“Reliable and economically meaningful carbon pricing regimes, whether based on tax, trading mechanisms or other market-based measures, should be set by governments at a level that incentivizes business practices … while minimizing the costs to vulnerable communities and supporting economic growth.” Joint statement, after a meeting with Pope Francis, by CEO’s of ExxonMobil, BP, Royal Dutch Shell, Total, Chevron and ENI
1. Oil and the Global Economy 2. The Middle East & North Africa 3. China 4. Russia 5. Mexico 6. Venezuela 7. The Briefs
1. Oil and the Global Economy
Until last Thursday, the oil markets largely ignored the increasing tensions between the US and Iran, including the attacks on six oil tankers near the Strait of Hormuz. Then Iran downed an unmanned US surveillance drone, and oil prices soared on the possibility that a war which could potentially halt the 18 million b/d of oil exports was imminent. After a day of vacillation, Washington backed off a retaliatory attack on Iran, allowing the situation to cool. By week’s end US crude was up 10 percent closing at $57.43 in New York and $65.20, or about 5 percent, in London.
The announcement that Presidents Trump and Xi are to confer about the trade dispute at the G20 summit later this week also supported the oil market. Trade talks between Washington and Beijing broke down more than six weeks ago after US officials accused China of backing away from commitments, prolonging the dispute that already is harming the global economy and disrupting supply chains.
Hovering in the background of the G20 meeting is new information showing that manufacturing is faltering in the US and other key economies, darkening the prospects for the global economy and the demand for oil. The Purchasing Managers Index for US manufacturing activity declined to 50.1 in June, the lowest level in nearly a decade and manufacturing activity in Europe contracted in June, wrapping up the weakest quarter for the goods-producing sector in six years. A similar survey of Japanese manufacturers found activity was at its worst in three years.
The World Bank earlier this month lowered its forecast for global economic growth in 2019 to 2.6 percent from its January estimate of 2.9 percent, citing trade disputes and declining business confidence. Worries are increasing that the longer the factory slowdown continues and the wider it spreads, the more likely it is to drag down other parts of the global economy.
The OPEC+ Production Cut: After weeks of disagreements, conflicting reports, and discussions about scheduling conflicts, OPEC has finally decided when it will hold the meeting to decide whether to extend the oil production cuts beyond June. The cartel+ is postponing the originally scheduled June 25-26 meeting for a week, to July 1-2. The Joint Ministerial Monitoring Committee (JMMC)—which reviews market fundamentals and makes recommendations to the whole group—will meet on the morning of July 1. A full OPEC meeting will be held in the afternoon on the same day, while OPEC’s non-OPEC partners led by Russia will join the talks on the next day, July 2.
Before last week’s price spike, it looked as if Moscow and its allies would go along with the Saudi position that the production cut should continue until the end of the year. Steadily falling oil prices prompted stories about how oil would fall to $40-50 a barrel should OPEC+ remove the production ceiling and flood the market with still more oil in the second half of the year. For now, an extension of the production cap seems the best possibility, but the Middle East situation remains highly volatile, and prices could spike higher at any time.
There is increasing evidence that the recent attacks on oil tankers just south of the Strait of Hormuz were carried out by or with help from Iran. These attacks were not intended to sink the ships but were a warning that Tehran can do significant damage to the world’s oil supply at any time. Some 70 large crude carriers or about 10 percent of the world’s total are in the vicinity of the strait at any time. In the days after attacks crippled two oil product tankers in the Gulf of Oman, fewer ships were leaving gulf ports, and daily freight rates for oil supertankers were as much as 50 percent higher. Adding to shipowners’ problems are insurance premiums. Coverage for a one way, seven-day supertanker charter through the gulf has soared by about 15 percent in recent days.
US Shale Oil Production: In the June issue of its Drilling Productivity Report, the EIA continues to forecast rapid growth in US shale oil production despite signs that an industry that consistently loses money is cutting investment. The output from the seven major shale formations is expected to rise by about 70,000 b/d in July to a record 8.52 million. The largest increase is forecast for the Permian Basin, where output is expected to climb by 55,000 b/d to a record peak of 4.23 million. The Bakken in North Dakota and the Niobrara in Colorado and Wyoming are forecast to increase by about 10,000-11,000 b/d in July, but production from the other five basins is to drop or stay about the same. It will be September before the actual rather than a forecast for July is known.
Three years ago, the STACK/SCOOP plays in Oklahoma were believed to be the next big shale oil bonanza. In recent months, the enthusiasm has come to an end as the deposit is not turning out to be as productive as first believed since the geological formation of the region is turning out to be more complex than expected. While drilling in the basin will continue, it is unlikely to become another Permian.
While the EIA has production in the Bakken growing by 11,000 b/d next month, the most recent report from the North Dakota Department of Mineral Resources is not so optimistic. The June report from the department shows production dropping slightly from March to April when production was 1.391 million b/d. North Dakota set a production record of 1.403 in January, but production has stagnated since then. The current price for Bakken shale oil is a low $40 a barrel, and drillers in the basin are having trouble with excess natural gas that has to be flared and in moving its oil to market. Given that Bakken production did not grow in the first four months of the year; that capital investment is moving toward the faster-growing Permian; and the low wellhead price, it seems doubtful that production will grow by 48,000 b/d between April and July.
A recent study based on the data in the 2019 BP Statistical Review shows that in the ten years between 2008 and 2018 the US and Canada were responsible for 10.5 million b/d or 90 percent of the 11.8 million b/d worldwide increase in production. Given that most US shale oil basins have already peaked, it seems unlikely that the performance in the last ten years will be repeated in the next ten.
2. The Middle East & North Africa
Iran: The Washington-Tehran confrontation took a turn for the worse last week. There seems to be little question that the US sanctions are making life very difficult and the Iranians are thrashing around trying to retaliate without getting themselves blown up. The recent attacks on tankers in the Gulf of Oman were carefully orchestrated to send a message, but not to sink any ships or take lives. Likewise, the attack on the US drone, whether blessed by the supreme leader or ordered by an overenthusiastic air defense officer, has made the point that Tehran has the ability to make life difficult by slowing or cutting off some 20 percent of the world’s oil supply.
Tehran is trying to build an international alliance against the US pressure and Moscow is saying it will help Iran with its oil payments problem if the new EU Instex payment system which would bypass the US dollar is not launched soon. Tehran announced that it would exceed the enriched uranium limit shortly in hopes that the European members of the nuclear pact will pressure the US to lift the sanctions. For now, there seems to be little else Tehran can do, other than help the Houthis fire missiles at Saudi Arabia, without provoking a military response.
