Production spikes from US shale oil and Canadian oil sands have sent a supply shock through world energy markets, the International Energy Agency said in a report Tuesday.
That shock makes the oil and gas industries in the United States and some developing nations winners in the new energy environment, while Europe's, quite possibly, emerges as a loser. Separately, European officials are investigating three energy companies accused of rigging oil prices.
The benefits of the North American oil boom on this side of the Atlantic are well-documented. Elsewhere, the production surge signifies a shifting dynamic between once-dominant oil giants and developing nations asserting their presence.
“The good news is that this is helping to ease a market that was relatively tight for several years," IEA Executive Director Maria van der Hoeven said in a statement. "But as companies rethink their strategies, and as emerging economies become the leading players in the refining and demand sectors, not everyone will be a winner.”
Steep growth in non-OECD refining capacity will put refineries in traditional powerhouses at risk of closure, according to the report. Unique drilling technologies pioneered in the US will be applied elsewhere, dramatically recasting global reserve estimates. This quarter, non-OECD economies will overtake OECD nations in oil demand for the first time, IEA projects. ( Continue… )
Back in 1939 a bet between two Shell scientists regarding who could build a vehicle to carry them the furthest on a set amount of fuel turned into an annual event which has grown in popularity ever since.
Today, the Shell Eco-marathon follows the same parameters, using a mix of ingenuity, imagination, and skill, high schools and universities from around the world compete to discover who can build the most fuel efficient car. Teams use an array of fuels to try and determine the most energy dense mixes, some which could possibly be used in vehicles or machines of the future.
Events now take place in Kuala Lumpur (Asia), The Netherlands (Europe), and Houston (the Americas), as the race has become a truly global event. There are two categories in each competition: prototype, and urban concept. (Related article: Nevada Renewable Energy – Good or Bad?)
Canada has a fearsome reputation in the Huston-based event, with the Laval University of Quebec having won the prototype category for four of the previous five years. They managed to retain their title this year, powering their car for 3,587 miles on a single gallon of gasoline (5,773 kilometres on 3.8 litres). ( Continue… )
U.S.-based industries and utilities that consume a lot of natural gas have been trying to figure out just how to respond to proposals in Congress to allow expanded natural gas exports, a move that could significantly raise the price of one of their chief inputs.
But, there is one segment of U.S. industry that ought to be cheering for such an outcome--though I doubt that its leaders will be offering their support in anything above a whisper. The renewable energy industry would benefit from higher natural gas prices--and higher coal prices, for that matter--since, as these fuels for electric power plants become dearer, renewable energy sources become more competitive. The costs for renewables are in the production and installation of the solar panels, wind towers and dams; the fuels--sunlight, wind, and water--are essentially free.
But it would seem almost unpatriotic to cheer for higher energy prices in America. Higher prices--all things being equal--tend to depress economic activity. And, higher energy prices also tend to make American goods less competitive on world markets by increasing the costs of many inputs. Hence, my observation that the titans of the renewable energy industry will probably stay largely mum in the fight over expanded exports of U.S. natural gas.
But there are good reasons for the American public to shoulder the burden of higher energy prices now to help build a more secure future. First, climate change is already on course to destroy the way of life that Americans say they want to preserve. Second, there is no chance, NONE, that fossil fuels can sustain American society and the world in the long run. Only renewable energy can offer the promise of essentially perpetual supplies. ( Continue… )
For all the energy prospects bandied about concerning the Arctic – including a new White House strategy paper for the region – oil drilling in US Arctic waters has come to a temporary pause.
Three major oil companies with operations in the region have pulled out for the year, citing harsh weather and regulatory difficulties.
Home to an estimated 13 percent of the world's undiscovered oil resources and 30 percent of undiscovered natural gas, the Arctic is sure to lure them back. How they return is crucial. If energy companies can show it's possible to recover those resources responsibly, it will have enormous consequences – for those companies' balance sheets, for the diplomatic relations of the eight nations whose borders fall within the Arctic circle, and for the health of the planet.
"Interest in the Arctic is not waning," Kara Moriarty, executive director of the Alaska Oil and Gas Association, wrote in an e-mail. "In fact, the interest is as strong as ever. Companies are already planning for the 2014 season and are working diligently to have the right equipment and plans in place to be successful." The group represents companies responsible for the majority of oil and gas activities in Alaska. ( Continue… )
The wealthiest man in Africa said he's secured billions of dollars in loans to help kick start the refinery business in Nigeria. OPEC-member Nigeria is forced to import most of its petroleum products because of aging infrastructure. Crude oil production in Nigeria has suffered in recent years because of militant campaigns and sabotage in the Niger Delta region. Last month, the rebel Movement for the Emancipation of the Niger Delta said it was launching a campaign to save Christianity in Nigeria. With militant group Boko Haram seeking to establish an Islamic state in a country divided along religious lines, poorly maintained refineries may be the least of Nigeria's concerns.
Nigerian business magnate Aliko Dangote said he's secured $4.25 billion in loans from domestic and offshore banks to breathe new life into the refinery business in Africa's largest crude oil producer. Nigeria exports about four times as much crude oil as it can handle with its existing refineries. Aging infrastructure and poor maintenance means Nigeria has to rely on imports to meet domestic oil requirements and Dangote said such a significant investment makes good business sense. (Related article: SOUTH SUDAN: More Good News for Oil Production)
The U.S. Energy Department's Energy Information Administration said Nigerian oil production peaked at 2.6 million barrels per day in 2005. Since then, militancy and corruption have contributed to relative declines in production. Last week, Timipre Sylva, former governor of southern oil-rich Bayelsa state was arrested for fraud, adding to a steady stream of corruption charges filed against officials in the Niger Delta. Later this week, lawmakers said they will look into allegations that Nigerian Oil Minister Diezani Alison-Madueke is loosely connected to some shady deals involving Niger Delta oil blocks. President Goodluck Jonathan, himself a former Bayelsa governor, said he would crack down on corruption, though recent developments show his efforts so far have lacked teeth. ( Continue… )
Four months after militants linked to Al Qaeda attacked the In Amenas gas facility in eastern Algeria – triggering a four-day confrontation with the Algerian army and the deaths of nearly 40 hostages – the Algerian government has beefed up border security and pledged to deploy the army to protect energy sites.
