Quote of the Week
“The migration towards the electrification of society is unstoppable.”
Lord John Browne, former CEO of BP
Graphic of the Week
Contents
1. Oil and the Global Economy
2. The Middle East & North Africa
3. China
4. Russia
5. Angola
6. Venezuela
7. The Briefs
1. Oil and the Global Economy
With only two weeks to go before President Trump decides whether the US will withdraw from the Iran nuclear treaty, the oil market’s chief concern is about what could happen if the US reimposes sanctions. Even though Washington would have few, if any, allies helping to reimpose sanctions on Iran, the US carries considerable weight in the world banking system by threatening to deny access to the US to anyone doing business with Tehran. Conventional wisdom holds that renewed sanctions would slow Iranian oil exports and drive prices higher.
London futures posted a small gain last week, closing on Friday at $74.64. However, the gap between London and US oil prices widened to as much as $6.74 a barrel last week, making US oil highly attractive to foreign buyers. The Midland, Texas-to-Houston spread widened to over $8.00 a barrel indicating that pipelines moving Permian oil to the coast are nearly full. Phillips 66 announced that it will move ahead with the construction of its Gray Oak Pipeline, which would move oil from the Permian to Corpus Christi. The pipeline would have a capacity of 700,000 b/d, and eventually 1 million b/d, but it won’t come online until the end of 2019.
As production from the Permian Basin increases, the US should be facing a glut of light, sweet crude which cannot be processed efficiently in Gulf Coast refineries. As could be expected, low US crude prices have sent exports to an all-time high of 2.3 million b/d last week. US exports are expected remain around this level over the summer or possibly climb even higher. A few months ago, Brent traded at a premium of only $2 per barrel relative to New York futures.
Total US crude and petroleum exports also hit a record high of 8.3 million b/d the week before last. Much of the increase in oil products is due to the near collapse of Venezuela’s refining capacity and other refining problems around the Caribbean leaving US refiners to pick up the slack.
The OPEC Production Cut: Now that the cut has been pronounced a success in reducing global crude inventories to normal levels, the question is what happens next. The cut has already been extended to the end of the year and several OPEC members are talking about extending it into 2019 in hopes of moving oil prices back above $100 again. OPEC now says it would like to see a pickup in investment, which fell by some $1 trillion in the three years of surplus and weak prices that started in June 2014.
Saudi Arabia’s energy minister al-Falih said in early April that oil production in a number of regions was declining and the only way to avoid a supply shortage in the longer term was to invest in new upstream projects. The IEA says that investment in new projects which was close to $800 billion in 2014, declined to $120 billion a year between 2014 and 2017. The agency, however, forecasts that investment in 2018 will be back to $466 billion. Some believe that there have been such large gains in the efficiency of oil production since 2014 that even the smaller investment total forecast for this year will be sufficient to prevent shortages in coming years.
Iran’s Oil Minister Zangeneh said last week that “high oil prices, even in the mid-term, would destabilize the market and put pressure against OPEC’s interests.” When asked about Iran’s position regarding an extension of the OPEC production cuts beyond 2018, Zangeneh told Iran’s news agency that “No decision will be made regarding this issue in the upcoming OPEC meeting.” There may be a split developing in OPEC on a continuation of the production freeze. However, this issue could be overshadowed by other developments if the US reimposes sanctions on Iran.
US Shale Oil Production: Optimistic forecasts regarding the immediate future of the Permian and other US shale oil production continue to abound. The US Energy Information Administration forecasts the Permian’s May output will be 3.183 million b/d—a 73,000 b/d rise from April. The IEA is talking about the basin’s production reaching 4 million b/d by 2023, which is getting close to Saudi’s Ghawar, the world’s largest oilfield which is thought to have a production capacity of 5.8 million b/d. Some are even talking about Permian, which is predominately a shale oil basin, becoming the largest producing field in the world.