In the meantime, Iran’s economy is slipping deeper into recession as oil revenues dry up. Iranian crude oil and condensate exports, which averaged about 1.7 million b/d in March, fell to about 1 million b/d in April and an estimated 800,0000 b/d in May, according to data from Platts trade flow software and shipping sources. The majority of those exports in May were to China, Turkey, and Syria, according to these sources.
After the US ended all sanction waivers for Iran’s oil customers on May 2, Iran’s crude oil exports dropped significantly in May this year compared to April and plunged by more than 2 million bpd off their 2.5-million-bpd peak in April 2018, just before the US withdrew from the Iran nuclear deal and moved to re-impose sanctions on Iran’s oil industry.
Tehran says it is considering revising its financial and budgetary policies to remove oil income from them as a means to “counter Washington’s economic sanctions”. How this would work is unclear as oil income is an essential part of Iran’s state revenues and the plunging crude exports are crippling its economy.
Secretary of State Pompeo will visit India this week but is unlikely to offer relief from the oil sanctions to one of Tehran’s best customers.
Iraq: On Wednesday rockets hit two sites in southern Iraq used by foreign oil companies including ExxonMobil. Three people were wounded. Police said one rocket landed 100 meters from a building used as a residence and operations center by Exxon. Some 21 Exxon staff were evacuated by plane to Dubai. There was no immediate claim of responsibility for the attack near Iraq’s southern city of Basra, the fourth time in a week that rockets have struck near US installations. Three previous assaults on or near military bases housing US forces near Baghdad and Mosul caused no casualties or significant damage. An Iraqi security source said it appeared that Iran-backed groups in southern Iraq were behind the Basra incident.
Just weeks ago, ExxonMobil looked ready to a sign contract for $53-billion project to boost Iraq’s oil output at its southern fields. However, a combination of contractual wrangling and security concerns, heightened by escalating tensions between Iran and the United States, is holding back the deal. The main sticking point is how Exxon would be paid, with the company aiming to share the oil produced by two fields – a method of payment Iraq has long opposed, saying it infringes on state ownership of production. One of the Iraqi negotiators said Baghdad would not sign anything with the current terms proposed by Exxon.
Baghdad is formulating contingency plans in case the situation in the Middle East results in some kind of blockade of Iraq’s oil exports through the Persian Gulf. Oil ministry spokesman Assem Jihad said, “There is no replacement for the southern port and our other alternatives are limited. It’s a source of anxiety for the global oil market.”
Saudi Arabia: Saudi Energy Minister al-Falih said last week that countries need to cooperate on keeping shipping lanes open for oil and other energy supplies after the tanker attacks. While he did not outline any concrete steps, Falih said the kingdom would do everything necessary to ensure safe passage of energy from Saudi Arabia and its allies in the region.
Crown Prince Mohammed himself told Saudi daily Asharq Al Awsat that the Aramco IPO is on track for 2020 or 2021, depending on market conditions. In August, the company will hold its first earnings call. The listing of 5 percent in Aramco, which last year emerged as the world’s most profitable company booking $111.1 billion in annual net earnings, is the foundation of the Crown Prince’s ambitious economic diversification program. While some have questioned the valuation of the company, its recent maiden international bond worth $12 billion drew an estimated $100 billion in investor interest.
Yemen’s Houthi rebels hit a power station in Saudi Arabia’s southern province of Jizan with a “cruise missile,” the group’s Al Masirah TV channel reported. On Thursday, the Saudi-Emirati-led military coalition in Yemen confirmed Houthi forces fired a “projectile” at a desalination plant in Al Shuqaiq city, but said no one was wounded and there was no damage caused to the facility.
The prospectus recently issued by Saudi Aramco showed the company’s largest oilfield, Ghawar, producing 3.8 million b/d instead of what many had thought was its current capacity of around 5 million b/d. Ghawar has contributed about half of the estimated 150 billion barrels of crude that Saudi Arabia has produced to date. Its remaining reserves are 48 billion barrels, so there is still a lot of oil there, but it will get harder to recover and require considerable expenditure.
Aramco is developing new fields to account for depletion, with half a dozen expected to come on stream by 2026 — adding an extra 1.25 million b/d, according to data from consultancy Energy Aspects. The firm emphasizes that future upstream development is designed to keep things steady “at current capacity levels…Aramco is not talking, as it has done in the past, about raising potential capacity from 12 million b/d to 15 million.”
Libya: Militias from Misrata are preparing to defend Tripoli, 125 miles to the east, against General Khalifa Haftar, a self-proclaimed foe of Islamists who launched a surprise attack in April against a UN-backed government based in the capital. Initially shocked by the audacity of Haftar’s assault, armed groups in western Libya have improved coordination and revived armories from Libya’s 2011 revolution against Muammar Gaddafi to equip their fighters. Their early disarray allowed Haftar’s Libyan National Army (LNA) force, allied to a parallel administration in eastern Libya, to reach Tripoli’s southern outskirts. But since then defenders drawn from Misrata and Tripoli have managed to hold off Haftar’s attack, even regaining some turf.
Western diplomats expect a long war — possibly until year-end — as both sides seem confident of their prospects and enjoy backing from foreign powers who are not pushing for a ceasefire. Such turmoil could disrupt oil flows and increase migration across the Mediterranean – a nightmare scenario for European countries. For now, both sides seem intent on a military solution.
Turkey has supplied drones and armored trucks to Tripoli’s defenders, diplomats and Tripoli officials say. Ankara’s support has helped balance supplies by Egypt and the United Arab Emirates to LNA. Perhaps as important is the fighting spirit in Misrata, the main bastion against Haftar, where the largest mobilization is underway since 2011 when the city helped topple Gaddafi.
Misrata’s fighters make up the main force defending Tripoli, where armed groups are less organized and tend to have flexible loyalties. Major Tripoli groups have not fully mobilized against Haftar, apparently seeking to keep their options open. Misratis say the Tripoli groups lack the “Misrata spirit” developed in 2011 when Gaddafi besieged the city for three months. Misratis tend to see Haftar, an ex-general from Gaddafi’s army, as a copy of the autocrat.
Community leaders rule out peace talks with Haftar: “We have more than 30,000 fighters in Misrata, but so far we have sent only 6,000.” Diplomats estimate Tripoli’s defenders at 3,000, similar to Haftar’s LNA force. Only 1,000 are at the frontlines.
