ODAC News – Thu 15 Mar
1/ ODAC:
2a/ US Housing Sickness: How Virulent, How
Contagious? (CIBC World
Markets Inc., Tue 13 Mar)
2b/ Missed home payments hit markets (BBC
News, Tue 13 Mar)
2c/ World’s share
dealers take fright over US loans crisis (The Times [
2d/ Sub-prime saga could prove very nasty
[Business editorial] (The Times, Thu 15 Mar)
3/ White House seeks to cut geothermal
research funds (Reuters, Tue 13 Mar)
4/ The Precarious Future of
Coal (MIT
Technology Review, Wed 14 Mar)
5/ BP says oil and gas recovery crucial
(Arabian Business, Wed 14 Mar)
6/ [US] Army Foresees Natural Gas
Crisis (DefenseTech,
Wed 14 Mar)
7/
8/ Labour crisis could stall oil and gas
boom (Arabian Business, Wed 14 Mar)
9/
1 ton of crude = approx 7.3 barrels of oil (6.6-8.0
bbl. of crude oil with 7.333 bbl. taken as average)
100 million tonnes/year = 2 million barrels/day
(approx)
mbd OR mn b/d OR Mb/d = million barrels per day
mn cf/d OR Mcf/d = million cubic
feet per day
Quotations from articles are now always in this type
of chevron: <<>>
If an ODAC comment is within an article, it will begin
with: ODAC:
where appropriate for clarification.
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1/
ODAC:
http://www.ogj.com/articles/article_display.cfm?article_id=286952
UKOOA seem to be changing their tune. Until as
recently as the end of last year they were adamant the
<<The
Data published by the UK Department for Trade and
Industry showed that the
In May 2006 the
A spokeswoman for the UK Offshore Operators'
Association said the difference in oil imports and indigenous production in
2006 was small. "Last year's dip can be attributed to lower-than-expected
Crude oil production in the
"Based on the most recent information given to us
by our members, we believe it now likely that the
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All Item 2 articles are about the, for want of a
better word, crash that is currently taking place in the
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2a/ US
Housing Sickness: How Virulent, How Contagious? (CIBC
World Markets Inc., Tue 13 Mar)
http://research.cibcwm.com/economic_public/download/mimar07.pdf
(PDF, 890 Kb)
Second article, p8. A brief review of the current
<<The FOMC used the term “leveling”
to give a hopeful spin to recent developments in the housing sector. But when
judged by the best metrics, US housing prices, construction and mortgage
markets are still weakening, and pose downside economic risks.
Building permits and starts are already off some 30%
from their peak (Chart 1), but past cyclical crunches for housing have seen on
the order of a 50% plunge. While that’s not our call,
such an outcome might be in play if the Fed failed to provide any interest rate
relief. Moreover, much of the hit to economic activity lies ahead.
... Sales don’t provide much
encouragement yet for a bottoming (Chart 2). Pending existing home sales
(measured when the deal is signed) renewed their decline in January. That
points to a drop in the more widely watched existing home sales figures
(reported on closing) for February. New home sales reports have also weakened
sharply, and the truth is even worse, as the increasing number of cancelled
purchases (due to financing troubles) are never erased from the data.
... The price data included in the new and existing
home sales releases can be heavily tilted by changes in the mix of houses.
Instead, keep an eye on the newest measure, the S&P Case-Shiller index. It controls for the mix of houses, and
includes the full range of house prices. Unlike the earlier descent in the
median house price series, the C-S data show that the slide has only just begun
(Chart 3). Little wonder, then, that the macro consequences of house price
declines are not yet observable...>>
2b/ Missed
home payments hit markets (BBC News,
Tue 13 Mar)
http://news.bbc.co.uk/1/hi/business/6447973.stm
<<Late mortgage payments and home repossessions
in the
The Mortgage Bankers Association (MBA) data for the
last three months of 2006 confirm investor fears that the sector is struggling
and may weaken more.
