Wednesday, June 22, 2016

GWPF Newsletter: Resilient U.S. Shale Producers Defeat OPEC








The Energy Absurdity Of The Paris Climate Agreement

In this newsletter:

1) Resilient U.S. Shale Producers Defeat OPEC 
Reuters, 20 June 2016
 
2) The New Swing Producer: Shale Bounces Back
The Economist, 18 June 2016
3) Trade Union Hits Out At Labour’s ‘Student Pub Politics’ Against Fracking
The Herald 16 June 2016
 
4) The Energy Absurdity Of The Paris Climate Agreement
Die Welt, 21 June 2016
 
5) The Antarctic Has Been Warmer Than Now For Most Of The Last 8000 Years
Not A Lot Of People Know That, 19 June 2016

Full details:

1) Resilient U.S. Shale Producers Defeat OPEC
Reuters, 20 June 2016
Ernest Scheyder and Terry Wade

HOUSTON -- Two years into the worst oil price rout in a generation, large and mid-sized U.S. independent producers are surviving and eyeing growth again as oil nears $50 a barrel, confounding OPEC and Saudi Arabia with their resiliency.

That shale giants Hess Corp, Apache Corp and more than 25 other companies have beaten back OPEC's attempt to sideline them would have been unthinkable just months ago, when oil plumbed $26 a barrel and collapses were feared. 

To regain market share, the Organization of the Petroleum Exporting Countries in late 2014 pumped more oil despite growing global oversupply. It aimed to drive prices lower and force higher-cost producers out of the market, with shale oil seen as especially vulnerable.

The pain was acute. Industry revenue fell more than 30 percent in 2015 from the previous year, the U.S. drilling rig count dropped by more than 70 percent from when oil was still above $100 per barrel, stock valuations plunged and scores of small producers filed for bankruptcy. 

But so far no U.S. producer that pumps more than 100,000 barrels per day (bpd) has gone bankrupt. The survival of these big producers partly explains why overall U.S. production has slipped only about 10 percent since peaking at 9.69 million bpd.

Their agility - which required slashing costs in half while doubling down on improved techniques to squeeze more oil from each new well - is now allowing the industry to cautiously focus on growth again.

But this time, U.S. producers say they will stay focused on capital returns, having abandoned a culture of maximizing production regardless of costs.

OPEC and Saudi Arabia "thought that there would be major capitulation and damage to U.S. shale producers as a result of the deep downturn," said Les Csorba, a leadership consultant at Heidrick & Struggles who works with shale executives. "But what happened was that it actually created a new paradigm among U.S. producers to transform their businesses." 

Full story

2) The New Swing Producer: Shale Bounces Back
The Economist, 18 June 2016 

Fracking has brought a new dynamic to global oil markets: the ability to flex output up and down more quickly than conventional oil drilling, rather like factories responding to changes in demand

IN THE wilds of western Texas, a flicker of life has returned to the fracking, or hydraulic-fracturing, industry. In the past four weeks nine idled oil rigs have been put back to work in the Permian basin, the richest of America’s shale-oil provinces. That is only a tiny fraction of the 429 that had been taken out of service over the previous 18 months as the oil price plunged, at one point hitting a low of under $30 a barrel. But it is the first four-week rise in a year.

In recent weeks the oil price has recovered to around $50 a barrel (see chart).
 



Scott Sheffield, boss of Pioneer Natural Resources, one of the top producers in the Permian, points out that futures prices for delivery in a year’s time have also risen above $50 a barrel, which allows him to lock in a decent profit on any new wells he can bring into production by then. Hence he may soon raise the number of rigs his firm has drilling in the Permian from 12 to at least 17 and perhaps as many as 22. “The Permian has bottomed out,” he says.

In addition to drilling more wells, some firms are planning to frack mothballed ones—wells that have been drilled but not yet pumped full of sand, water and chemicals to open up fissures allowing oil trapped in shale to flow out. Others are simply pushing their pumps harder, which uses more energy but may be worth it at $50 a barrel.

All this supports the claim that fracking has brought a new dynamic to global oil markets: the ability to flex output up and down more quickly than conventional oil drilling, rather like factories responding to changes in demand. Conventional oilfields take years to develop and then produce oil for decades, leaving oil output relatively unresponsive to short-term price movements. Shale wells, in contrast, take just a few weeks to drill and frack, and have a lifespan of only a few years, so production quickly falls if drilling abates.