Both sides have rejected a ceasefire. Misrata officials say their forces will try to take Tarhouna, a town southeast of Tripoli controlled by LNA. Haftar has been recruiting there. The LNA itself has strengthened positions near the central city of Sirte, controlled by Misrata.
3. China
Presidents Trump and Xi talked by phone last week and agreed to an extended meeting at the G-20 summit in Japan this week. US Commerce Secretary Wilbur Ross played down prospects of a trade deal at the meeting saying, “I think the most that will come out of the G-20 might be an agreement to resume talks.” Negotiations fell apart with US accusations that China backtracked on terms already agreed upon. China denies it did so. Since then, in addition to increasing punitive tariffs on roughly $200 billion of imports and eliminating the giant Huawei Technologies Co.’s access to American technology on national-security concerns, President Trump has ordered plans be drawn up to impose tariffs of as much as 25 percent on the rest of the $300 billion in imports of Chinese goods not yet subject to duties.
Military equipment firms in the US will likely have their supply of Chinese rare earths restricted. China’s state economic planner confirmed last week that industry experts have proposed export controls. Numerous reports from Chinese media have raised the prospect that China may limit its supplies of the minerals to gain leverage in the trade dispute.
China’s investment in thermal power construction last year fell to its lowest level since 2004, according to data from an official industry group. Beijing has vowed to reduce its dependence on polluting fossil fuels, and it aims to bring the share of coal in its overall energy mix to 58 percent by next year, down from 68.5 percent in 2012 and down to 50-53 percent by 2025. However, a recent study claimed China had resumed construction on more than 50 gigawatts of suspended coal-fired power projects last year and warned China could still build an additional 290 GW of capacity.
China could build as many as 30 overseas nuclear reactors through its involvement in the “Belt and Road” initiative over the next decade. A senior industry official told a meeting of China’s political advisory body this week that “China needed to take full advantage of the opportunities provided by ‘Belt and Road’ and to give more financial and policy support to its nuclear sector.”
4. Russia
Moscow is still trying to clean up the oil mess which left millions of barrels of contaminated crude stuck in its main export pipeline, which was closed down when its customers refused to accept the contaminated oil. The only way to deal with the situation is to pump the contaminated oil ahead into carefully segregated tank farms or tankers where it can be mixed with enough clean oil to bring the contamination down to acceptable levels. Some sections of the pipelines had to be reversed to pump the contaminated oil back into Russia where there was enough spare tank capacity to hold and decontaminate the crude.
The whole fiasco has been costly for Russia and has forced Moscow to reduce its oil production while the debacle is being cleaned up. For example, third-quarter exports of crude via Russia’s large Baltic port at Ust-Luga are set to slide to 2.8 million tons from 9 million scheduled for April-June. Oil flows to Europe have resumed, but problems still exist. Oil flows to Poland were suspended for a day last Wednesday evening after the discovery of contaminated oil still coming through the Druzhba pipeline.
In contrast to the US, Russia has done little to exploit what the IEA says is the world’s largest reserve of shale oil and gas. Some of the reason why this reserve has not been tapped is the high cost of the horizontal drilling and fracking necessary to produce shale oil from tight rock formations. However, a Gazprom official said last week that costs for extracting shale oil are falling and that the company expects they will reach an acceptable level to start production by 2022-2023.
5. Mexico
Mexico’s PEMEX will focus on shallow water projects and onshore plays and avoid investing in its deepwater oil fields for now, as the ailing Mexican state-run oil company seeks to turn around a 14-year slide in crude production. Pemex plans to book as reserves more than 20 billion boe via exploration and increased recovery factors, allowing it to achieve its December 2024 production goal of 2.6 million b/d. “We are putting a magnifying glass on opportunities near existing producing areas.” The company will incorporate 12 billion boe in new reserves by increasing the recovery factor of mature fields through enhanced and secondary oil recovery.
The company is also struggling under a substantial debt load despite government efforts to prop up its finances. Pemex plans to refinance $2.5 billion in debt this year while trying to revive oil production to boost income, the state-owned company’s chief financial officer said, as pressure mounts from credit rating agencies over its performance.
Earlier this month, Fitch Ratings downgraded Pemex’s roughly $80 billion of bonds to speculative grade – or “junk” status. A second downgrade is seen coming soon from Moody’s Investors Service that would formally confirm Pemex as a junk credit, or fallen angel as bond issuers stripped of their investment-grade ratings are known.
The Mexican government plans to cut Pemex’s profit-sharing duty, known as DUC, to 54 percent by 2021 from the current 65 percent, the company’s financial director said Thursday. “Results from this plan might be huge, spectacular.” This subsidy is in addition to the $1.5 billion stimulus package President Andres Manuel Lopez Obrador already announced for Pemex this year which will increase Pemex’s investment budget by $4.8 billion/year after 2021.
6. Venezuela
Venezuela’s severe motor fuel deficit is starting to weigh on the country’s crude production, as oil workers struggle to reach their jobs, and oil equipment and supplies fail to reach oil fields. The fuel crisis could push crude output below the May average of around 750,000 b/d, senior oil union officials warn. Venezuela’s domestic gasoline consumption as of June 15th had declined to about 80,000 b/d and diesel consumption to about 60,000 b/d, compared with peak consumption of 300,000 b/d of gasoline and 190,000 b/d of diesel in 2014, according to an internal oil ministry memorandum.
The memorandum attributes the plunge in fuel consumption to the “operational collapse” of PDVSA’s refineries and the company’s failure to replace refined products formerly imported from the US, and now banned by US sanctions, with products sourced from non-US suppliers. The supply gap would be worse if not for Venezuela’s economic contraction that has eroded demand, and the breakdown of up to two-thirds of the country’s automotive fleet of some 5 million vehicles.
Union officials in the oil-producing states of Zulia, Guarico, Anzoategui, and Monagas say the fuel deficit in their operational areas forced the company to quietly suspend all of its remaining in-house worker transportation services two weeks ago. Food distribution to company cafeterias at the oil fields has also stopped. “There is no fuel for PDVSA’s fleet of passenger and goods transport services, and other public and private alternatives are down for lack of fuel,” a union official in the Orinoco division says. “Oil workers without transportation are choosing to stay at home, and production operations are being affected by the growing absenteeism.”
The 635,000 b/d Amuay refinery and 305,000 b/d Cardon refinery are processing about 120,000 b/d of crude to produce about 60,000 b/d of diesel and about 40,000 b/d of poor-quality gasoline that does not meet oil ministry specifications for the local market, a senior oil union official says. The fuel crisis is also starting to impact operational readiness levels in the armed forces and other government security agencies such as Bolivarian intelligence service Sebin, a defense ministry official says. Shortages of gasoline and diesel are making it difficult for Venezuela’s farmers and cattle ranchers to get their goods to market and food stores in the cities are running short.
