Local Energy Issues on the Bellarine.

France jumps feet first into tidal energy, offshore wind to come 2015

By Joshua Hill on 4 December 2014


A round of government leasing for tidal pilot projects in France completed this week, with companies including GDF Suez, Alstom, and EDF among the big winners.

And the announcement of this round of tidal projects comes at the same time as France’s government promised another offshore wind leasing round some time in 2015.

A joint venture between GDF Suez and Alstom was awarded the go-ahead to build a pilot tidal stream project in France Tuesday, while a second group consisting of EDF, DCNS, and OpenHydro were also awarded a contract to install seven turbines of 2 MW each.

Both projects are set to be located in the Raz Blanchard, and are the result of a Call for Expressions of Interest announced back in September of 2013 as part of France’s Programme des Investissements d’Avenir.

“Thanks to this project, Alstom technology will be in a position to demonstrate its efficiency, its optimised costs and its maintainability, a necessary prerequisite to considering any future move towards a commercial phase on a larger scale,” said Jacques Jamart, Alstom Senior Vice-President in charge of new energies.

These latest approvals will give Alstom a chance to test its Oceade 18 1.4 MW tidal turbine under installation and operational conditions similar to those in commercial facilities.

A team of 80 Alstom engineers have been working on the Oceade turbine prototype, and this pilot farm in conjunction with GDF Suez represents a “decisive step towards setting up commercial operations in tidal energy.”



For complete detail and graphics –

Australian households could go off-grid by 2018 …..

UBS: By Giles Parkinson on 9 May 2014

For complete article:

Global investment bank UBS has highlighted the challenges facing Australian energy utilities by suggesting that the falling cost of solar and battery storage means that the average Australian household could find it cost-competitive to go off-grid by 2018.

The report by its Australian based analysts says the current cost of going off-grid for a households consuming the average of around 7 megawatt hours would be around $39,000.

That translates to an average cost of around 44c/kWh for the life of the system. That leaves it in the hands of early adopters and hobbyists in the city, but assuming capital cost falls of just 5 per cent per annum, by 2018 it would become cost competitive for average households with staying on the grid.

For those in remote rural communities it may already be attractive – a situation recognised by Rob Stobbe, the head of SA Power Networks, who suggested last week that rural communities could soon decide that looking after their own energy needs will soon be a viable option.

UBS offgrid solar

As RenewEconomy pointed out from the Energy Networks Association conference last week, there is a growing recognition, particularly among regional network operators, that a new business model is needed to deal with technological changes,

UBS takes up this point as well, but notes: “The current regulatory system for networks (cost minimisation) and the desire to protect the current asset base of the unregulated companies make them poorly placed and incentivised to respond to the disruptive change.”

It notes that lithium-based storage is starting to become commercially available and the cost currently comes to around $0.70 kWh of energy consumed. That is 40 per cent above the cost of grid-delivered electricity in Sydney, and while there may be limited scope to reduce the costs of the battery side of the storage devices, the balance of system costs could fall greatly if demand rises.

UBS argues that battery storage at the household level is likely to be most cost effective if the household remains connected to the grid, and simply uses the grid when storage is insufficient. “Since the current grid is largely a sunk cost there is little penalty to society for using the existing grid in this fashion,” it notes.

“Storage intuitively makes the most sense the further consumption is from production, i.e. where the grid costs are highest, as the regional networks with just three or four customers per kilometre of poles and wires. UBS notes that it is “interesting to obverse therefore that some of the network owners are now themselves looking at micro grids and community level storage.”

UBS notes that the cost of household storage varies, with some reports suggesting that lead acid battery storage can be achieved for  less than $0.30/kWh. But it notes that the focus is on lithium technologies, and the economics of systems such as this of Zen Energy are coming down quickly.

“Based on about $30k installed for a system that can deliver 5 kW of power and 14 kWh for 3000 cycles, the cost per kWh comes to $0.71 kWh. This compares to $0.50 kWh for peak electricity in Sydney. In other words, it’s not economical yet, but it’s not hard to imagine costs coming down further over the next five years. The Zen system is packaged with the “command and control” system that decides what the household system should do at any time i.e. buy from grid, charge from solar or supply to the house.”



