Tech Talk - is coal that dirty?

So when was the last time, reading an article about the coal industry, that you saw a photograph of the land after the mine has closed, and the site reclaimed? Or, in talking about an oil or gas rig, how many times do you see the relatively small footprint at the site, once the rigs have left, and the site is reclaimed so that all that is left is the production tree?

The fossil industry tends to be vilified at regular intervals with very few voices raised to murmur slight protest as to the picture painted of its evils. The Economist had an article this week which said, in part:

And coal would indeed be a boon, were it not for one small problem: it is devastatingly dirty. Mining, transport, storage and burning are fraught with mess, as well as danger. Deep mines put workers in intolerably filthy and dangerous conditions. But opencast mining, now the source of much of the world’s coal, rips away topsoil and gobbles water. Transporting coal brings a host of environmental problems.

Note that there is no comment about putting the topsoil back in place after the mine has passed, or re-establishing the land fertility. Laws passed in the 1970’s have ensured that the land reclamation is to a much higher standard than previously, and reclaimed land in Ohio, for example, is now harvested for hay and used for pasture. And it was possible to get 43 acres of recreational land filled with lakes full of fish etc for some $107,000 only a couple of years ago.

Figure 1. Reclaimed mine land that was for sale in Illinois (MidWest Energy News).

Now it is true that working underground will get you dirty – in the same way as it will if you are working in the tunnels of a subway system, or on a farm, not to mention repairing sewers – but unless it is the color of the dirt that leads to the discrimination – working in a job that can get you dirty has not, in the past, led to the disapprobation that one sees in papers such as the Economist these days.

The concept of working underground by itself cannot, surely be something of concern. There are all sorts of buildings that have been built underground – either in regions where the site was first an active mine which then converted into offices, warehouses and storage facilities, or where the plan, from the beginning was to mine the space for a specific purpose (whether a subway line, an underground school or public baths or other useful place). For example, consider Springfield Underground which I first visited over four decades ago, and which can run up to 100 ft below the surface, although there are entries where trains and trucks can have access.

At 2.4 million square feet, Springfield Underground continues to grow; we have ample space available for your unique application. While we can accommodate all sorts of businesses, Springfield Underground is home to warehousing, laboratories, food storage, records storage and data centers. Our location is convenient to railways and highways – which makes us ideal for distribution centers and manufacturers.

Figure 2. Cutaway showing the location of available space at Springfield Underground (Springfield Underground)

By utilizing the space between pillars (shown in white against the blue available space) and building temporary walls work spaces of thousands of square feet are located underground where they are safe from tornadoes, which are a hazard for the state, at a constant temperature and in relative quiet and security.

Similarly there are facilities under downtown Kansas City and in a number of other locations around the country.

“Intolerably filthy and dangerous” – well that dates the information that the writer is basing this on. Of course there are the images and stories of the past:

Figure 3. The Penitent by Hildebrand

When I was young I lay on my side and worked with a pick and shovel in low coal, not that much different from the conditions shown in Anthony Burton’s “The Miners.”

Figure 4. Mining in Low Coal at Condering Colliery. (The Miners)

But that was over 50 years ago, when Britain still desperately needed the coal to fuel its restoration and modernization, and where there was also a provision to keep mines open to help with employment.

Now those narrow seams are largely not economic to mine (though there are ways) and modern coal mines use large mechanized methods to remove the coal, often remotely from the work force. But the image remains.

Increasingly mines are much safer, there is a fair amount of white stone dust on the walls so that, as well as being better lit, it is also just a brighter place to be.

Figure 5. A modern longwall production face (Maple Creek via West Virginia University )

While, in the unregulated mines of the past there were death rates of up to 1,500 or more in the United States (at one time explosions underground could kill all the miners underground at the time of the explosion, and this could add up to more than 200) there were 19 miners killed in 2012. And while one death is too many there are sadly other industries that have a worse record.

According to Forbes, the ten most dangerous jobs in 2012 were:
1. Logging workers

2. Fishers and related fishing workers

3. Aircraft pilot and flight engineers

4. Roofers

5. Structural iron and steel workers

6. Refuse and recyclable material collectors

7. Electrical power-line installers and repairers

 8. Drivers/sales workers and truck drivers

9. Farmers, ranchers, and other agricultural managers

10. Construction laborers

Mining didn’t even make the list, nor of the more extended list of the 15 most dangerous jobs, as listed by AOL.

Sadly the industry has been stereotyped with an antiquated, and largely out of date set of images. (Though admittedly in parts of Asia particularly the low cost of labor and the need for both jobs and fuel can still lead to the odd dismal picture, yet even there, as regulations set in the picture is improving by the year).

One has to look no further than to the photographs of power stations that use coal to see the evidence of this bias. The only visible vapors that leave a modern plant are the steam clouds and yet in paper after paper the photographer has maneuvered so that, with the sun behind the steam, it looks grey or black.

These distortions are having less and less impact, as the real long-term need for coal is clearly evident, but it just makes the debates less honest. Unfortunately the image of underground workers are too often associated with the Trolls and Orcs of Tolkien's Middle Earth in contrast to the desired world where we see the contrast to the idyllic but unrealistic dream of us all living in the Shire in bucolic joy for ever.

