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Solar now ‘cheapest electricity in history’: How much will it matter?

Solar now ‘cheapest electricity in history’: How much will it matter?

The International Energy Agency (IEA), the Paris-based consortium of 30 countries, has told us in its flagship World Energy Outlook 2020 that solar-produced electricity is now the “cheapest electricity in history.”  That seems like very good news, that is, until the actual expected impact of that fact is examined more closely.

For those who are concerned about climate change and the need to reduce greenhouse gas emissions from electric generation, it is certainly good news—but not quite good enough to make a dent in fossil fuel emissions.

Setting aside any concerns about critical materials needed to make the solar revolution reach completion, it may surprise many readers of the “cheapest electricity in history” headline that growth in solar energy will likely NOT lead to a reduction of fossil fuel burning anytime soon. In fact, the IEA’s main forecast has natural gas consumption growing by 30 percent through 2040 while oil consumption levels off but does not decline. Coal use does continue to decline as a share of total energy.

With solar energy and other renewables expected to grow so much by 2040, how can this be so? The answer is that what the IEA calls non-hydro renewables (solar, wind, geothermal, biomass) will provide 80 percent of the INCREASE in expected global electricity demand. That means that the fossil fuel electricity infrastructure will continue to grow and that existing plants will remain in place rather than be supplanted by renewables.

Of course, for the part of the economy that runs on liquid fuels including transportation and many industrial processes requiring high heat, more renewable electricity doesn’t make much of a dent in fossil fuel use. Even where transportation is being electrified, the growth in internal combustion engine vehicles continues to dwarf those running on electricity…

…click on the above link to read the rest of the article…

 

IHS Markit: Oil Demand Won’t Fully Recover Until 2022

IHS Markit: Oil Demand Won’t Fully Recover Until 2022

Global oil demand will likely take another year or so to return to pre-pandemic levels—by late 2021 or early 2022, energy expert and IHS Markit vice chairman Daniel Yergin told Al Arabiya English in a video interview on Monday.

Yergin’s expectations for oil demand are roughly in line with the forecasts by the International Energy Agency (IEA) and OPEC, which don’t expect annual oil demand to return to the pre-COVID levels next year, despite the projected rise compared to this year’s slump.

Continued low demand for jet fuel will account for 80 percent of next year’s 3.1-million-bpd gap in oil demand compared to pre-pandemic levels, the IEA said in its monthly Oil Market Report earlier this month. OPEC also revised down its oil demand projections for this year and next in its Monthly Oil Market Report for December, expecting 2021 oil demand at 95.89 million bpd, down 410,000 bpd from its projection of 96.3 million bpd from November.

IHS Markit’s Yergin doesn’t see the biggest disruption on the oil market as either bringing forward or delaying peak oil demand.

“At the end of the day, it won’t have much impact on peak oil demand, which I still think will be around 2030 or so,” Yergin told Al Arabiya English.

The Pulitzer-Prize winning energy author also discussed the U.S. shale patch and the chances of it returning to the rapid growth in production in the years just before the 2020 price crash.

“Let me give you a very simple answer, the answer is no,” Yergin told Al Arabiya English when asked if U.S. oil production could return to 1.5-million-bpd annual growth.

According to IHS Markit, shale production will stay relatively unchanged at around 11 million bpd until late 2021, before it starts rising, but it will increase at a much more moderate pace.

“So that 1.5 million barrels per day, that two million barrels per day that was so disruptive for the oil market, that’s history,” Yergin told Al Arabiya English.

Forget Peak Oil Demand, Supply Crisis Could be Hitting First

Forget Peak Oil Demand, Supply Crisis Could be Hitting First

In today’s IEA’s annual World Energy Outlook 2020 report, the OECD energy watchdog states that it doesn’t see a peak oil demand before 2040, only a possible oil demand flattening. The energy agency repeats that oil demand is effected by COVID, but all scenarios show that oil demand has not peaked yet. The energy agency contradicts here the views currently being proponed by BP and others that oil demand has peaked already. The report bluntly states that after recovering from the “exceptional ferocity” of the COVID-19 crisis, world oil demand will rise from 97.9 million bpd in 2019 to 104.1 million bpd in 2040.

