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Saturday, February 16, 2008

Saturday Energy Bonanza!

CERA sees a dozen reactors under way by 2015 in US

HOUSTON, Feb 15 (Reuters) - Challenges facing a nuclear revival in the United States seem only to increase, but industry experts at the CERA conference expect to see a dozen new reactors under construction in the next decade, they said Friday. "It's execution time," said Jone-Lin Wang, a senior director of Cambridge Energy Research Associates, host of the annual conference in Houston. "There's a strong possibility we will see a dozen reactors under construction by 2015," said Christopher Hansen, CERA associate director of global power.

BUT ... Because of escalating costs of steel, concrete and other basic commodities used in nuclear plants, CERA's cost estimate for nuclear reactors has risen from $2,000 per kilowatt three years ago to $3,500 per kw, Hansen said.

China Energy Factoids
  1. Last year, 3.4 gigawatts (GW) of wind energy were added to China's electrical grid, making the country the fastest-growing market for wind power in the world. And by 2020, China will quadruple its nuclear capacity from 10 GW to 40, again the fastest rate of growth globally.
  2. The government has announced plans to add an astonishing 1,300 GW to its electrical generation capacity by 2020. (The U.S. is currently capable of generating 1,000 GW.) The goal is for 25-30% of this to come from clean and renewable technologies. But even if these ambitious targets are achieved, some 70% of China's electricity will still come from coal-fired plants in 2020. That's down from about 78% today.
  3. According to a forecast by policymakers at Beijing's Sustainable Energy Program, electricity demand from air-conditioners purchased by Chinese in 2008 alone will exceed the total capacity of Three Gorges Dam.
Peak Oil Models Forecast China's Oil Supply & Demand
Peak oil models show a widening gap between China's oil demand and production. The generalized Weng model predicts a peak oil production in China of 196 million tonnes in 2026 and the Hubbert model indicates a peak oil demand in 2034 of 633 million tonnes.

The BP Statistical Review of World Energy 2007 says that China's oil demand growth is one of the fastest in the world, increasing by 7.4%/year in the recent decade. China's oil demand has reached 350 million tpy in 2006, second only to that of the US. oil demand because of the fast growing economy still has a potential to grow rapidly. At the same time, China's oil production is growing slowly, only by 1.5% in the last decade. This gap between demand and production has reached 166 million tpy, and it seems that the gap will become larger in the future.

Asia's Tigers Eye Nuclear Future
East and Southeast Asia is the only region of the globe where nuclear power generation is growing significantly. According to the Nuclear Issues Briefing Paper, the region boasts 109 operational nuclear power plants, with 18 more under construction and around 110 in the planning stage. In addition, there are 56 research rectors in 14 countries.

Rising Oil Prices Trigger Food Crisis
A WFP official, for example, recently showed me the red plastic cup that is used to dole out daily rations to starving Africans – and then explained, in graphically moving terms, that this vessel is typically now only being filled by two-thirds each day, because food prices are rising faster than the WFP budget.

The asymmetry of economic war

The ability of extreme movements to undertake mass casualty attacks is already formidable; so also is their developing capacity to strike at the vulnerable underpinnings of advanced industrial economies - in short, economic targeting. This was seen in the attack on the world's largest oil-processing plant, the Abqaiq facility in Saudi Arabia, on 24 February 2006. The Saudi response to the Abqaiq attack has been rapidly to develop a new 35,000-strong security force devoted entirely to protecting the country's energy infrastructure; this decision is paralleled by one to allow the United States fifth fleet to guard the world's largest oil export terminal, at Ras Tanura.

It may be too early to call this a global trend, but the example of earlier periods and contexts of armed insurgency or guerrilla warfare suggests that "economic warfare" could become a potent weapon in the armory of a new generation of militants.

In addition to Iraq and Saudi Arabia, events in Mexico and Sri Lanka reflect this broader tendency. The coordinated attacks on six oil and gas pipelines in Mexico on 10 September 2007, causing explosions and fires, is a prime example.

The door to Iraq's oil opens
Iraq's proven reserves of oil are only smaller than those of Saudi Arabia and Iran - and Iraq is only about 30% explored. Experts are generally of the view that Iraq's actual oil reserves could well turn out to be at least double the 115 billion barrels of proven reserves. Beyond that, it is anybody's guess as to the scale of Iraq's as-yet-untapped gas reserves.

According to the International Energy Agency, the world demand for oil is set to increase from the current level of 85 million barrels a day ( mn b/d) to 116 mn b/d in 2030. Three quarters of the world's oil reserves (1,200 billion barrels) are located in the OPEC countries, with the Persian Gulf countries accounting for 62%. But the Persian Gulf countries are disinclined to raise their oil production sharply enough to meet the increase in global demand. Saudi Arabia, which has the world's largest oil reserves, for instance, is only planning to increase its oil production by 1.5 mn b/d over the next several years.