Threatened with a potentially weakened oil and gas sector, which accounts for more than 95 percent of Algeria’s exports, Algerian authorities had every incentive to quickly shore up confidence. This is particularly true at In Amenas, which represented over 10 percent of Algeria’s natural gas production and nearly 18 percent of its gas exports prior to January’s attack. The concerns of foreign governments, energy companies, and other investors, however, should not be assuaged by Algeria’s security window-dressing or assertions that the country’s woes can simply be traced back to a resurgent Al Qaeda.
While Algeria's maneuvers promise to improve its defenses against external forces, they do nothing to address – and in fact are likely to see their efficacy degraded by – the underlying threat to the security and economic progress of the country: the fundamental dysfunction of the Algerian state. Destabilizing rivalries among the country’s leaders and a habit of nurturing extremist groups for political ends have shaped the security environment that allowed the In Amenas crisis to occur and are unlikely to fade away in the short term.
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Rather than a story of youthful revolution, Algeria’s is one of ongoing struggle between two factions organized around septuagenarian autocrats clinging to power: President Abdelaziz Bouteflika and Gen. Mohamed “Toufik” Mediène, who has served as head of the country’s powerful intelligence agency, the Département du Renseignement et de la Sécurité (DRS), since 1990. President Bouteflika represents the public face of the Algerian government, while General Mediène, who is believed to have initially backed Bouteflika’s ascension to the presidency in 1999, maintains a less visible though equally influential presence within Algeria. ( Continue… )
Tesla Motors had a good week.
The luxury electric carmaker posted its first profit late Wednesday. The next day, Tesla's Model S tied for Consumer Reports’ highest testing score ever. Wall Street rejoiced, pushing shares of Tesla up 24 percent on the news.
Tesla Motors is a bright spot amid high-profile, federally-funded electric car flops. CEO Elon Musk's innovative approach to carmaking suggests the energy industry can benefit from borrowing a page from the tech sector's playbook.
The two sectors have borne some resemblence of late. New computer software has changed the way we look for oil. Smart thermostats are saving on residential energy consumption. The lithium-ion batteries that have powered our consumer electronics for a decade, are beginning to transform the way we fuel our cars.
But if you're expecting the electrical grid to transform as quickly as the superconductor, you may be disappointed. ( Continue… )
When it comes to energy efficiency, retailers are on a roll. Convenience store chain Wawa announced last year that it saves over $1 million a year in energy costs thanks to an LED lighting retrofit. Nationwide department store Kohl’s saved $50 million in energy costs over four years and has continued to improve its energy performance with lighting and energy management systems upgrades. As a result, Kohl’s claims, “we have one of the lowest energy usages per square foot in the retail industry.”
Walgreens, the country’s largest drugstore chain, recently completed lighting retrofits at 80% of its locations nationwide. The company said this change not only saves money, but also improves the customer experience: “Colors appear more vibrant and more like they would in daylight, so customers don’t need to second guess themselves in the cosmetics aisle.”
For retailers like these, energy efficiency offers an edge over their competitors. It’s about the bottom line, pure and simple.
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The quest for a competitive edge may explain why retail stands out as the only sector of the commercial real estate industry that has shown appreciable success in overcoming the plague of the “split incentive.” ( Continue… )
US coal giants have been hit hard, unable to compete with natural gas at home, but overseas this market is getting hotter by the minute.
Illinois is a key coal state benefitting from this development, with the latest reports showing that it exported a record 13 million tons of coal last year. This is a major increase over the previous years, with only 5.5 million tons of exports in 2011 and 2.5 million tons in 2010.
So now production is back on the rise. Illinois’ production is up 25% over 2011, and counting—despite that fact that US coal production in general has been down about 11%.
The military has been a leader in the development of biofuels – for good reason. As I’ve written before, the military’s single-source dependence on petroleum for fuel is a strategic vulnerability. Oil has a monopoly on energy supply for 80% of our military’s energy needs, including virtually all of the non-nuclear transportation. To simply accept that oil is going to remain as the sole source of liquid fuel that the US military relies on for its transportation, operations, and training is to say that we should accept the long-term strategic risks of price volatility and dependence upon uncertain foreign countries.
We should remember that, even if the military uses oil solely from the United States and its allies, the price that the Defense Logistics Agency pays for oil is largely set by global market conditions – and saying that those are highly vulnerable to conflict and unrest in the Middle East is an understatement. (Related: The Operational and Strategic Rationale Behind the U.S. Military’s Energy Efforts)
Last year, in an attempt to address this threat, the Department of Defense, the Department of Agriculture, and the Department of Energy were authorized under the Defense Production Act (DPA) to support the development of an alternative source of fuel. The funding agreed in a joint memorandum, and appropriated by Congress, each agency will invest $170 million over three years in helping to build a domestic biofuel industry (read more about the DoD’s biofuels policy here). This funding will be matched by investment from the private sector. Over the past several months, the agencies have been deliberating over which companies will partner with the government. ( Continue… )