Energy

Jeff Rubin, the former CIBC World Markets Inc. chief economist who accurately predicted oil’s surge in the decade just ended, expects crude to reach $90 a barrel this quarter and $100 by the year’s end.

Accelerating demand in Asia and the Middle East will force consumers to rely on costlier non-conventional energy sources such as oil sands, said Rubin, who spent 20 years with the Toronto-based bank and last year published a book on energy economics, “Why Your World is About to Get a Whole Lot Smaller.” Rubin correctly forecast in 2007 that crude would reach $100.

“It’s safe to say that we’ll see triple-digit oil prices by the fourth quarter of this year,” Rubin said in a telephone interview yesterday. “I would expect prices to move pretty close to that level, and be in the $90 range probably by the end of March.”

Source/Full Story:  Bloomberg.com

Mexico has taken out a $1bn insurance policy against oil prices falling next year, a clear signal that commodities producers remain wary about the threat of a double-dip recession.

“We want this as an insurance policy,” said Agustín Carstens, Mexico’s finance minister. “If we don’t collect any resources from this transaction, it’s OK with us.” That would mean the oil price had remained above $57 a barrel, he added.

Mr Carstens suggested he was not expecting prices to fall that low, but added: “More than anything, it’s a hedge against a really bad outcome.”

Source/Full Story: FT.com

A radiation leak at Three Mile Island contaminated about 100 employees Saturday afternoon, according to a TMI official.

Source/Full Story: 6abc.com
Technorati Tags: Three Mile Island

The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying.

The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves.

The allegations raise serious questions about the accuracy of the organisation’s latest World Energy Outlook on oil demand and supply to be published tomorrow – which is used by the British and many other governments to help guide their wider energy and climate change policies.
‘There’s suspicion the IEA has been influenced by the US’ Link to this audio

In particular they question the prediction in the last World Economic Outlook, believed to be repeated again this year, that oil production can be raised from its current level of 83m barrels a day to 105m barrels. External critics have frequently argued that this cannot be substantiated by firm evidence and say the world has already passed its peak in oil production.

Now the “peak oil” theory is gaining support at the heart of the global energy establishment. “The IEA in 2005 was predicting oil supplies could rise as high as 120m barrels a day by 2030 although it was forced to reduce this gradually to 116m and then 105m last year,” said the IEA source, who was unwilling to be identified for fear of reprisals inside the industry. “The 120m figure always was nonsense but even today’s number is much higher than can be justified and the IEA knows this.

“Many inside the organisation believe that maintaining oil supplies at even 90m to 95m barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further. And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources,” he added.

A second senior IEA source, who has now left but was also unwilling to give his name, said a key rule at the organisation was that it was “imperative not to anger the Americans” but the fact was that there was not as much oil in the world as had been admitted. “We have [already] entered the ‘peak oil’ zone. I think that the situation is really bad,” he added.

The IEA acknowledges the importance of its own figures, boasting on its website: “The IEA governments and industry from all across the globe have come to rely on the World Energy Outlook to provide a consistent basis on which they can formulate policies and design business plans.”

Source/Full Story: The Guardian
Technorati Tags: Peak Oil

China’s Powerful State-Owned Enterprises Scour the Globe in a Bid to Quench the Country’s Insatiable Thirst for Oil & Gas

News reports over the past few weeks of two potential multi-billion dollar Chinese oil deals in Africa, and another significant gas-related acquisition in Kazakhstan, only further reinforces China’s insatiable appetite for energy.

The recent news that China, through one of its state-owned enterprises, is a likely bidder for 23 oil blocks in Nigeria, for up to a staggering US$ 30 Billion, and another, separate $5 billion deal in Uganda, certainly caught the eye of the international community.

However, while the intricacies of these potential deals are interesting in their own right, their significance is that they are only part of a much larger story. While this may seem like a short-term flurry of deal making, it is simply the continuance of feverish activities by the Chinese to secure oil & gas over the past few years, and most notably, in the year-to-date 2009.

Source/Full Story:  Seeking Alpha

Britain’s energy watchdog warned today that consumers could face price rises of up to 60% in their gas and electricity bills in coming years as energy supplies become more volatile.

