Wednesday, April 22, 2009

Energy Summit - a radio visit and the Keynote

Today was the first of the 2-day Missouri Energy Summit but before I could go and grab my seat for the Keynote (covered below the fold), three of us were invited to a local radio station, KFRU, to appear on the Morning Meeting with Simon Rose and Renee Hulshof. Being a little unfamiliar with the town we barely got there, when we were on the air, talking about what had brought the three of us to the meeting. Lea-Rachel Kosnik was there to talk about her work with micro-hydro. Given that both wind and solar energy are variable producers, small scale-hydro provides a resource that can readily be brought on line when needed as backup. Further, as a mature technology, the parts are available and are thus more "shovel ready" than many alternatives. She had found some 5,000 locations in Missouri where this might be a viable option, without running into controversy over environmental problems, and where the plant could produce more that 1 MW. Lea is an economist, and was less concerned that some of us about the imperatives of finding an early solution to energy supply, feeling that as the price rises again so market economics will restrict demand and encourage alternate supplies.

Byran Becker from UMKC talked about energy efficiency, and gave the example of food storage in supermarkets. Where the cold food is stored behind doors, he noted that the conventional wisdom was that this would reduce sales, in fact their study showed that sales increased. (Tip - take the food at the back of the shelf since it has seen less temperature fluctuation) In addition he noted that the store would save 2/3 of the storage energy bill, where these displays were closed. Were this to be adopted nation-wide then we would save the equivalent output from 2.5 250 MW coal-fired power plants.

I talked a little about my day job, and the energy saving value of putting high-pressure waterjets on mining machines to reduce the overall energy cost of mining, but really also tried to turn the discussion to recognition that while solutions were evolving, the time for answers is much closer than the discussion would suggest. But when I pointed out that Cantarell was dropping in production by 250,000 bd/year and that Ghawar had very few years left, I got the feeling that I was the only one in the room who knew what I was talking about. (I did check with the one person I thought might, and he didn’t). Simon and Renee were gracious hosts, and kept the discussion moving in such a way that at the end they had us agreeing that we needed all forms of energy as soon as possible, to help. (But I did get a sense that they had the odd concern over ethanol, and Renee did note that with prices falling for ethanol, food prices were still up).

Yet the conversation prefaced my sense of the whole meeting, that then followed. The atmosphere seems to be that we have survived the energy crisis. That little blip when the oil price went so high, well that was it, and now we can sit back, relax and take the time to work out what we need to do next. No hurry! (At least over oil supplies, global warming is entirely another issue).

(Ed. note: The paragraph above on Dr Kosnik's work has been corrected to reflect the immediacy of application of the technology, and that here are 5,000 sites in Missouri, and not as originally written in the country. My apologies for the inaccuracy).

When I. later, mentioned Jevon’s Paradox, this was not something that folk were aware of. (Basically the paradox was noted back in the 1830’s as railway locomotives were made more efficient coal demand still went up.)
Jevon’s Paradox tells us that when we increase the efficiency of the use of a resource, we initially decrease the demand for that resource, but that ultimately this lower demand reduces price, which causes a “rebound” of increasing demand. When applied specifically to energy efficiency, this is commonly referred to as the “Rebound Effect.”

But hurry we did, to get back to the main campus, in time to hear T. Boone Pickens, come out to talk about Pickens Plan. As he admits in his video he is giving much the same presentation to folk around the country, seeking support for H.R. 1835, which has the following key parts.

Title I: Promote the purchase and use of NGVs with an Emphasis on Heavy Duty Vehicles and Fleet Vehicles
Title II: Promote Production of NGVs by Original Equipment Manufacturers
Title III. To Incentivize the Installation of Natural Gas Fuel Pumps and Service Stations and Depots and Domestic LNG Production Facilities for Small Energy Producers
Title IV: Natural Gas Vehicles (Not later than 2014, at least 50% of all new vehicles purchased by the US Government shall be capable of operating on natural gas.)

From which you might be able to guess why it is called the Natural Gas Act, and since Boone has a company Clean Energy Fuels that is “the largest provider of natural gas for transportation in North America” why he is that excited to get his “Army” to support it.

He noted something that I had not thought of. Until now Venezuela has been selling their heavy oil into the United States, not because they love us, but because we have the refineries that can process the heavy crude, and then sell it into the American market. However last May the Chinese signed an agreement with President Chavez, and will be building a refinery in China that will be able to refine 400,000 bd of Venezuelan crude. Apparently this number is now confirmed, but the deal has grown to include Total, and the construction of an upgrader facility in Venezuela to clean up the oil before it is shipped. Boone thinks that this prefaces a total coming sale of Venezuelan oil to China at 1 mbd, which will dramatically cut into the oil that we get from there.

It is information like this that has Boone predicting that we will soon be importing 75% of our oil, and that it will be costing us $300 a barrel. Money that we should be spending on health care and education will all go for oil. And if we are now willing to sit back and let this happen, then we should be filed under “stupid” in the drawer. (His humor was much better than this, I’m just a slow writer). He is not impressed with how much oil is left offshore in the US, where the “Drill, Baby, Drill” crowd want to drill, and when he looks at the future picture, only natural gas is going to be available to balance out declining fuel supplies, and to power an 18-wheeler. (That was his criterion for a replacement fuel, since without that power the fuel hasn’t enough practical value). He felt that with enough incentives natural gas could replace enough transportation fuels that we could be independent of foreign oil in 10 years.

He then took a few questions from the floor (when asked if he would have done things differently knowing what he does now, he commented that he thought things hadn’t turned out too badly.) He sees his plan as a way of spreading information about the coming crisis, and plans to continue and expand the activity. And then he was off.

I will cover the next part of the meeting in the next post, it having been a long day.


  1. Let me share a useful quote from an unlikely source, Irv Miller, VP of Toyota USA (at the Detroit Auto Show: “Last summer’s $4-a-gallon gasoline was no anomaly. It was a brief glimpse of our future.”

  2. He's more in tune with the future than a lot of the folk at the meeting.