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18 January 2014

Press review 18-01-2014 - Iran back to business

The most interesting news in the energy world seem to be still coming out of the Middle East. A new important step into the acceptance of Iran's nuclear program was reached, with a clear warming of relations between NATO and the Persian state. Tehran is wasting no time in making up the most of the ease in sanctions. The international oil majors remain on the sidelines for now, with watering mouths.

The Shiia now seem to have the favour of the US (and NATO) west of the Euphrates. With some cooperation, the western powers prefer to deal with Shiia hierarchies than with the conservative Sunni structure (often "linked" to Al Qaeda by the media). Why the attitude is pretty much the opposite elsewhere remains something of a mystery.

Associated Press
Iran, 6 world powers agree to deal opening Islamic Republic's nuclear program from Jan. 20
Nasser Karimi, 16-01-2014

Iran has agreed to limit uranium enrichment and to open its nuclear program to daily inspection by international experts starting Jan. 20, setting the clock running on a six-month deadline for a final nuclear agreement, officials said.

In exchange, the Islamic Republic will get a relaxation of the financial sanctions that have been crippling its economy.

The announcement that Iran and six world powers had agreed on the plan for implementing an interim agreement came first from Iranian officials and was later confirmed elsewhere. Some U.S. lawmakers have been leery of the agreement, calling for tougher sanctions against Iran, rather than any loosening of controls.
Petroleum exports from Iran are set to rise this year, but exactly to what level is unknown. This depends in first place on how fast the sanctions are lifted, but also on how mature are Iran's petroleum resources. In the past few months I have highlighted news bits that point to Iran's need for modern petroleum recovery methods and off shore technology as a main driver of the approach to NATO.
Lobe Log
Iran’s Oil Plans in 2014
Robin Mills, 13-01-2014

Iran’s oil sector is like an ageing wrestler who could still surprise opponents with a show of strength. With this essential industry currently flat on its back, President Hassan Rouhani’s team has to find a way to get their champion back on its feet. Meanwhile, international oil companies are looking on from the sidelines, and whispering some encouragement.

Iran’s revival would have a significant impact on global oil markets — and, in the longer term, on gas. Oil minister Bijan Zanganeh has predicted exports of 1.4 million barrels per day (bpd) this year, up from 1.15 million bpd in 2013.

Recent reports have indicated that Russia would swap equipment and goods for up to 500,000 barrels per day of Iranian oil, and that Chinese state trader Zhuhai Zhenrong was negotiating for a new contract to purchase condensate (extra-light oil). China currently accounts for about half of Iran’s reduced volume of exports. Although cracks may be appearing in the sanctions edifice, a full and rapid recovery will require the removal of sanctions, not just loopholes.
The interesting bit is that this approach is also coming from the US.
Yahoo! News
US, Iran find common ground in chaos of Middle East
Jo Biddle, Nicolas Revise, 11-01-2014

To Iran, the United States was the "Great Satan," while Washington slammed Tehran as a "rogue state" that was part of an "axis of evil."

But as chaos engulfs the Middle East, the two are cautiously eyeing ways to work together.

An ideological chasm separates the Shiite Islamic republic from its long-time enemy in the West, yet overlapping concerns from Afghanistan to Syria and even Iraq are sowing the seeds of a hesitant rapprochement.

Restoring full diplomatic ties, severed some 35 years ago amid the 1979 storming of the US Embassy in Tehran and the painful 444-day hostage-taking, remains far off on a distant horizon.

But the willingness of the Obama administration to engage in secret negotiations in Oman last year and the new leadership of Iranian President Hassan Rouhani have already borne fruit, facilitating an interim deal in November on reining in Iran's nuclear program.
Rice Farmer notes:
The tone of the mainstream US media has changed on Iran. I scanned a number of articles related to this subject and noted that, even though articles on Iran were until recently peppered with the term "regime" to describe Iran's government, I did not see a single occurrence. This suggests that by and large the propaganda machine has shifted toward the Obama administration's stance of pursuing rapprochement with Iran, and accordingly is cutting back on the heavy-handed demonization campaign.
In neighbouring Iraq the war rages on. Little to no information is coming out of the Anbar province, and pundits say the Shiia prime-minister has decided not to engage directly the ISIL simply because he lacks military power. The US media runs daily opinion pieces demanding from the Obama Administration a return of the US Army to Iraq.
The New York Times
Clashes Between Militants and Army Spread in Iraq
Kareem Fahim and Duraid Adnan, 13-04-2014

A confrontation between Iraqi insurgents and government forces in the western city of Falluja edged closer to the capital on Sunday, after clashes between militants and the army left at least 14 people dead in the Abu Ghraib district in Baghdad Province, according to security officials.