In a review of Britain’s energy market, Ofgem called for an investment of up to £200bn over the next decade in power plants and other infrastructure to secure supplies and meet carbon reduction targets. “The need for this investment arises at a time of volatile world energy prices and Britain’s increasing dependence on gas imports,” it said.

The warning comes two days after E.ON announced it was delaying its controversial plans to build a new coal-fired power station at Kingsnorth, blaming falling demand due to the recession.

The regulator has drawn up four possible scenarios for the next 10 to 15 years. They would result in increases in domestic energy bills of between 14% and 25% by 2020, from 2009 levels – with the risk that spikes in wholesale prices could lead to an increase in household energy bills of up to 60% in the next seven years.

Ofgem chief executive Alistair Buchanan said: “Our scenarios suggest that Britain faces a tough challenge in maintaining secure supplies whilst at the same time meeting its climate change targets.

Source/Full Story: guardian.co.uk

Many Americans have been getting a break on their electricity bills during the recession, but they should not expect the relief to last long as power demand recovers and climate regulations loom.

Utilities in major markets like New York, Chicago and Texas lowered rates as the recession cut industrial and residential consumption and wholesale power costs during the first half of 2009 fell to the lowest levels in seven years.

An expected economic recovery in 2010 and federal green energy regulations could push costs up again quickly, analysts and power companies said.

“No one can expect demand and fuel costs to remain this low forever. Once the economy recovers, demand will start to rise and utilities will likely have to deal with new government mandates,” said Jim Owen of the Edison Electric Institute (EEI), an association of investor-owned electric companies.

Source/Full Story: Reuters

The world is heading for a catastrophic energy crunch that could cripple a global economic recovery because most of the major oil fields in the world have passed their peak production, a leading energy economist has warned.

Higher oil prices brought on by a rapid increase in demand and a stagnation, or even decline, in supply could blow any recovery off course, said Dr Fatih Birol, the chief economist at the respected International Energy Agency (IEA) in Paris, which is charged with the task of assessing future energy supplies by OECD countries.

In an interview with The Independent, Dr Birol said that the public and many governments appeared to be oblivious to the fact that the oil on which modern civilisation depends is running out far faster than previously predicted and that global production is likely to peak in about 10 years – at least a decade earlier than most governments had estimated.

But the first detailed assessment of more than 800 oil fields in the world, covering three quarters of global reserves, has found that most of the biggest fields have already peaked and that the rate of decline in oil production is now running at nearly twice the pace as calculated just two years ago. On top of this, there is a problem of chronic under-investment by oil-producing countries, a feature that is set to result in an “oil crunch” within the next five years which will jeopardise any hope of a recovery from the present global economic recession, he said.

In a stark warning to Britain and the other Western powers, Dr Birol said that the market power of the very few oil-producing countries that hold substantial reserves of oil – mostly in the Middle East – would increase rapidly as the oil crisis begins to grip after 2010.

“One day we will run out of oil, it is not today or tomorrow, but one day we will run out of oil and we have to leave oil before oil leaves us, and we have to prepare ourselves for that day,” Dr Birol said. “The earlier we start, the better, because all of our economic and social system is based on oil, so to change from that will take a lot of time and a lot of money and we should take this issue very seriously,” he said.

“The market power of the very few oil-producing countries, mainly in the Middle East, will increase very quickly. They already have about 40 per cent share of the oil market and this will increase much more strongly in the future,” he said.

Source/Full Story: The Independent

Billionaire oil man T. Boone Pickens is shelving plans to build the world’s largest wind farm.

The chairman of BP Capital Management announced Tuesday that his plans for the Pampa Wind Project, designed to generate 4,000 megawatts of electricity using thousands of wind turbines, is on hold.

“I had hoped that Pampa would be the starting point, but transmission issues and the problem with the capital markets make that unfeasible at this point,” Pickens told CNN’s Ali Velshi. “I expect to continue development of the Pampa project, but not at the pace that I originally expected.”

The Pickens Plan was an attempt to wean the United States off foreign oil and switch to wind and natural gas. The project was to be set in four Texas Panhandle counties.

Pickens said he faced hurdles in routing the power from Texas to a distribution system. His plans were also stymied by a plunge in natural gas prices and a tightening credit market.

