free html hit counter Peak Oil Debunked: February 2009

Friday, February 27, 2009


(Image from M. King Hubbert's 1956 paper "Nuclear Energy and the Fossil Fuels")

Kentucky House panel approves nuclear bill
The Tourism Development and Energy Committee of the Kentucky House has approved a bill that could lead to the lifting of a 25-year-old moratorium on the construction of nuclear power plants within the US state.
Georgia lawmakers OK early recovery of nuclear costs
The Georgia House voted Thursday to let Georgia Power Co. begin charging customers for a planned nuclear power plant five years before it is due to go into service.

The bill, which passed 107-66, already has cleared the Senate and now heads to Gov. Sonny Perdue for his signature.

It would allow the utility to recover $2 billion in financing costs for the $14.4 billion expansion of Plant Vogtle near Augusta. Georgia Power plans to charge ratepayers $1.30 per month for the plant in 2011, when construction is due to begin.

The charge would continue to increase by that amount each year until 2016, when the first of two new nuclear reactors is scheduled to begin operating.
Iran tests first nuclear power plant in Bushehr
Iran began testing out its first nuclear power plant on Wednesday in the southern port of Bushehr, the New York Times reports.

Iranian officials say that fuel rods made of lead were used in place of nuclear fuel in order to test the 1,000 megawatt, Russian-built nuclear plant, according to the ISNA student news agency.

Deputy head of Iran’s Nuclear Energy Organization Mohammad Saeedi told reporters that the fuel rods contained lead instead of the usual uranium.

Meanwhile, Sergei V. Kiriyenko, the head of the Russian nuclear agency which helped built the power plant, said that the plant was “nearing its final stages before launching,” during his visit to Iran and that the construction was finished.

Russia supplied Iran with the nuclear fuel to build the plant under arrangements of the International Atomic Energy Agency (IAEA), which is the same UN agency that monitored the nuclear plants in North Korea’s Yongbyong.

According to an IAEA report released last week, Iran is planning on loading fuel during the second quarter of 2009.
Most Asean members want nuclear power
Most of the members of the Association of Southeast Asian Nations are amenable to tapping nuclear power to promote alternative sources of energy, an official said yesterday.

They expressed support for the idea even as they prepared to sign an agreement today that will allow governments to sell their oil to neighbors at “friendship” prices.

“Nuclear energy is being seriously looked at, but we are still very much at the preliminary discussion stage, at the technical working group level,” Asean Deputy Secretary General Pushpanathan Sundram said in an interview during the Asean Business and Investment Summit.

“There are some that are opposed to it, while others are pushing for it,” he said.

Those in favor of creating or reactivating nuclear plants are Thailand, the Philippines, Vietnam, Laos, Malaysia, Myanmar and Indonesia.
After a 20-year ban, France helps Italy embrace nuclear energy
Twenty years after banning new nuclear plants, Italy is turning to France to restore its nuclear program.

On Tuesday, Italy’s Prime Minister Silvio Berlusconi signed a cooperation deal with President Nicolas Sarkozy for the construction of four power plants in Italy.

Italy shut down its four nuclear plants following a 1987 national referendum that rode a wave of fear and outrage over Russia’s Chernobyl reactor meltdown. Now it is joining a growing number of European countries – including Germany, Slovakia, and Bulgaria – that are returning to nuclear energy due to concerns both about carbon emissions and about the reliability of energy supplies from Russia.
Workforce education for a nuclear energy revival
A rapidly growing demand for more electricity – from cleaner energy sources – has nuclear power poised for a revival in the United States.

The Nuclear Regulatory Commission (NRC) expects companies in the energy industry to apply in the next two years for construction and operation licenses for more than 30 nuclear power plants.