Even that the agency acknowledges that demand has been hit and is lagging behind 2019 levels, overall demand will increase, only the increase will be slightly slower than expected. The Paris-based agency, financed by the OECD governments, and lately known as a main proponent of energy transition and renewables, expects that a slower increase of oil demand the coming years will be caused by clean transport policies and surging renewable energy. At the same time the IEA also reiterates that demand for petrochemicals and global growth of long-distance transport will be leading to a net increase of oil demand until 2040.

It needs to be reiterated that several major factors are very unsure that could have a major impact on global oil demand growth. The current assessments are all taking into account a wide range of proposed and/or signed energy transition and net-zero emission government policies.

These will have an impact if fully implemented by all. Looking at the current situation, especially due to COVID-related economic issues, renewable and emission reduction policies could however become sidelined, delayed or put on ice. The need for a revamp of the global economies is clear, but choices will be made by respective constituencies without full focus on climate change and renewables.

…click on the above link to read the rest of the article…

CHART OF THE WEEK: The Surprising Drop In U.S. Crude Oil Production

CHART OF THE WEEK: The Surprising Drop In U.S. Crude Oil Production

U.S. crude oil production experienced a surprising drop last week, even though domestic demand for oil and petroleum products increased.  This came as a surprise to some energy analysts.  Furthermore, the IEA, International Energy Agency came out with a forecast for global oil demand to fall 8.1 million barrels per day in 2020.

I have to say, this is terrible news coming from the IEA.  Just last month, the IEA stated that global oil demand could fall to 7.1 mbd (million barrels per day), but only recently updated their forecast for an 8.1 mbd decline in 2020 due to “gloomy airline travel.”

Actually, we don’t really know what global oil demand will look like by the end of the year.  There are way too many variables.  Even though the Fed and central banks are planning to pump in more stimulus plans over the next few months, the negative SNOWBALL EFFECT of all the closed stores, unemployment, commercial real estate armageddon, collapse in airline travel, supply chain disruptions, and so forth, will likely impact oil demand to a greater degree by the end of 2020 and into 2021.

Another CURVEBALL to hit the United States is the coming collapse in U.S. Shale oil production.  While some companies have curtailed production, and are now bringing some of it back online, total U.S. crude oil production surprisingly declined to 10.7 mbd last week.

U.S. crude oil production reached a peak of 13.1 mbd in late February, right before the global contagion and shutdown of economies.  It fell to a low of 10.5 mbd in mid-June, then rebounded to 11.0 mbd for the next two months.  However, in the lasted EIA, U.S. Energy Information Agency weekly report, U.S. oil production fell from 11.0 mbd to 10.7 mbd last week.

…click on the above link to read the rest of the article…

Natural Gas Price Plunge Could Soon Lead To Shut-Ins

Natural Gas Price Plunge Could Soon Lead To Shut-Ins

Natural gas prices plunged to new lows this week, falling below $1.50/MMBtu, a catastrophically low price for U.S. gas drillers.  The factors afflicting the gas market are multiple. Prices had already fallen below $2/MMBtu at the start of 2020, weighed down by oversupply. But it wasn’t a problem confined to the U.S. There was also a global glut of LNG due to a wave of capacity additions in 2019.  

That was the situation heading into 2020. But just as the Covid-19 pandemic tore apart the oil market, natural gas also went into a tailspin. Global gas demand is expected to fall by 4 percent this year, “largest recorded demand shock” in history, according to the International Energy Agency. 

Buyers of U.S. LNG are now cancelling shipments at a rapid clip. U.S. LNG exports have declined by more than half compared to pre-pandemic levels.

“There would have been too much LNG in the world even without Covid-19,” Ben Chu, a director at Wood Mackenzie’s Genscape service, said in a statement. “Covid-19 has made it worse.”

Buyers abroad are willing to pay a cancellation fee instead of receiving shipment from U.S. exporters, a sign of how badly the market has deteriorated. For August delivery, between 40 and 45 cargoes have been cancelled, nearly double the rate of cancellation in June. 