Tech Talk - Of production stability, peaks and the future

Jeffrey Brown (Westexas from TOD) is quoted extensively in Kurt Cobb’s recent piece that points out that global crude production has pretty reasonably stayed constant at between 64 and 67 mbd since 2005. (H/t Nate Hagens). While there has been a total increase in the total refined products side of the house (with the total number floating around 90 mbd) this includes a number of different sources that, within generally defined standards, are not considered crude. The four main culprits that he lists are biofuels, natural gas plant liquids (NGLs), lease condensate and refinery gains. He makes a good point.

Figure 1. Crude oil production alone over the past decade (Kurt Cobb)

I can remember that it was some years ago, when looking at the OPEC reports on production, that I suddenly realized that the projected increases in NGL production made a significant difference in the overall volumes that they were producing. (It is anticipated to average 5.95 mbd in 2014). Back in 2001 OPEC just defined the fluid as natural gas liquids, but went through significant revisions of numbers in 2002 and in March 2004 redefined the volume counted as “OPEC natural gas liquids and non-conventional oils”.

Figure 2. NGL and unconventional oil production by OPEC (OPEC MOMR )

Over the past decade volumes have almost doubled. In the United States, with the increased development of the shale gases, production has also increased.

Figure 3. Increase in production of NGL in the United States (EIA )

The price obtained for these fluids, however, falls below that of conventional gasoline. For example:

Figure 4. Relative prices of NGL fuels relative to crude and gasoline. (EIA)

The EIA is reporting a continued growth in US production:

Altogether, in the Bakken, Niobrara, Permian, and Eagle Ford, oil production is expected to increase by 70,000 bbl/d in May 2014. The monthly growth rate is 3,000 bbl/d more than in April 2014 due to solid gains in Permian rig count and continuous rig productivity gains across the regions. While the DPR does not forecast weather impact, the spring thaw season has officially started in the Bakken region and may disrupt some drilling activity between now and June.

These additional resources take on an increasing importance as world demand is anticipated to increase another 1.14 mbd this year, slightly up on this year’s figure. This gain in demand was largely offset by increased production from the Americas, though OPEC note that overall global suppliy decreased last month to average 90.63 mbd but is expected to reach peak demand in the fall, at 92.24 mbd.

Looking at the supply side for this year, and bearing in mind that gains must more than offset lost production if the total increase in supply OPEC are projecting an overall gain in supply of 1.34 mbd, largely to come from outside of OPEC. This is expected to come from the OECD Americas (the USA, Canada and Mexico) group, while the increased production from countries such as those of the Former Soviet Union is expected, to rise by 150 kbd or less.

There has been relatively little change in the estimates of where the increases in North American production are anticipated to come. By the end of the year US production is expected to reach 12.45 mbd by the last quarter of the year. As OPEC noted:

Based on the US Energy Information Administration (EIA)’s monthly oil production report for January, regular crude oil output registered at 4.93 mb/d, tight oil production increased to 3 mb/d, NGLs output reached 2.64 mb/d and biofuels and other non- conventional oils recorded the highest output at 1.22 mb/d. The use of energy from biomass resources in the United States grew by more than 60% over the decade between 2002 and 2013 — primarily through increased use of biofuels like ethanol and biodiesel which are produced from biomass. According to the EIA, biomass accounted for about half of all renewable energy consumed in 2013 and 5% of total US energy consumed.

This month the OPEC MOMR focused on increased production from the Gulf of Mexico, with anticipated gains from the Olympus project at Mars B.

The total gain in production from the Gulf is currently anticipated to increase, this year alone, to perhaps 1.55 mbd, and to pass the previous record Gulf production of 1.8 mbd by 2016. In addition the Cardamom project is expected to add 50 kbd to the Olympus figure, and the start of oil production from Phase 3 of the Na Kika field is expected to add an additional 40 kbd to the 130 kbd which Na Kika is currently producing. However Gulf wells have a habit of going south a little earlier than predicted and I have borrowed the following graph from Ron Patterson which illustrates the cumulative fate of the combined Atlantis, Thunder Horse, Tahiti and Blind Faith fields.

Figure 5. Changes in production from major Gulf of Mexico fields over time (Ron Patterson )

When this is combined with Dennis Coyle’s prediction that the Eagle Ford field will peak in 2015, at 1.4 mbd, with a declining rate of production increase as one reaches that peak. Similarly the number of wells that can continue to be drilled in North Dakota in the sweeter counties of the state are limited, and beyond that there is a concern (which I have expressed before, and which others have explained much better than I) that as the estimates of production fall in the less successful regions of the state that it will become harder to raise the capital for the new wells needed to sustain and increase production.

That being said, I am beginning to suspect that this may be the year that the OPEC estimates for US production may get a bit ahead of what actually is produced. And if that is the case, then that means that the following two years will become even more interesting as the nations of the world start to realize that yes, there is a peak. Which might mean that the coal resurrection might be greater than I currently anticipate, but perhaps I will have more on that next time.