... Sub-prime lender Accredited Home Lenders Holding
saw 65% wiped off its value on Tuesday, having lost 28% a day earlier [looks
like a quote from John Kenneth Galbraith's Crash of '29], after it revealed
that it may have to raise extra funds, seek debt waivers, cut jobs and put back
its earnings announcement.
... Late or missed payments on mortgages rose to 4.95%
the MBA figures showed, rising to 13.3% in the sub-prime market.
And lenders launched repossession actions against more
than one in every 200 mortgage borrowers in the period.
The figures were the highest in the 37-year history MBA's national delinquency survey.
"Unfortunately, it appears delinquency rates will
likely worsen before they improve," said Gina Martin analyst at Wachovia
Securities.
... Sub-prime lenders provide money to clients with a
poor credit history, and the current problems have been sparked by a rise in
defaults and bad loans.
These, in turn, have been triggered in part by a
relentless rise in interest rates from rock-bottom levels in the past four
years, and falling house prices and rates of homebuilding in many parts of the
Another lender, New Century revealed that
2c/ World’s share dealers take fright over US loans
crisis (The Times [
http://business.timesonline.co.uk/tol/business/markets/united_states/article1517371.ece
<< Share dealers around the globe took fright again
yesterday, marking prices sharply lower on worries that the US sub-prime
lending implosion could destabilise financial markets and slow economic growth.
... Dozens of lenders to Americans with no credit
record or poor credit records have folded in recent months as their loans have
turned sour. Official data on soaring defaults added to the jitters on Tuesday.
… Jim Rogers, the investment expert and former business
partner of George Soros, predicted that falling real
estate prices would trigger more defaults and affect other asset classes. “You can’t believe how bad it’s going
to get before it gets any better,” Mr Rogers said. “It is going to be a huge
mess. When markets turn from bubble to reality, a lot of people get burnt.”
>>
2d/
Sub-prime saga could prove very nasty [Business
editorial]
(The Times, Thu 15 Mar)
http://business.timesonline.co.uk/tol/business/columnists/article1517376.ece
<<The worldwide fall in stock prices and the
wild ride on Wall Street yesterday was blamed on the carnage in American
sub-prime lending — worryingly, a much more credible, connected scapegoat. The
sheer scale of the sub-prime problem, its linkages to the heart of the
financial system, the opacity of what is really going on and the knock-on effects
on consumers in the world’s most important economy
all point to this being a serious issue.
On numbers alone
The problem will, therefore, be felt far and wide.
First, on the housing market. With
Second, the health of the financial sector. Mortgage
originators are already folding by the dozen. The more serious question is the
impact still to be felt on banks that lent originators money. Further down the
chain are the hedge funds, pension funds and insurance companies that bought
securitised mortgages from them. Most of these investments are excellent
quality and well secured. A minority is toxic waste. But no one knows exactly
where it lurks. And that makes the markets nervous.
Third, consumer spending. After years of easy money
and loose credit, the average American suddenly finds money is tight. It is not
just that interest rates are higher, but also that the previously plentiful
supplies of fresh credit for higher risk borrowers have dried up. That may
quickly feed through into lower consumer spending, which could slow US and
global growth.
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3/
White House seeks to cut geothermal research
funds (Reuters, Tue 13 Mar)
<<The Bush administration wants to eliminate
federal support for geothermal power just as many U.S. states are looking to
cut greenhouse gas emissions and raise renewable power output.
... "The Department of Energy has not requested
funds for geothermal research in our fiscal-year 2008 budget," said
Christina Kielich, a spokeswoman for the Department
of Energy. "Geothermal is a mature technology. Our focus is on
breakthrough energy [ODAC - like oil shales ?] research and development."
The administration of George W. Bush has made
renewable energy a priority as it seeks to wean the
"In spite of its enormous potential, the
geothermal option for the
Last year, the DOE requested no funding for geothermal
for the 2007 fiscal year, after funding averaged about $26 million over the
previous six years, but Congress restored $5 million. This year, the DOE's $24.3 billion budget request includes a 38 percent
federal spending increase for nuclear power, but nothing for geothermal.