To respond to the demand for more expertise in the field, the Ira A. Fulton School of Engineering at Arizona State University is launching a graduate-level program in nuclear power generation.
Wisconsin regulator says nuclear should be an option
Wisconsin Public Service Commission Chairman Eric Callisto told attendees at an energy conference Monday that he believes legislators will end the state's ban on new nuclear power plants. But Tia Nelson, co-chairwoman of the Governor's Global Warming Task Force, called nuclear energy a "distraction" from efforts toward conservation and energy efficiency.
Oklahoma nuclear power bill advances in committee
Oklahoma lawmakers signaled their interest to go nuclear, approving legislation that would streamline the state's regulatory process and provide new incentives to build a nuclear power plant.
Toshiba wins US nuclear plant projects
Japan's Toshiba Corp. said Wednesday it had won a contract to build two nuclear plants in the United States that are scheduled to start generating power in 2016.

It is the first such contract a Japanese company has won overseas, covering the projects entirely from engineering and procurement to construction of the nuclear plants, the company said.

Under the contract, Toshiba America Nuclear Energy Corp., a US-based Toshiba subsidiary, will build two Advanced Boiling Water Reactor (ABWR) nuclear power plants in Texas.

The plants, the first ABWRs to be constructed in the United States, will have an output of approximately 1,400 megawatts each, the company said.
Two new nuclear power stations planned for Cumbrian coast
Two new nuclear power stations could be built on farmland in west Cumbria, as well as those already predicted for the Sellafield site.

A German energy firm has revealed plans to build reactors on coastal sites near Egremont and Millom. These are separate to plans for reactor development on land around Sellafield.
W.Va. lawmakers propose nuclear power ban repeal
Some West Virginia lawmakers hope to add nuclear power to the state's energy portfolio.

A bipartisan group of senators has introduced legislation to repeal a partial 1996 ban on the building of nuclear power plants.

"A ban is inconsistent with West Virginia's claim that it is an energy state," said Sen. Brooks McCabe, the bill's lead sponsor.
Algeria to erect nuclear Power plant
The Algerian government has announced its plans to erect the first ever nuclear power plant by 2020, Energy and Mining Minister Chakib Khelil has said.

Minister Khelil said Algeria will also build new plants every five year after the erection of the fisrst station.

The Minister said Algeria has already signed civil nuclear agreements with Argentina, France, China and the United States. “Algeria presently has two experimental nuclear plants in Draria, in the suburbs of Algiers and another one in Ain Oussera, near Djelfa about 300 kms from capital Algiers,” he said, stating that further negotiations were underway with Russia and South Africa.
Jordan, Russia sign nuclear deal
Russia, which is helping Iran build its first nuclear plant, inked a preliminary cooperation deal with Jordan on Thursday to pave the way for producing nuclear power in the energy-poor kingdom.

Under the agreement, Russia will help Jordan, which imports around 95 percent of its energy needs, build power and desalination plants as well as research centres, Jordan Atomic Energy Commission head Khaled Tukan said.

"A final agreement will be signed in Moscow by the end March," Tukan told state news agency Petra after signing the deal with Nikolai Spassky, deputy director of the Russian Federal Agency for Nuclear Energy.
Yucca Mountain is Dead! Long Live Fast Breeders?!
The Obama administration's new budget essentially kills the Yucca mountain radioactive waste repository project. The original goal was to build a facility in which to safely store high level radioactive wastes from America's 104 nuclear power reactors. Anti-nuke environmentalist ideologues have long opposed the Yucca mountain facility. Their goal is make nuclear power impractical by blocking the waste disposal stream. But perhaps they've outfoxed themselves. nukepower

The new budget promises that the Obama administration will “devise a new strategy toward nuclear waste disposal.” Well, there is already a strategy that will work, using fast breeder reactors to burn up waste and simultaneously produce more reactor fuel.
Now Even “Greens” Are Turning To Nuclear Power
Nuclear power has new converts, according to top UK environmentalists, as they made public their belief that this energy source is still required.

Many have long opposed nuclear power because of the risk of weapons proliferation, as well as the difficulty of waste disposal.

In spite of worries about nuclear power, global warming is seen as a more serious hazard.

Nuclear is seen as an improvement over new coal-fired power plants.

Britain will have a key energy gap over the coming years.

Coal burning power stations and ageing nuclear power facilities will shutdown and the government is obliged to reduce carbon emissions by 80 per cent, not later than 2050.

