Tech Talk - of Wheat and Coal

The release of the latest assessment of the IPCC on the future of the planet, failing their push to cut greenhouse gas emissions, has brought forth headlines and supportive editorials in papers around the world. Yet I could not help but note a couple of things that form the basis for this tech talk. The first was that the report discussed the impacts of climate change (for which I suspect in this case they mean global warming) on agricultural production. They stress the negative impacts on crops such as wheat, and so, being curious, I went to the Wikipedia page that provides a table of wheat production over the past eighteen years, and plotted the data.

Figure 1. Global wheat production in millions of metric tons (after the Food and Agricultural Organization via Wikipedia)

Clearly wheat production is growing rather than, as the IPCC report implies, declining with the increase in carbon dioxide levels and longer growing seasons in parts of the world. More to the point – which is providing more food – (h/t Joules Burn) the two staple crops wheat and corn, have both seen growing production, but it is the slower pace of growth of wheat (at about 0.9%) over corn (at about 1.6%) that is of current concern, and which is to be addressed with new investments in the International Wheat Yield Partnership that plan to more than double yields in the next 20 years. This is needed in large part to match the continued growth in world population, which is likely to continue to rely on wheat to provide roughly 20% of the calories that this population will consume. Gains come both from increased land acreage being used, but also from the yields of that land. In the UK, for example, yields now average 7.8 tonnes per hectare up from 2.5 tonnes in 1940, the current target is to reach 20 tonnes per hectare in the next 20 years. Given that the global average is still down around 3 tonnes per hectare, the ability to bring this productivity to the broader community will give significant help to feeding the world.

I mention this because of the clear disparity between this information and the way that material is presented by the IPCC. Further the real needs of the world and its nations are now increasingly being addressed with less attention to the strident demand of the more alarmist of those who push the climate change agenda, in part perhaps because of the overhyping of the message. The latest illustration of this comes from Japan.

Following the devastation of the tsunami following the Great East Japan Earthquake on March 11, 2011 the Japanese public has been very nervous about the use of nuclear power, banning the restart of 48 nuclear power stations until after a new series of safety checks. This has had two short-term consequences, the financial melt-down of the power companies, which is now being addressed through government bailout and the need to switch to alternate fossil fuels to replace the power that the country obtained from the reactors. The switch was largely to natural gas, and to oil but this has proved to be an expensive undertaking with companies feeling that they could only raise power prices to a limited degree, hence their need now for government funding.

Figure 2. The changing face of electricity supply in Japan following the Earthquake, (MIT technology review )

But the sustained high cost of the gas and oil is estimated to be costing the companies over $30 billion a year and even with the government bailouts this is not an acceptable long term solution, given that it is likely to be years before the safety changes are made in the reactors, and also given the continued public opposition to restarting the reactors. As a result the companies have sought permission to switch back to coal-fired power plants. Concurrently the Japanese Coal Energy Center has been looking for coal resources around the world ranging from Mongolia to Mozambique.

in 2012 Japan was the second largest of the coal-importing nations at 189 million tons (behind China at 289 million) and current plans are to increase the amount of power that the fuel will provide by roughly 20% through construction of new power stations. (Some of these will be needed since, while some nuclear power stations may come back on line others are proving to be too expensive to restart under the new codes, and thus will be permanently closed).

It is this clear benefit of cost that is driving the change, and that benefit is unlikely to disappear over the next couple of decades. The renewable energy industry has not been able to overcome the advantages of coal’s ubiquitous presence and low cost of production. In the case of Japan supplies are anticipated to come from Canada and the United States easing their dependence on Australia and perhaps helping reduce their costs as they develop more international suppliers. Glencore, for example, their Australian supplier, has now reduced costs to $88 a ton, from the $95 being paid last year. It is estimated that there is currently a glut of about 5% of the coal market, and the reduced demands for thermal coal in the United States and Europe is unlikely to change that picture in the short term.

The longer term remains more cloudy, since the potential for the United States to enter, in a significant way, the LNG market and potentially to change those supply costs is not yet clear. It seems, however, unlikely that the volumes that will become available will not have much impact on price, and if that remains the case then coal will continue to grow as the price differential continues to add pressure for the its use in generating cheaper electricity.

Whether this will change the recently better-defined coal resources off the British Isles into a reserve remains, in the short term, unlikely, but even in the UK power costs can only rise so far before the public complaints begin to have an effect.