Separately, in Ramadi, another battleground in the western Anbar Province, militants captured and executed four members of an elite military unit, an official said. And in Baghdad, two car bombs exploded near bus stations, killing at least 14 civilians.

The violence posed a further challenge to Iraq’s prime minister, Nuri Kamal al-Maliki, whose government has struggled for a response after Sunni insurgents, including fighters linked to Al Qaeda, captured Falluja and parts of Ramadi almost two weeks ago. On Sunday, Mr. Maliki seemed to back away from earlier promises to mount an all-out military assault on Falluja, saying in an interview with the Reuters news agency that he wanted to “end the presence of those militants without any bloodshed.”
And in the midst of the fight hints that prime-minister Al Maliki may also be loosing his grip on the Kurdish province. Iraq is everything but a functioning state at the moment.
Gulf Daily News
Iraq threatens to cut funds for Kurdistan over oil row
13-01-2014

Iraqi Prime Minister Nuri Al Maliki threatened yesterday to cut central government funding for Iraq's autonomous Kurdistan region if the Kurds pursued a drive to pipe oil exports to Turkey without Baghdad's approval.

The Kurdistan Regional Government said last week that crude had begun to flow to Turkey and exports were expected to start at the end of this month and then rise in February and March.

"This is a constitutional violation which we will never allow, not for the (Kurdistan) region nor for the Turkish government," Maliki said in an interview.

He reiterated Baghdad's insistence that only the central government has the authority to manage Iraq's energy resources.
A rare moment of lucidity at CNN. I'm not this adamant to the Obama Administration, it too has been sowing the seeds of war. Nevertheless, the invasion of Iraq is indeed the main reason for the civil wars today in Syria and Iraq.



"There are no oil fields in Anbar" - a sentence that been repeated endlessly the past few weeks. Does it reassure anyone? Is any foreign entity willing to invest in Iraq at this stage?
CNBC
Fight in Iraq has oil traders holding their breath
Ted Kemp and Yousef Gamal El-Din, 13-04-2014

Energy traders are closely watching renewed fighting in Iraq, trying to gauge worst- and best-case scenarios for OPEC's second-biggest oil producer—and the coming weeks could be critical.

"This situation now certainly has the market on tenterhooks. It's why we're seeing the price of oil somewhat elevated" despite a period of relatively contained demand, said John Kilduff, founding partner of commodities-focused investment firm AgainCapital. "This is a very troubling development for the oil market for consumer nations," Kilduff said.

This month, the Iraqi government of Prime Minister Nouri al-Maliki lost control of the city of Fallujah to the Islamic State of Iraq and the Levant (ISIL), a group that wants to establish a strict religious state across western Iraq's Anbar province and eastern Syria.
Libya has hardly been in the big news lately, perhaps because the reports of violence are starting to became a bit monotonous. Another top government member was executed, this time in broad day light.
Reuters
Gunmen kill Libyan deputy industry minister - sources
12-01-2014

Gunmen killed Libya's Deputy Industry Minister Hassan al-Drowi late on Saturday as he was visiting shops in the coastal city of Sirte, official sources said.

"Unknown people shot him dead while he was coming out of one of the shops in the city," a member of Libya's General National Congress (GNC), or parliament, told Reuters.

A security source said Drowi had been assassinated.

No group claimed responsibility for the attack, but two years after the fall of Muammar Gaddafi, Libya is struggling with militias and former rebel fighters who often use force to impose demands on the fragile central government.
Closer to home, a gentle strain of news has been indicating a major shift in investment strategy by the international oil companies. Instead of investment these companies are now largely announcing asset sales for the next few years in order to sustain shareholder revenues. Are these companies simply expecting lower petroleum prices or are they acknowledging mal-investments in low quality resources in past years?
OilPrice.com
Shell Expected to Sell $15 Billion of Assets During the Next Two Years
James Burgess, 14-01-2014

The Financial Times has released a new report claiming that Royal Dutch Shell, the world’s third largest energy company by market worth, will look to divest $15 billion worth of assets over the next couple of years.

Last October the company announced that it planned to sell off a significant number of assets in 2014 and 2015 in order to reduce liabilities and improve the flow of cash through the business.

The new Chief Executive Officer Ben van Beurden, who took charge just two weeks ago, is expected to sell off assets and oil fields in the North Sea, some of its refining portfolio, and a few projects currently still in their early stages.

