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Monday, 05 January 15
FIVE ENERGY SURPRISES FOR 2015: THE POSSIBLE AND THE IMPROBABLE - KURT COBB
 The coming year is likely to be as full of surprises in the field of energy as 2014 was. We just don't know which surprises! I am not predicting that any of the following will happen, and they will be surprises to most people if they do. But, I think there is an outside chance that one or more will occur, and this would move markets and policy debates in unexpected directions.
1. U.S. crude oil and natural gas production decline for the first time since 2008 and 2005, respectively. The colossal markdown in world oil prices has belatedly been followed by a slightly smaller, but nevertheless dramatic markdown in U.S. natural gas prices. The drop in prices has already resulted in announcements from U.S. drillers that they will curtail their drilling operations significantly next year.
But drilling that is already contracted for will likely go forward, and wells waiting for completion will be completed. It can be costly to pull out of drilling contracts. And, failing to complete already successful wells and bring them into production is downright foolish since the costs incurred in drilling the wells including future debt payments remain. In those circumstances, some revenue at lower prices is preferable to no revenue at all.
Having said all that, scaled-down drilling plans when combined with what's left in drillers' immediate inventory both to drill and complete may not be enough to overcome the prodigious production decline rates from existing wells in deep shale deposits of oil and gas which have provided almost all the recent growth in U.S. production. The decline rates are 60 to 91 over three years for tight oil plays and 74 to 88 percent over three years for shale natural gas plays.
If low prices continue for a second year, the cheers for "Saudi" America will disappear. It was never to be anyway. What America has left is high-cost oil and natural gas. And, even at high prices both were likely to peak and decline in the next 5 years. Now, low prices may bring peak production rates in the coming year for both U.S. oil and natural gas--peaks that may never be seen again.
2. World crude oil closes below $30 per barrel. I think that such a price would only last a short time unless the world is in the throes of the next Great Depression. But since OPEC has reaffirmed that it will continue to pump oil at current rates until non-OPEC production declines, look for this game of chicken to create increasing inventories of oil worldwide for several months. The underlying cause for rising oil inventories is slowing economic growth in much of Asia, especially China, and economic stagnation in Europe and Japan. Any pickup in worldwide growth would send oil significantly higher than where it is today as oil demand increases.
3. Developments in solar thermal energy show that it can solve the storage problem for electricity from renewable energy. The difficulty with renewable energy supplying electricity is that electricity is very expensive to store (and so we do very little of this). Storage is important because renewable energy production comes when the wind blows and the sun shines, but not always when we need it. A breakthrough in solar thermal may be in the offing that would overcome previous limits on temperatures generated by solar thermal capture devices and make it possible to store heat cheaply enough to run solar electric generating plants around the clock at high output.
4. A climate agreement in Paris calls for binding greenhouse gas emissions limits. Expectations are exceedingly low for next summer's international climate conference to be held in Paris. The aim is to agree on binding limits for carbon emissions for the world's nations. Few people think that will happen no matter what the urgency of the matter.
But we cannot know what climate events might occur between now and the Paris conference that would change the outcome. It would have to be big, on the order of an ice shelf plopping into the ocean and raising sea-level enough to notice. Nevertheless, I would say that such a disturbing event becomes more likely with time and might be necessary to move the world's nations to a binding emissions agreement.
Even some progress in the direction of a binding agreement will have the world's energy analysts talking about stranded assets, a reference to the oil, natural gas and coal that would have to be left in the ground in order to avoid breaching agreed limits on carbon emissions. That would have significant consequences for the companies whose work is extracting and refining hydrocarbons.
5. Oil prices reach $100 per barrel before December 31, 2015. This is the other extreme from surprise No. 3. Almost all analysts expect oil prices to remain low, and many believe we are now entering a new era of cheap oil. (I, of course, don't buy it.) An earlier and more dramatic drop in production than anticipated and a greater rise in demand than anticipated could easily bring prices back above $100. I think this is more likely to happen later in 2016. But the timetable for a return to prices above $100 could be accelerated by many factors not now apparent.
I regard none of these events as likely which is why they would be surprises. But even one of these surprises would result in large financial gains or losses for many. And, either of two of them--binding greenhouse gas emissions limits or a breakthrough in renewable energy storage--would have giant consequences for the entire world.
About Author:
Kurt Cobb is an author, speaker, and columnist focusing on energy and the environment. He is a regular contributor to the Energy Voices section of The Christian Science Monitor and author of the peak-oil-themed novel Prelude. In addition, he has written columns for the Paris-based science news site Scitizen, and his work has been featured on Energy Bulletin (now Resilience.org), The Oil Drum, OilPrice.com, Econ Matters, Peak Oil Review, 321energy, Common Dreams, Le Monde Diplomatique and many other sites. He maintains a blog called Resource Insights.