OGPSS - China's energy and a conclusion

Although Energy Policy has not been a significant issue in the current political debate over who should be the next President of the United States, this has not been a particularly good month for that future. In August the Alaskan pipeline pumped an average of 399 kbd from the North Slope. As winter approaches that number needs to be above 350 kbd to ensure that there are no solids built-up within the pipe, and each year the numbers fall a little closer to that limit.

Just this past week Shell has announced that they will not complete any wells in the Chuchki Sea this year, but will only partially drill a number of wells, and leave completion until next year. This despite the fact that the Arctic Ice acreage fell to the lowest level in 33 years, the time over which these measurements have been made. Further over in Russia, the promised development of the Shtokman field, which has been postponed several times in the past, has again been put back on the shelf. The arrival of increasing quantities of shale gas, and the loss of the market to China have reduced the need, in the short term, for these supplies. At the same time the Russian government is, again, seeking support from Western companies for developments in East Siberia and offshore. They are, apparently, still courting BP.

Overall US Crude production has stabilized, following the impacts of Hurricane Isaac, but is not following the steadily upward production path that folks such as Wood Mackenzie would anticipate. That would require that the curve continue upward at a gain of around 0.5 mbd/year, which would be around the overall average for the gain this past year, but as a continuing slope, passing through the current apparent plateau.

US Crude Statistics for the week of Sept 20th 2012, (EIA TWIP)

It is this halt in the increase in oil production that is, perhaps, of the most concern to China (as well as the rest of us), since, while it can be shown that China has been able to provide for its future intermediate-term demand for natural gas and coal , they must have less confidence in their ability to sustain their growing demand for oil. The presumptive reason for that lack of confidence should come from a realistic assessment of their growth in demand, relative to the supply and demand scenarios for the rest of the world, Figure 1 playing some part in that realistic analysis.

The disagreements between China and Japan over island ownership in the China Sea is continuing to roil the waters. While the issue is nominally over who owns the Diaoyu/Senkaku Islands, the aggressive position that China is taking not only here, but also with other nations that border on the South China Sea show no signs of diminishing. Following a meeting between Secretary of Defense Panetta and the Japanese Foreign Minister Koichiro Gemba, the Japanese have stated that the US recognizes that the disputed islands fall within the purview of the U.S.-Japan security treaty. China, in response, is sending hundreds of fishing boats into the region, as well as official government ships that will monitor events.

“We will send monitoring ships in waves, and have them remain around the Diaoyu Islands at all times to display our will to defend our sovereignty,” the Chinese official said. The official added that the Fisheries Bureau will also work closely with the State Oceanic Administration.

According to the Fisheries Bureau, as of Sept. 19 more than 700 Chinese fishing boats were operating within 127 nautical miles, or 235 kilometers, of the Senkakus. Of these, 23 were within 60 nautical miles, or 111 km.

The official said commercial fishing boats will enter waters close to the islands at a time to be decided “based on the situation,” indicating that it will depend on Japan’s response.

Figure 2. Chinese fishing boats off the Senaku/Diaoyu Islands (Asahi Shimbun )

We are coming to the end of the period where increases in global demand for oil could be met by developing new reserves, or by expanding the production from older fields. Yet, while driving across America this past week, the amount of investment being made in repairing the interstate highway system, and expanding the number of lanes bringing cars into the cities shows that there is continuing commitment to automobiles and truck transport in the USA. (And as an aside there appeared to be more trucks on the road than I remember seeing in the past 3 or 4 years).

With a slow but significant re-growth in the American economy, certainly helped by the low price of natural gas, there remains a serious lack in viable alternative fuels to replace oil for use in transportation. Thus the demand for oil in America and Europe will continue to be sustained. It will continue to rise in those countries such as Brazil, Russia, China and India where automobile use has yet to fill the potential market. For the next few years Brazil and Russia can probably meet demand from their increased use of internal supplies, albeit by reducing exports. India and China, and their ilk, cannot.

Conflict over resources is, of course, not by any means new. Maschner and Reedy-Maschner have documented such conflicts in the Pacific Northwest during early arrivals of native peoples from Siberia, and conflict and warfare (as evidenced from skeletal remains) is pervasive throughout human history, from some of the earliest of times. (Stone weapon points found in mastodon skeletal remains are also found associated with some early human skeletal remains, showing that the tools were likely causes of the death of both).

