Quote of the Week
“There’s a complacency that shale is going to continue to produce at the kind of volumes that we had in the past…If the world keeps believing we’ve got surplus oil as far as the eye can see—which I don’t believe—then the reality is going to smack everybody in the face. And it will be hard to catch up.”
Jim Brilliant, portfolio manager for Century Management
Graphic of the Week
1. Oil and the Global Economy
2. The Middle East & North Africa
7. The Briefs
1. Oil and the Global Economy
The price surge, which began in mid-September, continued last week with NY futures closing Friday at $55.64 and London at $62.07. The $6.50 spread is leading to ever higher US exports which are now above 2 million b/d. Crude prices are at their highest level in over two years. Behind the price surge has been the steady stream of hints from the Saudis and the Russians that they are ready to back an extension of the production freeze through 2018 at the November 30th meeting. Some are asking whether the major oil exporters will be willing to continue a production freeze if prices move much higher. There now is a solid perception among traders that the global crude stocks are declining and that demand is rising. This in addition to the OPEC hype is contributing to the price surge.
Although the markets have been ignoring several festering geopolitical problems in Iraq, Iran, Venezuela, and Korea which could disrupt the oil markets, any of these situations could force oil prices considerably higher in the next year or so.
The only feasible way to offset the OPEC freeze in the immediate future is a significant increase in US shale oil production. The EIA has been forecasting such an increase. However, the evidence is accumulating that this may not happen. Observers have noted that in the past year there have been large divergences between EIA’s weekly and monthly oil production figures. In June, the EIA’s weekly numbers had US oil production at about 9.3 million b/d, but the more accurate monthly numbers which were published later had production nearly 300,000 b/d lower at 9.06 million. Coupled with a steady decline in the US drill rig count for the last three months, there is reason to suspect we may not be seeing a surge in US shale oil production between now and the end of 2018. The EIA recently released August oil production data, which showed that total US oil output fell from a month earlier, dropping from 9.234 million b/d in July to just 9.203 million in August.
The mix of US crude imports is changing due to the advent of US shale oil production, increasing Canadian production, and the OPEC production freeze. Last month US imports from Iraq surpassed those from Saudi Arabia for the first time in over 30 years. US imports from Canada are on the rise due to increased shale and tar sands production and the availability of pipelines to bring oil into the US. Canadian imports so far this year are averaging 3.43 million b/d which is 74 percent higher than the less than 2 million they were averaging seven years ago. Rail shipments to East Coast US refineries are down due to the high transportation costs of moving shale oil by rail to the East Coast. These barrels have been replaced by imports of lighter oil from West and North Africa.
The OPEC Production Cut: A Reuters survey says OPEC’s output dropped in October due to disruptions in Iraq as well as increased quota compliance by the rest of the agreement’s countries. Total production fell by 80,000 b/d in October as compliance rose to 92 percent – up four points from September. Saudi Arabia continued to pump below target, and Venezuelan output fell further as the nation’s economy deteriorates.
While conventional wisdom, backed by numerous assurances from leading oil producers, says that the production cut will be extended through 2018, there are concerns that the Kurdistan, Qatar, or the US – Iranian standoff could damage prospects for the deal.
US Shale Oil Production: Last week saw a decline of eight US rigs drilling for oil – the largest weekly decline this year. The US oil rig count now stands at 729. The shale oil business seems to be going through a change as growing concerns about the lack of profitability take over the industry. While the large international oil companies can continue to produce shale oil and gas at a loss, while offsetting the loss from conventional oil production and refining, the smaller oil companies have been losing money for years. These companies continue to survive by assuring their lenders that increasing production will soon lead to profits. While some companies are claiming they will soon be able to turn a profit by increasing production, with borrowed money, others are talking about reducing investment and concentrating on becoming more efficient at current rates of production.
The ups and downs in the shale oil rig count usually follow by several months the ups and downs of oil prices as it takes this long to reactivate oil rigs and bring them into production. It will be interesting to see if the rig count reverses and starts to grow again later this winter, or whether financial institutions begin to restrict their investments in losing propositions. Some now are noting that the low-interest rates that have prevailed for the past decade have been an important contributor to the unprofitable shale oil boom.
