01	78.51	0.18	2011-10	79.08
Staniford (Med)	2005	75.94	75.91	75.76	75.52	73.00	0.30	2007-05	75.98
Staniford (Low)	2005	70.13	69.20	68.60	67.92	63.40	0.64	2002-07	70.88
IEA (WEO)	2006	81.38	83.96	85.24	86.50	92.50	0.72	2030	104.90
Koppelaar	2006	82.31	85.60	88.03	91.00	NA	1.20	2010	91.00
Skrebowski	2006	81.97	85.14	86.76	87.95	NA	1.01	2010	87.95
Smith	2006	82.81	88.27	90.58	91.95	88.60	0.34	2011-02	92.31
Loglets	2006	82.14	83.74	84.29	84.65	83.26	0.14	2012-01	84.80
ASPO-76	2006	79.00	85.06	88.49	90.00	85.00	1.11	2010	90.00
Robelius Low	2006	82.19	82.35	81.92	81.84	72.26	0.39	2007	82.50
Robelius High	2006	84.19	89.27	91.65	93.40	92.40	2.11	2012	94.54
Shock Model	2006	80.43	79.51	78.93	78.27	73.74	0.37	2003	81.17
EWG	2007	81.00	79.79	79.00	78.06	69.21	0.41	2005	81.39
IEA (WEO)	2008	79.80	81.59	82.49	83.40	87.40	0.71	2030	95.00
Crude Oil + Lease Condensate
Observed (EIA)		73.46	73.80	71.93	NA	NA		2008-07	74.80
ASPO-46	2004	72.56	71.89	71.47	71.00	63.55	0.20	2005	72.80
Deffeyes	2004	69.92	69.64	69.37	69.01	65.98	0.17	2005-12	69.94
ASPO-58	2005	73.80	75.39	75.89	76.00	69.50	0.44	2010	76.00
IEA (WEO)	2006	71.78	73.76	74.74	75.70	80.30	0.38	2030	89.10
CERA¹	2006	76.89	80.35	81.58	82.29	83.83	2.00	2038	97.58
ASPO-76	2006	72.10	75.74	77.47	78.00	72.00	0.75	2010	78.00
HSM	2007	73.56	73.40	73.16	72.82	69.53	0.28	2006	73.56
Ace	2007	73.48	72.18	69.77	66.96	58.47	0.12	2006-01	73.55
IEA (WEO)	2008	69.73	70.64	71.06	71.46	73.00	1.07	2030	75.20

Table II. Summary of all the forecasts (figures are in mbpd) as well as the last EIA estimates.¹Productive capacities. ²MASE value for March 2009, the value in bold indicates the best forecast (i.e. the oldest with the lowest error).

Are We There Yet?

We can consider two competitive models for the crude oil + NGL production:

M0: The oil production will continue to grow with the world population at a constant rate of 4.3 barrels per capita.
M1: The production will fall according to the average peak oil forecast.

These two models are represented as a magenta and a yellow area on the top figure of this post. According to the M0 model, the current fall in production levels for March 2009 is 0.004 significant. However lower deviations were observed in the late 90s and in 2001 (there were previously 16 months with larger deviations since 1990). The likelihood ratio between the two models has significantly increased above 3 indicating than the M1 model is more stronly supported by the recent production levels than the M0 model which was not the case before 2009.

Fig. 8 - Likelihood ratio (M1/M0) at the left and Statistical significance of observed production levels according to M0 (the red circle is March 2009).

Previous Update:

August 2008

[1] Rob J. Hyndman, Anne B. Koehler, Another look at measures of forecast accuracy, International Journal of Forecasting, Volume 22, Issue 4, October-December 2006, Pages 679-688. pdf available here.

Khebab@theoildrum.com

The Oil Drum available for Amazon Kindle

Super G — Tue, 07 Jul 2009 10:03:22 -0400

The Oil Drum is now available for the Amazon Kindle reader. You can purchase a subscription for $1.99/month. Ideally we would give it away for free, but Amazon won't let us.

Subscribe by following this link or by clicking the icon in the right sidebar.
Enjoy!

DrumBeat: July 7, 2009

Leanan — Tue, 07 Jul 2009 09:57:31 -0400

EIA raises 2009 world oil demand forecast

WASHINGTON -- The U.S. Energy Information Administration on Tuesday once again raised its world oil demand forecast for this year as the global economy gradually improves.
In its monthly energy outlook, the EIA increased its 2009 global oil demand projection to 83.85 million barrel per day (bpd), up 170,000 bpd from its June estimate of 83.68 million bpd. World oil demand this year is still well below 2008 levels of 85.41 million bpd.
The agency said consumption will rebound to 84.79 million bpd in 2010, up 380,000 bpd from the previous estimate of 84.41 million.

Oil prices: is there a spike on the horizon?

So, have the past 12 months been a blip in the relentless charge ahead or were speculators the cause of an unsustainable boom?
The implosion of the global economy cut energy demand to such an extent that tankers were being used to store oil offshore in the hope prices would rise in the future. Offshore storage peaked in April, when 100m barrels were being stored aboard ships. However, since the oil price has started to recover, this oil is gradually being brought onshore.