The problem, however, that comes in the future is not just that the more powerful nations of the planet will need more crude oil resources than they can provide for their peoples on their own. It is that it will become more difficult to identify places where it is practical to carry out an invasion that will then provide the needed volumes for a given country. Evidence of recent conflicts (Iraq is a prime example) show that conflict makes resource recovery more difficult and delays levels of production that might be achieved if the conflict did not occur.

Perhaps the Chinese use of fishing fleets is an attempt to achieve its goals, without going to physical war. If so, it is unfortunate that the locations in which it can be deployed are likely to be few. Yet, at a time when most of the rest of the world appears unwilling to face the coming limitation on a vital resource, or to recognize that a problem might even exist, the Chinese awareness of the situation and their pro-active positioning of themselves to assure reserves ahead of other nations is beginning to be a greater concern.

OGPSS - Natural gas pipelines and regulation

In the last post on this topic I covered some of the earlier developments in the use of natural gas (NG) as a lighting source, and began to discuss its evolution into a widely used fuel. That use, and the international marketing of NG has largely come about as the increasing use of pipelines has made it easier to move NG from places where it is overly abundant, to those where it is not. A recent example of this has been the Rockies Express Pipeline (REX) which carries NG from Colorado to Ohio, and thence to points East. Out in the West NG is still abundant and so well head prices are low – in 2009 for example it averaged $3.21 per kcf in Colorado. That same year in Maine the residential price was $16.43 per kcf. (against $8.80 in Colorado). The well head price in Ohio fell from $7.88 per kcf, in 2008, the year before the pipeline was completed, to $4.36 in 2009.

The Rockies Express pipeline (Kinder Morgan )

As new fields, such as those in the various shale layers that are now becoming popular, are opened they only become significant as the gas that is produced from the well is connected into a distribution network. Pipeline costs have been estimated as around $1 to $1.5 million per mile. After the pipe is in place it is often hard to see where it runs, in the USA at least.

Pipeline route over the Marcellus Shale, after installation

In 2009 the US used some 22 trillion cubic feet of NG (Tcf) moving ahead of Russia to again become the world’s largest producer and consumer. In that year the greatest production came from five Western states.

Top Gas Producing States in 2009 (NEED )

The need for a network to supply other states, less fortunate in this resource, has largely been met, with new pipelines being installed as needed. However it should be noted that just having the production does not, in itself, create nirvana, since earlier this year New Mexico and the Southwest suffered from shortages since demand exceeded available supply due to an unexpected cold spell.

Natural gas pipeline network around the United States (EIA )

This network has made it much easier to ensure that gas is available to customers, when they need it. And while this has recently become more of an issue, as natural gas turbines are installed to provide back-up power to more intermittent power generators, such as wind and solar farms, NG fueled electric power stations have been the most, in fact almost the only, new power construction in the United States for several years.

As the experience in New Mexico showed, just having a network of pipes in place is not, in itself enough. The first need is that the gas must travel down the pipes to the customers at a given volume, and this requires that it be pumped under pressure. Rather than creating the driving pressure purely at the input end, the pipe travels through a series of compressor stations that raise the pressure along the pipeline length, as friction would otherwise reduce it to below viable levels. For safety reasons gas pressure is reduced as the pipes travel through urban areas, and the normal operating pressure can thus vary between 200 and 1,500 psi. For those that forget Boyle’s Law from high school science, at constant temperature, raising the pressure by a factor of 6 will cause an equivalent reduction in the volume of the gas that is being pumped.

However, if you consider the network as a schematic you will note a couple of additional features.

Flow Diagram of the US Gas Distribution Network (EIA )

The two additions are for temporary storage of gas for use at times when demand is high (Oops none in the Southwest - tsk !). The gas can be stored either as a gas, or it can be cooled to a liquid (which reduces the volume by a factor of 600 and stored in that form. The LNG facilities need a re-gasifier, and, if they are taking the gas from a pipeline, also a liquefaction unit to do the initial conversion. By using these facilities that are dotted around the country, pipelines don’t have to be as large to ensure that there is enough gas for the consumer at the high demand locations around the network.


Locations of storage facilities for natural gas including LNG import terminals (EIA )

I have used a map that shows the location of LNG import terminals, since this is an additional source of NG for the United States. Again the volume that is involved is a function of price, though often, to justify the cost of the parts of the supply train, there is a concurrent long-term commitment to a given price schedule, so that spot prices are not necessarily that valid, and what is paid in Japan, for example, is not indicative of prices elsewhere. That is particularly true at present since the loss in power from the nuclear reactors in Japan is expected to result in a long-term increase in LNG demand to replace the lost power.