2. The Middle East & North Africa
Iran: The US – Iran standoff remains the top issue with the threat of further US sanctions troubling US allies and the Russians taking advantage of the confrontation. Last week, Supreme Leader Khamenei said the United States is Iran’s “number one enemy” and Tehran will never succumb to Washington’s pressure over a multinational nuclear deal. Tehran is busy cozying up to Moscow. Last week Russia and Iran signed agreements to collaborate on “strategic” energy deals worth up to $30 billion. Observers say that should the US impose new sanctions that restrict Western business with Iran, Russia and China would be the biggest beneficiaries. France’s Total has opened an office in Washington to strengthen relations with the US administration as the company prepares to invest billions in Iran.
Last week it was announced that Gazprom would take part in the construction of a gas pipeline to transport Iranian gas to India. By the end of this year, the governments are expected to sign the legal framework for the project. Indian, Pakistani, Russian, and Iranian companies will be taking part in the pipeline project that would be 746 miles long. Such a pipeline would have to cross some very unsettled territory in Pakistan making it a prime target for numerous dissident groups.
Imports of Iranian crude to Asia rose in September for a third straight month to their highest since March, boosted by a surge in purchases in China and South Korea. China, India, South Korea and Japan imported slightly more than 1.9 million b/d in October, up 5.1 percent from a year earlier,
Syria/Iraq: Days after the federal North Oil Company restarted exports through the KRG-controlled pipeline, Iraq’s Oil Ministry ordered a stop. “The stoppage was upon the order of the Oil Ministry and we don’t know the reason,” a senior NOC official said.
Kurdistan fell deeper into political turmoil last week as acting President Barzani announced his resignation and violent protesters stormed the regional Parliament building. In a written statement delivered to Parliament, Barzani confirmed his tenure is over – a victim of the independence referendum he championed, after which the Kurdistan Regional Government (KRG) lost control of Kirkuk and nearly half of its oil production.
Iraq wants the Kurdistan region to stop independent crude exports and to hand over sales operations to the Iraqi state-oil marketer SOMO. Iraq is talking to Turkey to allow SOMO to sell the Kurdish crude that arrives by pipeline in Ceyhan, the Turkish terminal on the Mediterranean. About 530,000 b/d arrived in Ceyhan via the pipeline until mid-October, of which about half came from the Kurdistan Regional Government’s oilfields and the rest from Kirkuk. Output from Kirkuk fell in mid-October, when Iraqi forces took back control of the northern region’s oilfields from Kurdish fighters who had been there since 2014.
Iraqi crude oil is selling at the widest discounts to official prices in more than a year, with cargoes that backed up after hurricanes hit the US Gulf Coast facing competition from Mexican crude. The drop in US demand for Iraqi oil may impede Iraq’s effort to increase exports from the southern port of Basra to make up for a shortfall from the north. Basra crude shipments have been backed up after four hurricanes disrupted arrivals in the US Gulf between August and October. More than 22 million barrels of Basra crude was due to land in the United States in each of October and November.
Oil smugglers in southern Iraq are stealing crude and other oil products from southern pipelines, despite increased security measures. The latest smuggling operation to be uncovered, in late October, targeted an oil pipeline from the Rumaila oil field.
Saudi Arabia: The financiers and corporate chieftains gathered for Saudi Arabia ’s ‘Davos in the Desert’ heard the same message again and again. From the crown prince down, Saudi leaders wanted no room for doubt: the initial public offering of oil giant Aramco is “on track” for 2018. But beneath the disciplined message put forward in Riyadh lies a more uncertain reality. The 2018 deadline looks tight and the final shape of the deal — exactly where it happens, how big it is and who gets to take part — is no clearer than it was a week ago.
The IMF estimates the Saudis will need oil prices at about $70 per barrel in 2018 for its budget to break even, a dramatic improvement from the $96 per barrel it needed just last year. Saudi’s improvement suggests the combination of austerity, cuts to wasteful subsidies, new taxes and economic reforms are starting to bear fruit. Nevertheless, there is still a problem with Saudi Arabia’s breakeven price: it is still far higher than the current oil price.
The Saudis will hike December crude prices for customers in Asia to levels last seen in 2013 or 2014, according to a recent Reuters survey. Saudi Aramco is expected to raise flagship Arab Light’s December official selling price to at least 90 cents a barrel above Oman/Dubai quotes. That would be the highest premium since $1.65 in September 2014. Prices for heavier grades may see a bigger boost in December.