Chevron, the last major US oil company still operating in Venezuela, could be forced to leave unless US officials extend sanctions waivers scheduled to expire on July 27. A Chevron exit would follow on the heels of other major American companies that have retreated from the chaos in Venezuela in recent years. Chevron produced an average of 40,000 barrels of oil and natural gas in the country during the first quarter of 2019, according to SEC filings. That’s down from 44,000 barrels during 2018, most of which was crude oil.
The company currently has five onshore and offshore production projects in Venezuela with PDVSA, the national oil company. Chevron even established its Latin American headquarters in Caracas. In January, the US imposed tough sanctions on PDVSA in a bid to push out Maduro. Those sanctions prohibited American companies from doing business with PDVSA. However, the US Treasury Department granted six-month waivers to Chevron and five oil services companies including Halliburton, Schlumberger, Baker Hughes, and Weatherford International. Those waivers, set to expire on July 27, allow the companies to conduct transactions and activities with PDVSA.
A loss of Chevron’s expertise and resources would only make matters worse for Venezuela’s oil industry, which is already on the brink of collapse under President Nicolas Maduro. And it could trigger losses for Chevron in a significant market it spent decades sinking time, money and sweat into. “If Chevron leaves, the country will almost certainly nationalize its oil assets,” said Muhammed Ghulam, an energy analyst at Raymond James. “Maduro is in a fight for his country. He needs all the cash and resources he can get.”
7. The Briefs (date of the article in the Peak Oil News is in parentheses)
Venezuela’s state-owned PDVSA plans to reactivate the Isla Refinery on Curacao in July with imported crude from third parties, according to sources in the company, labor union and with Curacao’s government. (6/18)
Canada approved construction of a contentious pipeline project on Tuesday that is expected to help the country’s struggling energy sector. The project is drawing attacks from environmentalists and indigenous leaders and could hurt Prime Minister Justin Trudeau when he heads to the polls in four months. If built, the Trans Mountain pipeline expansion will run alongside an existing pipeline from the oil sands in Alberta to just outside Vancouver, British Columbia, and will carry an additional 590,000 b/d of diluted oil sands bitumen, bringing the total daily flow along that route to nearly 1 million b/d. (6/20)
The US oil rig count increased by one to 789 while the natural gas rig count declined by 4 to 177, according to GE’s Baker Hughes. Miscellaneous rigs saw an increase of one. The combined oil and gas rig count is 967, down 85 year on year. Canada’s overall rig count increased by 12. Canada’s oil rigs are still down by 23 year on year, with gas rigs down 18 year on year. (6/22)
More US exports: US oil refiner Phillips 66 is proposing a deepwater crude export terminal off the US Gulf Coast, challenging at least eight other projects aiming to send US shale oil to world markets. The project, called the Bluewater Texas Terminal, signals another major expansion of its logistics operations. (6/20)
PA refinery fireball: A massive fire at Philadelphia Energy Solutions Inc’s oil refinery on Friday damaged the largest US East Coast plant to the point that it could remain shut for an extended period. Philadelphia fire officials said several explosions sent a huge fireball into the sky, engulfing the surrounding areas in smoke after 4 a.m., following the ignition of a fire that started in a butane vat at the 335,000 b/d refining complex, also the oldest in the Northeast. (6/22)
US gasoline prices jumped after the fire and explosions were reported at the Philadelphia Energy Solutions oil refinery. The refineries in the greater Philadelphia region supply largely eastern gasoline, diesel and jet fuel markets including Philadelphia, Washington, and New York City. (6/22)
US gasoline demand reached a record high last week, new Energy Information Administration data showed Wednesday. In the week ended June 14, implied US gasoline demand — which the EIA measures as product supplied — reached 9.928 million b/d, the highest that figure has ever been in data going as far back as 1991. (6/20)
Ethanol political football: Shortly after touring an ethanol plant in Iowa this week, President Trump stood in front of a crowd of farmers—a group of people who have every right to be upset with him. Trump’s trade war with China has bashed the struggling farm economy, but the president came to Iowa to share some popular news: His administration will allow the sale of more gasoline containing higher blends of corn ethanol. (6/18)
LNG boom delays? Construction delays and cost blowouts could hit the next wave of liquefied natural gas projects as there are a limited number of contractors able to handle the huge projects, three developers said on Wednesday. Around $200 billion in projects across the globe from Australia to the United States are racing to be approved over the next two years, vying to provide around 65 million tons of new annual supplies that are needed by 2025, according to estimates by consultants Wood Mackenzie. (6/20)
Gas power plant to be shuttered: General Electric Co said on Friday it plans to demolish a 750-megawatt natural-gas-fired power plant it owns in California this year after only one-third of its useful life because the slow-ramping one-of-a-kind plant, completed in 2009, is no longer economically viable in a state where wind and solar supply a growing share of inexpensive electricity. The closure illustrates stiff competition in the deregulated energy market as cheap wind and solar supply more electricity, squeezing out fossil fuels. (6-22)
Nuclear storage costs: “The Maine Yankee nuclear power plant hasn’t produced a single watt of energy in more than two decades, but it cost US taxpayers about $35 million this year.” So begins a powerful report this week about the crushing cost of nuclear waste storage by the Los Angeles Times. (6/20)
Utilities transforming? Bloomberg’s New Energy Outlook 2019 concludes that US coal and nuclear resources are expected to have “almost disappeared from the electricity mix” by 2050, largely as a result of “age and economics,” while renewables penetration reaches 43 percent. The report, released Tuesday, states that “cheap renewable energy and batteries fundamentally reshape the electricity system,” and projected that solar will rise from supplying about 2 percent of current world electricity supply to about 22 percent by 2050. (6/21)
Not so fast! “The unbridled enthusiasm for renewable energy growth echoes a previous time in our industry when the very same statements were being made in the 1970s regarding nuclear power,” said Gary Ackerman, president of Foothill Services Nevada and former executive director of the Western Power Trading Forum. “Funny, none of those forecasts turned out to be correct. The same will be said about the much anticipated renewable and battery storage explosion. I am always amazed by the substitution of intelligent reasoning with straight-edge rulers plotting lines on log-linear paper.” (6/21
Wind in Norway: Norway proposes to open two new areas in the North Sea with the potential to hold installed capacity of up to 3.5 gigawatts of offshore wind, as Western Europe’s largest oil producer aims to use its offshore oil and gas expertise to boost the wind power exports of Norwegian companies. (6/20)
EU carmakers have to sell more EVs as new emission targets loom. Most analysts think a number of car companies are at serious risk of failing to achieve the targets, and some are calling it the biggest threat in a generation for an industry already battered by global tariff disputes, disrupted cross-border supply chains and fading demand in Europe and Asia. (6/22)