Therefore, many environmentalists are converting back to nuclear power.

In a momentous piece for the Independent newspaper, a member of the Green Party, a past head of Greenpeace, and Lord Smith, Chairman of the Environment Agency and a prominent columnist, made known their coversion to supporting nuclear energy.
India Targets 6,000-MW of Nuclear Power in 2009
The agreements with AREVA and TVEL come at a time when three reactors in the country are set to commence production. Units 5 and 6 at the Rajasthan Atomic Power Plant (2 X 220 MW), Unit 4 at the Kaiga Power Plant in Karnataka (220-MW) and one unit at the Koodankulam Power Plant in Tamil Nadu (1,000-MW) will go live this year. The steady supply of fuel is expected to boost atomic power production from the existing 17 facilities to about 6,000-MW by the end of 2009, with the reactors expected to operate at about 90 percent of their combined installed capacities.

NPCIL is also embarking on a joint venture with NTPC Limited (New Delhi) to establish new nuclear plants in India based on indigenous "fast breeder reactor" technology. Five other reactors with a production potential of 2,660-MW are already under construction. The Atomic Energy Commission recently said that India would have 20,000-MW of nuclear power by 2020.
German State Calls for Extension of Nuclear Power
Germany’s largest producer of wind- powered electricity, the northern state of Schleswig-Holstein, should extend the use of its three nuclear power plants, a government minister said.

A mix of energy, including nuclear power, is the most sensible way to guarantee energy security and cut carbon-dioxide emissions, said state economy minister Werner Marnette, a member of Chancellor Angela Merkel’s ruling Christian Democratic Party.

The minister’s comments renew the debate over atomic energy ahead of German federal elections later this year and follow Sweden’s Feb. 5 decision to scrap a ban on new atomic plants.

“It’s essential that we allow our three nuclear plants to keep running or we won’t have enough energy,” Marnette said today in an interview in Husum. “Of course, we have to work on the security issues as well as the problem of waste.”
Tender for Armenian nuclear power station
The Armenian Government has announced a tender for holding a competition which will identify which company should undertake the construction of a new nuclear power station in the country. In 38 days the tender commission will announce the winner of this tender, who will then hold the competition and thereby identify the most appropriate power station constructor.
China may help Vietnam build N-reactor
A Chinese firm has started talks to help Vietnam in building its first nuclear power project to reduce electrical shortages in the country.

China Guangdong Nuclear Power Group (CGNPG), one of the two main nuclear power plant operators in the country, announced Monday it was in talks with Vietnam to help the country construct its first nuclear power plant.

According to a report on the website of the Shenzhen-based company, Vietnam plans to build two 1,000-mW reactors in Ninh Thuan Province on the lower central coast.

Vietnam plans to build nuclear power projects with a total capacity of 4,000 mW by 2021, a CGNPG executive who declined to be named said.
Manitoba town pushes for nuclear reactor
The town of Pinawa, Man., may be in line for a nuclear renaissance.

The town of 1,500, 110 miles northeast of Winnipeg, is in discussions with Atomic Energy of Canada Ltd., to possibly build a nuclear power plant on the site of AECL's Whiteshell Laboratories.

Dale Coffin, a spokesman for AECL, said it's very much in the early discussion stage but said the idea of putting up a nuclear power plant in Pinawa is a good one.

``From our point of view, Pinawa is already a licensed site, there are already experienced people working there, abundant water near by and it's close to the United States and transmission lines,'' said Coffin. ``There are some very positive features there already.''
Third reactor at North Anna nuclear power plant debated
About 100 people turned out last night to argue for and against plans to build a third nuclear reactor at Louisa County's North Anna Power Station.

The U.S. Nuclear Regulatory Commission is evaluating the potential environmental impact of a third reactor at the nuclear power plant near Mineral. The agency used last night's meeting to gather public comments.
Sweden lifts ban on nuclear power
Nuclear power received a significant boost today when the Swedish government announced plans to overturn a near 30-year ban on atomic plants as part of a new drive to increase energy security and combat global warming.