Typically, cheaper gas can stimulate demand, particularly in the electric power sector. But that outlet is not as large as it may have been in the past, not least because gas has already been cheap for quite some time. Thus, the coal-to-gas option is limited. Without an export route, and without larger uptake from utilities, the gas glut has deepened. 

…click on the above link to read the rest of the article…

The International Energy Agency has Joined the Conspiracy Against the World

The International Energy Agency has Joined the Conspiracy Against the World

The International Energy Agency has joined the conspiracy outlining a $3 trillion plan to restart the global economy while cutting greenhouse gas emissions, saying that governments have a “once-in-a-lifetime opportunity” to create jobs while decarbonizing infrastructure. Their highly questionable economist Fatih Birol has suddenly come out and proclaimed that the world has six months to avert a climate crisis. He has warned of the need to prevent post-lockdown surge in emissions.  This is complete nonsense for this elitist consortium has already shut down the world economy to the point that in Britain, they have not produced and electricity by coal in two months. He spouts out statements with NO SUPPORTING scientific evidence and is pretending the world will end in 6 months if we allow people to use energy again.

You can Google Faith Birol and he is an economist with no background in climate. For decades his forecasts have been all about the rise and fall of energy – not climate change. It is made up of  30 member countries, 8 association countries, and 2 accession countries all of which must be a member of OECD. You will find that the IEA accepts also private donations and Birol is also now linked to Gates.

The IEA is an autonomous intergovernmental organization within the OECD framework, headed by its Executive Director. The strange part is that its Governing Board is the main decision-making body and it is composed of energy ministers or their senior representatives from each member country. For the IEA’s chief economist to come out of the blue with climate change forecasts are against the self-interests of member states that produce energy.

…click on the above link to read the rest of the article…

Abrupt Ecosystem Collapse

Abrupt Ecosystem Collapse

A new study in Nature (April 2020) casts a disturbing light on the prospects of abrupt ecosystem collapse. The report analyzes the probabilities of collapsing ecosystems en masse, and not simply the loss of individual species. (Source: Trisos, C.H. et al, The Projected Timing of Abrupt Ecological Disruption From Climate Change, Nature, April 8, 2020)

The paper states that a high percentage of species will be exposed to harmful climate conditions at about the same time, potentially leading to sudden and catastrophic die-offs of biodiversity. If high greenhouse gas emissions remain in place, abrupt events are forecast to begin before 2030 in tropical oceans and spread to tropical forests and temperate regions over time.

Without doubt, no nation is prepared for the consequences of collapsing ecosystems nor are they doing anything to avert it. Yet, it is all about the quintessence of life on the planet.

There is a high probability that fossil fuel emissions will not be curtailed enough in enough time to prevent abrupt ecosystem collapse(s). Sufficient mitigation efforts to slowdown carbon emissions are not happening, not even close.

Regrettably the International Energy Agency (IEA) projects future usage of fossil fuels that look an awful lot like “the reverse” of rapid emission mitigation with plans afoot by the U.S., Russia, Saudi Arabia, and other major producers to increase fossil fuel production by 120% by 2030, and China and India have elaborate, surprisingly huge, plans to increase usage of coal. All of which portends big-big-big trouble down the pike. Of course, it’s a crushing blow to the Paris ‘15 climate accord. (Sources: Dangerous Levels of Warming Locked in by Planned Jump in fossil Fuels Output, National Geographic, Nov. 20, 2019 and BBC News d/d November 20, 2019: “Climate Change: China Coal Surge Threatens Paris Targets” and IEA)

…click on the above link to read the rest of the article…

Many signs of peak oil and decline

Many signs of peak oil and decline

Preface.  Recently the IEA 2018 World Energy Outlook predicted an oil crunch could happen as soon as 2023.  Oil supermajors are expected to have 10 years of reserve life or more, Shell is down to just 8 years.

Political shortages are as big a problem as geological depletion. At least 90% of remaining global oil is in government hands, especially Saudi Arabia and other countries in the middle east that vulnerable to war, drought, and political instability.