EU’s EV trains + buses booming: Two major public transport orders this week from regional transport authorities in Germany showed how they are going beyond federal targets to decarbonize bus and train fleets. City state Berlin placed an order for 90 battery-powered buses while the state of Schleswig-Holstein ordered 55 battery-powered trains — which remove the need for costly overhead line electrification as diesel trains are replaced. Berlin plans to electrify its fleet of 1,400 city buses by 2030. (6/22)
Backlash at anti-science: President Donald Trump’s new order to cut the number of government advisory committees by a third is drawing condemnation from former government officials, scientists and environmental advocacy groups who say the committees provide a check against politically inspired regulatory reversals. “It’s just another extension of this administration’s attack on science, an attack on transparency, and an attack on anything that can get in the way of this administration doing what it wants to do without need for experts to intervene in any way,” said Gina McCarthy, former EPA administrator. (6/20)
Backlash at carbon rule: The Trump administration finalized a new carbon emissions rule for US power plants on Wednesday that it said could cut pollution without damaging the coal industry, replacing a much tougher Obama-era version to fight climate change. The move was a boost to coal companies facing tough competition from natural gas, solar and wind energy suppliers, but infuriated environmentalists and Democratic lawmakers who said the regulation was too weak to significantly reduce emissions and would put public health at risk. (6/20)
States’ partisan climate policies: At a time when the country is already deeply fractured along partisan lines, individual states are starting to pursue vastly different policies on climate change with the potential to cement an economic and social divide for years to come. A growing number of blue states are adopting sweeping new climate laws — such as New York’s bill , passed this week, to zero out net greenhouse gas emissions by 2050 — that aim to reorient their entire economies around clean energy, transforming the way people get their electricity, heat their homes and commute to work. (6/22)
New York state lawmakers passed early Thursday one of the nation’s most ambitious plans to slow climate change by reducing greenhouse gas emissions to zero by 2050. If signed into law, it would make New York the second US state to aim for a carbon-neutral economy, following an executive order signed by then California Governor Jerry Brown last year to make that state carbon neutral by 2045. (6/20)
Climate clash in Oregon: Republican lawmakers at the Oregon State Senate fled the state on Thursday to avoid being forced to vote on a climate bill that the Oregon House passed earlier this week in one of the strictest US emission-capping efforts to tackle climate change. Oregon will be looking to lower its emissions to 80 percent below the 1990 level by 2050. After clearing the Oregon House, the bill is now one vote away from becoming law. But this vote is in the Oregon Senate, where Republican Senators threatened walkouts to prevent the vote from taking place. (6/21)
Winners and losers: As disaster costs keep rising nationwide, a troubling new debate has become urgent: If there’s not enough money to protect every coastal community from the effects of human-caused global warming, how should we decide which ones to save first? After three years of brutal flooding and hurricanes in the US, there is growing consensus among policymakers and scientists that coastal areas will require significant spending to ride out future storms and rising sea levels — not in decades, but now and in the very near future. (6/20)
Big oil climate pledge: Some of the world’s major oil producers pledged Friday to support “economically meaningful” carbon pricing regimes after a personal appeal from Pope Francis to avoid “perpetrating a brutal act of injustice” against the poor and future generations. The list of participating companies included ExxonMobil, BP, Royal Dutch Shell, Total, Chevron and Eni. (6/18)
“The shale gas revolution has frankly been an unmitigated disaster for any buy-and-hold investor in the shale gas industry with very few limited exceptions. In fact, I’m not aware of another case of a disruptive technological change that has done so much harm to the industry that created the change. While hundreds of billions of dollars of benefits have accrued to hundreds of millions of people, the amount of shareholder value destruction registers in the hundreds of billions of dollars. The industry is self-destructive.”Steve Schlotterbeck, former CEO of drilling company EQT
Graphic of the Week
1. Oil and the Global Economy
After a week of rampant speculation about what could happen at the G20 summit that would affect oil prices, the announcement on Saturday that the US and China have agreed to keep the current tariffs in place for now and would resume trade negotiations left the situation about where it has been for months. President Putin announced that Russia and its friends would join Saudi Arabia in extending the OPEC production cut for another six to nine months eliminating the drama from the formal OPEC+ meeting that will take place early this week. Oil prices were up a bit for the week settling at $64.74 in London and $58.47 in New York.
The agreement between Washington and Beijing to resume negotiations was about what the markets expected from the G20 summit. The talks had broken down seven weeks ago when the Chinese said that they could not accept some provisions that had been tentatively agreed to in a draft text. President Trump will not impose any new tariffs on China and will backtrack on banning the sale of American equipment to the Chinese telecom giant, Huawei. In May, the US Commerce Department put Huawei on a blacklist that prohibits American companies from selling equipment to Huawei. The ban was a significant blow to Huawei, which relies on chips, software, and other electronic components from the United States. In return, China will resume purchases of US farm products and “other goods.”
Although an end to the US-China trade dispute is nowhere in sight, the G20 announcements suggest that the situation is under control at the minute and that tariffs which could lead to an economic recession are on hold. Likewise, the extension of the OPEC+ agreement until next year should prevent another 1 million b/d of crude being dumped on the market forcing prices down. On Sunday, an editorial in the official China Daily warned while there was now a better likelihood of reaching an agreement, there’s no guarantee there would be one. “Things are still very much up in the air.”
Although the better-known forecasters of oil production continue to talk about US shale oil output climbing by millions of barrels per day in the next couple of years, the evidence continues to accumulate that a large production increase, on top of the impressive gain we’ve seen over the past decade, is unlikely to happen.
US Shale Oil Production: US crude oil output in April rose to a new monthly record of 12.16 million b/d, according to the EIA’s Petroleum Supply Monthly which was released on Friday. This report which is compiled some two months after the most recent month analyzed is usually more accurate and less subject to revision than the weekly estimates or the forecast about how big production will be in the coming month. The agency also increased its estimate for March crude production by 11,000 b/d to 11.92 million. Production in the US Gulf of Mexico rose 77,000 b/d to 1.98 million in April. These numbers suggest that the US raised its onshore production, which is mostly shale oil, by 172,000 b/d in April, which seems to be rather high given that the Drilling Productivity Report for March was estimating only 85,000 for the month. Revisions to these figures may be in order.