Full story

3) Trade Union Hits Out At Labour’s ‘Student Pub Politics’ Against Fracking
The Herald 16 June 2016 
Daniel Sanderson

ONE of Scottish Labour’s biggest backers has told the party to “get real” over fracking and likened contribution of its MSPs at Holyrood over the issue to “a student politics pub debate”.

Trade Union GMB Scotland said that abandoning a “balanced energy strategy” would mean importing more gas from questionable regimes who have no regard for human rights or the environment.

Labour has heaped pressure on the SNP by demanding a fracking ban, winning a vote at Holyrood earlier this month after the nationalists abstained, claiming that the “the science is clear” against unconventional onshore oil and gas extraction.

The GMB spoke out following an intervention from Ineos, the owner of the Grangemouth industrial complex, which entered the political debate by challenging Labour’s assertion and arguments it deployed to justify its stance.

Ineos, which has fracking exploration licences across central Scotland but has seen progress halted by a moratorium, said the logic of Labour position suggested that “is now against fossil fuel development in general”. It also argued that gas is far more environmentally friendly than coal, as is developing indigenous reserves rather than relying on foreign imports shipped from overseas.

The Trade Union called for a “sensible debate on the economic and employment opportunities of fracking” and said it was part of a growing response to the anti-fracking lobby in Scotland which included voices from academia, industry and politics.

Gary Smith, GMB Scotland Secretary said: “This sobering intervention from the industry is one that Scottish Labour would do well to take on board because the idea that we can heat our homes or run our industries without fossil fuels anytime soon is a nonsense.

“Gas is around four times cheaper than electricity – it helps heat 78 per cent of all homes in Scotland – and I doubt any serious political party with ambitions of government would go to the electorate on a manifesto that proposes a fourfold increase on their heating bills.

“Abandoning a balanced energy strategy will mean importing more gas from questionable regimes who have no regard whatsoever for human rights or the environment, never mind tackling fuel poverty or redistributing wealth in the form of job creation.

“Some of the contributions earlier this month in the Scottish Parliament resembled a student politics pub debate and its time the party of labour got real again on Scotland’s energy future.”

Full story

4) The Energy Absurdity Of The Paris Climate Agreement
Die Welt, 21 June 2016
Daniel Wetzel

A Greenpeace study reveals what the feted Paris Climate Agreement implies for the German public. If implemented, Germany will be unrecognizable in a few years.
 



There was much cheering when representatives of 195 nations agreed a new global climate deal in December last year in Paris. Many environmental politicians had tears in their eyes, as the international community agreed they would limit global temperature rise to 1.5 degrees Celsius.

Yet many governments had no idea what would be necessary to achieve this objective when the first 170 government ministers, including Federal Environment Minister Barbara Hendricks (SPD), signed the Paris climate agreement at the United Nations headquarters in New York in April. After all, the agreement demands global “decarbonisation” – i.e. the end of all anthropogenic CO2 emissions. This requirement is equivalent to the end of all combustion processes in engines, boilers and power plants – because they emit CO2.

But what this exactly means if you want to get rid of all carbonaceous petroleum fuels and replace them with green electricity has now been analysed in a new Greenpeace study. It is the first major study on the topic of “sector coupling” – i.e. the expansion of the Energy Transition (Energiewende) to transport and heating. According to the calculations of study author Volker Quaschning of the University of Applied Sciences in Berlin (HTW), “the production of cars with gasoline and diesel engines has to end by 2025 and main roads will have to be fitted with overhead electrical lines for freight transportation.” 

The study also finds that Germany’s Autobahn too will need to have overhead catenary akin to overhead railway lines because the entire bus and freight transport needs to be electrified within a short period of time. The decarbonisation study, however, does not include any cost estimates.

Neither does the study elaborate what the politically decreed death of the combustion engine by 2025 would mean for Germany’s car industry, its competitiveness, its jobs and Germany’s industrial base. That’s because there are other important construction sites, such as in the real estate sector: “Because heating systems have a product cycles of up to 20 years, a ban on the fitting of new oil and gas heating and CHP plants will be necessary by 2020 to achieve decarbonisation by 2040,” the study says literally.

