Will RWE Quit Building New UK Nuclear Power Plants?
Part of the Government’s energy policy includes the construction of new nuclear power plants but this looks increasingly to be in jeopardy as RWE npower considers withdrawing from plans to build new nuclear power plants in the UK.
RWE, the German utility company which owns npower, is to conduct an internal review of plans to build two nuclear power stations in the UK. The news comes only weeks after Scottish & Southern Energy (SSE) decided to pull out of plans to build a new nuclear power plant in Cumbria.
Utility Exchange reported recently that the Government was planning to spend £15bn on undersea cables to connect the UK to Europe so that it can import electricity to avoid any power blackouts in the future. The concerns over possible blackouts will surely intensify if energy providers such as RWE npower and SSE decide against building new nuclear power plants. There will also be questions over how much this will impact on business electricity prices.
Nuclear power is part of the Government’s low carbon agenda but at the Conservative Party Conference, the Chancellor, George Osborne, disputed how affordable this low carbon plan is at a time when the country is facing serious financial constraints.
The Government has spent time encouraging energy companies to build new nuclear power plants but as well as the cost, the Government is also facing the fact that other countries including Japan and Germany are abandoning nuclear power after the Fukushima disaster earlier this year.
The closure of German nuclear power plants looks set to cause serious financial problems for RWE which could mean they abandon plans to build new plants at Wylfa in Wales and Oldbury in Gloucestershire. The Wylfa and Oldbury projects are a joint venture with E.ON under the name of Horizon Nuclear Power. RWE however, is also looking at a possible deal with Gazprom, the Russian gas giant. Consequently, if RWE and Gazprom become involved the gas giant is unlikely to be happy with RWE being involved in UK nuclear power.
Volker Beckers, CEO of RWE npower said in response to a report from the Chief Nuclear Inspector “New nuclear will be an important part of the UK’s future energy mix and RWE npower intends to be part of that future through our Horizon venture”.
This implies that despite the rumours, RWE intends to continue with its nuclear projects in the UK.
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North Sea Oil & Gas May Run Out In Just 17 Years
Everyone knows that there’s not much North Sea oil and gas left but it could run out in just 17 years if production carries on as it is at the moment.
According to Oil & Gas UK’s 2011 economic report there may only be 14 billion barrels of oil and gas left in the North Sea and extracting this at the current rate of 2.2 million barrels a day means it could run out in just 17 years.
However, it’s estimated there are reserves of around 24 billion barrels although some of these reserves will require new techniques to extract. In theory these 24 billion barrels should last another 30 years at the current rate of production.
As the oil and gas becomes more difficult to extract, production is likely to slow – it’s already down 6.5% compared with last year and by 2021 it could be that North Sea production is down to 500,000 barrels a day. This would mean as a country we would have to import more oil and gas making us more vulnerable to volatile wholesale energy prices which in turn could mean rises in business electricity prices, business gas prices and domestic energy bills.
The chief executive of Oil & Gas UK, Malcolm Webb, said “We believe that up to 24billion boe (barrels of oil and gas equivalent) remain to be produced here. The forecasts prepared at the start of 2011 showed that investment to develop these was set to increase dramatically to £8billion this year and be sustained at that rate for the next five years. Our calculations show that if the investment planned then were realised, over 40 per cent of our primary energy demand (or 60 per cent of oil and gas demand) could still be satisfied from these resources in 2020”.
While 40 billion barrels of oil have been extracted from the North Sea the SNP Westminster energy spokesman, Mike Weir, believes there’s still the same amount still to be extracted. He said “The oil and gas industry continues to be a vital part of our economy and clearly there continues to be a long-term future for the industry, with as much oil left around our shores as has already been extracted”.
Only this week E.ON announced an “encouraging” gas discovery in the southern North Sea. Chief Executive of E.ON’s exploration and production arm, Frank Siversten, said “We are pleased to announce a successful UK gas discovery. This result is another important step for our upstream business”.
The company expects to increase the amount of oil and gas it extracts from the North Sea as new fields start producing over the next few years.
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EDF Energy Suspends Doorstep Sales
After British Gas announced the suspension of its doorstep sales in August EDF Energy has today announced that it has also suspended doorstep sales until a review has been carried out.
EDF Energy has suspended un-solicited door to door residential energy sales until a review has been carried out of the sales channel and the staff affected are consulted. Utility Exchange reported in August that British Gas had suspended doorstep sales in line with a request from Consumer Focus.