And in 2018, the U.S. accounted for 98% of global oil production growth and since 2008, the U.S. accounted for 73.2% of the global increase in production (see Rapier below).   What really matters is peak diesel, which I explained in “When trucks stop running”, and fracked oil has very little diesel, much of it is only good for plastics, and yet America may well be the last gasp of the oil age if production isn’t going up elsewhere.

Related

2019. When will ‘peak oil’ hit global energy markets? dw.com.  Darren Woods, CEO of ExxonMobil predicts a 25% rise in global energy demand for the next two decades, due to “global demographic and macroeconomic growth trends. When you factor in depletion rates, the need for new oil grows at 8% a year,” he told analysts in March.

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Clearly the depth of wells we need to drill show we are reaching peak oil production:  2019-11-19 The Truth About The World’s Deepest Oil Well

How deep into the ground do we have to go to tap the resources we need to keep the lights on? How deep into the ground are we able to go? 

The first oil well drilled in Texas in 1866 was a little over 100 feet deep: the No 1 Isaac C. Skillern struck oil at a depth that, from today’s perspective, is ridiculously shallow.

…click on the above link to read the rest of the article…

The “Twin Threats” Facing Big Oil

The “Twin Threats” Facing Big Oil

Wolfcamp rig

The global oil and gas industry is facing the “twin threats” of the loss of profitability and the loss of social acceptability as the climate crisis continues to worsen. The industry is not adequately responding to either of those threats, according to a new report from the International Energy Agency (IEA).

“Oil and gas companies have been proficient at delivering the fuels that form the bedrock of today’s   energy system; the question that they now face is whether they can help deliver climate solutions,” the IEA said.

The report, whose publication was timed to coincide with the World Economic Forum in Davos, critiques the oil industry for not doing enough to plan for the transition. The IEA said that companies are spending only about 1 percent of their capex on anything outside of their core oil and gas strategy. Even the companies doing the most are only spending about 5 percent of their budgets on non-oil and gas investments.

There are some investments here and there into solar, or electric vehicle recharging infrastructure, but by and large the oil majors are doing very little to overhaul their businesses. The top companies only spent about $2 billion on solar, wind, biofuels and carbon capture last year.

Before even getting to the transition risk due to climate change, the oil industry was already facing questions about profitability. Over the past decade the free cash flow from operations at the five largest oil majors trailed the total sent to shareholders by about $200 billion. In other words, they cannot afford to finance their operations and also keep up obligations to shareholders. Something will have to change. 

…click on the above link to read the rest of the article…

IEA: An Oil Glut Is Inevitable In 2020

IEA: An Oil Glut Is Inevitable In 2020

Sohar oil tanks

Despite the OPEC+ cuts, the oil market is still facing a supply surplus in 2020, according to a new report from the International Energy Agency (IEA).

OPEC+ announced additional cuts of 500,000 bpd, which sounds more impressive than it is because the group was already producing under its limit. In November, for instance, OPEC was producing 440,000 bpd below the agreed upon ceiling.

Saudi Arabia agreed to shoulder an additional 400,000 bpd of voluntary cuts. But the deal also exempts 1.5 million barrels per day (mb/d) of Russia’s condensate production, allowing Russia to actually increase condensate output by 0.8 mb/d.

Still, the deal should take supply off the market. “If all the countries comply with their new allocations and Saudi Arabia delivers the rest of its voluntary cut of 0.4 mb/d, the fall in production volume versus today will be about 0.5 mb/d,” the IEA said.

OPEC said in its own report that the oil market would be largely in balance in 2020, albeit with a temporary glut in the early part of the year. The IEA sees inventories building at a rate of 0.7 mb/d in the first quarter.

The IEA cut its forecast for non-OPEC supply growth from 2.3 mb/d to 2.1 mb/d, due to weaker growth from Brazil, Ghana and the United States. The U.S. typically gets all of the attention, but disappointing news from Brazil and Ghana also led the IEA to revise forecasts lower.