Variation in the price of LNG in Japan (Mongabay )

As I write this the current quoted import price for LNG into the United States is $6.78 per kcf some $1.71 over the quoted Henry Hub price for NG.

One of the most powerful drivers in the growth of demand for natural gas has been as a result of its increased use in generating electricity. This is particularly evident as it takes market share from coal-fired power stations due to concerns over the emission of greenhouse gases.

Nationwide, coal-fired electric power generation declined 11.6 percent from 2008 to 2009, bringing coal's share of the electricity power output to 44.5 percent, the lowest level since 1978. Coal consumption at U.S. power plants paralleled the decline in generation, dropping 10.3 percent from 2008.

In sharp contrast, natural gas-fired generation increased 4.3 percent in 2009, despite the 4.1-percent decline in overall electric generation. The natural gas share of generation increased to 23.3 percent—the highest level since 1970. Electricity's share of the total U.S. natural gas consumption has also risen rapidly, growing from 17 percent in 1996 to over 30 percent in 2009

There is a greater capacity for gas-generated power than these numbers reflect, since the utilities still tend to use coal over NG for longer-term operation as the costs are lower.

The growth of this market developed after the Second World War, and the development of a distribution network. However in the years immediately after the war the industry was heavily regulated, both in terms of price and volume, in much the same way as the Texas Railroad Commission had regulated oil. But because the gas entered and left inter-state pipelines it was regulated under the Natural Gas Act of 1938 which among other things forbade the construction of a new interstate pipeline into a state that already had one. In 1954 the Supreme Court voted that the FPC should set wellhead prices for NG. This removed some of the incentive to develop new wells, and from then until 1968 production and prices remained relatively steady. In 1968 however reserves fell from 20 Tcf to 12 Tcf, and in 1969 they were down to 8 Tcf. With the industry still controlled, reserve additions failed to keep up with demand for the next 12 years. However the Arabian oil (and gas) embargo imposed in 1973 led the price of NG to multiply 750% between 1972 and 1976. Consumption fell at these higher prices, and the market re-equilibrated until 1980. But the over-regulation of the industry led to serious problems.

The interstate pipeline experience during this period was an unmitigated disaster. To deal with the shortages in the interstate market, interstate pipelines submitted curtailment plans to the FPC describing how they would determine who got gas and who did not. The plans gave top priority to residential consumers. Boiler fuel users, such as electric utilities, were given lowest priority. Users who experienced curtailed deliveries could either shut down their operations or switch to alternate fuels. During the winter heating season of 1977-1978, gas deliveries in New York and New Jersey were curtailed for everyone except residential consumers. Commercial users received only 94.3 percent of requirements, industrial users only 79.2 percent of requirements and electric utilities only 13.5 percent of requirements.

Just as the regulations were being changed to help resolve these problems, and de-regulate wellhead pricing, the Shah of Iran was overthrown, and prices took off again. This encouraged new drilling and in 1981 for the first time since 1968 more gas was discovered than was consumed that year. Unfortunately this happened just as the rise in prices was moving consumers out of the product. The result was a drop in demand, which bottomed out in 1986. With the increase in supply this generated a “gas bubble.” In 1986 the Texas Railroad Commission changed the rules to ease sales of the gas to end users rather than just the pipeline companies, at the same time the Federal Energy Regulatory Commission began the series of changes that, by 1992, meant that you no longer had to own a pipeline to be able to buy natural gas.

I’ll write about where that took us, and the evolution of the gas producers and market as I continue with this short topic next time.

The Japanese fuel crisis

One consequence of the Japanese earthquake and tsunami that is not receiving as much press as the ongoing struggle to cool the damaged reactors, but which continues to influence more people is the lack of fuel. Nine of the Japanese refineries were damaged and put out of action, and this dropped the amount of fuel being refined from 4,500,000 bd down to 3,100,000 bd. (Note that the Guardian report I quoted earlier was off by a factor of ten.) The lack of fuel for transportation affects not only those in the disaster area, but also those away from it, since food and fuel itself depend on transport to move it to customers around the country.

"What we urgently need now is fuel, heavy and light oil, water and food. More than anything else, we need fuel because we can't do anything without it. We can't stay warm or work the water pumps," said Masao Hara, the mayor of Koriyama city, in Fukushima prefecture.