Total’s chief executive Patrick Pouyanne warned that Saudi Arabia’s social and economic reforms might be a bit too ambitious, and might not go as smoothly, not to mention as quickly, as their proponents seem to believe. Speaking at an event in London, Pouyanne said: “You don’t change into a secular regime just like that.”
Factories across China are struggling with soaring costs or facing closure as they wait for authorities to approve new gas-powered boilers. The problems illustrate the burden that is falling on China’s small- and medium-sized manufacturers because of Beijing’s effort to shift quickly from coal to natural gas. The central government has ordered regions near the capitol to shut 44,000 coal-fired boilers that provide steam and energy for factories, including steel rolling mills, ceramics, and chemical manufacturers, and convert or replace them with gas-fired boilers or switch to electricity by the end of October. The change is part of the effort to wean the country off coal and reduce the amount of smog emitted by its industries. Other measures include cutting steel and aluminum output and curbing construction in northern regions. The city of Tangshan, China’s biggest steel-producing city, in Hebei province which surrounds Beijing, set an earlier deadline of Oct. 9th for the conversions and said it would shut companies that did not comply.
China is buying up LNG cargoes worldwide, pushing spot prices for the fuel above those for oil-indexed cargoes, as the country scrambles to avoid a looming winter supply crunch. China has moved millions of households from burning coal to natural gas this year, pushing up import demand amid an already tightening market. Most Asian LNG supplies are delivered under long-term contracts with prices linked to crude oil. But with the upcoming winter heating season, Chinese utilities have turned to the spot market in desperation to cover themselves to meet surging demand, chartering tankers from as far away as Norway.
Russian independent gas producer Novatek said it reached an agreement with a Chinese bank to help implement an Arctic liquefied natural gas project. “Our strategy envisages a rapid growth of LNG production using international financing sources.”
President Trump’s visit to China this week could launch a series of important trade deals. The administration will be taking some 40 US companies on a trade mission to discuss Chinese investments in the US. One of the biggest deals up for discussion is an investment of around $7 billion by an alliance including China Petroleum & Chemical Corporation, or Sinopec, in an oil pipeline in Texas and an expansion of an oil storage facility in the US Virgin Islands. The investment will still need a final go-ahead by both the US administration and China.
PetroChina, the first $1 trillion company, has sunk in value since 2007. The oil producer will report third-quarter earnings on Monday. Ten years after PetroChina peaked on its first day of trading in Shanghai, the state-owned energy producer has lost about $800 billion of market value.
The newest round of US sanctions against Moscow’s oil and gas industry targets Russia’s projects worldwide. The punitive measures – designed to be retaliation for Russia’s annexation of Crimea in 2014 – will have a limited effect on Moscow’s current operations abroad, experts said. A new provision now prohibits companies from assisting in exploration and production activities in deep waters, the Arctic Ocean, or shale projects initiated after January 29th, 2018. Projects that boast Russian holdings of 33 percent or higher are singled out in the fine print. Projects currently being implemented do not fall under the sanctions. This includes Lukoil’s projects in Romania and Ghana offshore as well as Rosneft’s projects in Venezuela.
US sanctions that target the Russian energy sector won’t do anything to influence the country’s crude oil production. Energy Minister Alexander Novak said Thursday the sanctions are nothing new, relate mostly to foreign projects where Russian companies have more than a 35 percent interest and deal only with new projects slated for a January start date.
Russia is increasingly wielding oil as a geopolitical tool, spreading its influence around the world and challenging the interests of the United States. But Moscow risks running into trouble, as it lends money and makes deals in turbulent economies and shaky political climates. The strategy faces a crucial test this week in Venezuela, a Russian ally that must come up with a billion dollars to avert defaults on its debts. Russia has been making a flurry of loans and deals all centered on the Venezuelan oil business, money that could make the difference between the government’s collapse and its survival.
The militant cease-fire is officially over, the Niger Delta Avengers said Friday. “Our next line of operation will not be like the 2016 campaign which we operated successfully without any casualties,” according to spokesman Murdoch Agbinibo. “This outing will be brutish, brutal and bloody.” The last time it took credit for an attack of note was during the second week of November 2016 when it said its rebel forces attacked an export pipeline.