There are two sets of factors that could upset the optimists’ narrative – short-term bottlenecks and the long-term geology of shale oil basins. The latter is simple. Most shale oil basins have “sweet spots” that will produce a satisfactory, perhaps even a profitable, amount of oil when the wells first start producing. Production from these wells quickly declines however so that production usually falls by 70 to 90 percent in the first three years. The sweet spots, which drillers quickly identify, usually comprise 20 percent or less of a shale oil field. When drillers have exhausted the sweet spots they must drill in increasingly less productive parts of an oilfield until the results become so uneconomical at the going prices that they quit.
The sweet spot phenomenon is well known, but it difficult to say just when it will lead to declining production as drillers guard this data carefully. If investors learn that a company no longer has profitable places to drill, money will become harder to raise. Some are forecasting that a decline in US shale oil production could come in the next few years while others see steady production and relatively high levels for decades. Because of the rapid decline of shale oil wells this will require unprecedented numbers of new wells.
It is the bottleneck problem, however, that has been getting much attention in the financial press in recently. These range from shortages of fracking sand and fracking crews, through overloaded and deteriorating road networks in the busiest parts of the basin, to insufficient pipeline capacity to move the production from newly opened wells to the Gulf Coast. This latter phenomenon is easy to detect as the value to crude that cannot be moved from the oilfield to markets drops rapidly. In the last two months the value of crude in Midland, Texas, the heart of the Permian Basin, has sunk from $3.50 a barrel in comparison to Brent crude, the international standard, to nearly $14 a barrel. Selling prices like these are not contributing to the profitability of drilling for shale oil.
Most of the current bottlenecks can be overcome within a year or two. New pipelines to move the excess oil and gas production to market are being built. Roads can be improved. New sources of sand can be found and more fracking crews trained. The real issue is the profitability of the oil that will be produced in the next couple of years and how soon the sweet spots will start to go dry.
2. The Middle East & North Africa
Iran: European leaders are talking about increasing sanctions on Iran over its ballistic missile program and regional meddling as they try to dissuade President Trump from abandoning a nuclear deal between world powers and Tehran. France’s president Macron, and Germany’s Chancellor Merkel, were in Washington last week trying to persuade President Trump to stay with the nuclear accord he has threatened to withdraw from on May 12. Macron, however, said after talking with the president it was his “bet” that Trump would withdraw the US from the nuclear deal. Many fear that tighter sanctions will lead to reduced Iranian exports and higher oil prices, or even hostilities if Tehran resumes its program to acquire nuclear weapons.
Iran’s supreme leader Ayatollah Ali Khamenei called on Muslim nations to unite against the United States, saying Tehran would never yield to US “bullying”. Tehran announced last week that it will start reporting foreign currency amounts in euros rather than US dollars due to tensions with Washington. Iran has little trade with the US due to decades of economic sanctions. Its most important trading partner is the UAE, which accounts for around 24 percent of all Iranian imports and exports with China second at 22 percent.
Iraq: The government failed to attract investment from any of the top international oil companies at its oil and gas contract auction last week. This development suggests that the Iraqi government has not yet found a revenue-sharing formula that the major oil companies find sufficiently attractive to increase their business in Iraq. Italy’s Eni was the only major company submitting a bid but did not win. As many as 16 companies, including Exxon, Chevron, Total, Lukoil, Gazprom, and CNOOC, had expressed interest in taking part in the auction.
Iraq awarded six of the 11 blocks up for auction to Middle East and China-based companies, while five of the less desirable exploration areas failed to attract any bids. Three blocks went to United Arab Emirates-based Crescent Petroleum, two to China’s Geo-Jade, and one to United Energy Group, based in Hong Kong.
Saudi Arabia: Minister of Energy al-Faleh said at a meeting of oil producers in Jeddah that the global oil market can absorb higher prices. The statement drew a swift reaction from US President Donald Trump who accused OPEC of inflating prices. The Saudis are rumored to want $100 oil again but if prices rise that high the next economic downturn could follow. The government wants more revenues for their budget and a higher oil price to increase the valuation of the Aramco IPO and to pay for the ambitious plans to reduce its reliance on oil revenues by diversifying its economy.