Views and opinions / conclusion expressed herein are personal views of the author and not that of COALspot.com.
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Friday, 19 December 14
U.S WEEKLY COAL PRODUCTION REACHED APPROXIMATELY 19.8 MMST; UP 1.0% WOW
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.8 million short tons (mmst) of coal ...
Friday, 19 December 14
HANDY: SOFTER TONE; PANAMAX: QUIET WEEK; CAPESIZE; PAINFUL WEEK
Handy
A softer tone for rates and volumes for the Supras, perhaps less apparent in the Pacific the last week before the season holidays and good ...
Thursday, 18 December 14
INDONESIA TO REVISE UP COAL OUTPUT TARGET TO 460 MILLION TONS IN 2015
COALspot.com: Indonesian government has revised up its next year coal output forecast to 460 million tons from its previous forecast of 421 million ...
Wednesday, 17 December 14
CAPES RATES SLIPPED BELOW $5,600/DAY, FELL 84% YOY
COALspot.com: In the very rare occurrence when the BCI stands below the BDI, words to describe market sentiment are probably poor, said Intermodal ...
Wednesday, 17 December 14
MARKET INSIGHT - INTERMODAL SHANGHAI, SNP TEAM
As the end of the fourth quarter is approaching, we are all witness to the second hand market prices softening day by day. Any new deal surfacing t ...
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- Timah Investasi Mineral - Indoneisa
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- Parliament of New Zealand
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- Ministry of Transport, Egypt
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- Heidelberg Cement - Germany
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- Price Waterhouse Coopers - Russia
- Mjunction Services Limited - India
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- Kumho Petrochemical, South Korea
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
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- Simpson Spence & Young - Indonesia
- Samtan Co., Ltd - South Korea
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- Chamber of Mines of South Africa
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- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Carbofer General Trading SA - India
- Mercuria Energy - Indonesia
- Georgia Ports Authority, United States
- Sakthi Sugars Limited - India
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Romanian Commodities Exchange
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Sidhee Cement - India
- Ceylon Electricity Board - Sri Lanka
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
- Australian Coal Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- ASAPP Information Group - India
- Sree Jayajothi Cements Limited - India
- Sinarmas Energy and Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Salva Resources Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Indonesian Coal Mining Association
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- Pendopo Energi Batubara - Indonesia
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- The Treasury - Australian Government
- Baramulti Group, Indonesia
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- IEA Clean Coal Centre - UK
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- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Renaissance Capital - South Africa
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- Savvy Resources Ltd - HongKong
- Cigading International Bulk Terminal - Indonesia
- Xindia Steels Limited - India
- Tamil Nadu electricity Board
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- Bhatia International Limited - India
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Metalloyd Limited - United Kingdom
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- ICICI Bank Limited - India
- India Bulls Power Limited - India
- Ministry of Mines - Canada
- GMR Energy Limited - India
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- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Makarim & Taira - Indonesia
- Meralco Power Generation, Philippines
- Bangladesh Power Developement Board
- Siam City Cement PLC, Thailand
- Coastal Gujarat Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Central Electricity Authority - India
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- Ministry of Finance - Indonesia
- Altura Mining Limited, Indonesia
- Tata Chemicals Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Global Coal Blending Company Limited - Australia
- Meenaskhi Energy Private Limited - India
- Therma Luzon, Inc, Philippines
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- White Energy Company Limited
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- Electricity Generating Authority of Thailand
- Maheswari Brothers Coal Limited - India
- Global Business Power Corporation, Philippines
- Eastern Coal Council - USA
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- Economic Council, Georgia
- Port Waratah Coal Services - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- Thiess Contractors Indonesia
- Minerals Council of Australia
- Merrill Lynch Commodities Europe
- Ind-Barath Power Infra Limited - India
- Jindal Steel & Power Ltd - India
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- Malabar Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- Semirara Mining Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Standard Chartered Bank - UAE
- Bhushan Steel Limited - India
- Kapuas Tunggal Persada - Indonesia
- Goldman Sachs - Singapore
- Marubeni Corporation - India
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- Gujarat Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Bharathi Cement Corporation - India
- Borneo Indobara - Indonesia
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Planning Commission, India
- Jorong Barutama Greston.PT - Indonesia
- Energy Link Ltd, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- Agrawal Coal Company - India
- Siam City Cement - Thailand
- Larsen & Toubro Limited - India
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