Ministers said they would present a bill on 17 March which would allow the construction of nuclear reactors on existing sites and introduce a new carbon tax as part of a programme to cut carbon emissions by 40% on 1990 levels by 2020.
Kuwait eyes nuclear power with French help - paper
Kuwait is considering developing nuclear power with the help of a French firm to meet demand for electricity and water desalination, the country's ruler said in remarks published on Wednesday.

"A French firm is studying the issue," daily al-Watan quoted Emir Sheikh Sabah al-Ahmad al-Sabah as saying, adding that the oil-rich Gulf Arab state would only put nuclear power to civilian use and according to international laws.

Nuclear power would "save a lot of wasted fuel in electricity and water desalination plants", he said, giving no further details. The emir did not specifically refer to any French firm in his published remarks.
by JD

Tuesday, February 24, 2009


Since the crash started in summer 2008, the general view in the peak oil community has been that the current low prices are an anomaly, and that prices will soon return to their upward trajectory. A number of voices are starting to question this view. The main issue seems to be this: Is the economy going to actually recover any time soon?

It reminds me of an inconsistency I often noticed when oil prices were skyrocketing. Many doomers were simultaneously claiming that: a) the economy was dying, and b) oil prices would continue to go through the roof. Something had to give, and as we all now know, that turned out to be claim b).

Now we've got the same contradiction all over again. Naturally the doomers are jazzed that the credit crisis is sending the economy into a death spiral, but at the same time they keep talking about oil prices soaring "when the economy comes back". It doesn't add up. If the financial crisis is a death spiral, the economy isn't going to come back for a long time. I keep wondering, are they just in denial, hoping for their oil portfolios to come back?

Consider the Asian Financial Crisis of 1997. That was peanuts compared to what we've got happening now, and it knocked the price of oil down to $10 a barrel -- equivalent to only $13 a barrel in 2009 dollars. It would seem that oil has a lot more room on the downside.

The Wall Street Journal Blog is starting to wonder:
With already tottering demand getting even weaker, oil bulls are having second thoughts. Barclays Bank, which for months has warned oil prices will rebound because of supply shortages, slashed its 2009 forecast for Brent crude to $61 from $70.
Another skeptic says the unthinkable in Your Oil Stocks Aren't Coming Back:
Remember when Intel (INTC), Microsoft (MSFT), Dell (DELL), Lucent (ALU), Yahoo (YHOO) and Cisco (CSCO) ruled the markets? There was an era, roughly 1997 to 2000 when those stocks actually mattered. They were important companies doing big things in terms of providing the technology needed for the next century’s communications and internet build-out. And then, they just didn’t matter anymore. Once the dot com bubble burst, every bounce or rally in these names was basically a selling opportunity…for 8 years and counting! See the above chart for a notion of how frustrating it must have been to stay positive on NASDAQ tech names.

It took a long time for people to get it through their heads that these stocks had seen the best valuations and prices that they would ever see. Investors couldn’t imagine a world where these stocks would no longer be important, but with each passing quarter and year, these NASDAQ Generals diminished in stature and market cap.

I believe that this story is repeating itself in the oil patch. Market participants seem to be in a state of disbelief that Chesapeake (CHK), Transocean (RIG), National Oilwell Varco (NOV) and ConocoPhillips (COP) aren't important anymore. These stocks may have have seen the best levels they will ever see, at least for a long time.
Traders talking about "dumb money" in the oil markets:
Flynn expects oil prices to eventually drop well below $30 a barrel in coming months as manufacturers cut operations and millions of laid off workers stop commuting to work.

"We're getting ready for a tailspin, but you just don't know what's going to happen," Flynn said. If it weren't for the new federal stimulus package and promises of further OPEC production cuts, "we'd probably already be there."

Trading on the Nymex has been erratic because of a influx of "dumb money" entering the market, analyst Stephen Schork said. Amateur investors are flocking to energy funds that have bet crude prices will eventually spike again.