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The refineries that remain in production are responding to the need. Idemitsi Kosan has raised production at its four refineries by 83,200 bd (from 87% to 100% production) and Cosmo Oil has raised production at its two operating refineries by an additional 80,000 bd but this does not match the size of the problem.

There are several different aspects to the problem, first the oil has to come ashore. With ports closed and unable to re-open for possibly months, shipments from the Middle East, which supplies 80% of Japan’s need, have now been curtailed until the situation becomes clearer. Within the country the Japanese Government has released around 8 million barrels of oil from their strategic reserve. It is also shipping 250,000 barrels of refined product to the area affected by sea (though this runs into the issue of how to get into the ports and distribution network). At Chiba some of the port has been able to re-open ) but not the terminal that fed to the Cosmo refinery (since that had burned).

Then the oil must be refined, there are 29 refineries in Japan, and Wikipedia lists them as follows. (I have modified the list to show which ones have had a status change).

▪ Chiba Refinery (Cosmo Oil) (Cosmo Oil), 240,000 bbl/d (38,000 m3/d) CLOSED BY EARTHQUAKE & BURNING
▪ Yokkaichi Refinery (Cosmo Oil), 175,000 bbl/d (27,800 m3/d) INCREASING PRODUCTION
▪ Sakai Refinery (Cosmo Oil) (Cosmo Oil), 80,000 bbl/d (13,000 m3/d)
▪ Sakaide Refinery (Cosmo Oil), 140,000 bbl/d (22,000 m3/d) INCREASING PRODCTION
▪ Muroran Refinery (Nippon Oil Corporation (NOC)), 180,000 bbl/d (29,000 m3/d)
▪ Sendai Refinery (Nippon Oil Corporation (NOC)), 145,000 bbl/d (23,100 m3/d) CLOSED BY EARTHQUAKE
▪ Negishi Yokahama Refinery (Nippon Oil Corporation (NOC)), 340,000 bbl/d (54,000 m3/d) CLOSED BY EARTHQUAKE
▪ Osaka Refinery (Nippon Oil Corporation (NOC)) 115,000 bpd
▪ Mizushima Refinery (Nippon Oil Corporation (NOC)), 250,000 bbl/d (40,000 m3/d)
▪ Marifu Refinery (Nippon Oil Corporation (NOC)) 127,000 bpd
▪ Toyama Refinery (Nihonkai Oil/Nippon Oil Corporation (NOC)), 60,000 bbl/d (9,500 m3/d)
▪ Kubiki Refinery (Teikoku Oil), 4,410 bbl/d (701 m3/d)
▪ Chiba Refinery (Kyokuto) (Kyokuto Petroleum/ExxonMobil), 175,000 bbl/d (27,800 m3/d) CLOSED BUT RESTARTED
▪ Kawasaki Refinery (TonenGeneral Sekiyu/ExxonMobil), 335,000 bbl/d (53,300 m3/d) CLOSED BUT GETTING READY TO RESTART
▪ Wakayama Refinery (TonenGeneral Sekiyu/ExxonMobil), 170,000 bbl/d (27,000 m3/d)
▪ Sakai Refinery (TonenGeneral) (TonenGeneral Sekiyu/ExxonMobil), 156,000 bbl/d (24,800 m3/d)
▪ Nishihara Refinery (Nansei sekiyu/Petrobras), 100,000 bbl/d (16,000 m3/d)
▪ Keihin Refinery (Toa Oil/Shell), 185,000 bbl/d (29,400 m3/d)
▪ Showa Yokkaichi Refinery (Showa Yokkaichi/Shell), 210,000 bbl/d (33,000 m3/d) SENDING PRODUCT OVERLAND
▪ Yamaguchi Refinery (Seibu Oil/Shell), 120,000 bbl/d (19,000 m3/d)
▪ Sodegaura Refinery (Fuji Oil Campany), 192,000 bbl/d (30,500 m3/d) INCREASING PRODUCTION
▪ Kashima Refinery (Kashima Oil Campany/Japan Energy), 210,000 bbl/d (33,000 m3/d)CLOSED BY EARTHQUAKE
▪ Mizushima Refinery (Japan Energy) (Japan Energy), 205,200 bbl/d (32,620 m3/d)
▪ Shikoku Refinery (Taiyo Oil), 120,000 bbl/d (19,000 m3/d)
▪ Ohita Refinery (Kyusyu Oil), 160,000 bbl/d (25,000 m3/d)
▪ Hokkaido Refinery (Idemitsu Kosan), 140,000 bbl/d (22,000 m3/d) INCREASING PRODUCTION
▪ Chiba Refinery (Idemitsu) (Idemitsu Kosan), 220,000 bbl/d (35,000 m3/d) CLOSED BY EARTHQUAKE BUT BACK ON LINE AND INCREASING PRODUCTION
▪ Aichi Refinery (Idemitsu Kosan), 160,000 bbl/d (25,000 m3/d) INCREASING PRODUCTION
Tokuyama Refinery (Idemitsu Kosan), 120,000 bbl/d (19,000 m3/d) INCREASING PRODUCTION

(The last four refinery increases in production will add another 83 kbd to the total.)