More Ideas for Breaking the Climate Deadlock

There’s a batch of new proposals for breaking the persistent global deadlock over dealing with global warming, all coming as world leaders prepare to meet at the Group of 8 summit in L’Aquila, Italy, and in parallel sessions of the biggest emitters of greenhouse gases. Britain’s former prime minister, Tony Blair, rolled out a list of climate and energy strategies. A couple of other new ideas are summarized below. I will add reactions from other specialists immersed in the ugly nexus of economics, climatology, demography, diplomacy, energy policy and politics.

Pickens paring down wind farm project

T. Boone Pickens' plan to build the world's largest wind farm is off.
Instead, Pickens said he will build five or six smaller wind farms, in the Midwest and possibly Texas, though he hasn't settled on locations.
Last year, Pickens announced that he would build a 1,000-megawatt wind farm in Pampa, Texas. The problem a lack of a transmission line to bring the juice to population centers, Pickens said in an interview last week.

Rep. Welch pushed Vt. energy initiatives

"Although some dispute it, there is little doubt that our oil is a finite resource, that we are at or near-peak oil, that global warming is real, the threat to our economy immediate, the need to act urgent," Welch said.
The legislation will create jobs in a new "green" economy in Vermont and across the country, Welch said in a telephone interview prior to Friday's vote. "The concern I heard is people want jobs," he said.

The Fed and peak oil

Laurel Graefe, a senior economic researcher working for the Federal Reserve Bank of Atlanta has written an excellent overview of peak oil, “The Peak Oil Debate”. I consider this a must-read piece, as much for armchair oil experts as beginners, and as much for who published this as what it contains. This should be very high on your list of “brother-in-law” documents, the ones you can safely recommend to co-workers, neighbors, or, well, your brother in law.
While Graefe has taken a decidedly middle of the road approach, which will be enough all by itself to infuriate the Apocalypticons, she also touches on several points that I would have expected a publication from any part of the Fed to ignore.

B.C. pipeline bombings just a 'nuisance' to industry

RCMP are calling a wave of bomb attacks on natural gas facilities in northern British Columbia "terrorism," but an energy analyst says the bombings are having little impact on the gas industry.

When a takeover battle goes nuclear

What happens behind the scenes when one energy company refuses to be swallowed by a bigger rival?

EU Hits U.S. Biodiesel Makers With Five-Year Tariffs

(Bloomberg) -- The European Union imposed five-year tariffs on U.S. biodiesel to help EU producers counter American subsidies and price undercutting, a step that may stoke trans- Atlantic trade tensions.
The duties punish U.S. manufacturers of biodiesel, a type of biofuel made from vegetable oils and animal fats for use in diesel engines, for receiving government aid and selling in the EU below cost. The companies targeted include Archer Daniels Midland Co., the world’s largest grain processor, and Cargill Inc., the biggest U.S. agricultural company.
“This is all about protecting vested agricultural interests on both sides,” said Christian Egenhofer, a researcher at the Centre for European Policy Studies in Brussels. “Governments are not in control.”

California - And by Extension the U.S. - Headed for Permanently Smaller Economy

The June issue of Gregor.us Monthly, The Scholarship of Collapse, addresses several views of economic and systemic collapse from the works of Jared Diamond to Joseph Tainter, and then goes on to apply these views to the United States–and to its biggest state, California. Frankly, it’s not much fun to suggest that another leg down in housing is on the way. Or, that California is unlikely to see its GDP exceed its previous peak for quite some time. But without the two industries that characterized post-war growth in the US, housing and automobiles (and the financial industry that squatted on top of these) it’s hard to see how California–and the US by extension–does not become a permanently smaller economy.

ConocoPhillips Reports Increase in Second-Quarter Output

(Bloomberg) -- ConocoPhillips, the third-largest U.S. oil company, said second-quarter production rose from a year earlier as new projects came online.
Output of oil and natural gas climbed to the equivalent of 1.86 million barrels of crude a day, Houston-based ConocoPhillips said today in a statement on Business Wire. That compares with production of 1.75 million barrels in the second quarter of 2008.

Iran’s Political Turmoil Cuts Crude Oil Demand, PFC Energy Says

(Bloomberg) -- Iran’s oil will probably extend declines in the first four months of the year as the political turmoil that followed last month’s disputed presidential election damps economic growth, consultant PFC Energy said.
Oil demand dropped by 30,000 barrels a day in January to April year, compared with a growth of 100,000 barrels a day in the same period in previous years, Raja Kiwan, PFC’s Dubai-based analyst, said in a report received by e-mail late yesterday.

Congressional Smokescreen (Blown With Oil)

REINSTATE Glass-Steagall in its entirety, and return commercial banking to the utility function that it is and should be, as it is both regulated and protected by the government against the full consequences of failure.
Demand that those who want the "hedging exception" demonstrate their actual use of the commodity in question in amounts that correspond to the hedged positions held, with nightly reporting requirements to the CFTC.