Oil spill victims under the aegis of Oil Spill Victims Vanguard have initiated a lawsuit in the United Kingdom against Shell Nigeria, a subsidiary of the Royal-Dutch Shell, over alleged $3,600,191,206 compensation to 168,000 persons and 350 communities affected by the December 20, 2011 spill from its Bonga Oil Field in Delta State.
A Lagos Court has dismissed an application filed by Diezani Alison-Madueke, former Minister of Petroleum Resources, that she be joined as a defendant in a fraud case in Nigeria. The judge rejected her application which he said was a misuse of court processes, stressing that he would not allow himself to be used to delay Diezani’s imminent trial in the United Kingdom, where she is currently under investigation and on bail for money laundering. She is far more likely to be convicted by a British rather than by a Nigerian court.
Most of the news last week had to do with Caracas’s efforts to get out of its impending bond-default crisis which is coming to a head and could mean further deterioration of the economy and loss of the remaining oil exports. President Maduro said late on Thursday that the country would restructure and refinance its debts after the state-owned oil company makes one final bond payment that was due that day. Maduro said he had ordered the payment of $1.1bn on PDVSA obligations due on Thursday, and the company said in a statement that it had initiated transfers to JPMorgan Chase to cover the principal and interest due on the bond. “We have had to face a real global financial persecution,” Maduro said. “They will not asphyxiate us, and we will never, ever surrender to the US empire.”
The situation became confused when Maduro switched between “restructuring” and “refinancing” which have different meanings to bond holders. The problem for Venezuela is that U.S. sanctions could make a restructuring very difficult. The Trump administration has barred U.S. financial institutions from engaging in this kind of transaction with Venezuela or PDVSA. They are also prohibited from purchasing Venezuelan bonds, making new debt virtually impossible for Venezuela. According to Capital Economics, Venezuela and its entities owe a combined $65 billion in bonds…and it has less than $10 billion in foreign exchange to work with, much of which is in non-liquid assets. Another $1.6 billion is due before the end of the year, plus a further $9 billion due in 2018. The next immediate hurdle is a smaller $81 million payment – one that was originally due on October 12 but has a 30-day grace period.
Venezuela has already lost an estimated 20,000 b/d each month for the past year, and in September, Venezuela’s output fell more than 50,000 b/d compared to a month earlier. Production could fall by an additional 240,000 b/d in 2018. One OPEC source told Reuters that they see a potential for production declines on the order of 300,000 to 600,000 b/d next year.
7. The Briefs (date of article in Peak Oil News is in parentheses)
A quarter of the world’s oil refineries risk closure by 2035 if governments meet targets to limit fossil fuel burning in the fight against global warming, a report released on Thursday said. A surge in electric vehicle sales and higher efficiency in internal combustion and jet engines are expected to slow demand growth for fuels such as gasoline, diesel and aviation fuel in the coming decades, potentially putting pressure on refining profits. (11/2)
The UK’s proven and probable (2P) oil and gas reserves as at end-2016 were 5.7 billion barrels of oil equivalent (boe), down from 6.3 billion boe at end-2015, due to production exceeding additions and reserves adjustments for producing fields. Last year, some 600 million boe were produced, but only 80 million boe of contingent resources were matured to reserves. (11/1)
In Russia, economic sanctions have made the offshore Yuzhno-Chernomorsky oil field economically unfeasible, and Rosneft will now suspend exploration in the area for five years. Rosneft also claimed that a lack of drillships and other equipment prompted the suspension—equipment needed for well-drilling in the Yuzhno-Chernomorsky license area in the Black Sea. (10/31)
Saudi Arabia has sent a request for information to international suppliers to build two nuclear power plants, a first step towards a formal tender, three sources said. The kingdom is considering building 17.6 gigawatts of nuclear capacity by 2032, the equivalent of about 17 reactors, making it one of the biggest prospects for an industry struggling after the 2011 nuclear disaster in Japan. The Saudis want to reduce the amount of crude they burn at home to generate electricity so they can sell more of it overseas. (11/1)
Royal Dutch Shell said Wednesday it made further progress in a major divestment plan by completing the sale of assets in Gabon and in the North Sea. Shell said the sales show “clear momentum” behind the effort to shed $30 billion in assets and “re-shape the company into a world class investment.” (11/2)