 If only it was as easy as building the model above to put on top of your xmas tree and dream it may come true in Port Philip Bay.

Imagine the benefits of a power generating turbine below the waves silently powering the Bellarine. It could be true if the government would look at it seriously!


Morgan Stanley-Backed Atlantis Raises $33 Million for Tidal Plan

By Louise Downing Feb 20, 2014 7:00 PM ET


Atlantis Resources Corp., a Morgan Stanley-backed maker of tidal turbines, raised 20 million pounds ($33 million) with a European grant, funds from a government institution and an initial public offering in London.

The Singapore-based company raised 12 million pounds by selling about 12.8 million new shares at 94 pence each on London’s Alternative Investment Market, Chief Executive Officer Tim Cornelius said. That values Atlantis at 72 million pounds.

Most investors were London-based institutions, with some from continental Europe, Cornelius said. Morgan Stanley, which had 45.7 percent before the placing, didn’t sell any shares.

“We chose AIM because people in the U.K. market are familiar with the renewables sector and there is good support,” Cornelius said. “People understand the landscape here.”

Atlantis also raised 8 million pounds through a cash grant from the European Commission and from a government institution that offered non-recourse financing repaid from future profits.

Funds investing in renewable energy have listed in London in the past year as investors seek steady dividends that beat returns on government bonds. Ingenious Media Holdings Plc last month said it was planning to raise 160 million pounds.

The tidal-power industry is in its infancy, with developers testing prototypes in the hope of bringing systems to market. As yet there are no commercial-scale projects in operation.

“It’s a growth story because we have a global portfolio and it’s a new and emerging market,” Cornelius said by phone. “From that perspective I think people tend to find it really interesting. It’s not solar and it’s not wind.”

MeyGen Project

Part of the proceeds will be spent on developing the 86-megawatt first phase of Atlantis’s MeyGen project in Scotland.

Construction is expected to start early in the second quarter, generation is projected from early 2015, and capacity may eventually reach as high as 398 megawatts.

The project seeks to take advantage of government subsidies for the power it produces, withScotland offering one of the highest for tidal energy. Waters in the region are estimated to account for as much as a quarter of Europe’s tidal resource.

Any remaining money from the funds raised will be invested in development of turbine technology alongside Lockheed Martin Corp. and for investments around the world, Cornelius said. The company is pursuing projects in Canada, India and China.