The Director of Residential Customers, Jim Poole, said “We want to be first choice for customers. We understand that the majority of customers do not want to be sold energy on their doorstep via unsolicited calls, so today we have suspended this activity while we review the channel. This is in line with the call from Consumer Focus for a moratorium on this type of sales”.
He continued “The views of our customers are of paramount importance to us, and we want to make sure that their experience of EDF Energy is the best it can be. Customers are increasingly looking for and using other ways to compare and choose their energy supplier. We will continue to invest in attracting new customers and also in keeping our existing customers – so they not only choose to stay with us, but also recommend us to their friends and family”.
He added “We recognise that face to face advice is important to some customers and this will continue with sales at retail venues and via appointment. We are committed to being open and honest with our customers, which is critical in developing trust in the energy sector”.
At a time when energy prices have been increasing customer service is one of the few areas that can differentiate one energy company from another and companies don’t want to alienate potential customers. Many people are put off by door to door sales tactics and after recently coming bottom of the table with the most customer complaints, as reported by Utility Exchange, EDF will want to rectify this situation as quickly as possible.
However, the decision to suspend door to door sales will affect around 300 employees of EDF Energy.
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North Sea Oil Spill Biggest In Over Decade As Second Leak Found
Shell announced an oil spill in the North Sea on Wednesday and while initially it was thought to be only a small leak Government figures now suggest it is the biggest leak in over a decade and a second leak has now been found.
The Shell oil leak in the North Sea is thought to be as large as several hundred tonnes and the Department of Energy & climate Change (DECC) has described it as “substantial”.
The Gannet Alpha platform is around 112 miles east of Aberdeen and is operated by Shell. While the subsea well was shut down on Wednesday Shell has not said how much oil has leaked into the sea. It’s thought the oil giant is still trying to ensure the leak is completely sealed and that there is no further leak.
A spokesman for the DECC said “Although small in comparison to the Macondo, Gulf of Mexico, incident, in the context of the UK continental shelf, the spill is substantial – but it is not anticipated that oil will reach the shore and indeed it is expected that it will be dispersed naturally. The UK continental shelf oil spill record is strong, which is why it is disappointing that this spill has happened. We take any spill very seriously and we will be investigating the causes of the spill and learning any lessons from the response to it”.
He went on to say that so far estimates are that the spill could be several hundred tonnes but that it’s difficult to assess the size of a spill. He said the Maritime and Coastguard Agency are flying over the area twice a day to monitor the situation.
Speaking from Oil and Gas UK, Mick Borwell said he thought Shell would be doing everything they could to tackle the leak.
He said “Any oil company operating in the UK takes oil spill, any volume of oil spill, very seriously”.
Meanwhile there are concerns for the environment and the effect any oil reaching the shore could have on wildlife and marine life.
The director of the RSPB Scotland, said “If Shell is confident that the situation is now under control we must now start to assess what happened and make sure the relevant precautions are in place to stop this happening again”.
The latest news is that a second leak has been found in the flow line under the Gannet Alpha oil rig and the oil giant is trying to locate its exact position.
The technical director of Shell’s exploration and production activities in Europe, Glen Cayley, said “We’ve got a very complex sub-sea infrastructure and the position of the leak is in an awkward place with a lot of marine growth. It’s taken our diving crews some time to establish exactly and precisely where that leak is coming from”.
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British Gas Announces Suspension Of Doorstep Sales
British Gas has announced that it will stop doorstep sales for three months in line with a request from Consumer Focus to all energy suppliers.
British Gas said doorstep selling was increasingly out dated as a way of communicating with customers and that the company would now work with both customers and consumer bodies to develop how it “provides access to advice and information about its products and services, including the role of appointment based face-to-face advice”.
British Gas said doorstep selling was no longer the preferred or trusted way that consumers want to assess their energy arrangements.
British Gas has actually cut down on the number of doorstep sales agents over recent years. The number is now less than a quarter of the 1,300 agents employed in 2006.
Customers have reported that they do value face-to-face advice but have said it needs to be delivered differently. British Gas will consult with Consumer Focus which called for a three month suspension of doorstep selling and has suggested that in future energy providers should have an appointment system.
British Gas said it was “committed to giving its customers control of how they can access product information and advice at a time and place convenient to them”.
The company said there was an increased demand for appointment based face-to-face advice from trained energy experts. Now British Gas wants to develop new ways to do this. Working with Sainsbury’s British Gas has gained over 100,000 new accounts this year since the partnership was launched.