Ghana May Buy Kosmos’s Stake in Jubilee Oil Field

(Bloomberg) -- Ghana National Petroleum Corp., the state-owned company that oversees the country’s nascent oil and gas industry, may buy Kosmos Energy LLC’s stake in the $3.1 billion Jubilee oil field.

Saudi, Total sign $9.6 billion Jubail refinery deals

RIYADH (Reuters) - Saudi Aramco and France's Total signed on Tuesday 13 agreements with contractors to build a $9.6 billion joint-venture refinery in the kingdom, state news agency SPA reported.

Aramco to start gas plant expansion in Sept

State oil giant Saudi Aramco plans to start up the expanded Juaymah gas plant in September, a few months later than last scheduled, sources working on the project said.
'Difficulties during the mechanical commissioning caused the delay,' one source told Reuters. The plant was last scheduled to come online in June, after several delays from the initial schedule to start in the first quarter of 2008.

The Dark Side of Climate Change: It's Already Too Late, Cap and Trade Is a Scam, and Only the Few Will Survive

Father of the Gaia Theory, James Lovelock says we can't stop climate change, but that humanity will continue in some smaller form.

Turkey Loses $630 Million Dam Financing on Flood Plan

(Bloomberg) -- Turkey lost European financing for a hydroelectric plant on the Tigris River after failing to offer environmental protections such as relocating antiquities from the Middle Ages that will be flooded by the dam.

GCC likely to pump $200bn into renewable energy plans

The choice of the UAE as the location of the International Renewable Energy Agency (Irena) will provide a strong push to efforts by Gulf and other Arab countries to develop such resources, said officials and analysts.
Although Gulf countries have the biggest conventional hydrocarbon resources, they need to develop other sources to meet a steady growth in domestic consumption and save those resources for future generations.

Nuclear Output Little Changed; Hope Creek in New Jersey Slowed

(Bloomberg) -- Nuclear output was steady today as the Hope Creek reactor in New Jersey slowed to 85 percent from full capacity yesterday and the Millstone reactor in Connecticut remained shut.
Output from U.S. nuclear plants decreased by 172 megawatts, or 0.2 percent, to 97,962 megawatts today from 98,134 early July 6, according to a report from the U.S. Nuclear Regulatory Commission. The total represents 98 percent of U.S. capacity. Two reactors are offline, according to the commission.

Vattenfall’s Kruemmel Reactor Won’t Start for Months

(Bloomberg) -- Vattenfall AB, the Nordic region’s biggest utility, said its Kruemmel nuclear reactor in Germany won’t start for “several months” and that the plant’s head resigned.
Vattenfall will replace the 1,346-megawatt facility’s two tranformers, the Stockholm-based company said today in an e- mailed statement. Hans-Dieter Lucht, the head of the plant near Hamburg, resigned after two automatic halts this month.

MDU to Join ITC on Green Power Transmission Project

(Bloomberg) -- MDU Resources Group Inc., the largest company in the Dakotas, said it will join with ITC Holdings Corp. in developing the Green Power Express, a transmission project that will link wind farms in the U.S. Plains to cities.
The transmission lines will run about 3,000 miles (4,827 kilometers) through North Dakota, South Dakota, Iowa, Wisconsin, Minnesota, Illinois and Indiana, MDU said today in a statement. MDU, based in Bismarck, North Dakota, said the Green Power Express will carry as much as 12,000 megawatts. One megawatt can power about 800 average U.S. homes, according to the Energy Department in Washington.

Richard Heinberg: Peak Oil Day - July 11

Maybe it’s a stretch to say that the production peak occurred at one identifiable moment, but attributing it to the day oil prices reached their high-water mark may be a useful way of fixing the event in our minds. So I suggest that we remember July 11, 2008 as Peak Oil Day.
We are now approaching the first-year anniversary of Peak Oil Day. Where are we now? The global economy is in tatters, yet oil prices have recovered somewhat (they’re now about half what they were in July 2008). World energy consumption is down, world trade is down, the airline industry is shrinking, and most of the world’s automakers are on life support.
It is too late to prepare for Peak Oil—a year too late, in fact. Now the name of the game is adaptation. We are in an entirely new economic environment, in which old assumptions about the inevitability of perpetual growth, and the usefulness of leveraging investments based on expectations of future growth, are crashing in flames. Even if economic activity picks up somewhat, this will occur in the context of an economy significantly smaller than the one that existed in July 2008, and energy scarcity will quickly cause most green shoots to wither.

Oil, Gas Market Speculation May Face Restrictions by U.S. CFTC

(Bloomberg) -- U.S. regulators say they may clamp down on oil and gas price speculators by limiting the holdings of energy futures traders, including index and exchange-traded funds.
The Commodity Futures Trading Commission will hold hearings to explore the need for government-imposed restrictions on speculative trading in oil, gas and other energy markets, Chairman Gary Gensler said today in a statement. The agency didn’t say when the hearings would start or who would be asked to testify.

