Sunday, March 1, 2009

P45. Pick Points

Talking with the utility companies the other week, they had noted that, while there was still a planned growth in using natural gas for new power stations, the rising cost was giving some of them second thoughts. Well on Friday Speaker Pelosi noted on her blog that she and Senator Reid had sent a letter to the Acting Architect at the Capitol, asking that the Capitol Power Plant (CPP) switch from burning both coal and natural gas to just natural gas. Turns out it is not that easy – the plant now burns 65% natural gas and 35% coal (down from 49% in 2007). There are cost, technical and political problems in making the changes, but Dr James Hansen is pressing them hard. (isn’t he still a civil servant?). But even the Guardian seems to having the odd second thought
Peter Huber and Mark Mills – in their outstanding 2005 book about energy, The Bottomless Well – made this point clear, declaring: "Economic growth marches hand in hand with increased consumption of electricity – always, everywhere, without significant exception in the annals of modern industrial history." . . . The second problem with Hansen's prospective coal ban: scale. According to the latest data from the BP Statistical Review of World Energy, the countries of the world now consume the coal equivalent of about 63.8 million barrels of oil per day. That's the energy equivalent of about 7.5 times the daily oil production of Saudi Arabia. Where will the world find a replacement for such a vast quantity of energy? And how will it pay for it, particularly now, given the worldwide recession?

Hansen doesn't offer any ideas. And frankly, aside from a huge push for increased nuclear power (a move that I favour) no one else has any reasonable ideas either.
Well there is supposed to be a march of protest tomorrow, so we will see how it goes, but the weather may snow it out. ”It's no accident that he's announced he'll be on hand to get arrested. (Hansen that is).”

Tehran looks as though it may be getting into the LNG business, with talks progressing with Total. At present LNG seems to be moving from shortage to surplus, making it tougher for those in the business to succeed. Remember that Russia has just become a supplier (though mainly to Japan) but there are markets developing in India, for example, who are looking to double deliveries this year, as the Gujarat terminal expands. It will help if the global surplus lowers price for India.
India is a gas deficit country. Power and fertiliser plants consume 70 per cent of the gas available in the country. Inadequate supply of gas forces them to operate at 50-60 per cent of capacity. At present, power plants in the country are getting 34-35 million standard cubic metres per day (mcmd) supply against the requirement of 70 mcmd.

Currently, spot LNG is trading at $8 per million British thermal units (mBtu), whereas naphtha is trading at $13 per mBtu in the spot market. In December, LNG was trading at $10 per mBtu, whereas naphtha was trading at $7.04 per mBtu
At the same time the disputes over coal supply also seem to be coming to an end, with supplies guaranteed at least at 90% of actual supplies last year.

Meanwhile the Russians are beginning to invest more in floating nuclear power plants. Four more are to be built to bring power to the northern coast region of Siberia. Although delays are reported, the first plant is scheduled to be ready in May 2010. The region for which the plants are destined has large deposits of uranium. Elkon being reported to have about 6% of the worlds reserves. Production is planned to reach 3,000 tons by 2015. But some of that production may be needed for the upgrade of Russian nuclear forces . Don’t forget that the Miss Atom 2009 contest is coming up.

Russians are also investing in coal, with the purchase of the Bluestone Coal Corp, although the domestic industry appears to be in some trouble. Bluestone currently mines coal around Beckley, W. Va and has estimated sales of around $23 million, with 180 employees. The price was $425 million plus shares for a $4 billion deal.

Senator Lisa Murkowski of Alaska has introduced a bill to permit oil production in the Arctic National Wildlife Refuge, from directional wells that are drilled outside the refuge's borders. The state is also considering supporting renewable energy with a new line of credits.

It was only last week that the thought of a pipeline across the Sahara was floated, but it is already getting threats from a major Nigerian militant group .

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