Chad is on a collision course with top creditor Glencore as it wants to divert oil from the Swiss trading house to US energy company ExxonMobil from the new year amid a dispute over debt restructuring. (10/31)
Offshore Senegal is where most of next year’s budget for Australian energy company FAR Ltd. will be focused next year. The broader West African basin is gaining a reputation as an emerging producer and Senegal in particular could hold more than 1.5 billion barrels of oil off its coast. (11/1)
The economies of sub-Saharan Africa get some support from oil production in Nigeria and elsewhere, though it flattens out by 2019, the IMF said Monday. (10/31)
In Brazil, the oil majors showed up on October 27 and bought several deepwater offshore blocks from auction, indicating a high level of interest in the country after a major policy overhaul allowed private investment. Royal Dutch Shell won half of the blocks that were offered. Shell’s strategy: the company argues it can break even with oil at $40 per barrel, making Brazil one of the most attractive places to drill offshore in the world. (10/31)
Mexico’s Pemex has made its biggest onshore oil discovery in fifteen years with a find in the eastern state of Veracruz. The overall field is believed to hold some 350 million barrels of proven, probable and possible reserves. (11/4)
Mexico spent some $1.26 billion on contracts to hedge its 2018 oil exports, Finance Ministry Chief Economist Luis Madrazo said on Tuesday, part of government’s efforts to stabilize its budget. For more than a decade, Mexico’s government has paid for a hedge every year in a bid to guarantee its revenues from oil exports by state company Pemex. (11/1)
US crude exports have boomed since the decades-old ban was lifted less than two years ago, with shipments recently hitting a record of 2 million barrels a day. But shippers and traders fear the rising trend is not sustainable, and if limits are hit, it could pressure the price of US oil. (10/30)
In better shape now: In a normal world, some of the oil producers who signed long-term drilling contracts in the good years would have gone bankrupt from 2011 on, but they kept getting refinanced. Over the past year, equity and bond investors have forced onshore E&P companies to be more disciplined about their capital spending. That does not mean spending only their internally generated cash flow, of course. But the onshore industry is in much better shape than it was. (10/30)
US gasoline demand reached the highest level on record in August this year, at 9.77 million b/d, or up by 83,000 b/d from August 2016. That’s according to the Energy Information Agency, which added that this was the fourth monthly increase in demand in the past five months. (11/2)
US climate report: The Trump administration released a dire scientific report Friday calling human activity the dominant driver of global warming, a conclusion at odds with White House decisions to withdraw from a key international climate accord, champion fossil fuels and reverse Obama-era climate policies. To the surprise of some scientists, the White House did not seek to prevent the release of the government’s National Climate Assessment, which is mandated by law. (11/4)
More on report: Directly contradicting much of the Trump administration’s position on climate change, 13 federal agencies unveiled an exhaustive scientific report on Friday that says humans are the dominant cause of the global temperature rise that has occurred since the start of the 20th century, creating the warmest period in the history of civilization. Over the past 115 years global average temperatures have increased 1.8 degrees Fahrenheit, leading to record-breaking weather events and temperature extremes, the report says. The global, long-term warming trend is “unambiguous,” it says. (11/4)
Senator Lisa Murkowski was unequivocal when asked recently about rising global temperatures. “Climate change is real,” the Alaska Republican told an audience in Anchorage. Yet her stance on drilling in the Arctic National Wildlife Refuge is just as clear. Senator Murkowski, who heads the Senate Energy and Natural Resources Committee, has long argued that it must happen, for the economic prosperity of her state and the security of the country. (11/2)
US shale player Sanchez Energy said that it expects to cut spending next year, after reporting a record-setting rate of production in the third quarter. As 2017 draws to a close, they expect capital spending to be between $525 million and $550 million for the full year and anticipate that 2018 capital spending will be $75 million to $100 million less than 2017. Sanchez is one of the larger operators in the Eagle Ford shale basin in Texas. (11/4)
Off the hook: Over 80 oil and gas pipeline companies will be exonerated of a lawsuit that claims damage to wetlands via the construction of canals in Louisiana after the Supreme Court decided this week not to hear the case. The Southeast Louisiana Flood Protection Authority-East had filed their appeal against the 5th circuit’s decision back in March. (10/31)