$20 Oil Is On The Table Again: Can Obama Pull The Israeli Rabbit Trick?

The bears are out again and there is talk of $20 oil; the logic is:
• All the oil stored up in super-tankers will flood the market.
• World GDP growth is low and perhaps getting lower or at least not likely to rocket any time in the immediate future.
But much of the oil stored in tankers was bought against futures contracts so it's sold waiting delivery. That was a nice little win-win situation for anyone who could buy oil when the current price was a lot less than what you could sell futures for. But don't expect the tooth fairy to touch you on the shoulder twice in a row; sure there may be a trading opportunity when that unfolds, and maybe not, it will all depend on the "discipline" of OPEC, and if you are a betting man on that sort of thing, well place your bets!

Oil Prices: Demand, What Demand?

Crude oil slud, as Dizzy Dean might have said, to $64 a barrel, continuing a dismal run for oil and underscoring just how uncertain the global economic outlook really is.
But here’s the thing: Even a modest economic recovery might not do the trick. Demand for oil cratered after last year’s spike in prices, and could go walkabout for years to come. Crude futures closed down 4% today to $64.05.

Lock ‘n load

Today’s deflationary environment will ultimately be replaced by inflation. You’ll have no trouble recognizing this when oil hits $150, a litre of gas is a buck and a half, food prices are going nuts and mortgage rates are rising monthly.
But this will not make us Argentina. Instead of hyper-inflation which wildly inflates wages, salaries, prices and asset values at the same time, this is the kind that just sees prices go up, while your income doesn’t. There are many sound economic reasons for my saying this. I’ll explain over a few scotches some time.
This inflation will also not escalate house values. Not by enough to compensate for your lost net worth, anyway. The main reasons will be stagnant family incomes, the debilitating effect of energy prices and rising mortgage costs.

Schork Oil Outlook: The Fear Trade

Apropos the current strength in the market, the common refrain amongst traders and analysts interviewed on these shows goes something like this… I don’t believe in this market’s strength, but I want to participate while it lasts.
Got that? Traders are so desperate that they are now buying, not on fundamentals, but rather on fear of missing out before this market heads back into the toilet.

Repsol Says Global Oil Reserves Will Cover 40 Years of Needs

(Bloomberg) -- Repsol YPF SA, Spain’s biggest oil producer, said existing global oil reserves will meet supply needs for 40 years while gas reserves will last for 60 years.
New areas of exploration such as offshore blocks in Brazil and Siberia will add to future reserves, Nemesio Fernandez Cuesta, general director of upstream at Madrid-based Repsol, said today at a conference in the Spanish capital.

Nigeria Rebel Attacks Shut 589,000 Barrels of Oil, Trust Says

(Bloomberg) -- Armed militants targeting Nigeria’s oil industry shut 589,000 barrels of crude a day in two months, Daily Trust reported, citing Mohammed Barkindo, head of the Nigerian National Petroleum Corp.
The losses resulted from more than 12 attacks carried out between May and June, Barkindo told oil and gas workers at a meeting in the capital, Abuja, according to the report.

Is Nigeria Still a Relevant Issue for Oil?

At the end of June, the oil market got something it hadn't had in a while: news of actual, real-life supply shock. After months of declining demand reports and inventories that are quite robust, the unrest in Nigeria gave people something bullish (admittedly not happy) to add to their buy/sell equations.

PDVSA Sells $1.42 Billion of Bonds, Less Than Planned

(Bloomberg) -- Venezuelan state oil company Petroleos de Venezuela SA issued $1.42 billion of bonds in the local market, less than half the $3 billion it planned to sell.

China eyes $14.5-billion bid for Repsol stake

China National Petroleum Corp. (CNPC), the country's largest oil company, could pay up to $14.5-billion (U.S.) for 75 per cent of Spanish oil major Repsol's REP-N Argentine unit YPF, sources said on Tuesday.

Russia's Gazprom confirms Naftogaz payment for June gas volumes

Moscow (Platts) - Russia's Gazprom confirmed Tuesday it received payment from Ukraine's Naftogaz Ukrayiny for gas supplied in June.
"Naftogaz has paid in full for June gas supplies," Gazprom official spokesman Sergei Kupriyanov said Tuesday in a statement.

Oman Seeks to Produce 804,000 Barrels a Day of Oil by Year End

(Bloomberg) -- Oman, the largest Gulf Arab oil producer that isn’t a member of OPEC, seeks to produce 804,000 barrels of oil a day by the end of the year, its economy minister said.

Chinese oil firms may bid for Iraqi oil fields

BEIJING (AFP) – China's three largest oil companies may take part in Iraq's second auction of oil and gas fields, as the Asian giant seeks to strengthen its foothold in the oil-rich nation, state media said.

Iraqi oil revenues up in second quarter

Iraq says its oil revenues rose by more than 45 percent in the second three months of the year compared with the first quarter.
Oil Ministry figures released Tuesday showed that second-quarter revenue was about $9.57 billion, up from $6.57 billion in the first quarter.