Many of the large oil companies are facing pressure from shareholders to try and reduce spending as costs of projects continue to rise and the price of oil is expected to fall in the future.
One region that is openly going to take the impact of this divestment is the North Sea. This is a mature region well into the decline phase; the end of exports is years away.
Reuters
High investment in UK N.Sea unlikely to continue past 2015-report
10-01-2014

Current high levels of investment in Britain's North Sea are unlikely to continue after 2015, according to a forecast from energy consultancy Wood Mackenzie that could feed concerns about the longer-term future of the country's oil industry.

Britain's oil and gas output has fallen by about two thirds since 2000, posting particularly steep falls of 14.5 percent last year and 18 percent in 2011, but big new investments have fuelled hopes that some of the declines can be reversed.

In 2013, capital investment in the UK part of the North Sea hit its highest level in real terms since the mid-1970s, Wood Mackenzie said in an annual report published on Friday, but cautioned that higher spend was also a result of rising costs and that it was not likely to continue.
At least in the Norwegian side there's no reluctance in blaming this decline on rising costs. The resource is still there, it simply isn't profitable at 110 $/b. Will it ever be?
Reuters
Norway's rising oil costs hit Arctic output hopes
16-01-2014

Delays to flagship Arctic projects due to sharply higher costs and taxes, and lower oil prices, will hamper Norway's efforts to revive oil output stuck at a 25-year low, officials and companies say.

The development of several smaller fields, which often fly under the radar, is also either delayed or in doubt, the Norwegian Petroleum Directorate (NPD) told Reuters.

Cost in Norway's oil sector have roughly doubled between 2005 and 2012 and a tax hike unveiled last year pushed several projects over the edge just as oil firms around the globe increased efforts to reduce spending to save cash for dividends.
I abominate the idea that Peak Oil is theory. But on this particular article this piece of deviance can almost be forgiven.
OilPrice.com
Peak Oil becomes an Issue Again after the IEA Revised its Predictions
Tom Dispatch, 09-01-2014

Among the big energy stories of 2013, “peak oil” -- the once-popular notion that worldwide oil production would soon reach a maximum level and begin an irreversible decline -- was thoroughly discredited. The explosive development of shale oil and other unconventional fuels in the United States helped put it in its grave.

As the year went on, the eulogies came in fast and furious. “Today, it is probably safe to say we have slayed ‘peak oil’ once and for all, thanks to the combination of new shale oil and gas production techniques,” declared Rob Wile, an energy and economics reporter for Business Insider. Similar comments from energy experts were commonplace, prompting an R.I.P. headline at Time.com announcing, “Peak Oil is Dead.”

Not so fast, though. The present round of eulogies brings to mind the Mark Twain’s famous line: “The reports of my death have been greatly exaggerated.” Before obits for peak oil theory pile up too high, let's take a careful look at these assertions. Fortunately, the International Energy Agency (IEA), the Paris-based research arm of the major industrialized powers, recently did just that -- and the results were unexpected. While not exactly reinstalling peak oil on its throne, it did make clear that much of the talk of a perpetual gusher of American shale oil is greatly exaggerated. The exploitation of those shale reserves may delay the onset of peak oil for a year or so, the agency’s experts noted, but the long-term picture “has not changed much with the arrival of [shale oil].”
I recently highlighted the growing number of accidents with rail cars transporting crude petroleum in North America. This week a few media outlets reported that these and other issues may be actually caused by the chemicals used to fracture the source rock.
OilPrice.com
Are Fracking Fluids to Blame for Rail Car Explosions?
James Burgess, 15-01-2014

Over the past year or so there seems to have been far more train derailments of cars carrying crude oil that have resulted in huge, deadly explosions, and it is not a coincidence that the oil in these explosions originated from the Bakken shale formation in North Dakota.

One problem is that the light crude extracted from the Bakken is more flammable than heavy crude, but there are other factors at play here as well.

In order to extract oil in the Bakken the oil companies use fracking to split apart the shale rock and gain access to the tight light oil trapped there. A special mix of chemicals is used to split the rocks underground, and while companies refuse to disclose the exact composition of this cocktail of chemicals, claiming that it is a trade secret, there is a high possibility that they are extremely flammable. Some of these chemicals remain mixed up in the crude oil, thereby increasing its flammability.
Remember the Polish shale gas? Just forget about it.
UPI
Polish shale gas may be too hard to exploit
15-01-2014

The geological characteristics in Poland means it may be hard for energy companies to duplicate the shale gas success in the United States, an analyst said.

New drilling technologies used for shale deposits have given energy companies access to oil and gas reserves previously out of reach, putting the United States in a leadership position in terms of production of those resources.