“The capital markets have dealt us all a setback, and I’m less aggressive with the Panhandle project than I have been,” Pickens said.

He said he was still committed to 667 wind turbines that he has already ordered and would find homes for them.

Source/Full Story: CNN.com

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The bill requires that large U.S. companies, including utilities, oil refiners, manufacturers and others, reduce emissions of carbon dioxide and other gases associated with global warming by 17 percent by 2020 and 83 percent by 2050, from 2005 levels.

They would do so by phasing in the use of cleaner alternative energy than high-polluting oil and coal.

At the core of the bill, which is around 1,500 pages long, is a “cap and trade” program designed to achieve the emissions reductions by industry.

Under the plan, the government would issue a declining number of pollution permits to companies, which could sell those permits to each other as needed.

‘BIGGEST JOB-KILLING BILL’

…

House Republican leader John Boehner called the measure “the biggest job-killing bill that has ever been on the floor of the House of Representatives.”

Representative Joe Barton, the senior Republican on the Energy and Commerce Committee that played a key role in the bill, said it would set unrealistic targets for cutting carbon pollution. “You would have to reduce emissions in the United States to the level that we had in 1910,” Barton said.

Both predicted higher prices for energy and other consumer goods and more U.S. jobs being shipped abroad as companies try to avoid the tough pollution-control requirements. Democrats said consumers mostly would be protected from price hikes. 

Source/Full Story: Reuters

San Francisco’s average hit $3.09 on Monday, according to AAA. Oakland reached $3.01, the same as the state average, and San Jose, $3.02.

Gasoline prices usually rise through the spring and peak in the summer, as Americans take to the road on vacation. Last year’s historic price spike reached its pinnacle on June 19, when California’s average price for regular hit $4.61, a record. Then, prices crashed along with the global economy.

They have now rebounded.

Since late April, traders have bid up the price of crude oil, gasoline’s raw material. They’re betting that the economy has hit bottom and will start improving this year, driving up the demand for fuel. And with the dollar struggling against other currencies, big institutional investors have used oil as a relatively safe place to park their money.

As a result, gasoline prices are climbing just as families prepare for summer trips. So far, prices haven’t climbed high enough to keep vacationers at home.

Source/Full Story: sfgate.com

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The FBI is investigating a computer intrusion at a large Texas power company that crippled the firm’s energy forecast system for a day in March, costing it over $26,000.

Early Thursday morning FBI agents raided the home of a former employee of Dallas-based Energy Future Holdings — the corporate parent of three large Texas electric companies, including Luminent, which has over 18,300 megawatts of generation in Texas, and operates the Comanche Peak nuclear power plant.

The ex-employee, Dong Chul Shin, was fired from the company March 3 for performance reasons, and escorted off the premises, according to court records. But the company failed to immediately shut off his VPN access. That afternoon, someone using Shin’s account began logging onto the corporate network, e-mailing out proprietary data to a personal Yahoo account linked to Shin, and modifying and deleting files, according to a search warrant affidavit by Dallas FBI agent Robert Smith.

Company logs showed that the VPN connection originated at Shin’s home IP address, Smith writes.

While logged into the VPN, the intruder sent an e-mail to the engineering group operating the Comanche Peak nuclear reactor. The message asked questions about the safety of the reactor, in particular wondering what would happen if the load were to be “increased to 99.7 percent of capacity.” While at EFH, Smith notes, “Shin was responsible for programming the models which controlled the management of EFH power generation facilities, including Comanche Peak.”

No charges have apparently been filed, but the FBI is treating the case as a suspected violation of federal computer crime laws, including a rarely-used statute prohibiting breaking into a computer and creating “a threat to public health or safety.”

Source/Full Story:  Wired.com

Sounds great, but personally I am tapped out.  I’m already “on the hook for an extra $55,000 a household to cover rising federal commitments made just in the past year for retirement benefits, the national debt and other government promises.”  So, where’s the money coming from?