Notably, Tullow Oil revealed a major disappointment from its Ghana operations, causing a complete meltdown in its share price this week. Its stock fell nearly 70 percent in a single day as investors overhauled their valuation of the company. Tullow admitted that its production from Ghana would decline in the years ahead.

…click on the above link to read the rest of the article…

IEA Sees $90 Crude Ahead Of Oil’s Downfall

IEA Sees $90 Crude Ahead Of Oil’s Downfall

Petchem

Global oil demand will plateau around 2030, according to a major new report, but the decline in demand is way too slow to head off the worsening effects of climate change.

Oil demand begins to flatten out in the 2030s “under pressure from rising fuel efficiency and the electrification of mobility,” The International Energy Agency (IEA) said in its widely-anticipated annual World Energy Outlook.

However, the agency does not see a peak in CO2 emissions through 2040, even in a scenario that incorporates some intended policy targets. The IEA says that an expanding economy and growing global population outweigh efforts to cut emissions. Reducing emissions will require “significantly more ambitious policy.”

“The dissonance between the rising trend for CO2 and the commitment of countries to reach an early peak in emissions was especially striking in the light of the latest scientific findings from the Intergovernmental Panel on Climate Change,” the IEA said, referring to the rather dire conclusions from the IPCC report in 2018, which found that the world is running out of time to make deep and far-reaching cuts to emissions.

As Reuters reports, some groups criticize the IEA for consistently predicting strong oil demand growth. “The IEA is effectively creating its own reality. They project ever-increasing demand for fossil fuels, which in turn justifies greater investments in supply, making it harder for the energy system to change,” Andrew Logan, senior director of oil and gas at Ceres, told Reuters.

With that said, renewable energy is growing fast and taking a growing slice of all new investment. The IEA sees solar becoming the single largest source of installed electricity capacity by 2040, surpassing coal in the 2030s.

 …click on the above link to read the rest of the article…

The EIA Is Grossly Overestimating U.S. Shale

The EIA Is Grossly Overestimating U.S. Shale

Cushing oil

The prevailing wisdom that sees explosive and long-term potential for U.S. shale may rest on some faulty and overly-optimistic assumptions, according to a new report.

Forecasts from the U.S. Energy Information Administration (EIA), along with those from its Paris-based counterpart, the International Energy Agency (IEA), are often cited as the gold standard for energy outlooks. Businesses and governments often refer to these forecasts for long-term investments and policy planning.

In that context, it is important to know if the figures are accurate, to the extent that anyone can accurately forecast precise figures decades into the future. A new report from the Post Carbon Institute asserts that the EIA’s reference case for production forecasts through 2050 “are extremely optimistic for the most part, and therefore highly unlikely to be realized.”

The U.S. has more than doubled oil production over the past decade, and at roughly 12.5 million barrels per day (mb/d), the U.S is the largest producer in the world. That is largely the result of a massive scaling-up of output in places like the Bakken, the Permian and the Eagle Ford. Conventional wisdom suggests the output will steadily rise for years to come.

It is worth reiterating that after an initial burst of production, shale wells decline rapidly, often 75 to 90 percent within just a few years. Growing output requires constant drilling. Also, the quality of shale reserves vary widely, with the “sweet spots” typically comprising only 20 percent or less of an overall shale play, J. David Hughes writes in the Post Carbon Institute report. 

 …click on the above link to read the rest of the article…

The Country Using The Most Electricity May Surprise You

The Country Using The Most Electricity May Surprise You

In 2017, global electricity consumption increased 2.5 percent to reach 25,721 Twh.

When it comes to consumption, China uses the most of any country at 25.9 percent, followed by the United States with 17.5 percent; but, as Statista’s Niall McCarthy noteson a per capita basis, the situation is different.

According to the IEA Atlas of Energy, electricity consumption in Iceland was 54.4 megwatt hours per capita in 2017, the highest level of any country.

Infographic: Which Countries Use The Most Electricity?  | Statista

You will find more infographics at Statista

That’s primarily due to abundant natural resources that make electricity production affordable along with energy-intensive industries. The harsh and dark Icelandic climate also contributes to heavy demand for electricity.