Russia subsoil law up for discussion

US oil major ExxonMobil is looking to clinch new deals in Russia but sees the country's subsoil law, which limits foreigners' access to strategic fields, as the main obstacle, an executive said today.

China to slap curfew on riot-torn city

Xinjiang has long been a hotbed of ethnic tensions, fostered by a yawning economic gap between Uighurs and Han Chinese, government controls on religion and culture and an influx of Han Chinese migrants who now are the majority in most key cities.
Beijing has poured cash into exploiting Xinjiang's rich oil and gas deposits and consolidating its hold on a strategically vital frontierland that borders Pakistan, Afghanistan and Central Asia, but Uighurs say migrant Han are the main beneficiaries.

India: Govt may end fuel price curbs; cuts natgas tax

NEW DELHI (Reuters) – India, Asia's third-largest oil consumer, outlined plans in Monday's national budget to pull domestic fuel rates into line with global prices and waived tax on natural gas production to spur investment in exploration.
Finance Minister Pranab Mukherjee said the government would form an expert group to decide on a viable fuel pricing system in an announcement just days after India hiked petrol and diesel prices by as much as 10 percent after a recent rally in global crude prices.

GM product chief says no delay for plug-in SUV

DETROIT (Reuters) - General Motors is on track to launch a plug-in sport-utility vehicle in 2011 despite scrapping its Saturn brand as part of a sweeping reorganization in bankruptcy, according to the automaker's product chief.
"I can tell you that I won't lose one day in terms of customers being able to walk into dealerships and actually purchase a plug-in," GM Vice Chairman Tom Stephens said in an interview.

Pure Energy Launches - First National Radio Program Dedicated to the Business of Renewable Energy

MIAMI /PRNewswire/ -- Pure Energy, the first national radio show dedicated to the business of renewable energy, is launching from the Miami studios of 880 The Biz (WZAB) on Monday, July 13, 2009 at 6:00 p.m. EDT. Pure Energy is hosted by noted energy expert Sean O'Hanlon, who is also the Executive Director of the American Biofuels Council (ABC). Guests for the premier show include renowned engineer and author Dr. Robert Zubrin as well as worldwide peak oil expert and author of nine books including "Peak Everything," Richard Heinberg.
"With oil prices heading back over $70/bbl, and set to go higher, it could not be more urgent for America to take immediate action to break free of the stranglehold of the oil cartel," said Zubrin, author of "Energy Victory". The U.S. congress could effectively destroy OPEC with the stroke of a pen simply by passing a law requiring that all new cars sold in the U.S. be flex fueled. Such a law would make flex fuel the international standard and would thereby create fuel choice all around the world."

Carbon vs Cap and Trade - taxes that will never go away

All that talk to get us away from oil is partly a ruse. Sure, we need to get off of oil, but "peak oil" doesn't mean no oil at all, like we're dry. Besides, there are plenty of ways to transform our country without taxation. How about giving people a tax break? Why not be positive, but government-revenue neutral? That won’t happen, and here’s why.
Whther we have a straight Carbon Tax or a Cap and Trade, process especially reflects a political end game, a massive scheme in socio-economic engineering that makes automotive technology look like a grade-school science project. The project really started when the green heads kidnapped the ultra-liberal wing of government to advance their fears of climate change, aside from the fact the planet has seen multiple climate changes long before man ever walked the earth.

Transition Town timeline - a vision of hope

The Transition Town movement has produced a year-by-year timeline to lead us to a happier, healthier society. Shaun Chamberlin outlines this vision - beginning with a landmark 2010 climate change accord.

Incandescent Bulbs Return to the Cutting Edge

SANTA ROSA, Calif. — When Congress passed a new energy law two years ago, obituaries were written for the incandescent light bulb. The law set tough efficiency standards, due to take effect in 2012, that no traditional incandescent bulb on the market could meet, and a century-old technology that helped create the modern world seemed to be doomed.
But as it turns out, the obituaries were premature.
Researchers across the country have been racing to breathe new life into Thomas Edison’s light bulb, a pursuit that accelerated with the new legislation. Amid that footrace, one company is already marketing limited quantities of incandescent bulbs that meet the 2012 standard, and researchers are promising a wave of innovative products in the next few years.

China's first of 7 mega wind farms ready to start rolling

China will start constructing a 10-gW wind farm in Jiuquan, Gansu province on Friday, the first in a batch of similar mega wind power projects the country has planned for over the next few years to increase the share of clean energy sources in its power consumption mix.

ADB backs China wind farm project

MANILA (AFP) – The Asian Development Bank is helping to finance a pioneering private-sector wind farm in China's Inner Mongolia that will help the fast-growing nation fight climate change, officials said.
The Manila-based ADB is lending about 24 million dollars towards the overall cost of 73 million dollars for the facility, China's first wind farm to be built as a joint venture between Chinese and Japanese companies.

Hybrid Solar Cells Shine

As the race to create clean, renewable power heats up, the solar industry is focusing on a technology in hopes of producing utility-scale energy.
Concentrating photovoltaic (CPV) solar power -- which marries traditional solar photovoltaic technology to large-scale concentrated solar power plants -- could ramp up utility-scale solar production, advocates say, especially in niche markets. But as with all developing technologies, the effort faces significant hurdles.