President Obama today announced over $467 million from the American Reinvestment and Recovery Act to expand and accelerate the development, deployment, and use of geothermal and solar energy throughout the United States.  The funding announced today represents a substantial down payment that will help the solar and geothermal industries overcome technical barriers, demonstrate new technologies, and provide support for clean energy jobs for years to come. Today’s announcement supports the Obama Administration’s strategy to increase American economic competiveness, while supporting jobs and moving toward a clean energy economy.

“We have a choice.  We can remain the world’s leading importer of oil, or we can become the world’s leading exporter of clean energy,” said President Obama. “We can hand over the jobs of the future to our competitors, or we can confront what they have already recognized as the great opportunity of our time:  the nation that leads the world in creating new sources of clean energy will be the nation that leads the 21st century global economy.  That’s the nation I want America to be.”

“We have an ambitious agenda to put millions of people to work by investing in clean energy technology like solar and geothermal energy,” Energy Secretary Steven Chu said.  “These technologies represent two pieces of a broad energy portfolio that will help us aggressively fight climate change and renew our position as a global leader in clean energy jobs.”

Geothermal Energy
Geothermal energy is a clean source of renewable energy that harnesses heat from the Earth for heating applications and electricity generation; geothermal plants can operate around the clock to provide significant uninterrupted “base load” electricity, or the minimum amount a power utility must provide to its customers.

The Recovery Act makes a $350 million new investment in this technology, dwarfing previous government commitments. Recovery Act funding will support projects in four crucial areas: geothermal demonstration projects; Enhanced Geothermal Systems (EGS) research and development; innovative exploration techniques; and a National Geothermal Data System, Resource Assessment and Classification System.

• Geothermal Demonstration Projects ($140 Million)
  Funding will support demonstrations of cutting-edge technologies to advance geothermal energy in new geographic areas, as well as geothermal energy production from oil and natural gas fields, geopressured fields, and low to moderate temperature geothermal resources.
• Enhanced Geothermal Systems Technology Research and Development ($80 Million)
  Funding will support research of EGS technology to allow geothermal power generation across the country. Conventional geothermal energy systems must be located near easily-accessible geothermal water resources, limiting its nationwide use.  EGS makes use of available heat resources through engineered reservoirs, which can then be tapped to produce electricity. While the long-term goal of EGS is to generate cost competitive clean electricity, enabling research and development is needed to demonstrate the technology’s readiness in the near-term.
• Innovative Exploration Techniques ($100 Million)
  Funding will support projects that include exploration, siting, drilling, and characterization of a series of exploration wells utilizing innovative exploration techniques. Exploration of geothermal energy resources can carry a high upfront risk.  By investing in and validating innovative exploration technologies and methods, DOE can help reduce the level of upfront risk for the private sector, allowing for increased investment and discovery of new geothermal resources.
• National Geothermal Data System, Resource Assessment, and Classification System ($30 Million)
  The long-term success of geothermal energy technologies depends upon a detailed characterization of geothermal energy resources nationwide.  In 2008, the United States Geological Survey (USGS) conducted an assessment of high temperature resource potential in the Western United States.  To fully leverage new low-temperature, geopressured, co-production, and EGS technologies, DOE will support a nationwide assessment of geothermal resources, working through the USGS and other partners.  Second, DOE will support the development of a nationwide data system to make resource data available to academia, researchers, and the private sector.  Finally, DOE will support the development of a geothermal resource classification system for use in determining site potential.

Solar Energy
Solar energy is a rapidly expanding industry with a double-digit annual growth rate in the United States. DOE is focused on supporting the U.S. industry’s scaling up of manufacturing, production, and distribution so the technology can become cost competitive with conventional sources of energy.  DOE will provide $117.6 million in Recovery Act funding to accelerate widespread commercialization of clean solar energy technologies across America.  These activities will leverage partnerships that include DOE’s national laboratories, universities, local government, and the private sector, to strengthen the U.S. solar industry and make it a leader in international markets.

• Photovoltaic Technology Development ($51.5 Million)
  DOE will expand investment in advanced photovoltaic concepts and high impact technologies, with the aim of making solar energy cost-competitive with conventional sources of electricity and to strengthen the competitiveness and capabilities of domestic manufacturers.
• Solar Energy Deployment ($40.5 Million)
  Projects in this area will focus on non-technical barriers to solar energy deployment, including grid connection, market barriers to solar energy adoption in cities, and the shortage of trained solar energy installers.  Combined with new technology development, these deployment activities will help clear the path for wider adoption of solar energy in residential, commercial, and municipal environments.
• Concentrating Solar Power Research and Development ($25.6 Million)
  This work will focus on improving the reliability of concentrating solar power technologies and enhancing the capabilities of DOE National Laboratories to provide test and evaluation support to the solar industry.