To contact the reporter on this story: Louise Downing in London at

Trouble in fracking paradise

By Chris Nelder | August 7, 2013, 1:32 AM PDT
For complete article and graphics refer:
The shale revolution is “a little bit overhyped,” Shell CEO Peter Voser said last week as his company announced a $2.1 billion write-down, mostly owing to the poor performance of its fracking adventures in U.S. “liquids-rich shales.” Which of its shale properties have underperformed, Shell didn’t say, but CFO Simon Henry admitted that “the production curve is less positive than we originally expected.”
Shell was a latecomer to the tight oil game. As late as 2010 it was acquiring mineral rights at inflated prices, predicting that those properties would produce 250,000 barrels per day in five years. Three years down the road, they are yielding only 50,000 barrels per day, and the company intends to sell half of its shale gas and tight oil portfolio. Shell has officially abandoned its production target of 4 million barrels per day by 2012-2018. Instead, Voser said, “we are targeting financial performance.”
Second-quarter earnings were dismal for the so-called oil supermajors. Shell, BP, Exxon Mobil, Chevron, Total SA, Statoil, and Eni SpA all reported sharply lower profits.
Production was also down nearly across the board, with only Total SA reporting an increase.
Of course, none of this would be a surprise for those who read my article from March, “Oil majors are whistling past the graveyard.”
The declining profitability and production primarily owed to lower oil prices and rising costs. AsPlatts reported in June, total capital spending for the top 100 U.S. producers in 2012 rose 18 percent year on year. Costs will be higher still this year.
Rising costs are partly due to the tight oil boom itself. Producers that invested heavily in tight oil production are struggling to maintain output against the accumulating undertow of existing wells, where output declines rapidly. Geologist David Hughes finds an average decline rate of 60 percent to 70 percent for the first year of production in new wells in the Bakken shale of North Dakota. And a new statistical analysis by Rune Likvern at The Oil Drum shows production from most Bakken wells falls by 40 percent to 65 percent in the second year.
For the Bakken field as a whole, Hughes calculated an annual production decline rate of 40 percent per year in his February report, Drill, Baby, Drill.
The problem is obvious. Decline rates that sharp make tight oil production a treadmill that speeds up a little more every year. Producers have to keep drilling more each year to simply keep output flat. That increases costs.
Other factors contribute to rising costs across the industry globally, including the ever-increasing difficulty of finding new prospects, and overall price inflation for basic commodities like cement and steel.
A good summary by Tom Fowler and Daniel Gilbert in the Wall Street Journal quotes analysts at Bernstein & Co. who see trouble ahead. “This cannot continue. . . . As long as oil prices stay flat and costs continue to rise, it will be impossible for the industry to sustain the current levels” of spending. If their spending drops off, production will too.”
Declining performance
One thing that doesn’t help the cost curve is unprofitable investments, and some of the newer tight oil plays aren’t panning out as hoped. In April, Bloomberg reported that the four biggest stakeholders in the Utica shale of Ohio were divesting, due to “disappointing” results. And the Monterey shale in California has continued to prove troublesome.
A growing consensus suggests that only the Bakken, Eagle Ford, and Permian formations will be major tight oil producers.
Prices are going higher
To be clear, smaller companies who are extremely focused on U.S. tight oil exploration are still turning profits. Tight oil production is still growing, and should continue to grow for several more years at least, just not as quickly as it has for the last several years. However, I am dubious about its production increasing from a bit over 2 million barrels a day today to 5 or 8 million barrels per day by 2020, as some have forecast.
We’ll probably drill around 19,000 horizontal wells this year, which will push production another few hundred thousand barrels per day higher. But we’re not going to raise production by a million barrels per day in a year anymore.
And it’s gonna cost ya. U.S. oil prices have bounced around $95 this year (as I predicted) but that has not been high enough for Shell to make money in tight oil and shale gas. It has not been high enough to sustain high drilling rates in the Bakken. It has not been high enough for most of the supermajors to turn a profit.
The decline in Bakken drilling could have been partly due to the glut at the Cushing, OK delivery point, which forced Bakken producers who ship by pipeline to accept a steep discount. (Bakken producers who shipped by rail directly to coastal refineries could fetch higher prices.) That is now partially relieved due to new pipeline capacity, and U.S. oil prices have risen back to global price levels. That may spur a new uptick in production as we head into the end of the year. As I explained in my last column, tight oil production supports price, it doesn’t reduce it.
But the decline in Bakken drilling can’t be wholly explained by the temporary glut at Cushing. The entire U.S. tight oil boom appears to be running into more systemic problems.
Analyst Bob Brackett of AllianceBernstein says, “the prime locations have already been drilled” in U.S. tight oil plays, and that drillers are moving on to less prospective areas. He sees the U.S. oil price benchmark WTI averaging $103 per barrel in 2015, while the European benchmark Brent rises to $113.
Rising costs across the industry, and declining profitability for the supermajors in an era of triple-digit global prices, suggest that oil prices need to be higher to maintain output. Since domestic gasoline and diesel prices, which are strongly linked to global prices, have remained stubbornly high even while U.S. oil prices were falling this year, that suggests we will likely see gasoline prices pushing toward $4.50 a gallon next year in higher-priced U.S. markets like San Francisco and New York City.
From an oil booster’s perspective, drilling 19,000 new horizontal wells (and 35,000 new wells in total) this year is a good sign. But regular folks might want to think about how much longer such a frenetic pace can go on, about the incursion of fracking into their backyards, about the environmental cost, and about the financial cost of keeping the “bonanza” going.
There is trouble in fracking paradise. A $2 billion write-down by Shell doesn’t quite spell the end of the U.S. oil boom, but it doesn’t bode well either. The “Saudi America” craze was cute, but that slogan isn’t going to make you any happier when you’re shelling out $4.50 and more for a gallon of fuel.
Want my advice? Get a more efficient vehicle. Don’t settle for less than 40 mpg. If your habits and pocketbook allow, consider an electric vehicle. And if energy independence is really your thing, then make it an EV with a rooftop solar PV system. That’s your best protection against the persistently rising cost of fuel.
My thanks to David Hughes and Rune Likvern for their contributions to this article.