Coal Industry Sees Life or Death in Senate Climate Debate

When people in the coal business talk about "the valley of death," they are referring to a grim place not located near any mine. It is an economic chasm that the industry fears awaits it if the Senate approves climate legislation similar to what passed the House.

India Says Developed Nations Are Responsible for Climate Change

(Bloomberg) -- Developed countries must bear “historic responsibility” for industrial emissions of greenhouse gases they have produced, India’s Prime Minister Manmohan Singh said ahead of climate change talks this week.
“What we are witnessing today is the consequence of over two centuries of industrial activity and high consumption lifestyles in the developed world,” Singh said in a statement in New Delhi today before leaving for the Group of Eight summit in Italy. “It is the developing countries that are the worst affected by climate change.”

World's rich targeted in new model for carbon cuts

(CNN) -- Researchers in the U.S. have proposed a new way of allocating responsibility for carbon emissions they say could solve the impasse between developed and developing countries.
The method sets national targets for reducing carbon emissions based on the number of high-income earners in each country, following the theory that people who earn more generate more CO2.

How the US Is Blocking Progress on Climate Change

As the predictions for global warming get more and more alarming, talks on a worldwide climate treaty have stalled --largely due to the United States. The G-8 summit in L'Aquila, which begins Wednesday, is likely to generate little more than the usual platitudes.

A new take on Kyoto

Obama's fear is the US will be unable to cut fast enough. And if it fails, US taxpayers could have to pay for a billion tonnes of carbon credits. At $20 per tonne of CO2, that would add up to serious money. But with a large forced buyer like the US, the carbon price could soar. Just how high, no one knows. Obama is understandably reluctant to take on such a huge open-ended commitment – one which could prove highly unpopular with electors demanding spending on health, education and pensions.
Can Obama find a way out? Yes he can! He should ditch the whole system of national emissions targets and move instead to a genuinely global system for regulating emissions. It sounds revolutionary, and it is. But a proposal along these lines could garner widespread international support. The talks leading up to the Copenhagen climate conference in December are stuck. Governments are all reluctant to take on ambitious targets – because doing so could cost their taxpayers dear, and because they fear competitive disadvantage compared to countries with weaker targets.

'The Greenland Ice Sheet Is an Awakening Giant'

The Greenland ice sheet is, like some regions in Antarctica, an awakening giant. In the coming centuries it will add significantly to the global sea-level rise. It matters to a huge number of people around the globe, as there are definitely regions that are very sensitive to even the slightest changes in the global sea level. People in the Indian Ocean island nation of the Maldives, for example, are already worried right now.

High altitude wind power: an era of abundance?

Ugo Bardi — Mon, 06 Jul 2009 10:06:25 -0400

The kitegen concept: high altitude wind power based on kites. In this configuration ("stem"), the kite reaches altitudes of the order of 1000 m; pulling on a power generator located on the ground. High altitude wind power promises to be a low cost and widely available technology able, in principle, to provide amounts of energy comparable, and even superior, to the present production based on fossil fuels. (See here an animated representation of how a stem works)

Why should there be an energy problem? After all, there is plenty of energy around us. The sun beams on the earth's surface a daily amount of energy that corresponds to almost ten thousands times the primary energy we generate - mainly - from fossil fuels. And that doesn't include geothermal energy nor the perspectives of nuclear energy, especially in terms of fusion power. Just tap a small fraction of this energy bonanza that surrounds us and we can have more than we need.

But, of course, things are not so simple. We still rely heavily on fossil fuels for our needs and switching to alternative sources is proving to be a very slow and difficult process. Production from traditional nuclear plants is going down (WNA 2009) and fusion power remains far away in the future. Traditional renewable sources, such as wood burning and hydroelectric have very limited possibilities of expansion, while the "new" renewables (mainly photovoltaic and wind power) still produce only a minuscule fraction of the worlds' total primary energy. It was only last year (2008) that for the first time the total power of new renewable plants installed outstripped that of new traditional plants in the US and in Europe (REN21 2009). Renewables are growing fast, but can they grow fast enough to compensate for the depletion of fossil fuels?

We have a problem of cost. That can be intended as monetary costs, but also in terms of energy return of energy invested (EROEI). As shown in Charles Hall's "balloon graph" (2009) the EROEI of renewables can be considered as reasonably good in most cases (with the exception of biofuels). It is around 10 for photovoltaics and around 20 for wind. Similar returns are reported for current nuclear technology. These are good returns on the investment, but not as good as it was for fossil fuels in the golden days. Decades ago, the EROEI of petroleum was of the order of 100 and perhaps even better (Hall 2009). It was this high EROEI that led fossil fuels to acquire the dominance that they have today. Without that kind of EROEI; other energy sources haven't had a possibility to compete. Today, we still need fossil energy to build non-fossil energy plants. But, with fossil fuels starting their decline, it will be more and more difficult to sustain the growth of alternative energies at a rate fast enough to provide a smooth substitution of conventional sources. We can think of an industrialized world that doesn't need fossil fuels, but we don't seem to be able to get there fast enough.