Source/Full Story: energy.gov

Storage tankers across the globe may be brimming with oil that no one is buying because of the global economic downturn, but the traditional laws of supply and demand don’t always apply to oil prices. Drivers have faced rising prices at the gas pump in recent months, as investors and oil-producing countries hoard supplies in anticipation of a global economic recovery later this year.

The 12 member countries of the OPEC cartel voted in Vienna on Thursday to maintain output at current levels rather than increase supplies in order to bring some relief to consumers, particularly in the gas-guzzling West. The OPEC oil ministers, whose countries account for about 40% of the world’s entire crude-oil supply, also renewed their commitment to stick to their agreed quotas, rather than ship extra oil, as they began doing last April when several members ignored their agreed output limits. OPEC leaders, many of whose economies are heavily dependent on oil exports, have struggled to stabilize prices at a level that suits their own economic needs amid falling demand and rising supplies. Prices had rocketed to a record level of $147 a barrel last July before plummeting to $30 just five months later and beginning a new climb. (See pictures of South Africa’s oil-from-coal refinery.)

Oil analysts believe OPEC’s decisions on Thursday could help push oil prices even higher; oil futures on the New York Mercantile Exchange have risen 36% in just two months, to about $63.46 a barrel on Thursday. And that appears to be on track to achieve targets set by OPEC leaders. Saudi Oil Minister Ali al-Naimi – OPEC’s key power player – said Wednesday that oil prices ought to rise to between $75 and $80 a barrel by the end of the year. “Demand is picking up, especially in Asia,” he told reporters puffing alongside him as he jogged through the streets of Vienna. “The price rise is a function of optimism that better things are coming in the future.”

Source/Full Story:  Yahoo! News

New survey of Arctic’s mineral riches could stoke international strife

The battle for the Arctic’s hidden mineral riches is likely to intensify after a survey revealing the energy reserves present beneath the ice.

A map of potential oil and gas reserves in the region, published today in Science, shows that about 30% of the world’s ­un­exploited gas and 13% of oil lie under the seas around the north pole. Billions of barrels of oil and trillions of cubic feet of gas lie within the Arctic ­circle, where, until now, permanent ice has prevented drilling.

The report is likely to further stoke international competition for mineral, tourism and shipping rights in the region. Exploration and drilling for oil and gas have become easier as climate change forces the ice to retreat, and all countries with borders inside the Arctic circle are fighting to claim their share. “For better or worse, limited ­exploration prospects in the rest of the world ­combined with technological advances make the Arctic increasingly attractive for ­development,” said Paul Berkman of the Scott polar research institute at the University of Cambridge, who specialises in the politics of the Arctic.

Russia filed its claim with the UN in 2001 but it is being contested by Canada, ­Denmark, Norway and the US. In 2007, Russian sailors used a submarine to plant a flag on the sea bed beneath the north pole in an area also claimed by Denmark, thanks to its sovereignty of Greenland. Earlier this month, Russia said it would be prepared to use military force to protect its claims in the Arctic.

Source/Full Story: New survey of Arctic’s mineral riches could stoke international strife | Environment | The Guardian

Assessment of Undiscovered Oil and Gas in the Arctic

Among the greatest uncertainties in future energy supply and a subject of considerable environmental concern is the amount of oil and gas yet to be found in the Arctic. By using a probabilistic geology-based methodology, the United States Geological Survey has assessed the area north of the Arctic Circle and concluded that about 30% of the world’s undiscovered gas and 13% of the world’s undiscovered oil may be found there, mostly offshore under less than 500 meters of water. Undiscovered natural gas is three times more abundant than oil in the Arctic and is largely concentrated in Russia. Oil resources, although important to the interests of Arctic countries, are probably not sufficient to substantially shift the current geographic pattern of world oil production.     Read the Full Text