Native algae biofuel could make Australia oil rich

Date: July 24, 2013


clip_image005 clip_image007clip_image009

Australia could become a major oil exporter like the Middle East if it starts farming native algae, researchers say.

University of Queensland experts say Australian algae species hold great promise in the race for cheap, efficient biofuels that can compete with fossil fuels.

UQ’s Dr Evan Stephens says microscopic algae from Australia’s fresh and saltwater environments have proven to be hardy and fast-growing.

The most promising are now being trialled at a pilot processing plant in Brisbane.

"If we devoted just 1 per cent of our land mass to algae farming, we could theoretically produce five times more oil than we currently consume," he said.

"We could potentially become an oil exporter, rather than an importer. We could be like the Middle East."

He said previous research had focused on oil-rich algae, but those species had their shortcomings.

"Usually these are not fast-growing and they are tastier to predators – like microscopic scoops of ice-cream," Dr Stephens said.

He said new technologies meant researchers could now look at a broader range of algae, including Australian species that grow well, and are resistant to predators and temperature changes.

Dr Stephens said algae fuels were some way off being commercially viable, but identifying the best species was a critical step.

"We know we can produce algae oil that is even higher quality than standard petroleum sources," he said.

The challenge now is to develop efficient production processes.

Read more:

To view:

Beyond Zero Emissions are seeking an experienced and passionate CEO


Beyond Zero Emissions Chief Executive Officer Wanted

The company

Beyond Zero Emissions is a not-for-profit research and communication organisation developing solutions for the implementation of climate change mitigation programmes. Their objective is to transform Australia from a fossil fuel based economy to a renewable powered clean tech economy. Sharing this research with tens of thousands of Australians via a multitude of external channels, the organisation is engaging, educating and inspiring stakeholders with real and positive solutions to climate change.
As one of the fastest growing NGOs in Australia, BZE are seeking an experienced and passionate CEO who can lead and consolidate the organisation through the next period of change and growth.
The role
Reporting to the Board of Management, your role as CEO will be to provide the collaborative leadership needed to ensure the organisation can deliver on its ambitious goals. You will work to foster an environment of courage, collaboration and accountability alongside staff and volunteers alike.
The key responsibilities for the role are:

  • Staff management and leadership
  • Operational management
  • Fundraising
  • External stakeholder engagement
  • Media communications

The requirements
As someone with proven leadership, coaching and management experience you will be thoroughly committed to, and passionate about, action on climate change and the work that the organisation undertakes. As a strong communicator you will be the focal point externally therefore it is essential that you have advanced influencing skills.
Further key requirements include, but are not limited to:

  • Excellence in organisational and project management with the ability to coach staff, manage, and develop high-performance teams, set and achieve strategic objectives.
  • P/L management, ensuring the fiscal viability and sustainability of the organisation.
  • Strong marketing, public relations, and fundraising experience with the ability to engage a wide range of stakeholders.
  • Experience developing productive, collaborative partnerships with external agencies and influential individuals.

The rewards
You will be given the platform to be a highly visible exponent of climate change mitigation, engaging with influential private and public stakeholders across Australia and potentially further afield. This is a fantastic opportunity for you to help shape the future of the Australian energy industry and build on the progress that this organisation has achieved to date.
For a confidential discussion contact Ben Cartland on 0413 555 632 or Richard Evans on 0431 414 883 or send your resume to

UPDATE – Beyond Zero Emissions welcomes a new CEO

Posted on 26 Aug 2013
It is our pleasure to announce that after a long and exhaustive search we are finally able to announce the appointment of our new Chief Executive Officer – Dr Stephen Bygrave.
Stephen will be commencing as CEO of Beyond Zero Emissions on Monday the 9th of September 2013.
Stephen has worked on climate change, renewable energy, energy efficiency and sustainable transport for the past 20 years, primarily in policy and research positions at a local, national and international level.
Dr Stephen Bygrave

Economic growth and conservation – Garnaut reconciles


Extract from:


Ross Garnaut warned against over-playing the dangers of economic growth damaging the ecosystems AAP/Julian Smith

Economist Ross Garnaut has warned against over-playing the dangers of economic growth damaging the ecosystems that are important to life.
Current patterns of economic growth had those effects, he said, but “economic growth is not inherently in conflict with conservation of the natural environment”.
Garnaut, who did much of the groundwork for Labor’s carbon pricing, was launching a booklet of essays titled “Placing global change on the Australian election agenda”.
It has been issued by Australia21, a non-profit group, chaired by a former secretary of the defence department, Paul Barratt, that promotes research on big issues.
The aim of the booklet is to “stimulate a constructive discussion between voters and political aspirants from all parties about the kind of Australia we will leave to our children in an increasingly hazardous, globalised and resource-constrained world”.
The essays have a heavy emphasis on climate change but also cover such topics as defence, the global financial future and the threat from chemical and antibiotic overuse.
Garnaut said that increases in material wellbeing (“economic growth”) derived from increases in population, in the amount of capital each worker used and in productivity.
While an inexorable increase in population was by definition in conflict with finite natural resources, experience showed that rising living standards reduced fertility, in a process that was stronger “than the edicts of imans as well as popes”.
Increases in capital per worker could be resource-saving or resource-using – and he suggested China would provide an example of the former, Garnaut said.
The same went for productivity growth which came from technological change – much technological improvement resulted in less pressure on natural systems per unit of economic value.
“When we see economic growth in this light, we do not need to make enemies of the whole of the developing world’s people as they seek higher standards of living.
“When we see economic growth in this light, we recognise that the important thing is to make sure that we put in place policies that encourage resource-conserving and discourage resource-using capital intensification and technological change”.
That was what Australia had done in a small but so far effective way with its carbon pricing and associated clean energy policies.
He conceded that the linking of the Australian price to the European Union from 2015 would probably lead to lower carbon prices for a while and diminished pressure for the use of carbon-conserving investments and technologies.
“However, the pressure of the carbon pricing causes firms to consider the likelihood that European prices will rise in future, and to think twice about the carbon intensity of future output from investments that they are making now”.
In a shot at the opposition, which is pledged to remove the carbon tax, Garnaut said: “To expect Australians to put the welfare of future Australians near the top of their priorities may be too much to ask as we live through what I hope are the later days of the great Australian complacency.
“But surely it is not too much to expect that we will not make things worse, by retreating on the modest steps forward that we have made in addressing one of the great challenges facing our people”.
In the preface to the booklet Barratt and editor Bob Douglas, former director of the National Centre for Epidemiology and Population Health at ANU, have framed a dozen sets of questions that they hope “become part of the political discourse in the lead up to the election of our next government”.
If you want to grill your local candidates during this election, here are some of the questions. (Good luck with them.)
GREENHOUSE GASES. Do you believe we should radically curtail energy production from fossil fuels? If so, over what timeframe? Should we also curtail our mining and export of fossil fuels to other countries?
ECONOMIC MANAGEMENT AND GROWTH. Do we need to develop a more “steady state” approach to economic management, in which we can maintain full employment without rapid growth in the demands placed upon our resources and the biosphere?
DEFENCE POLICY. Are we spending enough on defence for the Australian Defence Force to be able to meet your expectations? Are you concerned about the prospect of strategic competition emerging between China and the US, and how should Australia respond?
FOOD FOR OUR FUTURE. What are the prospects of Australia feeding itself in the context of rising temperatures, declining extent and health of croplands, and rising food prices and international famine?
OUR DEPENDENCY ON OIL Should the government adopt policies to ensure we have specified stock levels of fuels and lubricants in-country?
PROSPECTS FOR THE GLOBAL ECONOMY What is the likelihood of another global financial crisis? What should we do to prepare for such an eventuality?
PROTECTION AGAINST TOXINS AND ANTIBIOTIC RESISTANCE. What role should government play in protecting the community against exposure to toxins and deterioration in antibiotic sensitivity?
THE VALUATION OF SERVICES PROVIDED BY ECOSYSTEMS. Should we include in our evaluation of proposed developments or changed land use the economic value of the services provided by local ecosystems to human communities and to industry?
ECOLOGICAL FOOTPRINTS AND EQUITY. How can we reduce our per capita footprint in a way that both assists developing countries and makes limited resources more equitably available to all Australians?
ENVIRONMENTAL REFUGEES. How should we best integrate provision for refugees from the results of climate change into our immigration policy?
DOMESTIC TRAVEL. Do you think that the rising demand for rapid movement between our major cities can be met into the indefinite future by increasing civil aviation capacity?
RESPONDING TO THE NEEDS OF THE COMING GENERATION. Is Australia preparing its younger population adequately for the likely risks ahead as climate change and resource scarcity challenge the conventional wisdom of endless economic growth?

