Friday, 30 March 2012

2011: A bad year for UK energy production

DECC has just released it's latest Energy Trends publication, including statistics for 2011 as a whole, as well as for the fourth quarter of that year. It's not looking good....

Here's some lines form their summary page, and comments from me:

Total energy production was a record 13½ per cent lower than in 2010.
Note the word 'record' in there - and that's from DECC, not from me. It's a bit alarming that over a decade after the UK's peak in oil and gas production, that we're hitting new record percentage declines in energy output. Of course, there are other factors as well as the stuff simply running out, but we have to assume they'll come along every year anyway - like the leak at the Elgin platform right now.

Oil production was 17½ per cent lower than in 2010, the lowest level of production since the 1970s and part of a long downward trend.
Another shockingly steep decline in output...

Natural gas production was 21 per cent lower than in 2010. In 2011 gross imports of natural gas were greater than gross production for the first time since 1967, with Liquefied Natural Gas (LNG) accounting for 47 per cent of gas imports.
Just to underline this, as they don't spell it out very clearly. In 2011 the UK imported more gas than it produced. Half of these imports were LNG, which is traded globally and can easily be diverted to where the price is higher.

Coal production was ½ per cent lower than in 2010. Coal imports were 23 per cent higher.
Nothing new here, continuing the trend of growing imports.

Total primary energy consumption for energy uses fell by 7½ per cent from 2010. When adjusted to take account of weather differences between 2010 and 2011, primary consumption fell by 2 per cent.
We all remember how cold it was in both early and late 2010, so it's not surprising to see a fall in energy consumption in 2011. But after allowing for that, consumption still fell 2%, probably because the economy is still struggling here, and less money means spending less on stuff, including energy.

Low carbon electricity’s share of generation increased from 23 per cent in 2010 to 28½ per cent in 2011, due to higher renewables and nuclear generation. Renewables’ share of generation increased by 2½ percentage points on 2010 to a record 9½ per cent.
The one positive bit I could find in there... It's good to see renewable electricity climbing quickly here, though it's important to note that this includes landfill gas and co-firing with coal. Most of the increase came from wind and hydro though, as it was wetter and windier in 2011 than 2010.

I wonder what 2012 will bring? We already have the Elgin gas leak and RWE and E.On pulling out of new nuclear plants....


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Friday, 9 March 2012

Risk to UK gas supply in 2012?

There's an interesting article in the Telegraph today, looking at the future of LNG imports to the UK:

Britain has become increasingly dependent on shipments of LNG as domestic production of gas falls "precipitously", the analysts at Merrill Lynch Bank of America said. LNG imports accounted for about 25pc of UK supplies last year.
It is not implausible that UK LNG imports fall to zero by the end of 2012 especially if none of Japan's nuclear power plants are re-started this year.... With Asian demand resurging, UK and European gas prices will have to increase to stem the ongoing diversion of LNG cargoes to Asia.

full story
If you look back at an earlier post I wrote, DECC noted that gas supplies actually dropped 20% in 2011, not the 10% reported in the above article. Part of the reason for elevated gas prices last summer, which fed through into all of our bills, was the nuclear shutdowns in Japan (as I mentioned here). A story here, originally in the New York Times, says:
All but two of Japan's 54 commercial reactors have gone offline since the nuclear disaster a year ago, after the earthquake and tsunami, and it is not clear when they can be restarted. With the last operating reactor scheduled to be idled as soon as next month, Japan -- once one of the world's leaders in atomic energy -- will have at least temporarily shut down an industry that once generated a third of its electricity.

So perhaps these concerns about the LNG market, which the UK is depending on more every year, are valid. Thankfully we've just had a mild winter, but we can't count on that happening every year...


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Monday, 5 March 2012

Rising oil prices during a recession?

So somebody at the Telegraph has noticed that oil prices aren't doing what they should... Of course, back in 2008 it was all playing out as normal - prices reached a peak, most economies in the world went into recession, and the price plummeted back down again.

But look what's happened since 2002:

  • 2002 - Jul 2006: run up from $20 to $76 
  • Jan 2007: dropped to around $52 
  • Jul 2008: up to $147 
  • Dec 2008: drop to around $35 
  • Apr 2010: up to $85 
  • May 2010: drop to $65 
  • Dec 2010: Brent and WTI start to diverge (around $85 at the time) 
  • Apr 2011: Brent at $125, WTI at $110 
  • Oct 2011: Brent at $105, WTI at $77 
  • Feb 2012: Brent at $126, WTI at $108 
So right now many countries are back in recession, or close to it, but the price keeps heading upwards.  Also, from the UK point of view, note that $125 today is about £79.60, while $147 in July2008 was about £73.50 - so in £ sterling, the oil price is at a new high now.

Check out the average prices as well:

Year WTI ($) Brent ($)
2007 average 72.34 72.44
2008 average 99.67 96.94
2009 average 61.95 61.74
2010 average 79.48 79.61
2011 average 94.87 111.26
2012 average 101.09 114.82

So what the guy in the Telegraph has realised is:

The unpleasant fact we must all face is that the relentless supply crunch - call it `Peak Oil’ if you want, or `Plateau Oil’ - was briefly disguised during the Great Recession and is already back with a vengeance before the West has fully recovered.
So we have a remarkable situation. China alone will be adding 125m cars to its roads over the next five years, with auto production targets of 30m annually by 2016. India is spending $1 trillion on infrastructure projects over the next five years.
The West has the disquieting experience of watching crude soar even as we languish in stagnation. This never used to happen. If we faltered, energy costs would fall too, acting as a stabilizer. This harsh new reality is going to become uncomfortable when the emerging world enters a new cycle of growth, leaving us behind. Rising utility costs have already raised the numbers of UK households in poverty from a fifth to a quarter.

We should not be defeatist. Engineers and scientists are forever at work. A quantum-leap is possible in solar technology. The Chinese may crack cheap and safe nuclear power from thorium, abdicated by the British. But we should not be complacent either. Windmills anybody?
Read the full story here.

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