OPEC Admits American Shale Oil is Significant
For the first time OPEC acknowledged the significance of shale oil supply in North America, cutting its previous estimates of medium and long-term global oil demand.
"Given recent significant increases in North American shale oil and shale gas production, it is now clear that these resources might play an increasingly important role in non-OPEC medium- and long-term supply prospects," the Organization of the Petroleum Exporting Countries said in the report.
Although OPEC has been slow to admit the impact of new technologies such as hydraulic fracturing, or “fracking,” on global supply, others have gone as far as to predict that North America will be self-sufficient in oil and gas by 2025.
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Caroline Bain, Lead Commodities Analyst for the Economist Intelligence Unit (EIU), made the following statement:
“OPEC's 2012 World Oil Outlook highlights the extent and severity of risks but takes a relatively benign medium-to-long-term view in its reference case. OPEC has lowered expectations of consumption, particularly in the OECD, over the next few years and expects OPEC's contribution to global supply to remain relatively stable. The report discusses the advent of shale oil in the US, but unsurprisingly is somewhat cautious about its long-term implications, referring to resource uncertainty and rapid depletion rates as well as environmental concerns.”
OPEC has raised its medium-term price forecast from last year to about $100/barrel, citing the rising costs in the oil industry, shortages of labor and costs of new sources of supply that “will be in technically more difficult and higher cost location,” according to Bain.
According to last week's report, the world is expected to reduce its dependence on oil from OPEC members, who currently pump more than a third of the world's oil and account for about 80 percent of its conventional crude reserves. In 2016, demand for crude from OPEC is expected to average 29.70 million bpd, less than it is currently producing.
"This downward revision, together with updated estimates of OPEC production capacity over the medium-term, implies that OPEC crude oil spare capacity is expected to rise beyond 5 million bpd as early as 2013/2014," OPEC said.
Over the last decade, a barrel of oil averaged $85-95. As prices rise with inflation, OPEC predicts the average to reach $120 by 2025 and $155 by 2035.
Hydrostor receives $4m funding for A-CAES facility in Canada
Hydrostor has received $4m funding to develop a 300-500MW Advanced Compressed Air Energy Storage (A-CAES) facility in Canada.
The funding will be used to complete essential engineering and planning, and enable Hydrostor to plan construction.
The project will be modeled on Hydrostor’s commercially operating Goderich storage facility, providing up to 12 hours of energy storage.
Hydrostor’s A-CAES system supports Canada’s green economic transition by designing, building, and operating emissions-free energy storage facilities, and employing people, suppliers, and technologies from the oil and gas sector.
The Honorable Seamus O’Regan, Jr. Minister of Natural Resources, said: “Investing in clean technology will lower emissions and increase our competitiveness. This is how we get to net zero by 2050.”
A-CAES has the potential to lower greenhouse gas emissions by enabling the transition to a cleaner and more flexible electricity grid. Specifically, the low-impact and cost-effective technology will reduce the use of fossil fuels and will provide reliable and bankable energy storage solutions for utilities and regulators, while integrating renewable energy for sustainable growth.
Curtis VanWalleghem, Hydrostor’s Chief Executive Officer, said: “We are grateful for the federal government’s support of our long duration energy storage solution that is critical to enabling the clean energy transition. This made-in-Canada solution, with the support of NRCan and Sustainable Development Technology Canada, is ready to be widely deployed within Canada and globally to lower electricity rates and decarbonize the electricity sector."
The Rosamond A-CAES 500MW Project is under advanced development and targeting a 2024 launch. It is designed to turn California’s growing solar and wind resources into on-demand peak capacity while allowing for closure of fossil fuel generating stations.
Hydrostor closed US$37 million (C$49 million) in growth financing in September 2019.