"They're looking at the fact that crude went to $150 a barrel a year ago, and its in the 30s today," Schork said. "They think it's going back up."
More in the same vein from Rigzone (hat tip to OilFinder):
Oil Cos' Bet on Swift Price Rebound Has Its Risks
Major oil companies are trying not to repeat the mistakes of the last price slump in the late 1990s, when cutting back on investment left them ill-prepared to meet growing demand in later years. This time they promise to maintain investment through the current price dip, but the risk is growing that a prolonged slump could stymie their plans.

If the years ahead follow the pattern of the last major recession in the early the 1980s, where global oil demand shrank during the downturn and remained well below production capacity for years, even as the recovery accelerated, prices may stay low for much longer than current expectations. Steady as she goes may be their mantra for 2009, but oil chiefs may be on course for some tough choices in 2010.


We are barely six months past the last peak in the oil price, but OPEC already has 8 million barrels a day of spare oil production capacity after big output cuts, said the group's Secretary General Abdullah Al-Badri. The group is very concerned about the impact the economic downturn will have on the medium- and long-term oil demand, he said.

OPEC's spare capacity looks likely to grow. Thanks to investment in the boom years, the world's productive capacity should grow faster between 2009 and 2012 than it did from 2003 to 2008, said a report from U.S.-based consultancy Cambridge Energy Research Associates.

Companies May Face Massive Cash Outflows

If companies do not reduce their upstream investment at all during the current economic downturn, CERA said spare capacity could reach 10 million barrels a day by 2013. "This would be an unprecedented margin and would tend to undermine the oil price," the consultancy said.
by JD

Saturday, February 14, 2009


Many newcomers are confused about what we stand for here at Peak Oil Debunked. So today I'd like to describe our basic position, and how we differ from the more pessimistic mainstream of the peak oil community.

The main difference is that the pessimists focus obsessively on the supply side. They are committed to the idea of societal breakdown or collapse, so they constantly fret about supply, like Dave Cohen:
Here's the main point: Can anyone, anywhere, point to a large new secure supply of crude coming online anywhere in the next few (5) years that solves the supply and demand equation in that time frame and beyond? I think not.
When the IEA draws some crazy curve which says world demand is going to be 121mbd in 2030, pessimists like Dave really take it to heart. They genuinely think that the world is going to need that much oil. That is why they are pessimistic. The world will need 121mbd, but it's unlikely that amount will be forthcoming, so the system is going to breakdown.

That's the doomer view in a nutshell, and it's nicely captured in a recent graph from the Oil Drum, which Gail Tverberg uses to terrorize the wide-eyed newbies in her presentations on peak oil:

Note that Gail and her fellow pessimists are very careful to never question the unexamined doomer assumption, i.e. to ask: "Is all that oil really necessary?"

I, on the other hand, am an optimist. I believe that most oil is wasted and conservation is actually quite easy. I don't believe we need most of the oil we are using today, so the failure to meet the 121mbd target is not really a big deal. Like I wrote back to Dave:
The error in your ways is that you are thinking only in terms of supply side solutions. You think that the failure to meet demand is a terrible problem. It's not. Most oil demand is for frivolous, wasteful uses (like single person commuting in the U.S.) It's a form of addiction, and demand destruction isn't a bad thing, it's "healing" or "getting better".

To answer your question: The large new supply of secure crude is going to come from conservation, i.e. U.S. commuters riding two-to-a-car instead of one-to-a-car etc.
It is patently obvious that vast amounts of oil are being wasted, particularly in first world countries. The Hirsch Report itself admits (P. 24) that "67 percent of personal automobile travel, and 50 percent of airplane travel are discretionary". This means that 6.3 million barrels per day (roughly equal to the oil production of Iran+Iraq) are used in discretionary auto/air travel in the US alone. That's huge: 30% of US oil consumption, and 50% of US oil imports. And it's being wasted on non-mission-critical, optional travel. Or consider commuting. The average commute in the US is 16 miles Source. Which means that, in a pinch, half the population could easily commute to work by bicycle. Those with longer commutes can conserve, while still maintaining functionality as usual, by car pooling, or driving a hyper-efficient vehicle, like the Veken hybrid scooter, which is available today for less than $3000, and gets 180mpg (you can see a video here. More info here). On top of that, you can count numerous other demand-side measures, like telecommuting, telepresence, or even gasoline rationing with tradeable credits. You could very easily draft a plan to eliminate half of US oil consumption (10mbd, or 1 Saudi Arabia) simply by trimming waste and lifestyle.