Department of Defense: More Fight -- Less Fuel
Among the implications for DoD are that after peaking, prices for fuel will be even higher than today. The Task Force did not discuss the geopolitical, economic or national security implications of peak oil, but the recommendations in this report regarding reduced fuel demand would help mitigate its effects.

OPEC Hints At Output Cut If Supply Rise Continues
The Organization of Petroleum Exporting Countries said Friday weakening world economic growth and demand prospects and ongoing increases in U.S. and European crude and gasoline inventories could soon force the producer group to pare back its own production to avert a drop in crude prices ... The group, whose output meets about four out of every 10 barrels consumed globally every day, shaved its forecast for 2008 global oil demand growth by 100,000 barrels a day to 1.2 million barrels a day, representing a rise of 1.4% from 2007. Total crude consumption globally this year is expected at 87 million barrels a day.

The group said daily consumption of OPEC oil this year was now forecast to be 375,000 barrels less than in 2007, compared with an expectation for a drop of 307,000 barrels a day in its January report. Total demand for OPEC oil is expected to average 31.53 million barrels a day in 2008.

OPEC Lowers Its Oil Demand Projections for 2008

The Organisation of Petroleum Exporting Countries in its February report said demand would likely grow by 1.43 percent this year rather than its previously estimated 1.52 percent. The cartel said average daily demand growth would come to 1.23 million barrels, taking demand to 86.99 million barrels a day. In January OPEC put the overall figure at 87.07 million barrels.

Peak Oil: The Next Five Years
Overall, the chart implies ample supply in 2008, a possibility of pinched supply in 2009, a squeeze in 2010, and a serious shortfall thereafter.

Siberian field to produce cheaper oil than Saudi crude - Rosneft
Rosneft has already invested 70 billion rubles ($2.8 billion) in the Vankor deposit, located some 150 kilometers (93 miles) west of the river port city of Igarka with production at the oil field expected to start in August 2008. Vankor crude will be pumped to the Eastern Siberia-Pacific Ocean pipeline, an ambitious multibillion-dollar project to send Russian hydrocarbons to the energy-hungry Asia-Pacific region countries.

Crunch Time for Mexican Oil
Mexico's oil industry is in decay and production is falling. But it doesn't appear the country is going to do anything about it anytime soon ... Mexican oil output has declined steadily from its peak of 3.4 million barrels a day in 2004 and is expected to fall to 2.8 million barrels a day by the end of this year. If that continues, Mexico will likely stop exporting oil within seven years. The country relies on oil exports for about a third of government revenue. And Mexico is the third-largest supplier of oil to the U.S., behind Canada and Saudi Arabia.

Mexico Congress Won't Take Up Oil Plan
Mexican President Felipe Calderon's party probably won't send congress a bill to open the state oil industry to foreign and private investment this session because support for the plan is lacking, the speaker of the house said ... Daily crude output could drop to 2.1 million barrels by 2016 from about 3 million barrels now unless Pemex gets the money it needs to explore in waters deeper than 5,000 feet in the Gulf of Mexico, where much of Mexico's oil is located, according to a government study.

Top Oil Firms Spend More But Get Less Crude

Exxon Mobil Corp. , Royal Dutch Shell Plc and BP Plc posted falling 2007 output, even though they upped capital spending to over $60 billion and some expect a further rise this year.

In a February 4 report, Citigroup said there are over 175 large new oil projects due to start up by 2012 worldwide, although it remains to be seen whether they will be enough to counteract declines elsewhere. "The fear remains that most of this supply will be offset by high levels of decline, pointing to genuine difficulties in building net production levels, particularly after 2012," the bank said.

Mankind Can't Afford More Oil Drilling -- Ex-BP Executive
The oil industry may be wasting $50 billion annually searching for new fields, said Jan-Peter Onstwedder, formerly BP's most senior risk manager. He left BP in December ... He calculated potential carbon emissions from proven oil, gas and coal reserves at around 700 billion tonnes, compared with about 500 billion tonnes which can be emitted this century and keep temperature increases within less dangerous bounds.

Canadian Oil Firms See Record Year
The Canadian oil industry is poised for another gusher of a year with 2008 profits rising 18 per cent to nearly $23 billion, the Conference Board of Canada says. However, the Conference Board warned Thursday that the oilpatch is likely to hit a bump in the road in 2009 because of rising costs and because world oil production is being ramped up, which will eat into prices.

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