US withdraws: The United States will not be part of a recent international treaty to fight corruption in revenues management, according to a new decision from the White House. The Extractive Industries Transparency Initiative (EITI) was designed to aid in the effort to regulate oil, gas, and mineral profits around the world, and the US is withdrawing effective immediately according to director of the US office of Natural Resources Revenue, Gregory J. Gould in a Thursday note to the EITI board. The EITI was founded in 2003, but the US did not join until March 2014. (11/3)
CA ban? With China mulling an eventual ban on sales of cars with gasoline or diesel engines, the world’s largest car market made it clear earlier this month that it intends to force a conversion to zero-emission vehicles. Now California, which has led the US in environmental awareness and emission reduction for decades, is doing the same. (11/1)
New biofuel feedstock: Aemetis signed a 20-year feedstock supply agreement to produce cellulosic ethanol at a former US Army munitions facility located in Riverbank, California, which is near the existing Aemetis biofuels plant. The cellulosic ethanol bio refinery will convert 1.6 tons/year of waste orchard wood and nutshells into cellulosic ethanol. That feedstock, generated each year from approximately 1 million acres of almond, walnut, and pistachio orchards in the Central Valley, will cost Aemetis $20 per ton delivered for the first ten years. Aemetis plans to produce more than 10 million gallons of cellulosic ethanol annually. (11/4)
Biofuel step forward: ExxonMobil and Renewable Energy Group (REG) announced that by utilizing REG’s patented fermentation technology, the companies’ joint research program has demonstrated the ability to convert sugars from a variety of non-edible biomass sources into biodiesel. (11/2)
Biofuel setback: DuPont Industrial Biosciences on Thursday said it halted operations at a two-year-old ethanol plant and will sell it, dealing another blow to efforts to create biofuels without using food crops. The decision to shut the Iowa plant comes as political winds are undercutting efforts to produce ethanol from plant waste and wood shavings. (11/3)
The US coal industry has been making a comeback this year, hailed this week by President Donald Trump. In the power generation sector, however, only one variety of the fuel is in demand — low-cost production from the large open-pit mines of western states such as Wyoming. The trend has buoyed listed US mining groups Peabody Energy and Arch Coal, which have both emerged from bankruptcy after the wave of failures that swept the industry in 2015-16. But it is a bad sign for the Appalachian region, including states such as West Virginia and Kentucky, which Mr. Trump has pledged to help. (11/3)
Coal prices are on the rise again. With benchmark rates in Australia up over 30 percent since July — approaching the $100/t mark that prevailed in November 2016 after a massive run-up last year. And a number of events the past week show that things could get even more heated in coal over the coming months. The biggest story recently has been China. (11/2)
Coal-mining company Armstrong Energy Inc. filed for bankruptcy on Wednesday with a plan to turn over ownership of its struggling operations to a competitor and its lender. The St. Louis company plans to use the chapter 11 process to transfer the ownership of its five mines and other operations to a new entity. (11/2)
CCS: The Petra Nova facility, a coal-fired power plant located near Houston, Texas, is one of only two operating power plants with carbon capture and storage (CCS) in the world, and it is the only such facility in the United States. Petra Nova’s carbon-capture system is designed to capture about 90% of the carbon dioxide (CO2) emitted from the flue gas slipstream. The post-combustion process is energy intensive and requires a dedicated natural gas unit to accommodate the energy requirements of the carbon-capture process. The captured CO2 is then used in nearby oil fields for enhanced oil recovery (EOR). (11/1)
Solar push: The European Bank for Reconstruction and Development said Thursday it signed an agreement with the International Solar Alliance that envisions deep collaboration on the solar energy front. To date, the EBRD said it’s invested more than $4.5 billion directly on renewable energy, backing the development of 6.5 gigawatts of renewable energy capacity in more than 20 countries. The bank said it’s now “well on the way” to its commitment of sending 40 percent of its annual investments toward green finance by 2020. (11/3)
Solar tariff? The US solar industry has surged in recent years, accounting for the largest source of new electric capacity in the past year, with plenty of room to grow. However, the Trump administration is weighing a trade tariff that could seriously curtail the explosive growth figures for US solar. On Tuesday, the US International Trade Commission (ITC) recommended a 35 percent tariff on imported solar panels in response to a complaint from a U.S.-based solar manufacturer over cheap imported panels. (11/2)