Of course my point here is true, and it carries a lot of force. In fact, I've never met a doomer who didn't immediately acknowledge the validity of this point. There is no genuine "need" for people to commute to computerized desk jobs 100 miles away in 6000 lb. single-occupant SUVs. You don't even have to think about it; it's patently ridiculous. We waste staggering volumes of oil on frivolous lifestyle bullshit.

So the optimist solution is to gradually (or quickly, if need be) eliminate all this waste, and switch over the remaining essential part to alternate power sources. For example, the classic case would be a commuter who switches from a single-occupant 12mpg SUV to a 180mpg hybrid scooter, and then to an ∞ mpg electric scooter driven by solar or nuclear. Radically reduce oil use to the minimum necessary, and then substitute. That's the optimist solution in a nutshell.

Of course, the doomers are fully committed to horror and mayhem, and have a pre-packaged rebuttal to this solution too. They say that conservation and efficiency are poison to our economy because the economy is based on waste, and eliminating waste will send the economy into a death spiral. It sounds plausible the first time you hear it, but if you think about it carefully, you'll see the fallacy.

Consider the classic example: Jane was driving an SUV that got 12mpg. Then she purchased a hybrid scooter for $3000, which gets 180mpg. Assuming $5/gallon gas (due to post-peak conditions), car travel costs $.42/mile and scooter travel costs $0.03/mile. So when she rides her scooter, she's saving about $0.39/mile. At the scooter's top speed of 40mph, she's saving $15.60/hour. She's making as much money driving her scooter as she would working a well-paying second job. She'll pay off the moped in a few months, and after that it's all gravy. Lots of extra money in her pocket is hardly a negative for the economy. That money will get spent somewhere, and the people providing those goods and services will benefit.

This is the key point: Whenever you conserve oil, you also save money, and that money gets spent or invested, stimulating the economy. Unlike money spent on oil, which generally flows out of the country, money saved by conserving oil is far more likely to be spent in a way which stimulates the domestic economy and employment.

A recent study of efficiency efforts in California bears this out:
• Energy efficiency measures have enabled California households to redirect their expenditure toward other goods and services, creating about 1.5 million FTE (Full Time Equivalent) jobs with a total payroll of over $45 billion, driven by well-documented household energy savings of $56 billion from 1972-2006.
• As a result of energy efficiency, California reduced its energy import dependence and directed a greater percentage of its consumption to in-state, employment-intensive goods and services, whose supply chains also largely reside within the state, creating a “multiplier” effect of job generation.
• The same efficiency measures resulted in slower growth in energy supply chains, including oil, gas, and electric power. For every new job foregone in these sectors, however, more than 50 new jobs have been created across the state’s diverse economy.
• Sectoral examination of these results indicates that job creation is in less energy intensive services and other categories, further compounding California’s aggregate efficiency improvements and facilitating the economy’s transition to a low carbon future.
So there you have it. Conservation is the easiest and best solution to peak oil, and it's highly beneficial to the economy. Careful examination shows the pessimist argument to be based on a series of fallacies.
by JD

Friday, February 06, 2009


The oil glut continues...

Crude Oil At Sea Frustrates Efforts At Price Stability
Every time the oil market attempts to ignite a rally, an upsurge from the sea of crude stored on waterborne tankers snuffs it out.

The accumulation of oil held in "floating storage" gained speed in December, as available space in traditional onshore storage hubs dwindled due to the onslaught of excess supplies in the market. This floating storage is now among the biggest impediments to oil prices recovering any of the ground lost over the last six months. Companies are quick to sell cargoes at the hint of a turnaround in the oil market, unleashing a flood of oil onto a near-saturated landscape.