The situation is similar in Norway which comes second with 23.7 megawatt hours per capita.

Bahrain, Qatar and Kuwait follow due to considerable demand for air conditioning.

Many signs of peak oil and decline

Many signs of peak oil and decline

Preface.  Recently the IEA 2018 World Energy Outlook predicted an oil crunch could happen as soon as 2023.  Oil supermajors are expected to have 10 years of reserve life or more, Shell is down to just 8 years.

Political shortages are as big a problem as geological depletion. At least 90% of remaining global oil is in government hands, especially Saudi Arabia and other countries in the middle east that vulnerable to war, drought, and political instability.

And in 2018, the U.S. accounted for 98% of global oil production growth and since 2008, the U.S. accounted for 73.2% of the global increase in production (see Rapier below).   What really matters is peak diesel, which I explained in “When trucks stop running”, and fracked oil has very little diesel, much of it is only good for plastics, and yet America may well be the last gasp of the oil age if production isn’t going up elsewhere.

Related articles:

2019-6-10 World crude production outside US and Iraq is flat since 2005

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Rapier, R. 2019. The U.S. accounted for 98% of global oil production growth in 2018. Forbes.

Earlier this month BP released its Statistical Review of World Energy 2019.   The U.S. extended its lead as the world’s top oil producer to a record 15.3 million BPD (my comment: minus 4.3 million BPD natural gas liquids, which really shouldn’t be included since they aren’t transportation fuels). In addition, the U.S. led all countries in increasing production over the previous year, with a gain of 2.18 million BPD (equal to 98% of the total of global additions),… which helped offset declines from Venezuela (-582,000 BPD), Iran (-308,000 BPD), Mexico (-156,000 BPD), Angola (-143,000 BPD), and Norway (-119,000 BPD).

Peak demand?  Hardly: “the world set a new oil production record of 94.7 million BPD, which is the ninth straight year global oil demand has increased.

Fickling, D. 2019. Sunset for Oil Is No Longer Just Talk. Bloomberg.

 …click on the above link to read the rest of the article…

‘A Breath of Fresh Air’: Offshore Wind Power Could Produce More Electricity Than World Uses

‘A Breath of Fresh Air’: Offshore Wind Power Could Produce More Electricity Than World Uses

“Let’s get going!”

Shanghai Donghai Bridge's 100mw offshore wind power project is China's first national offshore wind power demonstration project in the early morning light of morning in Shanghai, Oct. 4, 2019.
Shanghai Donghai Bridge’s 100mw offshore wind power project is China’s first national offshore wind power demonstration project in the early morning light of morning in Shanghai, Oct. 4, 2019. (Photo: Costfoto/Barcroft Media/Barcroft Media/Getty Images)

A new report from the International Energy Agency released Friday claims that wind power could be a $1 trillion business by 2040 and that the power provided by the green technology has the potential to outstrip global energy needs. 

“Talk about a breath of fresh air,” tweeted writer Steven E. de Souza.

The IEA report looks at the business of wind power and opines that as investment increases and the technology becomes cheaper, the sector could explode. 

The IEA finds that global offshore wind capacity may increase 15-fold and attract around $1 trillion of cumulative investment by 2040. This is driven by falling costs, supportive government policies and some remarkable technological progress, such as larger turbines and floating foundations. That’s just the start—the IEA report finds that offshore wind technology has the potential to grow far more strongly with stepped-up support from policy makers.

“Offshore wind currently provides just 0.3% of global power generation, but its potential is vast,” said IEA executive director Fatih Birol.

It would take a major infrastructural commitment to develop wind power to the point that the renewable energy resource could take over the majority of global energy needs, but it’s not impossible. As The Guardian pointed out Friday, “if windfarms were built across all useable sites which are no further than 60km (37 miles) off the coast, and where coastal waters are no deeper than 60 metres, they could generate 36,000 terawatt hours of renewable electricity a year.”

“This would easily meeting the current global demand for electricity of 23,000 terawatt hours,” added The Guardian.

 …click on the above link to read the rest of the article…

Olduvai IV: Courage
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Olduvai II: Exodus
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