China’s Sinopec, the largest oil refiner in Asia, will continue to cut imports of Saudi crude in June and July, as prices for other Middle Eastern crudes are more favorable. Earlier this month, Sinopec requested 40 percent lower Saudi oil import loadings for May. With the increased flow of Russian oil into China and the recent arrival of a ship carrying 2 million barrels of oil from Louisiana to China, Beijing is not as dependent on the Saudis as it has been in the past. Given the deteriorating geopolitical situation in the Middle East, China may be seeking to diversify its sources of oil in addition to seeking lower prices.
Libya: General Haftar returned to Benghazi from a hospital in Paris and ordered a renewed military assault on Islamist-controlled areas. Numerous sources has reported that Haftar, 75, had either died or had a stroke of such severity that his public career was at an end, prompting speculation that his chief backers – the United Arab Emirates, Egypt and France – were locked in secret discussions over a successor likely to play a decisive role in Libya’s future.
Haftar’s allies say his Libyan National Army will now seek to capture Derna, the last eastern town out of its control. The success of Haftar in quelling the various militias thwarting increased oil production is the main reason Libya’s production has grown to around 1 million b/d in the last 18 months. It appears that the 75-year old general may be around for a while longer.
Libya’s National Oil Corporation (NOC) is holding discussions with BP and Eni about resuming exploration activity, the company announced last Thursday. BP signed an exploration deal in Libya in 2007 but put its onshore plans on hold in 2014 because of security concerns following the 2011 revolution. Italy’s Eni has stakes in onshore and offshore oil and gas production in Libya through a joint venture with the NOC. Libya is estimated to have the largest easily exploitable oil reserves in Africa.
3. China
Russia was China’s largest crude oil supplier in March, according to data released last week. Last month, Russia supplied Beijing 1.36 million b/d, up 23.6 percent from March 2017. Moscow has been the biggest oil exporter to China for the last 13 months.
Saudi Arabia was China’s second-biggest supplier in March, shipping Beijing 1.09 million b/d, up 1.2 percent from a year ago, but down from 1.2 million b/d in February. While Saudi shipments to China have been dropping of late, a private Chinese chemical producer, the Hengli Group, will start operating a new refinery in northeast China this coming October. The plant can process up to 400,000 b/d and is designed to use heavy Saudi oil.
As part of its war on pollution, China’s government is gradually taking over the country’s heavy industry which is responsible for much of the pollution. Last year, the state’s share of steel capacity increased to 67 percent from 60 percent while aluminum smelting saw about an equal increase. The government now controls 80 percent of the country’s coal production compared with about 45 percent in 2010. While the massive state companies are less efficient than smaller private ones, they give the government better control of its national priorities including cleaning up the air.
Air pollution improved in many cities last year as small companies were shuttered. State companies, unlike private companies, have the money to meet environmental regulations which may be more important to the government than efficiency.
Last December, LNG imports into China hit a record high amid natural gas shortages due to the government moving too fast with its shift from coal to gas. China became the world’s second-largest LNG importer in 2017, taking in some 38 million tons of the fuel, a 46-percent increase on 2016. Even so, some parts of the country suffered shortages because the gas could not reach them fast enough.
Sinopec says it plans to boost its LNG import capacity to 26 million tons annually over the next six years from the current 9 million tons. China’s total of LNG import capacity is 17 million tons. Customs figures for March show a 64.2-percent increase in LNG shipments to 3.25 million tons. During the first quarter of the year, China imported 12.38 million tons of LNG, up 59.1 percent on Q1 2017.
China’s current natural gas storage capacity is only enough to cover 5 percent of the country’s consumption. That is only about half the international average, which stands at 10-12 percent, but Beijing has launched a storage-building program that will see the current capacity doubled over the next five to eight years in part by using depleted natural gas fields.