More oil is being produced than recession-stricken economies need, and oil prices have fallen as the extra crude fills storage terminals worldwide. Crude futures prices are down more than 70% from all-time record highs hit in July 2008. Light, sweet crude oil for March delivery on Tuesday settled 46 cents, or 1.1%, lower at $40.32 a barrel on the New York Mercantile Exchange.

The oil sitting at sea adds an extra layer of uncertainty about the extent of the supply overhang, which traders say must be whittled down for oil prices to rebound.

Tankers carrying up to 2 million barrels each are not counted in government inventory statistics, but can deliver their cargoes anywhere in the world. Ship trackers estimate that up to 80 million barrels may be on the water, or more than twice the amount kept in Cushing, Okla., the largest commercial storage center in the U.S.
An LNG glut seems to be brewing as well. Hate to be repetitive, but whatever happened to that imminent cliff in natural gas that Matt Simmons was hysterically squealing about 6 years ago? With rising domestic production from shale and other unconventional natural gas plays, and now a surge of LNG, we seem to be swimming in the stuff.

Natural gas glut could hit U.S.
As many as seven massive natural gas export terminals are expected to start up overseas this year, expanding worldwide capacity by 20 percent and flooding markets with new supplies of the key power plant and heating fuel. Dozens of new tankers capable of carrying natural gas in a liquefied form are slated to hit the seas.

Just as these new supplies come on line, worldwide demand is expected to drop as the global recession deepens.

Operators of these new facilities are unlikely to cut back production, however, so shipments of liquefied natural gas will most likely head to the deepest markets with the greatest amount of natural gas storage capacity — the United States.

“It’s completely counterintuitive,” said Murray Douglas, a global LNG analyst with Wood Mackenzie in Houston, who is predicting U.S. LNG imports will grow 30 percent to 456 billion cubic feet this year and to more than 1.1 trillion cubic feet by 2013.

“We don’t believe Asia and Europe will be in a position to absorb this new production, and the U.S. is the only market that can take it, that has a large amount of storage.”

The wave of imports might even be strong enough to challenge growing domestic natural gas production from various shale formations, including the Barnett Shale near Fort Worth and Fayetteville Shale in Arkansas.

“This can put pressure on U.S. gas prices and could delay the full development of some of the new shale projects,” Douglas said.

Other analysts, including Houston-based Waterborne Energy and Raleigh, N.C.-based Pan Eurasia Enterprises, agree that an American gas import surge may be coming.

Even the Department of Energy updated its LNG import predictions for 2009 recently to include the possibility of such a surge.
And thanks to OilFinder for some more detail:

Surge in US Crude Stocks Blunts OPEC Cuts

OPEC cut crude oil output by nearly 1.3 million barrels a day in January in an attempt to tame the growing supply glut that is anchoring prices near $40 a barrel.

But as the Organization of Petroleum Exporting Countries tightened the taps, crude oil inventories in the U.S. were growing by 700,000 to 900,000 barrels a day. That growth rate, the most seen in the month of January in 85 years, and the highest in any month since at least October 2002, is a serious setback to OPEC's efforts.


Biggest Surplus Since 1990

That helped U.S. crude oil inventories balloon by the highest level in years. Crude inventories climbed by at least four times the average January rate over the last five years, which is the biggest rise in the month since 1924, EIA data show.

At 346 million barrels, crude stocks are the most since July 2007, when they topped 351 million barrels.

Crude stocks are sufficient to cover more than 24 days of current refinery demand, compared with a five-year average of 20 days, and the highest level since 1995.

What's more, crude stocks are likely to continue to gain. The EIA expects refinery runs in February and March to average 400,000 barrels a day below current levels.

Jan Stuart, economist at UBS Securities, said he expected refineries to slash operations to be below 70% of capacity on occasion in coming months, compared with an 83.5% rate in the Jan. 30 week. That implies a cut in crude runs of about 2 million barrels a day from current rates.

U.S. crude oil stocks haven't peaked in January in 55 years, data from the EIA show, a further indication of likely gains in coming months. Incentives for refiners to bulk up stockpiles are still in place, even as inventory at Cushing, Okla., the delivery point for the Nymex crude contract, stands at record levels.

by JD