There are numerous reports that most shale oil drillers, except perhaps for the major oil companies, are cutting back on opening new wells to mollify their financial backers. It seems unlikely that the shale oil industry will be able to increase production by 83 thousand b/d in June and 70 thousand in July as projected by the EIA.
A recent survey by the Dallas Federal Reserve reveals that oil industry executives are unusually pessimistic about the prospects for the future. A combination of low oil prices, increasing costs, and the lack of investor willingness to fund losing firms suggest that the era of rapid increases in shale oil production may be coming to a close.
The monthly report from the North Dakota government on the status of production in the Bakken shows that output for the six months through April is nearly flat. These numbers suggest that the Bakken along with the Eagle Ford and Niobrara basins may be close to peak production. This development leaves the Permian Basin — and within the basin only the efforts of a handful of large international oil companies — to keep US shale oil production growing in the next few years
2. The Middle East & North Africa
Iran: President Trump imposed “hard-hitting sanctions” on Iran’s Supreme Leader last week leading to an exchange of invective with Tehran calling the President “mentally retarded” and the president threatening to obliterate parts of Iran if it attacked “anything American.” Moreover, Tehran announced that the sanctions on Khamenei mean the end of diplomacy and the negotiations that the White House has been signaling it is ready to begin.
Iranian crude exports have dropped in the first three weeks of June to 300,000 b/d or less after the US tightened the screws on Tehran’s primary source of income. Iran’s June exports are down from about 400,000-500,000 b/d in May as estimated by industry sources and a fraction of the more than 2.5 million b/d that Iran shipped in April 2018, the month before President Trump withdrew the US from the nuclear deal. Iran has exported 5.7 million barrels of crude in the first 24 days of June to the United Arab Emirates, Turkey, Singapore, and Syria, although these may not be the final destinations.
Asia’s crude oil imports from Iran fell in May to the lowest in at least five years after China and India wound down purchases amid US sanctions, while Japan and South Korea halted imports. Total imports from Asia’s top four buyers came to 386,021 b/d of Iranian crude in May, down 78.5 percent from a year ago to the lowest monthly level since the data began to be collected by Reuters in 2014. Imports had hit a 9-month high of 1.62 million b/d just a month earlier as buyers rushed to ship in as much as they could before waivers ended.
Iran is on course to breach a threshold in its nuclear agreement, but President Trump says there was “absolutely no time pressure” on the issue. Other world leaders gathered in Japan continued to express concern about Iran, even as Trump appeared relaxed. Chinese President Xi Jinping said the Gulf region was “standing at a crossroads of war and peace,” calling for calm and restraint and talks to resolve the issue. European Council President Donald Tusk, also at the G20, expressed concern about Iran potentially breaching the pact, saying the European Union would continue to monitor Tehran’s compliance. The escalating crisis has put the United States in the position of demanding its European allies enforce Iranian compliance with an accord Washington itself rejects.
The countries that are still parties to the agreement – European powers Britain, Germany and France plus Russia and China – held urgent talks with Iranian officials on Friday in hopes of persuading Tehran to hold off. Iran’s envoy, Deputy Foreign Minister Abbas Araqchi, said the talks were “a step forward, but it is still not enough and not meeting Iran’s expectations.” The likelihood that Iran could exceed the deal’s limits as soon as the next few days is the next looming worry for European leaders trying to keep confrontation between Washington and Tehran from spiraling out of control. Despite abandoning the deal, Washington has demanded European countries ensure Iran complies with it. Iran says it cannot do so unless the Europeans provide it with some way to receive the deal’s promised economic benefits.
Iraq: Baghdad’s oil ministry reported last month that the country’s May crude production rose to 4.595 million b/d, its highest since January 2017 and more than its quota of 4.512 million b/d. Analysts and independent estimates have put Iraqi production at even higher levels than those reported by the ministry. S&P Global Platts’ latest survey of OPEC output pegged Iraq’s May production at 4.82 million b/d.
Last week Iraqi Oil Minister al-Ghadhban said “Iraq confirms its commitment to the cut agreement. “However, the ministry stays ready to satisfy any growth in global oil demand when the overhang of stocks disappears by maintaining the production capacity and by improving export infrastructure.”
Secretary of State Pompeo urged Iraq’s prime minister to take steps to ensure that Iraq isn’t used as a new staging ground for attacks on the Saudis. The May 14 drone attacks were initially thought to originate from Yemen, where Houthi rebels had claimed credit for causing damage to an important oil pipeline stretching hundreds of miles across Saudi Arabia. But US officials familiar with the intelligence said the attacks had originated in southern Iraq, most likely implicating Iran-backed militias with a strong presence there. Iraqi leaders are questioning the US assessment and have asked the Trump administration for more evidence to support its claims.
Saudi Arabia: Saudi Aramco was busy last week trying to reassure its customers that it has the ability to keep oil shipments flowing no matter what happens in the Gulf. The CEO, Amin Nasser, said in an interview in Seoul on Tuesday, “we can supply through the Red Sea, and we have the necessary pipelines and terminals.” Saudi Arabia is South Korea’s most important source of crude oil.
In reality, Aramco will not be able to keep the necessary crude oil and products volumes flowing to Asian and European markets in the case of a full Strait of Hormuz blockade. Even though Aramco operates a crude oil pipeline with a capacity of 5 million b/d, carrying crude 750 miles between the Arabian Gulf and the Red Sea, much more is needed to keep the oil market stable.
Libya: Forces supporting the UN-recognized Government of National Accord in Libya have seized a town near Tripoli that served as the main supply base for the Libyan National Army (LNA) of General Haftar. The takeover of Gharyan is a severe blow to Haftar’s forces, which are affiliated with the rival eastern government of Libya. Forces allied to the Tripoli government, backed by air strikes, stormed the town, some 90 km (56 miles) south of Tripoli, in a surprise attack, witnesses said. They took the central operations room of the LNA, which by evening had left the town, they added. Gharyan is also home to field hospitals, and a helicopter base located there.
“This is a game changer,” said Tarek Megerisi, a policy fellow with the North Africa and Middle East program at the European Council on Foreign Relations. “If Haftar can’t retake Gharyan quickly. Tarhouna and the remaining LNA units will be more isolated, under-resourced, and with lower morale,” he said.