Forecasts that the advent of electric vehicles will have a major impact on oil demand are starting to appear in China. Beijing had about 99 percent of the 385,000 electric buses on the road worldwide in 2017, accounting for 17 percent of the country’s bus fleet. Every five weeks, China adds 9,500 new electric buses, the equivalent of London’s entire fleet. A new report from Bloomberg New Energy Finance says that economics are driving the change, with the total cost of ownership for electric buses far outperforming fossil fuels. The report says a 110kWh battery e-bus coupled with even the most expensive wireless charging facilities reaches parity with a diesel bus at total cost of ownership at around 37,000 miles traveled per year. This means that a bus with the smallest battery, even when coupled with the most expensive charging option, would be cheaper to run in a medium-sized city, where buses travel an average 106 miles/day.
4. Russia
Gazprom is currently shipping as much gas to Europe as it typically does in winter months, and expects demand this summer to be close to winter levels. The coldest winter in Europe since 2012 depleted storage facilities across the continent that now need to be refilled. Industrial gas-fired power generation increases and economic growth in Europe further boost demand for gas, even if winter is now over and the period is generally a lull in gas demand and markets. Gazprom announced last week that it was building an LNG complex near the Baltic Sea with a capacity of 45 billion cubic meters per year.
Although Moscow should benefit from increasing oil prices, some 1.4 million b/d are now being exported to China and this number is expected to increase. As the Chinese are known to drive a hard bargain on long-term contracts and paid for much of the new pipelines required to bring the oil into China, it is doubtful that the Russians are making much on selling oil to China.
5. Angola
While falling Venezuelan oil production captures the world’s attention, problems also are growing in Angola, once Africa’s biggest crude producer. The country is suffering sharp declines from its onshore and offshore fields, with output dropping almost three times as much as required by the OPEC agreement. Crude exports are expected to fall in June to the lowest since at least 2008.
Angola’s slide could be alleviated by the end of the year with the opening of an new oil field operated by Total. The Kaombo field, already delayed from 2017, will have a capacity of 230,000 b/d. Angola’s deep-water operations are costly to maintain. Because of insufficient capital expenditure, the rate of decline from Angola’s offshore fields are at 13 to 18 percent a year, more than double the global average. Most Angolan fields enter into a steep decline after three years due to the geological characteristics of Angola’s offshore production.
The IEA says that since peaking at 1.9 million b/d in 2008, Angola’s production has fallen to about 1.5 million this year, and is expected to be under 1.3 million b/d in 2023 despite the opening of the new offshore field.
6. Venezuela
The flow of migrants fleeing Venezuela is increasing every day, putting a strain on Colombia’s health and education systems and its jobs market. Emigrants are crossing into Colombia at the rate of more than 100,000 per month, with many more arriving illegally. Venezuela’s economy will contract 15 percent this year, according to the latest forecasts by the International Monetary Fund, while inflation increases to about 13,000 percent.
The two local Chevron employees that were arrested in Venezuela last week could be charged with treason for refusing to sign a parts contract for a joint venture with PDVSA. The arrests are the first at a Western oil firm operating in Venezuela and represent an escalation of growing tensions between PDVSA and foreign companies over control of supply contracts which are a source of corruption in Venezuela’s oil industry. The treason charge raises concern that Chevron has been pulled into the fight between Washington and President Maduro, who accuses the US of sabotaging Venezuela’s economy to topple his administration.
In the aftermath of the arrests Chevron has evacuated about 30 expatriate employees overseeing operations in Venezuela. The firm has about 150 employees in its Puerto la Cruz headquarters and has two other offices in the country. The company’s earnings from Venezuela dropped 18 percent last year, to $329 million, according to regulatory filings. Chevron and other firms aim to avoid a repeat of what happened to Exxon Mobil Corp and ConocoPhillips in Venezuela in 2007, when the government of then-President Hugo Chavez expropriated their assets after they could not reach an agreement to convert their projects into PDVSA-controlled joint ventures. This chaos has caused the country’s oil output to plunge by 23 percent, or 450,000 barrels per day, since October.