So, we are facing Tantalus' curse: we are surrounded by abundant energy but we can't get it. That is, unless we can develop a technology with a much better EROEI than what we have now. With a very fast energy return on investment, we could free the world's energy system from its dependence on fossil fuels. That is, unfortunately, easier said than done. The internet is full of claims of supposed breakthroughs in energy technologies that promise a lot but turn out to be just dreams; or even outright scams. But there may exist an energy technology that can not only promise, but deliver a high EROEI and that is also based on sound physical principles: high altitude wind power.

The basic idea of high altitude wind power is that wind is more intense as you move up in the atmosphere. The average wind speed increases with height according to an exponent (called "Hellman exponent") which is about 1/7. But the energy contained in a mass of air in movement increases with the cube of speed. From a simple calculation, we see that if we could raise a wind turbine to a height of 800 m, we could increase the power obtained of a factor of 8 in comparison to the same turbine near the ground. Even larger increases are possible at higher altitudes, where winds are also much more constant; easing the intermittency problem of conventional wind turbines. But of course, it is impossible to reach such heights with the current wind technology, limited to about 100 m because of the cost and weight of the tower.

This concept has been clear for a long time and has led to several proposals to tap the wind at higher heights. There are two possible ways for doing that: balloons and wings. You can find a recent summary of the progress in this area in the work by Big Gav (2009) published on TOD . As you can see, there are many ideas in this field, many of which exist only as sketches on paper. In many cases, the energy yield of the proposed systems is only a guess while, for those systems based on aerostats, the need of a non renewable resource (helium) is a considerable limit.

However, a few systems have been studied in depth and some tested in practical experiments. Systems based on rotors are possible and systems based on kites, in particular, do show a lot of promise. Saul Griffith of Makani Power has shown some images of a test done with a three rope kite. Wubbo Ockels, (Delft University of technology) has been also experimenting with a kite , this one using a single rope. In this field, the most advanced system seems to be the "kitegen"; a kite system created by Massimo Ippolito of Sequoia Automation , a company based in Italy. Tests on a prototype system have been completed and a first energy producing plant is being built in Northern Italy.

The Kitegen is a simple aerodynamic system: it uses state of the art kites which create lift dynamically by flying at 70-80 m/sec; this is the speed reached by the tips of the blades of a conventional wind turbine. In the simplest configuration (called "stem"), the system uses a single kite linked to a power generator located on the ground. The kite moves like a yo-yo: when it goes up, it generates energy that is transformed into electric power by the generator. When it reaches its maximum height, it is placed in an aerodynamically non-lifting configuration, so that it can be pulled down at a very small energy cost. Two coupled stems would work like a two-cylinder engine, although the "power" phase would last 90% of the time while the "pull back" phase would be much faster. A single stem could have a maximum power of a few MW. Larger plants could be operated in the "carousel" configuration. In this case, the kites fly at a constant height and at much higher altitudes, pulling a generator that moves on a circular rail. For a large carousel system, the maximum power obtained can be calculated as of the order of 1 GW or even higher.

Since the kitegen has been studied in detail, we can use it to make an estimate of the EROEI involved in high altitude wind generation. Before getting to that, however, let's summarize the known data for the current wind technology. A recent LCA study for a conventional 3 MW wind turbine was reported by Nalukowe et al, (2006). They estimate the total energy input for building and maintaining the turbine as ca. 8000 MWh for 20 years of lifetime. Since the total weight of the above ground part of the turbine is about 400 tons, we can estimate an embodied energy requirement of about 20 kWh/kg. The turbine will produce about 160,000 MWh during its lifetime and hence the final EROEI is ca. 20.

Now, let's see the results of a similar approach for the kitegen. According to Massimo Ippolito (data published on www.kitegen.com), the energy required to make a 3 MW rated power kitegen stem is of 40kWh/kg or 40 MWh/ton. The calculation that leads to this value takes into account all the requirements in terms of the materials needed: steel for the structure, copper for power lines, neodimium and boron for the magnets, machining, transportation, building, etcetera. This value includes also the energy costs involved with having workers at the plant and for the periodic substitution of cables and kites over a 30 year lifespan.

We see that the kitegen requires more energy per kg than a conventional wind turbine; this is expected because it is a more sophisticated machine. But the stem is much lighter: we are talking of about 30 tons in total for a 3MW plant. So, we can estimate the total energy requirement as 30 tons*40 MWh/ton= 1200 MWh. Assuming 5000 hours per year of operation at maximum power, the plant could produce approximately 15,000 MWh per year, or 450,000 MWh in 30 years. The final result is an EROEI = 375 (!!). If we assume a 20 year lifespan, the estimate should be reduced, but it remains large. For larger kitegen plants of the carousel type it would be possible to reach higher heights, tap into stronger winds and increase even more the EROEI. This calculation is valid for the specific case of the kitegen system, but other proposed systems based on kites or rotors would probably be able to attain similar large EROEIs.

