Why oil markets have become so volatile [Recharge]

Oil prices bounce up and down in search of a floor; LNG sees investments slow; 'Clean coal' suffers a setback. Catch up on global energy with Recharge. 

Recharge is a weekly digest of energy news and analysis written by Monitor reporters David J. Unger and Jared Gilmour, and delivered to inboxes each Saturday.

Yo-yo: Mixed signals make for turbulent oil markets. On the one hand, ample US oil stocks and Saudi price cuts kept downward pressure on oil prices last week. But new data shows US energy firms shed jobs and idled rigs in vast quantities last month, and will continue to do so in the coming months. That gives traders a reason to believe the oil price collapse has hit something resembling a floor. Either way, oil is the most volatile it has been since 2009 with more ups and downs to come.

LNG: Even if prices do begin to recover, the tide may have already come out on liquefied natural gas projects in North America, East Africa, Russia and elsewhere across the globe. BG Group, one of the world’s major LNG firms, wrote down billions in assets last week as low prices undermined the economic viability of capital-intensive export projects. For years there’s been growing interest in LNG exports as a way for producers to connect with high-priced Asian markets. But as prices collapse, the so-called Asian premium isn’t so premium anymore.

FutureGen: Last Tuesday, the US Energy Department pulled funding from a high-profile carbon capture and storage project, prompting concerns over the viability of a technology that aims to clean up the world’s dirtiest (and most dominant) electricity source. But the FutureGen project is just one of many CCS experiments across the globe (just a day later, DOE announced it was supporting another CO2 storage project in Canada). Coal isn’t going away overnight, and a breakthrough in even one of those CCS experiments would help rein in heat-trapping emissions.

In the pipeline

• Tuesday, Feb. 10: LONDON – IEA releases its Medium-Term Oil Market Report 2015. The report’s release will be closely watched by traders searching for any signs of if and when oil markets will settle.
• In the coming week: WASHINGTON – The US House is likely to vote on the Keystone XL pipeline and send a bill to the White House, according to various reports. The move would finally force President Obama’s hand on the pipeline, with most expecting he would veto the bill.

 

Drill deeper

Africa’s quiet solar revolution [The Christian Science Monitor ]
Could Africa – a continent that skipped land lines for cellphones – also leapfrog traditional generation for distributed solar power? Start-ups are giving it a try, building on lessons learned from ill-fated attempts to spread solar power across the continent in the 1970s and ’80s. Most units generate just enough to power lights and charge a phone – but if scalable, they could help spread cleaner, safer energy across Africa.

The man who brought us the lithium-ion battery at the age of 57 has an idea for a new one at 92 [Quartz]
The nonagenarian lithium-ion battery inventor says the world desperately needs a super battery to store intermittent renewable power. Good news: He’s on it. “I want to solve the problem before I throw my chips in,” John Goodenough tells Quartz. He’s not alone, either: “There are a lot of people working, and none of them is stupid. I don’t say I’m the only one who can solve the problem.”

The US is losing the clean energy race. Why that's OK.
[The Breakthrough Institute via The Christian Science Monitor ]
For years, global clean energy innovation has largely been framed as one of cutthroat competition not unlike the Cold War-era space race. Alex Trembath of The Breakthrough Institute makes the case that the approach is shifting more toward the collaborative – and that the future of energy and the environment is the better for it.

Energy sources

• CGEP: "The eventual export of US crude and condensates to Mexico would be a significant shift of policy in both countries. The US would take an additional step toward easing export restrictions that have been in place for a long time. Mexico would import crude oil for the first time since the first half of the seventies."
• EPA: "Given recent large declines in oil prices and the uncertainty of oil price projections, the ... low price scenario included in the Final [Keystone XL environmental impact statement] should be given additional weight ... due to potential implications of lower oil prices on project impacts, especially greenhouse gases."
• Oxford University via Bloomberg: "Oxford University scientists, after a year of research, have determined the best technology to suck carbon dioxide from the atmosphere and try to reverse global warming. It’s trees."

Unplug

Recharge is a weekly digest of energy news and analysis written by Monitor reporters David J. Unger and Jared Gilmour, and delivered to inboxes each Saturday.