The managing Director of Energy at British Gas, Ian Peters said “Doorstep selling, in its current form, is no longer a sustainable way to engage or build a relationship with customers. We want the energy advice we give our customers to be trusted and delivered at a time and place that is convenient to them”.
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BP North Sea Oil Pipeline Shut Down To Remove Unexploded Bomb
A pipeline which delivers around 40% of the oil produced in the UK into the country has been shut down so that an unexploded bomb can be removed.
The BP Forties pipeline has been closed off Peterhead in Scotland so that a Second World War mine can be removed safely. The pipeline will be shut for five days while the mine is removed.
The German built mine will be taken 2.5 miles away from the pipeline and detonated underwater. It was found 25 miles off the coast of Peterhead in March and according to a BP spokesman “It didn’t pose any risks where it was, but we knew pretty quickly we didn’t want it there. It’s very rare that the whole system is shut down, but we are not taking any chances”.
BP has shut down the pipeline now while demand is lower. BP will make the most of the shut down by carrying out maintenance on the pipeline.
BP said “The Forties pipeline system has started a five-day planned shutdown, to enable the safe removal and disposal of ordnance lying next to the pipeline. BP is also taking the opportunity to conduct some important maintenance while the system is shut down. All users of the Forties pipeline system have been kept regularly informed and are fully aware of the plan. The plans have also received full regulatory approvals and support”.
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BP Invests £3 Billion In North Sea Oil Projects
BP is to spend £3billion redeveloping two North Sea oil fields even though the government introduced changes to the tax on production profits.
The oil giant BP will put £3 billion into expanding production at Schiehallion and Loyal oil fields which are situated west of the Shetland Isles. According to BP there are around 450 million barrels of oil waiting to be extracted.
The investment is one of the biggest in the North Sea for a number of years and despite the new tax on production profits BP says the investment is worth it because of the “size and scale” of potential oil reserves.
A spokesman for BP said “Like all investments in the UK Continental Shelf the value in the project for the companies involved has been reduced because of the tax change. The tax increase certainly didn’t make the decision any easier. However, the size and scale of this development means we are able to progress – industry’s concerns remain around future green field developments, gas projects and smaller, more mature fields”.
He said the development would include drilling a number of new wells over several years. Each stage of the development would be evaluated because with the new tax regime some of these developments could prove to be uneconomic.
Much of the investment will be used on a new FPSO (Floating, Production, Storage and Offloading) vessel which could be in place by 2015. BP expects production to begin in 2016.
The new FPSO vessel will be able to process 130,000 barrels of oil a day and store over 1 million barrels. The investment will also create hundreds of new jobs.
It’s hoped the BP investment will encourage other businesses to invest in the North Sea after they had previously lobbied the Government over the decision to increase the tax on production profits.
With rising oil prices affecting business electricity prices and business gas prices it’s good news that BP is to invest in the North Sea. Not only will it improve UK energy security but it will also create jobs.
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Oil Prices Fall As IEA Releases Emergency Supplies
Oil prices fell yesterday after the International Energy Agency (IEA) opened its emergency reserves on to the market but it looks like motorists won’t benefit from the fall.
The International Energy Agency agreed to release 60m barrels of oil to make up for the shortage of supplies as a result of trouble in the Middle East and North Africa. However, Opec has criticised this so called political intervention.
It’s only the third time in the history of the IEA that emergency reserves of oil have been released. It had only been done before during the first Gulf War and when Hurricane Katrina struck in 2005.
The emergency supplies of oil were released to try to prevent fuel prices increasing even further and damaging the global recovery. But domestic and business gas prices are also linked to oil prices and these have been increasing too as oil prices have risen. As a result of the release of oil, prices dropped by as much as $8 a barrel – the equivalent of 4p off a litre of petrol.
However, motoring organisations have questioned whether motorists will see the benefit of this drop in prices. The head of AA public affairs, Paul Watters, said fuel prices were unlikely to drop significantly even if supermarkets prompted a price war. He said “‘In March this year, the average UK price of petrol levelled off at 133.5p a litre when oil hit a plateau of $115. Yet when oil returned to $115 in early to mid May, petrol dropped to only 135.75p – even with the benefit of the fuel duty cut in April”.
He added “We hope this oil price crash will lead to a price war on UK forecourts, but we remember post-Hurricane Katrina when a 4p drop in wholesale petrol prices took nearly three months to be reflected in its entirety at the pump”.
However, the International Energy Agency said the reason for releasing the oil reserves was to help ease shortages and not to lower prices. However, North Sea Brent crude fell to $107 a barrel while light crude fell to $90 a barrel.