In another development, ConocoPhillips filed suit on Thursday in the US District court in Manhattan seeking to enforce $2.2 billion it was recently awarded by International Chamber of Commerce arbitrators in payment for the firm’s assets in Venezuela that were expropriated by then-President Hugo Chavez in 2007. Conoco had sought an award of $22 billion.
7. The Briefs (date of article in Peak Oil News is in parentheses)
Marine fuels disruption: The upcoming implementation of restrictions on sulfur emissions in marine fuels can potentially jack up the annual fuel costs for the shipping industry by a whopping $50-$60 billion, including by $10 billion for the containers sector alone according to Moller-Maersk CEO Soren Skou. Skou favors greater use of cleaner fuels in the near term vis-a-vis other options such as LNG and scrubbers. The new global cap of 0.5% sulfur on marine fuels will be implemented from 2020. The lower-emissions standard can cascade into higher costs of moving goods across the globe (4/27)
The UK’s Tullow Oil said Wednesday it would cease all natural gas output from its assets in the UK’s Southern North Sea in the third quarter of this year in line with the announced closure of the ConocoPhillips-operated Theddlethorpe Gas Terminal in late 2018. (4/26)
The UK will need to have one well per day fracked in the period between 2021 and 2035 if it wants to reduce its natural gas imports by 50 percent, a report from Cardiff Business School has estimated. This rate of well fracking means a total of 6,100 wells will need to be drilled in the country over the 14-year period and will involve land takeover on a very large scale. While the report has been disputed, the fact remains that the future of shale gas in the UK is not necessarily bright. (4/26)
In the UK, BP Chief Executive Bob Dudley on Tuesday urged Cambridge University not to yield to pressure from hundreds of students and academics to cut its investments in fossil fuels and pointed to BP’s donations to the university. (4/25)
Pakistan has lifted a ban on fuel oil imports to address the problem of planned power cuts as energy consumption rises towards the summer season. Current fuel oil stocks are seen as extremely low. (4/24)
Brazil, after being caught up in major corruption scandals and suffering from what some have claimed was its worst economic downturn in 100-years, has pulled itself back from the brink. The economy commenced growing again in 2017. One of the key drivers of Brazil’s improving economic outlook are Brasilia’s plans to launch what could become the biggest oil boom in Latin American history. The massive pre-salt oil fields located in the Atlantic Ocean on the Latin nation’s continental shelf are thought to contain recoverable oil reserves of a massive 50 billion barrels but in the past, they have proven difficult and costly to extract. (4/24)
Uruguay’s first oil auction in seven years that had offered 17 offshore blocks didn’t attract any bids by the April 26 deadline. Interest in Uruguay’s offshore has faded after the companies that had won blocks in the previous two rounds haven’t yet made significant oil discoveries. (4/28)
In Argentina, Shell unloaded its downstream business, from service stations to refinery capacity. But they retained their position in the Vaca Muerta shale formation, which they see has having substantial growth potential remaining. (4/25)
Mexico’s 2018 elections could have far-reaching implications for the country’s energy reform, but any shift in policy would likely come from a slowdown in implementation rather than an outright reversal. (4/24)
In Mexico, the chief executive of national oil company Pemex said on Wednesday it must move towards a stock exchange listing like Saudi Arabia’s Aramco has done but that such a step would take years. (4/25)
In Canada, a proposed $31.1 billion liquefied natural gas export terminal on British Columbia’s coast edged closer to reality on Friday, as the company behind the project said it had chosen a contractor to lead project construction once financing is in place. (4/28)
In Alberta, a convoy of big rigs is gearing up to haul Canadian crude oil hundreds of miles across the US border into Montana, where the oil will be transferred to pipelines and rail cars headed south and west. Trucks loaded with crude are an increasingly common sight at the border. Production has risen in the world’s fifth largest producer, but full pipelines and a rail car shortage have made it difficult for drillers to ship oil out of Canada. (4/23)