None of the worlds top industries would be profitable if they paid for the natural capital they use

Extract from:

The notion of “externalities” has become familiar in environmental circles. It refers to costs imposed by businesses that are not paid for by those businesses. For instance, industrial processes can put pollutants in the air that increase public health costs, but the public, not the polluting businesses, picks up the tab. In this way, businesses privatize profits and publicize costs.
While the notion is incredibly useful, especially in folding ecological concerns into economics, I’ve always had my reservations about it. Environmentalists these days love speaking in the language of economics — it makes them sound Serious — but I worry that wrapping this notion in a bloodless technical term tends to have a narcotizing effect. It brings to mind incrementalism: boost a few taxes here, tighten a regulation there, and the industrial juggernaut can keep right on chugging. However, if we take the idea seriously, not just as an accounting phenomenon but as a deep description of current human practices, its implications are positively revolutionary.
To see what I mean, check out a recent report [PDF] done by environmental consultancy Trucost on behalf of The Economics of Ecosystems and Biodiversity (TEEB) program sponsored by United Nations Environmental Program. TEEB asked Trucost to tally up the total “unpriced natural capital” consumed by the world’s top industrial sectors. (“Natural capital” refers to ecological materials and services like, say, clean water or a stable atmosphere; “unpriced” means that businesses don’t pay to consume them.)
It’s a huge task; obviously, doing it required a specific methodology that built in a series of assumptions. (Plenty of details in the report.) But it serves as an important signpost pointing the way to the truth about externalities.
Here’s how those costs break down:

The majority of unpriced natural capital costs are from greenhouse gas emissions (38%), followed by water use (25%), land use (24%), air pollution (7%), land and water pollution (5%), and waste (1%).

So how much is that costing us? Trucost’s headline results are fairly stunning.
First, the total unpriced natural capital consumed by the more than 1,000 “global primary production and primary processing region-sectors” amounts to $7.3 trillion a year — 13 percent of 2009 global GDP.
(A “region-sector” is a particular industry in a particular region — say, wheat farming in East Asia.)
Second, surprising no one, coal is the enemy of the human race. Trucost compiled rankings, both of the top environmental impacts and of the top industrial culprits.
Here are the top five biggest environmental impacts and the region-sectors responsible for them:
UNEP: top five environmental impactsUNEP
Click to embiggen.
The biggest single environmental cost? Greenhouse gases from coal burning in China. The fifth biggest? Greenhouse gases from coal burning in North America. (This also shows what an unholy nightmare deforestation in South America is.)
Now, here are the top five industrial sectors ranked by total ecological damages imposed:
UNEP: top five industrial sectors by impactUNEP
Click to embiggen.
It’s coal again! This time North American coal is up at number three.
Trucost’s third big finding is the coup de grace. Of the top 20 region-sectors ranked by environmental impacts, none would be profitable if environmental costs were fully integrated. Ponder that for a moment: None of the world’s top industrial sectors would be profitable if they were paying their full freight. Zero.
That amounts to an global industrial system built on sleight of hand. As Paul Hawken likes to put it, we are stealing the future, selling it in the present, and calling it GDP.
This gets back to what I was saying at the top. The notion of “externalities” is so technical, such an economist’s term. Got a few unfortunate side effects, so just move some numbers from Column A to Column B, right?
But the UNEP report makes clear that what’s going on today is more than a few accounting oversights here and there. The distance between today’s industrial systems and truly sustainable industrial systems — systems that do not spend down stored natural capital but instead integrate into current energy and material flows — is not one of degree, but one of kind. What’s needed is not just better accounting but a new global industrial system, a new way of providing for human wellbeing, and fast. That means a revolution.