Chris Huhne, the Energy & Climate Change secretary said conflicts in Libya and Yemen had affected global oil supplies. He said “The stock release will help prevent short term supply disruption driving a more volatile oil price that could damage the UK economy and threaten the global economic recovery”.
The petrol price war however, may already have started as this morning Tesco cut 3p off a litre of petrol and diesel. We’ll have to see if any of the other suppliers follow suit.
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Oil Prices Rise After OPEC Fails To Increase Production
Oil prices have risen after OPEC met this week but found they couldn’t agree on whether or not to increase production.
The oil cartel had been expected to raise oil production after their meeting in Vienna this week but according to reports, increasing tension amongst OPEC members resulted in them not being able to reach a decision.
Petrol prices have been rising on the back of high oil prices as supplies are affected by the conflict in Libya and elsewhere in the Middle East. Analysts had expected the cartel to agree to raise production in order to lower prices and increase confidence in supplies.
Rising petrol prices are not just affecting ordinary drivers but they are affecting small businesses and those in the haulage trade too who not only have to cope with higher fuel prices but rising business electricity prices.
Brent crude rose to $117.90 a barrel in Asian trading while US sweet crude was up to $101.10 a barrel on Thursday.
The Secretary General of OPEC, Abdullah Al-Badri, said “We are unable to reach consensus to… raise our production”.
Oil consumption has increased over recent years with statistics from BP showing that consumption increased last year at its fastest rate since 2004. It’s predicted that demand will rise again this year and there’s concern that demand could outstrip supply.
The Saudi oil minister Ali al-Naimi said “This is one of the worst meetings we have ever had”. Saudi Arabia and some of the other states in the Gulf want to increase production to ensure prices don’t rise any more.
However, countries against increasing production included Venezuela, Iran, Algeria and Libya. The Venezuelan oil minister said if they agreed to increase oil production it could result in a collapse in prices.
But analysts say that an agreement to increase production would actually have little effect. A director at BNP Paribas commodity futures, Tom Bentz, said “It seems to me that with crude prices as high as they are, most members are already producing as much as they possibly can”.
But an OPEC official has now said that if there were concerns about oil supplies running out the group would act as a whole. It’s been said that economic factors were the reason the discussions failed with members having different numbers for how many barrels of oil the market needed and how many were currently being produced.
However it could be that we have actually reached peak oil and demand has now outstripped supply. Demand has increased because countries such as China have increased consumption – The Chinese demand for oil has increased to 860,000 barrels a day.
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Pensioners Choose Between Heating & Eating During Cold Winters
There’s concern that some pensioners have to choose between eating and heating during cold winters, something which may get worse as Scottish Power announces massive gas and electricity price rises.
According to a report by the Institute for Fiscal Studies (IFS), retired people increase their spending on fuel by 7% during cold weather and the poorest quarter spend less on food as a result.
Only yesterday Scottish Power increased gas prices by 19% from 1 August and electricity prices by 10%. This move will affect around 2.4 million households and if the rest of the big six also increase prices, households all over the country could find themselves paying around £200 more on their energy bill.
Sky news reports that the rest of the big six energy suppliers including nPower, E.ON and EDF have all said they are constantly reviewing their prices. But it’s expected that they will all follow suit because where one supplier leads the others generally follow.
Utility Exchange reported recently that British Gas had warned that wholesale prices were much higher and were not reflected in current gas prices. Consequently, the company suggested that prices would have to increase to reflect this difference. Furthermore, it’s expected that business gas prices and electricity prices will also increase.
It’s argued that Scottish Power had managed to absorb the increase in wholesale prices since November 2010 but it couldn’t do this any longer and so it now had to increase prices.
There are concerns that the energy companies are operating a cartel and the MP for Glasgow North West, John Robertson says this needs to be investigated by the Competition Commission.
He said “Scottish Power made £1.3bn profit in 2009/10. If you look at Southern Energy, they made £2.1bn. That’s just two companies. There’s another four and some of them make even more; particularly those in the South East. So there’s lots of money there”.
Ofgem investigated the energy suppliers earlier in the year and said the energy market was “failing customers”. Ofgem recommended making tariffs simpler to make it easier for customers to compare gas and electricity prices.
An Ofgem spokesman said “Ofgem’s role is to ensure that the market works in the interests of energy consumers. The conclusion of our retail market review shows that this is currently not the case”.
Meanwhile, gas and electricity prices are set to increase further and some poorer pensioners may again have to choose between heating and eating if it’s a cold winter.