Pipeline approved: With certain conditions, a judge in Minnesota backed a plan by Canadian oil shipper Enbridge to replace an aging oil pipeline with a bigger one. Enbridge is proposing an overhaul of the Line 3 segment of a broader network that extends through parts of Canada and into the northern United States. (4/24)
The US oil rig count increased by 5 to 825, according to Baker Hughes. For the month, drillers added 28 oil rigs in April after cutting two rigs in March. Gas rigs increased by 3 to 195. The total rig count, at 1020, is up 150 year-over-year. (4/28)
Crude exports climbing: a 2 million barrel-carrying supertanker arrived for the first time at a Texas City jetty as surging US oil output drives up incentives to export. The tanker is being brought into the terminal to determine measurements for future VLCC loadings, at least of partial cargoes. Nave Quasar will not load any supplies at this time for shipment. (4/28)
Oil exports: The first VLCC to directly load a cargo at the Louisiana Offshore Oil Port arrived at the port of Huizhou, China, on Sunday. The Shaden departed LOOP on February 18 after a loading time of about five days. The VLCC took approximately two months to reach its final destination on the east coast of China. Prior to arriving at Huizhou, the Shaden had previously stopped at Rizhao, China, on April 17. As the only US Gulf Coast export facility that does not require Aframax or Suezmax vessels for reverse lightering on to a VLCC, LOOP is poised to become a major export hub in coming years. (4/27)
Shell Offshore, Inc. will proceed with the Vito deep-water development in the US Gulf of Mexico. The Royal Dutch Shell subsidiary’s final investment decision, which assumes a break-even price below $35 per barrel, sets in motion the construction and fabrication of a new, simplified host design and subsea infrastructure. The company expects to produce up to approximately 100,000 barrels of oil equivalent per day from Vito, located roughly 150 miles southeast of New Orleans. (4/25)
ConocoPhillips is coming off its best exploration season in over a decade, and they have Alaskan oil to thank for it. The company struck it big in the National Petroleum Reserve-Alaska this winter, finding oil at all six of their test wells. The company has estimated that there are at least 300 million barrels of recoverable oil in its “Willow Discovery” along Alaska’s Western North Slope. More importantly, this discovery could represent just a fraction of the available reserves along the North Slope, and ConocoPhillips plans to keep exploring the area over another busy exploration season next year. (4/23)
Refinery advantage: the US shale revolution boosted crude production to a record 10.5 million barrels per day, upending the global oil market by adding millions of barrels of very light crude to the supply mix. That gives an advantage to some independent refineries equipped to handle lighter crude vs. the some larger refineries that spent billions to handle heavier. (4/26)
Offshore rules softening: The Trump administration is moving to relax some offshore drilling requirements imposed in response to the Deepwater Horizon disaster but is rebuffing the oil industry’s plea for bigger changes. (4/28)
Electricity prices to rise? The tea leaves seem to tell us that after a relatively long period of stability, electricity prices will soon rise, perhaps quickly. Interest rates are moving up. And on the commodity front, oil prices have been on the move as well. This is likely to affect utility fuel costs both directly and indirectly. (New England for example burned several million barrels of oil to produce electricity last year.) When we add in recent legislative moves to prop up aging, uneconomic power stations, we have even more reason to think so. (4/26)
Electric scooters: A new wave of electric-scooter rental start-ups is facing a legal reckoning, as city authorities across the US race to tame the “dockless” two-wheelers that have flooded their streets. New regulations proposed in several cities could place a cap on the number of scooters a single company can operate, as regulators demand that fast-growing start-ups Bird, Limebike and Spin do more to educate and police their customers safety. (4/26)
Faster EV charging coming: Japanese energy company Marubeni Corp. said it would work in the US market to deliver ultra-fast charging stations for electric vehicles. The company said it was working to make a $2 billion investment in electric vehicle infrastructure. The company said it would build 340 charging stations in the US market. Charging stations will be seven times faster than conventional charging stations, though some of that speed would depend on the vehicle. (4/24)