Following the taking of Gharyan, Libyan government fighters discovered a cache of American missiles, usually sold only to close American allies, at the captured rebel base. Markings on the four Javelin anti-tank missiles’ shipping containers indicate that they were sold to the United Arab Emirates in 2008.
Even if General Haftar’s LNA is forced to withdraw from its attempt to seize Tripoli, it still has the ability to disrupt much of Libya’s 1 million b/d of oil production.
3. China
Beijing’s booming economy has had the undesired side-effect of increasing China’s dependence on foreign oil imports. Twenty-five years ago, China produced approximately 4 million b/d, which was enough to satisfy the country’s domestic demand for petroleum products. In April 10.64 million b/d were imported, which is a new record. In 2018, the share of imported oil reached 70 percent and is expected to grow.
Even though Russia became China’s largest crude supplier, pumping in some 1.48 million b/d via pipeline, Beijing is still vulnerable to upheavals abroad. It has already lost a share of its traditional oil supply due to the US sanctions on Iran and Venezuela. Should hostilities in the Middle East slow or halt much of the region’s exports, China’s economy would be in trouble.
This ever-increasing reliance on foreign oil has become especially worrying for Beijing in the past year due to the escalating trade war with the US. To at least slow this dependency, President Xi has called on Chinese energy companies to increase domestic production. While China would love to replicate the American shale boom, they face a different situation. Shale formations in China differ from the ones in the US because the oil and gas deposits are located much deeper and are less concentrated, which makes extraction more difficult and expensive. They also lack the technical expertise required to frack horizontal wells and, so far, have made little progress in extracting shale oil.
Beijing’s only choice is to try to get more oil from its existing oil fields by using expensive secondary recovery techniques to extract more oil. In the next five years China’s “big three,” PetroChina, Cnooc, and Sinopec, aim to increase spending by $77 billion on oil fields that are mature and require high costs to raise production. Skeptics are already questioning the policy of spending so much capital on mature oil fields. According to a researcher at the China National Petroleum Corp., the additional spending will only increase production to 200 million tons by 2022, which is not a significant gain.
4. Russia
The two-month-old contaminated oil saga continued to play out last week. Moscow says the problem is over, but some of its customers are still unhappy. To clear the contaminated oil from the Druzhba pipeline, oil traders loaded a dozen tankers with contaminated crude and sent them off in search of customers who would buy the bad oil at a discount and mix in with enough clean oil so that it could be refined. This plan has not worked out so well, and more than 7 million barrels worth around $500 million remains homeless, zigzagging between Europe and Asia.
In China, buyers have refused to take dirty Russian oil, forcing trader Vitol to send a cargo back to Europe. “I’m not willing to risk our equipment just for cheap crude,” said an oil trader with a North Asian refinery. Buyers have also paid millions of dollars in demurrage charges as tankers are stuck with the dirty oil, preventing ship-owners from sending them on new voyages. Russia has promised to compensate buyers after they file claims post-sale. “The problem is that this oil is often impossible to sell. So how can I file a claim?” a Russian oil buyer said.
Elsewhere on the pipeline, Czech oil refiner Unipetrol stopped taking oil from the Druzhba pipeline due to chloride contamination detected at the Ukraine-Slovakia border. Oil flows to Poland through the Druzhba pipeline resumed on Thursday after being suspended on Wednesday evening due to the discovery of contaminated oil. It has been a hard year for Russian oil exports, and the whole debacle will likely cost Moscow billions of dollars in lost production and reparations.
5. Mexico
Pemex reported another decline in its crude oil production in May, which was partially offset by a modest uptick in condensates, natural gas liquids and gas output. The company produced 1.68 million b/d of crude, down just a fraction of one percent from production of 1.69 million b/d in April.
Mexico’s new president, López Obrador, has been a critic of the energy reform of his predecessor Enrique Peña Nieto, who opened Mexico’s oil and gas sector in 2013 to private investment for the first time in seven decades. Six months into office, the populist left-wing president now blasts the energy reform as “a failure” and vows not to call new bidding rounds for foreign oil companies for oil exploration and production in Mexico unless those companies show results.
López Obrador wants a greater role for Pemex in reversing the downward trend in Mexican oil production and is criticizing the foreign oil firms for failing to do so. He is ignoring the fact that lead times between awarding contracts for finding oil are measured in years, not months.
After allocating a $1.5 billion stimulus package to the company earlier this year, Lopez Obrador has declared his intention to see Pemex increase its oil production to 2.4 million b/d and its gas production to 6.5 billion cf/d by 2024. However, the cancellation of recent joint-venture auctions for Pemex by Mexico’s Comision Nacional de Hidrocarburos (CNH) has raised concerns about the government’s new strategy for the company. Earlier this month, the commission announced the cancellation of a farmout previously scheduled for October of seven inland production areas where oil and gas production has lapsed in recent years. The commission’s latest joint venture cancellation drew criticism from some of its members who have argued that the government’s production goals for Pemex would be unachievable without private investment.
President López Obrador said on Thursday that the natural gas pipeline contracts that the previous administration had signed were ‘abusive’ and ‘unfair’ to the Mexican state, raising additional concerns whether the new administration will respect previously signed energy deals. Delayed startup of the Sur de Texas-Tuxpan pipeline could continue indefinitely amid possible arbitration proceedings, and already appears to be impacting South Texas natural gas supply. Over the past several months, supply likely contracted by the state-owned Mexican power generator to feed the delayed pipeline has overwhelmed the region, depressing prices and filling regional storage inventories. In June, prices at hubs in south and east Texas are down sharply compared to last year.
