Thursday, December 31, 2009

Looking back at 2009

This has been an interesting year to look back on. The change in the Administration and the difference in outlook that they bring to many of the concerns that I write about have altered the way in which the future will evolve. That evolution is still continuing, but there can be no doubt that the key committees in the Congress are now led by folk that do not look particularly kindly on the historic producers of fossil fuels. Yet the path forward for the alternatives, power from renewable energy, is not necessarily going to be that certain either. That was brought home just recently with the move by Senator Feinstein to protect portions of the Mohave Desert from future construction. This limits some of the areas in which solar farms had been planned, though clearing some of the legislative hurdles for others. But the legislation (which would apparently affect some 19 applications) is a sign of the debates to come, as the land needed for renewable energy is discovered to have other potential uses or benefits, that will make the search for available space that much more difficult.

And it is not just in California, there are debates in other states, including Wyoming.
As a result, 23 percent of Wyoming's winds that are class 4 or higher -- and about half or more of developable class 6 and 7 winds -- are in core areas. And in July, the state put those winds off-limits by essentially banning big wind farms in core areas. Many in the wind industry see it as devastating. The Interwest Energy Alliance -- a trade group -- said the ban could have "a deleterious effect on renewable energy development" across the West, and that it could kill the development of 10,000 megawatts of wind in Wyoming.
Though there are some sites that appear less controversial than others.
He takes me on a tour in a big white truck, making me wear a hardhat because turbine blades can throw chunks of ice. From the top of a hill, as a bunch of antelope amble nearby, Anderson points southward through the forest of windmills to a huge plume of steam that marks the Dave Johnston power plant. Then he motions to the earth all around where we stand. The wind farm sits on the reclaimed remnants of an old, giant coal mine; all this land was once torn up, gouged by draglines, its carboniferous bounty burned in the plant down below. "We wanted to take a coal mine," says Anderson. "And make it useful."
Yet as these debates continue, there seems to be little recognition of the needs that the future will bring, that are not being prepared for. Nor is there much recognition of the problems in getting power from where wind can generate electricity to the places where it is needed (particularly those states that have mandated high levels of renewable energy into their mix in the nearer future). For while wind turbines can generate money for the landowner, there is much less for the farmer who lets a transmission line across his land, who only gets a single payment.

The cap-and-trade legislation may not, in the end, make it through the Senate, and thus may die for this Congress, but it has made it difficult to justify investment in coal-fired power stations, when the rules that will govern their use are not clear. And while the EPA has adjudged carbon dioxide to be a pollutant , it has yet to write the rules under which plants that produce carbon dioxide will operate. (Remembering of course that each of us is also a generator). As a consequence some 100 or more power plants have been put on hold until the situation becomes clearer. But given the challenges that will likely come to the legislation (there is some question, for example as to whether they can limit the application of legislation to plants that produce more than 25,000 tons for example), the delays in planning for construction of future power plants are likely to continue, and perhaps grow worse.

The new Administration does not see much in the short-term that will cause energy supply, whether crude oil or electricity, to be a problem. The Secretary of Energy, through the research and funding that they have produced over the past year, is looking at more distant options for generating power than meeting any proximate needs. Unfortunately, coming from California, where it was easy to mandate a reduction in coal-burning in the state when the power could be generated alternately from coal-burning plants in Utah, does not work as well when the entire country becomes subject to the legislation, and such an alternative no longer exists.

Among other news of the past year that make my list of major stories I would count two more. They don’t seem to have caught as much attention of folks such as Robert Rapier who has a different list, but one of them is listed in the page that Platts had for their survey. The first (and that listed by Platts) is the continued collapse of the oil production in Mexico. While this has significant impact to the United States (which is now going to have to find alternate sources for the Mexican oil it was importing from fields that are now running dry, particularly Cantarell) the impact on Mexico’s deficit has been to drop the deficit off a cliff. For the USA it is going to be increasingly difficult to find that alternate supplier. China has increased their purchases from Saudi Arabia by more than 12% this year (to 800,000bd) and has signed agreements to take this over 1 mbd next year. With non-OPEC production having peaked, it is only the surplus production in the OPEC countries that keeps the world in balance, and the size of that “cushion” is something that we debate. (I am less optimistic than some others).

The other event was the opening of the gas pipeline from Turkmenistan to China. Again it is feeding fuels that were, at one stage, available to the West, to a new customer, itself growing in demand, and with a considerable scope to increase market purchases in the years to come. The glut in natural gas that we currently see will not I suspect, last as long as it is currently projected, and that will open a different can of worms.

But all these stories from the past aside, I do wish you all a Successful and Prosperous Year, that brings you Happiness and Joy, and not too many snow storms.


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