Paul Stevens, an oil analyst at London think tank Chatham House, told the New York Times it may be tough to replicate that success in Poland.
One of the articles published in this blog in 2013 that still gets regular visits is on China's water scarcity. This week The New York Times published a good update on this evolving problem.
The New York Times
China's water squeeze worsens as wetlands shrink 9 pct
Stian Reklev and Kathy Chen, 14-01-2014

China's wetlands have shrunk nearly 9 percent since 2003, forestry officials said on Monday, aggravating water scarcity in a country where food production, energy output and industrial activity are already under pressure from water shortages.

China has more than a fifth of the world's population but only 6 percent of its freshwater resources, and large swathes of the nation, especially in the north, face severe water distress.

Since 2003, wetlands sprawling across 340,000 sq. km. - an area larger than the Netherlands - have disappeared, officials of China's State Forestry Administration (SFA) told reporters.

"The investigation shows that China is facing various problems with wetlands protections," Zhang Yongli, vice director of the forestry body, told a news conference, adding that loopholes in protection laws imperil the shrinking wetlands.
On the alternative energy domain there is a green technology that has been making the rounds. And when I say green I mean immature; at this time it is just the product of a laboratory experiment. I don't how many news bits like this, promising to save/change the world, I've read in the last few years. My impression is that these are just blatant advertisements for private funding, especially so when journals like Nature or Science are involved.
gizmag
Organic flow battery could transform renewable energy storage
Grant Banks, 14-01-2014

Researchers at Harvard have developed an inexpensive, high capacity, organic battery that uses carbon-based materials as electrolytes rather than metals. The researchers say the technology stands to be a game-changer in renewable energy storage by solving the intermittent generation problems faced by renewable sources, such as wind and solar. The battery offers large volume electricity storage not possible with solid-state batteries and at a fraction of the cost of existing flow battery technology.

Energy in flow batteries is stored in fluids held in external tanks, meaning storage capacity is only limited by the size of the tanks. As a result, larger amounts of energy can be stored than in traditional solid-electrode batteries. However, existing flow battery technology uses expensive metals, such as vanadium or platinum, as electrolytes, resulting in a high cost per kilowatt-hour of storage.

[...] The Harvard approach utilizes the electrochemistry of quinones, organic molecules that are similar to molecules that store energy in plants and animals and are plentiful in crude oil and green plants. Using these naturally abundant and inexpensive organic molecules, the researchers have developed a metal-free flow battery that already performs as well as vanadium flow batteries, while using significantly less expensive chemicals and no precious metals.
This doesn't mean that breakthroughs on electricity storage are unlikely, my hopes are much to the contrary. And the first hint that it might happen is the growing demand for these technologies.
Solar Industry
IHS Says Grid-Connected Energy Storage Set To 'Explode'
15-01-2014

IHS estimates that only 340 MW of commercial grid-connected energy storage systems (ESS) were installed across 2012 and 2013, with these installations generally demonstration projects. However, the market research firm forecasts annual installations will reach over 6 GW in 2017.

The U.S. will be the largest region for grid-connected ESS installations between 2012 and 2017, IHS says, accounting for 43% of MW capacity installed during that period. Other regions that will see significant deployment of grid-connected ESS will be Germany and Japan, where the installation of energy storage will be promoted by increasing renewable penetration, growing peak demand and the increasing financial attractiveness of self-consumption of renewable energy.

According to the report, lithium-ion batteries will account for 64% of energy storage installations between 2012 and 2017. However, opportunities also exist for other storage technologies, including sodium sulfur, sodium nickel chloride, flywheels, flow batteries and alternative compressed-air energy storage systems in the long term.
To end this edition of the press review some great news out of Italy, a country that has been growing as an European leader on open source. I last used Microsoft Word in 2004, Microsoft Excel I quit in 2007, and Microsoft Powerpoint soon after. I do not need Microsoft Office; do you?
ZDNet
'Like driving a Ferrari at 20mph': Why one region ditched Microsoft Office for LibreOffice
Raffaele Mastrolonardo, 16-01-2014

If you're up for a visit to the beautiful Italian region of Umbria, better make sure your laptop is running some open source software — chances are you'll feel more at home there.

This small area in the middle of the Boot, known for its centuries-old monasteries and for being the birthplace of St Francis of Assisi, is in fact quickly becoming a mecca of free software.

Thanks to a project called LibreUmbria, the biggest local government bodies are migrating to LibreOffice in what's thought to be the most carefully-designed transition away from proprietary software ever undertaken. Though not as big as other international migration initiatives, the Umbrian project has been praised for its attention it pays to every aspect of the transition, not just the technical ones.
Have a good weekend.