... Leland "Roy" Mink, who until last
October was geothermal program director at the DOE, said he thinks the White
House's waning interest in geothermal is a mistake. He said he left the DOE
when he saw the Department was cutting funding.
"It's far from a mature technology," said
Mink, who is now working on a geothermal project in
While its industry is largely undeveloped, the
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4/ The
Precarious Future of Coal (MIT Technology Review, Wed
14 Mar)
http://technologyreview.com/Energy/18389/
<<A new MIT report says that much more effort is
needed to develop and test technology that will make clean-coal power plants
economical and practical.
Energy experts from MIT have released a long-awaited
report on the future of coal. The report recommends that much more be done to
develop technology for decreasing the impact of burning coal on global warming.
The report also challenges some conventional thinking about the best way
forward. It criticizes current efforts by the Department of Energy (DOE) and
calls for an approximately $5 billion, 10-year program to demonstrate
technology for capturing and storing carbon dioxide released by coal-fired
power plants.
The report, based on a study by 13 MIT faculty
members, comes at a time when growing concerns about global warming are making
it increasingly likely that governments worldwide will impose a price on
carbon-dioxide emissions to force a cut in the release of this important
greenhouse gas. Nevertheless, coal, the leading source of carbon-dioxide
emissions from electricity generation, will continue to be a major source of
electricity, say the authors of the report. That's because even with a high
price on carbon, coal is abundant and probably necessary to meet fast-growing
demand for energy worldwide.
... And although there are a few carbon-sequestration
projects going on around the world, none of these has been put together with
the sort of careful monitoring required to assure the public and energy
investors that long-term, extremely high-volume carbon-dioxide storage is
possible.
The report challenged the idea, argued by some energy
experts, that a new type of coal plant--one that converts coal into a gas
before burning it--will make it easier and cheaper to capture carbon dioxide,
compared with collecting it from the smokestacks of conventional power plants.
The MIT experts say that several factors make the picture more complicated.
Such coal gasification doesn't work well with low-grade coal, for example, and
both the new and the conventional plants will require major changes to capture
carbon dioxide, according to the MIT report...>>
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5/ BP
says oil and gas recovery crucial (Arabian
Business, Wed 14 Mar)
The message is clear enough. Big oil is not finding
enough oil from new fields/ discoveries, they need to get more from existing
fields:
<<Maximising recovery from existing oil and gas
fields will be crucial to meeting the world's growing energy needs as the
number of undiscovered fields diminishes and the cost of new exploration
increases, according to a BP representative speaking at the 15th Middle East
Oil and Gas Show held in Bahrain from March 11-14.
"Demand for energy is expected to increase 50% to
60% by 2030, much of it from newly emerging markets," explained Peter
Roberts, Subsurface Manager, BP Abu Dhabi. "At BP, we believe the industry
needs to look to increasing recovery from existing fields to meet this rising
demand."
Roberts explained how up to 50% of BP's reserves
growth since 2002 has come through the application of good reservoir management
techniques which help to extend the productive field life.
"Technology and reservoir management has been
essential to the progress of BP over the past five years, enabling us to add
around 8 billion barrels of oil equivalent to our resource base through
exploration, an additional 8 billion barrels from appraisal and revisions and
to shift some 9 billion barrels of oil equivalent from non-proved to proved
reserves," illustrated Roberts...>>
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6/
[US] Army Foresees Natural Gas Crisis (DefenseTech,
Wed 14 Mar)
http://www.defensetech.org/archives/003358.html
The article has a link to the original PDF file, but
it does not work. You need to go to this page http://dccw.hqda.pentagon.mil/services/RFP1.asp
then select the line where the description = “Army Natural Gas Study - Performance
Work Statement (PWS)”, date = 13 March 2007. A message
will pop up saying you have to log in, but the PDF file opens anyway:
<<The Pentagon has been talking recently about
going oil-free by 2050, a fairly radical initiative given the hidebound nature
of the institution and the complexity of the technologies it employs.
