Morocco’s first solar power plant started generating electricity last week. With an electricity production capacity of 160 megawatts, Noor 1 is on the edge of the Sahara desert, around 20 km (12 miles) outside Ouarzazate. The facility stores thermal energy from the Sun’s rays and uses it to activate steam turbines that produce electricity. The project’s next phases — Noor 2 and Noor 3 — are to follow this year and next, and a call for tenders is open for Noor 4. Once all phases are complete it will be the largest concentrated solar power plant in the world and produce 500 MW, providing power to more than 1 million Moroccans by 2018. The North African country started producing electricity at Africa’s largest wind farm in its southwestern coastal region of Tarfaya last year.

Heating and air conditioning use the most energy in the European Union, accounting for half of all European electricity use and just under half of its natural gas consumption.

The International Energy Agency said that the global crude oil glut is likely to continue through 2016. It is skeptical an agreement can be reached among OPEC members and non-OPEC members (eg. Russia) to increase oil prices and the market will continue to produce more supply than is being demanded. “…with the market already awash in oil, it is very hard to see how oil prices can rise significantly in the short term.” The IEA summarized current conditions being characterized by weaker global oil demand, likely new production from Iraq, Iran and Saudi Arabia, low chances of OPEC agreeing to raise prices, and resilient US shale oil production against a background of a strong US dollar.

US President Barack Obama is proposing a $10-per-barrel tax on oil companies to raise hundreds of billions of dollars to fund transportation and renewable energy projects. He believes the opportune time to impose such a tax is when petroleum product prices are low and thereby mitigate the pain to consumers.

The world’s largest offshore oil drilling rig contractors are expected to see their sales tumble 25% this year and another 10% next year. Demand for offshore vessels and rigs was down 40% last year.

While the world is awash in oil, the big oil companies are seeing their market values decline. Royal Dutch Shell had its debt rating cut from AA- to A+, its the lowest grade since Standard & Poor’s began coverage in 1990. Shell was also placed on watch for another possible reduction. S&P also assigned a negative rating outlook to BP, Eni, Repsol, Statoil and Total. BP lost almost $7 billion dollars last year as prices spiraled downward. The company also announced it expects to cut its workforce by up to 7000 people. Shell’s profit was down 80% last year and Norway’s Statoil was down 63%.

Chevron Corp., Hess Corp. and Continental Resources had their credit ratings cut by Standard & Poor’s as well. Chevron’s rating was reduced to AA- from AA, Hess was lowered to BBB- from BBB, and shale oil driller Continental was cut to junk status. EOG Resources Corp., Apache Corp., Devon Energy Corp. and Marathon Oil Corp. also faced downgrades.

In addition to credit ratings cuts, some US energy companies are starting to falter and are entering bankruptcy protection where their assets will be sold off to other industry participants.  Many mergers and bankruptcies in the global energy sector are expected this year.

Canada’s largest crude-oil producer, Suncor Energy, reported a fourth-quarter net loss of $2 billion due to declining oil prices.

Saudi Arabia has cut government spending, reduced petroleum subsidies and called for a wave of privatizations in unprecedented efforts to wean the kingdom off of oil.

Nigeria’s government is in talks for loans worth $3.5 billion from the World Bank and African Development Bank to help finance a planned record budget deficit this year. The west African nation depends on oil for almost all exports and two-thirds of all government revenue.

In the US, a deep and prolonged drop in oil prices is increasingly squeezing tax revenue in those states that produce oil, putting pressure on local governments for tax increases and cuts to schools, road projects and other government services. The hardest hit states are Texas, North Dakota, Oklahoma, Louisiana, New Mexico, and Alaska.

Mexico has many of the same geological formations that have powered the shale oil industry in the US state of Texas.  Now Mexico’s Ministry of Energy is seeking to learn how it can replicate the success of the highly successful South Texas’ Eagle Ford shale. Mexican representatives met in late January with the Texas Railroad Commissioner (which regulated shale oil production) to gain insights into the legal and technical factors and the overall regulatory structure needed to foster shale development south of the US border.

US electricity generation from coal fell to the lowest monthly level in 35 years in November 2015 as generators switched to cheaper natural gas. Natural gas surpassed coal as the leading source of US electric power for a fifth month in a row in November.


with h/t Tom Whipple

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