America’s oil choice: Pay up, or get off

By Chris Nelder | February 20, 2013, 1:55 AM PST

For complete article:


The oil industry has an important message for you, America: You’re not paying enough for fuel. And if you want to realize the fantasy of “North American energy independence,” you will have to pay more for it — a lot more.

Getting drivers to go along with this notion will not be easy, so the industry has couched this message in much more careful language.

Its new media campaign began with a Feb. 5 editorial in the New York Times by Christof Rühl, group chief economist of BP. After claiming victory for optimists over peak oil pundits like me and trumpeting “North America’s oil and gas renaissance” — new “tight oil” production from shale formations like the Bakken in North Dakota and the Eagle Ford in Texas — Rühl explained how the “expected surge of new oil will lead to increased supply overall and continued market volatility.”

He wrote: “If history is any guide, OPEC will cut production and forego market share in favor ofprice stability.” (Emphasis mine.)

The United States and Canada have an important policy choice to make, Rühl asserted. “Nations with abundant resources must decide whether to follow the path of open markets, including foreign access and competitive pricing,” or “opt for restrictive investment regimes that risk becoming less rewarding.” (Emphasis mine.)

In other words, North American oil prices need to be higher. And the way to do that is to export crude to the rest of the world.

An editorial in the Financial Times the day after the Times piece, written by the head of the International Energy Agency (IEA), Maria van der Hoeven, echoed this message.

Under the subtitle “Conditions expose misalignment between resources and regulations,” she explained how “logistical and policy hurdles above ground” are “depressing domestic oil prices and curtailing investment.” The glut of oil at U.S.’s primary delivery point in Cushing, Oklahoma, caused by new tight oil production have driven the price of some varieties of mid-continent crude as low at $50 to $60 a barrel, well below the primary West Texas Intermediate (WTI) benchmark price of $96. The main European benchmark grade, Brent, currently trades at more than $117.

The industry has a choice to make, van der Hoeven wrote: “Either U.S. crude is shipped abroad, or it stays in the ground.”

That’s right: The United States needs to become an oil exporter to “avoid [the] shale boom turning to bust.”

Elected officials in Alberta, Canada, have complained similarly in recent weeks about the glut, the “bitumen bubble.”

Tar sands oil is fetching just $50 to $60 a barrel due to a lack of export capacity, which is why the industry has been pushing for the approval of the Keystone XL pipeline. The discount from global prices will cost the Canadian province an estimated $6 billion in lost royalties this year, and the provincial government is anxious to find export routes for its crude.

A Feb. 17 article in the New York Times put a finer point on the dilemma: “If the Keystone pipeline is not completed, energy experts say, weak prices will make the economics of future oil sands projects questionable.”

As indeed they are. Two weeks ago, tar sands giant Suncor Energy wrote down a $1.5 billion investment in an $11.6 billion upgrade project that was to be built north of Fort McMurray, the heart of the tar sands development. Without Keystone XL, “the province seems fated to face continuing steep price discounts, as a captive in an oil-glutted North American market,” opined theGlobe and Mail, and the upgrade project could be cancelled altogether.

Content missing here / available on website

A strategic choice

Content missing here / available on website

C. Gil Mull, a 78-year-old career petroleum geologist who worked for Atlantic Richfield (now ARCO), Exxon, the U.S. Geological Survey, and Alaska Geological Survey and Division of Oil and Gas, shared his perspective with me recently. Mull was fortunate enough to be working at the discovery well when the Prudhoe Bay field was found on the North Slope of Alaska in 1968.

“I was proud to be associated with the group that found the largest field in North America, but we’ve squandered it, pouring it into SUVs and all the rest,” Mull told me ruefully. “We’ve squandered it for 40 years without making much progress toward a more sustainable energy future. No doubt that the fractured shales have given us a huge increase, but there’s no way it’s going to make up for the decline of conventional resources. It can buy us more time but I hope we don’t screw this one up!”

I couldn’t agree more. It’s time we did something about our oil addiction, for real. Exporting crude is not the way to do it.

(Photo: The author, in front of a sculpture made from two oil tankers at Burning Man in 2007.)