But oil apparently is among the least of the Army's
energy problems.
According to this newly-minted memorandum , the Army's
assistant chief of staff for installation management is more worried that the
worldwide supply of natural gas will dry up within 25 years. Says the memo:
"Current Army assumption is that natural gas may
cease to be a viable fueld for the Army within the
next 25 years based on price volatility and affordable supply
availability."
If the Army's assumptions are correct, the situation
may "threaten the Army's ability to house, train and deploy
soldiers," adds the memo.
What will replace natural gas? This is certainly not
my field of expertise, but perhaps readers or other bloggers
may have something to add here.
I know the Air Force is keen about a new form of
synthetic fuel derived from liquefied coal to power its jet aircraft. A
demonstration is underway with the B-52, which is actually using a slightly
different synthetic product derived from -- oops -- natural gas. The fuel is
made using a process known as Fischer-Trope, which has the unfortunate
distinction of being employed by only two countries -- Nazi Germany and
apartheid South Africa.>>
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7/
<<Kuwait is considering an import terminal for
liquefied natural gas, gas imports from Iran and Iraq and nuclear power to help
it match soaring demand for electricity, its energy minister said yesterday.
“We are discussing an LNG terminal and have already
started talking to major players in that field,” he told reporters.
Another potential option is importing gas from
Power demand in the region was rising so quickly that
“We are in very serious talks (about nuclear power),”
he said. “We have to consider alternatives with the cost of fuel and gas.”
Any outages at power plants could cause a repeat of
the power outs this summer that hit the country last year, he said.
As consumers crank up air conditioning units in the
summer, power demand could reach as much as 10,000MW, equivalent to
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8/
Labour crisis could stall oil and gas
boom (Arabian
Business, Wed 14 Mar)
It is beginning to look like even if there is enough
oil to prevent Peak for a decade or two, we do not have the manpower:
<<Management consultants, Booz
Allen Hamilton says the oil and gas industry has stretched its resources to
breaking point, creating the potential to stall the oil and gas boom that is
currently occurring. From the industrial platforms of oil rigs to air-conditioned
design offices, the oil and gas industry is confronted with a shortage of brawn
and brains so severe that it threatens to stall exploration and production
growth around the world. In an interview with Oil & Gas Middle East, Raed Kombargi from Booz Allen Hamilton explains the situation… >>
An interview follows.
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9 /
The London-based Centre for Global Energy Studies (CGES) is holding its fifth one-day seminar chaired by H.E. Sheikh Zaki Yamani, chairman of CGES. From one of the conference fliers:
Date & Venue: 21st March 2007 at the Carlton Tower Hotel,
Programme Incudes:
The Changing Political Scene and Oil
World politics in the light of energy developments
What can the
An oil producer’s view
The Global Economy and Oil
Can
Do high oil prices harm economic growth?
Oil Market Assessment and Price Outlook
Short-term oil market outlook
Should we worry about oil depletion?
Oil, Currencies and Inflation
The US Dollar’s weakness, is there more to come?
Speakers Incude:
Lord Howell of
House of Lords and Member of the Board, CGES
Shukri Ghanem, Chairman of
the Peoples’ Committee, National Oil Corporation of
Phebe Marr, Author, Former Senior Fellow, US Institute
of Peace and Member of the Experts of the
US Committee for the Iraq Study Group
Martin Wolf, Associate Editor & Chief Economics Commentator, Financial
Times
Jeffrey Culpepper, Head of Investment Banking, Merrill Lynch
Humphrey Percy, Chief Executive Officer, House of
Professor Tim Congdon CBE, Founder of
David Fyfe, Senior Oil Analyst, IEA
Leo Drollas, Deputy Executive Director, CGES
Seminar Programme (PDF, 19 Kb)
Seminar Flyer - contains booking form (PDF, 82 Kb)
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