Supercharging EVs: Electrify America will be installing ultra-fast electric vehicle chargers at more than 100 retail, convenience and refueling locations across the US, increasing the convenience for consumers who drive or are considering purchasing an electric vehicle. Last week, Electrify America announced it will install electric vehicle fast chargers at more than 100 Walmart locations across 34 states by June 2019. These chargers are part of
Electrify America’s first $500-million, Cycle 1 investment in electric vehicle charging infrastructure in the US. The company plans to complete four investment cycles over the next decade, resulting in a total investment of $2 billion. (4/24)
Ford Motor Co. said Wednesday it will drop most of its North American car lineup as part of a plan to save money and make the company more competitive in a fast-changing marketplace. The changes include getting rid of all cars in the region during the next four years except for the Mustang sports car and a compact Focus crossover vehicle. The decision means Ford will no longer sell the Fusion midsize car, Taurus large car, CMax hybrid compact and Fiesta subcompact. (4/26)
Coal resilient: The International Energy Agency said coal consumption declined by about 2 percent from 2016 and down 4.2 percent over the last two years or so. While use is in the midst of a decade-long period of decline, demand by 2022 will be about the same as the current five-year average. (4/26)
Poland’s coal problem: Poland has some the most polluted air in all of the European Union, including 33 of the EU’s 50 dirtiest cities. Not even mountain retreats are immune. The problem is largely a result of the country’s love affair with coal. Like elsewhere in Poland, most of the homes in the villages of southern Poland are still heated by coal. (4/23)
Asian thermal coal demand is defying its typical seasonal slowdown as well as the expanding use of renewables and natural gas, with prices holding not far off $100 a ton despite the onset of the usual lull at this time of year. Australian thermal coal prices are at $93.40 a ton, their highest seasonal level in five years and $15 per ton above the five-year average price. The firm prices are due to robust use in India, Japan, South Korea and even China, where coal consumption has held up despite huge programs to boost the use of gas and renewable energy. (4/27)
Oil country wind boom. There is one simple reason why renewables are surging: both solar and wind continue to decline in operating costs, while increasing in energy efficiency. The combination is making it difficult for coal to recover and poses a challenge in what had been oil-dominant areas. The Permian Basin, which straddles Texas and New Mexico, continues to be one of the most prolific drilling locations in the country. Yet the same location has also become the largest in the country for wind power. In the Permian Basin and to the south Texas produces more wind energy than the next three states combined. (4/23)
Windy UK: US conglomerate General Electric will test the world’s largest wind turbine in a facility in northeast England, it said on Tuesday. GE Renewable Energy, the renewable arm of the US firm, and the British government-funded Offshore Renewable Energy Catapult signed a five-year agreement to test GE’s Haliade-X 12 megawatt (MW) turbine near Blyth, Northumberland. (4/25)
Solar insight: Constant illumination was found to relax the lattice of a perovskite-like material, making it more efficient at collecting sunlight and converting it to energy. The stable material was tested for solar cell use by scientists at Rice University and Los Alamos National Laboratory. Longer term, the prospects look good for a less-costly, more efficient solar cell. (4/27)
Carbon withdrawal: Europe’s largest bank has joined the list of global investors retreating from new financial commitments in the fossil fuel industry, including investments in oil-rich Alberta. HSBC, whose global assets total more than $2 trillion, announced Friday that as the climate change crisis deepens, it will no longer finance new coal-fired power plants (with a few targeted exceptions), Arctic drilling or new oilsands projects, including pipelines. (4/24)
In Italy, a government decree from late 2017 allows local administrations to cut woods, even against the will of the owners of the land. It is the start of a new wave of deforestation in Italy—primarily to fuel Italy’s growth in use of pellet stoves. Italians consume 40% of all the pellet burned in Europe while Italy produces only about 10% of the wood it burns. (4/25)