The International Energy Agency revealed that the world is becoming more efficient at using energy. Energy intensity, which measures the amount of fuel consumed per unit of gross domestic product, fell 1.8% last year, triple the average rate over the past decade and more than the 1.5% reduction in 2014.

Work has begun the construction of the docks that will carry the world’s first floating nuclear power plant to its location off the Chukotka coast, the easternmost part of Russia. Starting in 2019 the plant will supply electric power to the coast as well as to the offshore oil and gas platforms pumping crude in Arctic waters. Work on the power plant has been in progress since 2007, and the plant itself is already complete and undergoing testing.

Concern continues to be expressed about the lack of investment in future crude oil production. The Saudi Arabian oil minister said that over $1 trillion worth of crude oil projects have been canceled or delayed since prices began crashing two years ago. Last week OPEC officials expressed the same sentiment. It will take 4 to 5 years for these spending cuts to have an impact on oil production so it will be early in the next decade when production starts to decline. Meanwhile, a significant number of projects that were begun before the price drop will still be coming online in the next couple of years which suggests that lower oil prices will still be with us.  The US Gulf of Mexico, Angola, Libya, Iraq, Iran, Kazakhstan, and Nigeria are all expecting to increase production within the next year or two. Should price increases move above $60, many US shale oil producers say they are ready to step up production again.

OPEC Secretary General Mohammad Barkindo said his organizations crude oil producers have lost more than US$1 trillion in revenues over the past three years due to the global slump in oil prices. Investments in the oil industry shrank more than 26% last year and are projected to drop by another 22% this year.

Low crude oil prices have forced Saudi Arabia to cut its capital spending by 71% from the highs seen three years ago. The desert kingdom has the largest budget shortfall among the top 20 world economies and has been slashing spending as fast as possible to make up for this situation.

Saudi Arabia say it has enough crude oil reserves to last another 70 years. Whether this is true or not is not known. Saudi reserves have not been audited by any outside entity for the last 20 years.

Rystad Energy released an estimate of world oil reserves. The report reveals that the US now holds more recoverable oil reserves than both Saudi Arabia and Russia. For the US, more than 50% of remaining oil reserves are unconventional shale oil. Texas alone holds more than 60 billion barrels of shale oil according to this new data.

The first batch of crude oil from the giant Kashagan oil field off the coast of Kazakhstan in Central Asia has been processed and is ready for export. The plan is to gradually increase Kashagan production to the target capacity of 370,000 barrels per day by the end of next year.

The latest 3D seismic surveys suggest that there may be billions of barrels of undiscovered crude oil  in the Barents Sea, according to a geology and geophysics expert. The Barents Sea is a part of the Arctic Ocean located off the northern coasts of Norway and Russia.

In Poland, the race to explore for shale gas is now over after its state-run firm PGNiG and oil refiner PKN Orlen cancelled exploration projects there. Polish gas was expected to come to market in 2014 but several international oil companies pulled back their exploration efforts after disappointing results coupled with plummeting crude oil prices.

Israel and Turkey are discussing building a natural gas pipeline between the two nations, according to the Israeli energy minister.

Rising demand for crude oil over the next two decades is likely to overwhelm the impact of the electric car on petroleum markets, said Spencer Dale, chief economist for BP. The clean-energy research unit of Bloomberg LP estimates that battery-electric vehicles, which only run on power from a plug, will displace 13 million barrels of crude oil a day by 2040.  However, BP estimates demand for crude oil will grow 20 million b/d during that same period, or 7 million barrels per day more than the Bloomberg figure.

Germany’s Bundesrat (federal council) has passed a resolution calling for a complete ban on the sale of new internal combustion engine cars by 2030. From then on, German’s would have to buy a zero-emissions vehicle, whether an electric vehicle or one running on a hydrogen fuel cell.

 

with h/t Tom Whipple

 

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