German heating engineers would have to switch production now 

That would hit builders hard: Highly efficient and cheap gas boilers have been by far the most desired heating system among homebuilders. But because decarbonisation stands in their way, gas boilers may have to end up in the Museum of Technology in four year’s time. Viessmann, Vaillant and Co, Europe’s leading heating engineers, would have to change their production almost immediately because they are expected shortly to sell only heat pumps powered by renewable energy.

The same technology ban threatens the combined heat and power electricity and heat production in so-called cogeneration plants. Cogeneration technology is believed to be unmatched in terms of energy efficiency and was therefore heavily subsidised by the federal government. Many municipal utilities (Stadtwerke) rely on thermal power stations with cogeneration technology. But because cogeneration plants usually run on natural gas they are, according to the Greenpeace study, “unsuitable for the decarbonisation of the energy transition ” and are “no longer to be built by 2020″.

However, if all cars and all heaters operating in Germany are only to run on renewable energy, much more green kilowatt hours are needed, of course. According to the study, German electricity consumption would increase five-fold, from around 600 terawatt hours today to 3120 TWh in 2040. That’s a number that requires a certain ability to rethink even among converted Energy Transition protagonists.

That’s because in the years before the nuclear accident in Fukushima and until recently, all forecasts, studies and estimates without exception assumed that as a result of the Energiewende German electricity consumption would decline. The German public widely believed the official forecasts probably also because it gave rise to the hope that it would also denote the end of the construction of ever new wind turbines.

Current energy consumption increases five-fold, instead of decreasing

The “Energy Concept of the Federal Government” which is still current policy proclaimed in 2010 that the goal was to cut German electricity consumption by ten percent by 2020. The justification for this reduction target was that it was a necessary requirement of climate protection. Now it is becoming evident that Germany’s climate policy does not only fail to decrease current energy demand, but to an increase by up to five times. Even the Greenpeace study admits that “a demand of 3,000 terawatt hours supplied by renewable energy by 2040 is considered to be a futile exercise.” No wonder: Today, green energy producers supply only 200 terawatt-hours per year.

Hence, the HTW study imagines all sorts of possible “efficiency gains ” in its calculations such as the prohibition of the combustion engine and untapped power savings in industry. If that were to happen, Germany’s electricity demand would only double by 2040 to approximately 1320 terawatt hours. But even this reduced target would still mean a six-fold increase in green electricity production. Thus the Greenpeace study assumes that the generating capacity of onshore wind turbines would have to quintuple from around 40 gigawatts today to 200 gigawatts.

Given that wind turbines are getting higher and more powerful, probably not the fivefold increase in the number of wind turbines in Germany is required. Maybe four times or three times is enough. But even in this case rural residents and their children will have to mentally prepare for an increase in the next few years from 26,000 wind turbines today to 80,000 rotor towers, if the study correctly describes how to achieve the climate targets agreed in Paris.

The amendment of the Renewable Energies Act (EEG) starts its way through parliament on Tuesday. It provides fixed annual expansion targets for wind and solar power generation. Although the targets are at the top end of what has been achieved in recent years, they are not nearly enough to achieve the Parisian climate targets, according to Greenpeace study. Onshore wind power would need to be expanded by 6.3 gigawatts (GW) each year and not by 2.8 GW, as envisaged in the new EEG. And photovoltaics would require an installed capacity of 15 GW annually instead of the 2.5 GW target of the new EEG.

Full story

Translation GWPF

5) The Antarctic Has Been Warmer Than Now For Most Of The Last 8000 Years
Not A Lot Of People Know That, 19 June 2016
Paul Homewood

Most of the time since the end of the ice age temperatures in Antarctica have been much higher than now

A paper recently published attempts to measure the relationship between ice accumulation and temperature in Antarctica for the last 31000 years.

The study is based in West Antarctica. I won’t go into the details, which were covered by WUWT here. But what was interesting were the temperature graphs included, based on ice cores.
 

image_n_grl54270-fig-0003
We can see that for most of the time since the end of the ice age temperatures have been much higher than now. We can also clearly see the sharp drop coinciding with the LIA, and that temperatures were similar to now in the MWP.

We are continually told that humans are pushing the earth’s climate into unknown territory, but once again we see this is not true. As far as the Antarctic is concerned, all the evidence points to the 20thC rise in temperatures being no more than a natural recovery from the LIA.

Full post

The London-based Global Warming Policy Forum is a world leading think tank on global warming policy issues. The GWPF newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at www.thegwpf.com.

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