Of course, these values have to be taken with a lot of caution, but this calculation should be enough to show us the enormous potential of high altitude wind power. EROEIs higher than 100, perhaps even much higher, bring us back to the golden age of cheap and abundant fossil fuels, without all the troubles and problems that fossil fuels brought. A further advantage of high altitude wind is that plants can be placed almost anywhere; another is that we can obtain a nearly constant output for most of the time (Archer and Caldeira, 2009). Although the cost of energy storage would not be completely eliminated, it would be much reduced. With high altitude wind, we might really have the kind of energy "too cheap to meter" that was prophesied in the optimistic 1950s. Not only we could have cheap energy, but we could also have it fast. Consider a conventional wind turbine, with an EROEI of 20 over a 20 years lifetime. During this period, the energy generated could be used to build 20 more turbines; an average of one per year. A kitegen, with an EROEI > 200 and the same lifespan, could be the "seed" for hundreds more kitegens, an average of more than one per month. With such a high EROEI, high altitude wind energy wouldn't need fossil fuels as energy subsidy. It could grow by itself so fast that it could replace fossil sources well before we arrive to the last drop. That would also ease the climate problem by rapidly reducing the emissions of greenhouse gases from fossil fuels.

Now, of course, all this should be considered still a dream until it is tested and verified. But, at least, it is a dream that has some solid basis in physics and engineering. So, assuming that the promise of low cost and high EROEI can be really fulfilled, we should still remember that the earth is a limited system. So what are the ultimate limits of high altitude wind power?

It is estimated that about 2% of the Sun's energy that arrives on the earth's surface is transformed into wind energy. The atmosphere is not very efficient as a thermal engine, but there is so much energy from the sun that even a mere 2% is a huge amount in comparison to our needs. The total energy stored in form of winds is estimated as of the order of 2000 TW (Hurley 2009) or perhaps higher according to other estimates. In comparison, the total primary energy generated by humans corresponds to an average of just about 16 TW. So, there is no doubt that wind energy is abundant: according to a 2005 study by Archer and Jacobson, already at 80 meters of height there is enough energy in the atmosphere that it could be exploited by means of the conventional wind technologies to provide a total amount corresponding to the present production. But there is much more energy at higher altitudes and we need to exploit just a few percent of it to be able to produce enough for our current needs.

One problem could be the effect of high altitude kites or rotors on the atmospheric wind circulation. This question has been examined by Archer and Caldeira (2009) by means of climate models. The results are that tapping high altitude winds would reduce precipitation. Also, it would have a cooling effect and could affect climate. The problem would be minimal (around 0.1% reduction in precipitation) for amounts of energy tapped corresponding to our present demand. But this effect does pose a limit to the technology. It may not be advisable to use high altitude wind power for generating more than a maximum of around ten times the present production. It is still a huge amount of energy available for free and generating a very small impact on the earth's ecosystems. It could even be further increased, indirectly, by using wind energy to manufacture photovoltaic panels or other kinds of solar plants. In the end, we shouldn't be surprised of these perspectives. After all, as we said, we are surrounded by huge amounts of energy and if we find a way to exploit it, well, why not?

From these data, we could be tempted to see high altitude wind power as a nearly limitless energy technology. But that would be a mistake. Energy production is not static - it goes with the economy and if the economy is powered by a source of cheap and abundant energy it tends to grow exponentially. Exponential growth is treacherously misleading: we could find ourselves bumping into the ceiling of high altitude winds much sooner than we would expect.

But there is a much more serious problem in the fact that energy is not the only parameter that affects the economy. Abundance of something is not abundance of everything. Abundant electric power doesn't necessarily translate into abundant food, although electricity can surely be used in agriculture in place of fossil fuels. That our problem is not just energy is confirmed by the models developed for the "Limits to Growth" series (Meadows 2004). The models can be run for scenarios that assume abundant (or even infinite) energy available, but the result is that the economic system collapses because of the strain on the environment and on agriculture generated by a combination of overpopulation and pollution. To avoid collapse, we need to stabilize both the economy and the population at a stationary level. Even so, the gradual depletion of mineral ores will make us depending on more and more energy if we want to keep the flux of mineral commodities at the present level (Diederen 2008, Bardi, 2008). So, even with abundant energy, we'll still need to recycle materials and reuse what we manufacture.

So, even with abundant energy we still need to come to terms with the fact that the earth is a limited system. However, high altitude wind power offers us a hope of a future of relative abundance, even of prosperity, if we'll be able to keep the economy and the population stable and avoid overexploiting our agricultural and mineral resources.

Acknowledgement: the author thanks Mr. Massimo Ippolito for his comments and input for this paper.

Note: the author is not financially linked to Kitegen Research S.r.l., the company which is developing the kitegen system described in the present article. He has, however, a small financial interest in "Wind Operations Worldwide" (WOW) which is formed of a group of of small investors who intend to finance the development of high altitude wind power, and in particular of the kitegen system.

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