A Republican tax bill unveiled on Thursday included cuts to renewable energy tax credits considered critical to enabling wind projects to compete with fossil fuel plants, but tax breaks for solar power were left largely intact. The credits, which receive broad bipartisan support, were extended by Congress less than two years ago. The wind industry decried the proposal, saying it put $50 billion in planned investment at risk. (11/3)
NY offshore wind: Norway’s Statoil aims to sign a power purchase agreement with a US utility to develop an offshore wind power project off New York. Statoil won a lease sale of 79,350 acres offshore New York, which could be potentially used to develop up to a 1-gigawatt capacity wind power park, by bidding $42.5 million last December. (11/1)
Peak wind: A stormy weekend led to free electricity in Germany as wind generation reached a record, forcing power producers to pay customers the most since Christmas 2012 to use electricity. Power prices turned negative as wind output reached 39,409 megawatts on Saturday, equivalent to the output of about 40 nuclear reactors. (10/31)
Cost of energy: People across the US are spending an annual average of $3,512 per person on energy, according to the EIA. With the average worker making $48,664 per year, that is a large amount of money devoted to keeping the lights on, the house warmed and cooled and the gas tank full. (11/1)
EV switcheroo: A Texas energy regulator said a proposal to eliminate federal tax breaks for electric vehicles keeps the government from falsely distorting the energy market. At least six sections of the 429-page bill meant to overhaul the federal tax code extend into the energy sector. While some considerations are extended for solar and small-wind energy projects, a tax break for electric vehicles would expire for those vehicles placed into service at the beginning of the 2018 tax year, if the measure passes. (11/4)
Southern California Edison plans Tuesday to release its vision for how California can comply with a new law that requires greenhouse gas emissions to be cut 40 percent by 2030. SoCalEd’s CEO said the most “efficient and affordable” path involves increased electrification of the economy, through a “robust, modern electric grid.” (11/1)
Detroit’s Big Three automakers are showing a new sense of bottom-line discipline as they angle for any advantage in the race with Silicon Valley, and one another, to develop the cars of the future. All need to keep squeezing more profits from mainstream products to finance the new technology necessary for electric and self-driving models. (10/30)
Battery R&D: MIT researchers have developed an “air-breathing” flow battery that exhales oxygen, stores power for months, is made of common materials, and costs about one-fifth of what current storage batteries cost to run. The team estimates that a scaled-up version of their breathing battery would cost between $20 and $30 per kilowatt hour stored. By comparison, other storage systems currently available cost about $100 per kWh. (10/30)
Climate data: Concentrations of CO2 in the Earth’s atmosphere surged to a record high in 2016, according to the World Meteorological Organization (WMO). Last year’s increase was 50% higher than the average of the past 10 years. Researchers say a combination of human activities and the El Niño weather phenomenon drove CO2 to a level not seen in 800,000 years. (10/31)
Climate change significantly imperils public health globally, according to a new report, by the British medical journal The Lancet, that chronicles the many hazards and symptoms already being seen. The authors describe its manifestations as “unequivocal and potentially irreversible.” Climate change is a “threat multiplier,” they write. (10/31)
Climate refugees? There has been a surge in international migration in recent years, reaching a total of 244 million individuals in 2015. Forced displacement has also reached a record high, with 65.3 million individuals displaced worldwide by the end of 2015 – including refugees, internally displaced persons and asylum seekers. For at least the last two years, UN experts say, we have seen more people forced from their homes by extreme weather events than by conflict; according to the Internal Displacement Monitoring Centre, over 40 million people have been internally displaced by floods, storms, and, in some cases, earthquakes, volcanic eruptions and landslides, in 2015 and 2016. And these numbers do not take into account the many people compelled to move every year as a result of slow-onset disasters, such as drought and environmental degradation. (11/2)
About 7.5 billion people share the earth with us right now, in 2017. That’s around twice the number that was here in 1970, 47 years ago. Roughly every 13 years since 1960, about a billion more people have come onboard, and this pattern continues. And we didn’t even arrive at our first billion until 1804, after existing for 75,000 years or so. While scientists work on how to deflect an asteroid if it were to head straight for the earth, we all need to work on how to deflect runaway population growth before it becomes a disaster. (10/30)