6. The Briefs (selections from the press – date of article in Peak Oil News is in parentheses – see more here: http://www.news.peak-oil.org)
In Turkey, state upstream operator TPAO will start drilling for gas east of Cyprus in early July, within the Exclusive Economic Zone (EEZ) claimed by the Republic of Cyprus. TPAO’s drillship has been anchored off Turkey since Monday; the vessel will depart “in a few days” for its planned drill site. (6/28)
Somalia prospects? Royal Dutch Shell and Exxon Mobil are looking to re-enter the market in Somalia ahead of an oil block bid round taking place later this year. Shell and Exxon Mobil had a joint venture there prior to the toppling of dictator Mohamed Siad Barre in the early 1990s. Somalia has been mired in insecurity since Barre. The country currently does not produce any oil but production could transform the economy as early stage seismic data has shown there could be significant oil reserves. (6/28)
In Brazil, Petrobras plans to increase oil exports from 600,000 b/d on average in the first half of 2019 to more than 800,000 b/d, thanks to increasing production from their off-shore pre-salt oil plays. (6/29)
Argentina’s ambitious drive to emulate the US shale boom is moving ahead after the country delivered its first-ever exports of light crude oil and liquefied natural gas from its massive Vaca Muerta shale deposit in Patagonia earlier this month. Two private-equity firms – the UK’s Riverstone and Argentina’s Southern Cross Group – unveiled plans on Thursday to invest $160 million in a 78.4 percent stake in the first exclusively midstream company to operate in the Vaca Muerta, or “Dead Cow”, rock formation. A gradual rise in exports is expected, with Argentina’s light oil shipments forecast to reach 70,000 b/d next year. (6/28)
Vaca Muerta #2: After years of drilling and development and billions of US dollars of investment, Argentina’s vast shale play Vaca Muerta has finally seen the first tangible results with the first exports of light crude oil and liquefied natural gas (LNG) from the resource-rich formation. Apart from Argentina’s oil and gas group YPF, international oil and gas majors including Exxon, Chevron, Shell, and Total hold acreage positions in Vaca Muerta and have recently announced plans to proceed with major development projects in the most promising shale oil and gas basin outside the United States. Higher costs, regulatory uncertainty, and insufficient infrastructure have so far hampered a U.S.-style shale revolution in Argentina. (6/27)
The US oil rig count increased by four to 793, while the gas rig count decreased by four to 173, according to GE’s Baker Hughes. The combined oil and gas rig count is still 967 for the week, with oil seeing a 65-rig decrease year on year and gas rigs down 14 since this time last year. (6/29)
Water handling: In the Permian Basin alone, the combination of saltwater from wells and water used in the fracking process is expected to be three times larger than crude output by 2023, according to Jefferies Group. Pipeline owners already are adept at transporting oil and gas, so adding water handling to their portfolios may be a logical next step for them. (6/26)
Refinery fire: Philadelphia Energy Solutions will seek to permanently shut its oil refinery in the city after a massive fire caused substantial damage to the complex. Shutting the refinery, the largest and oldest on the US East Coast, will cost hundreds of jobs and squeeze gasoline supplies in the busiest, most densely populated corridor of the United States. (6/27)
East coast fill-in: US East Coast ports can expect more cargoes like the one aboard the Maersk Cancun once Philadelphia Energy Solutions refinery shuts. The tanker delivered 296,000 barrels of reformulated gasoline from the Netherlands to New Jersey last Thursday, on the eve of the fire that sealed the fate of the plant. Suppliers in Canada, Europe and the US Gulf Coast are likely to pick up most of the slack. (6/28)
Shale gas $$ bust: Reported spending outweighed income for a group of 29 large public shale gas companies by $6.7 billion in 2018, bringing the group’s 2010 to 2018 cash flow to a total of negative $181 billion, according to a March 2019 report by the Institute for Energy Economics and Financial Analysis. (6/25)
Oil Leak: A new federal study has found that a leak in the Gulf of Mexico that began 14 years ago has been releasing as much as 4,500 gallons a day, not three or four gallons a day as the rig owner has claimed. The leak, about 12 miles off the Louisiana coast, began in 2004 when a Taylor Energy Company oil platform sank during Hurricane Ivan and a bundle of undersea pipes ruptured. Taylor Energy, which sold its assets in 2008, is fighting a federal order to stop the leak. (6/26)
Green New Deal pricey: Eliminating fossil fuels from the US power sector, a key goal of the “Green New Deal” backed by many Democratic presidential candidates, would cost $4.7 trillion and pose massive economic and social challenges, according to a report released on Thursday by energy research firm Wood Mackenzie. (6/27)
The US state of Michigan has filed a lawsuit asking for an Enbridge Inc oil pipeline that runs under the Straits of Mackinac in the Great Lakes to be decommissioned, Michigan’s attorney general said on Thursday. The Line 5 oil pipeline ships 540,000 b/d of light crude oil and propane and is a critical part of Enbridge’s Mainline network, which delivers the bulk of Canadian crude exports to the United States. Potential disruption to Line 5 adds to the Canadian oil sector’s worries about transporting crude. (6/28)
Harris County in Texas plans to sue Valero Energy Corp for pollution from its Houston refinery. In recent years, environmental groups like the Sierra Club and Environment Texas have filed citizen lawsuits against refineries and chemical plants, but it is rare for governments to do so. (6/29)
Boulder County, Colorado halted accepting new oil and gas drilling and seismic testing permits for nine months, the latest community in the state to enact measures aimed at curbing oil and gas production. Colorado is the fifth largest oil producing state. This year Colorado lawmakers passed Senate Bill 19-181, tightening regulations on the state’s oil and gas industry. (6/29)
Another bankruptcy: Oilfield services firm Weatherford International on Friday filed a prepackaged restructuring plan with the US Securities and Exchange Commission, according to a regulatory filing. The proposed restructuring will reduce the firm’s funded debt from roughly $8.35 billion to $2.5 billion. (6/29
EU’s EV growth: Registrations of pure electric, plug-in hybrid and hybrid cars totaled 94,000 units in 18 European markets in May 2019, counting for 7.1 percent of the total volume, up from 5.3 percent in May 2018, according to figures from JATO Dynamics. The majority of registrations came from hybrid vehicles, but the growth was driven by pure electric cars, where registrations jumped from 12,300 units in May 2018 to 22,300 (+81 percent) last month. (6/25)
France registered its highest temperature—45.9 deg C (114.6 deg. F)—on record. Twelve towns in southern France saw new all-time highs on Friday and three experienced temperatures above 45 degrees, it said. The World Meteorological Organization said 2019 was on track to be among the world’s hottest years, and that 2015-2019 would then be the hottest five-year period on record. (6/29)
Britain’s new target to reach net zero greenhouse gas emissions by 2050 became law on Thursday, making it the first among the major G7 countries to set such a goal. Outgoing Prime Minister Theresa May had announced the target earlier this month, saying the plans were ambitious but crucial for protecting the planet for future generations. (6/27)
Population tracking: Since the days of Thomas Malthus, we’ve worried that overpopulation is about to overwhelm our planet. Those fears haven’t gone away. A further two billion people will be added to the current world population of 7.7 billion by 2050, the UN Population Division said in a report this week. Numbers will still be rising as the total approaches 11 billion people in 2100, according to the UN’s central forecast. At the same time, signs are starting to emerge that this picture may be too pessimistic. Malthus’s key error was his failure to foresee how fertility rates would fall with increasing incomes – and the pace of change on that front has been staggering in recent years. (6/25)
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