By the end of the month it is expected that the recovery will only be to 3.4 mbd although this will still leave the country some 1 mbd short of the refined fuel it needs.

At present only one LNG terminal, at Shinminato, remains closed, but it is unlikely that this will reopen in the near term. The rest are operational, and LNG cargoes will be made available from a number of sources, if needed.

Japanese LNG ports

The northeast coast ports of Hachinohe, Sendai, Ishinomaki and Onahama are so severely damaged that they are not expected to return to normal operations for months.

Looking at a map (from Stratfor showing the power plants, and the road layout, the damage to the distribution network with the destruction at Sendai illustrates the problem in gaining access to the damaged area and in sending in new fuel. Food to parts of Ishinomaki has had to be delivered by helicopter, and for a town of 160,000 this is not nearly enough.

As the Independent reports

On the drive north out of Sendai city in northeast Japan, a slip-road takes you to a motorway that would normally be filled with traffic but was this week a scene of destruction to rival the most far-fetched Hollywood disaster movie. A thick coating of mud had been deposited at the toll booth, along with smashed vehicles, motorbikes and heavy machinery from a nearby factory. Beyond the booth, the road rose up to meet the highway and a panoramic view of the blitzed landscape below, where a jumble of hundreds of cars, trucks and splintered debris stretched as far as the eye could see. In the background, thick black smoke billowed from fires burning at a damaged oil refinery near the city bay.

Japanese infrastructure (Stratfor)

There are trunk pipelines running from the main LNG terminals, to assist in distribution.

Japanese trunk pipelines and LNG terminals

Fuel needs are not just for gasoline and diesel for vehicles. With the bitter cold that remains over much of the north of Japan, and no electric power, kerosene is also needed for heating. For domestic heating many homes rely on kerosene stoves to heat individual rooms in use, rather than using central heating. Stocks had been falling, before the earthquake, due to the severe winter this year. And with stocks being sent to help refugees, there are now shortages in other parts of Japan.

While there are some indications that the nuclear problems may be being brought under control, the problems of fuel shortage and the cascading problem of food, fuel and other resource distribution that it brings with it, are likely to remain in Japan for several weeks, as the crisis continues.

Japan - using water cannons and replacing lost power

There are two different time intervals (short and intermediate term) for my comments today on the problems that Japan now faces with their nuclear power stations, following the earthquake and tsunami that have left the nation facing concerns over radiation and a shortage of power, that have accompanied the vast and tragic damage to people and property. I am gong to give a short technical comment on putting water on the nuclear station fires (wet stuff on red stuff as they say in the trade) and then comment a little on what the alternatives might be for replacing the lost power in Japan. (UPDATE: The loss of petroleum products due to the damage to nine refineries has cut the amount of oil and its products that is available from 450 kbd to 310 kbd. )

The first aspect of the problem relates to the immediate short-term, and the need to cool the reactor sites and the spent fuel pools at the Fukushima Daiichi power plant. Because the attempt to drop water onto the critical areas using helicopters did not work, the current plan is to use police water cannon. Police cannon, for those who have lived a righteous life, are used to control riots where it is desirable to minimize damage to the participants. They can be used either with plain water, or a small amount of a polymer (also used in fracking operations) which reduces friction (it is usually a poly-acrylamide). The latter is sometimes referred to as “Banana Water” since when it is used it makes the ground surface very slippery. After all, it is hard to continue a riot when you cannot get up off all-fours. (The polymer also makes the jet throw considerably further). A water cannon might throw a jet up to 60-meters at a working pressure of around 160 to 200 psi. They are generally designed for relatively close operational ranges, and with a stream that disperses. More effective designs to throw longer distances would have a greater section of straight section behind the nozzle (to stabilize flow) though sometimes internal flow straightening devices are used instead, allowing a shorter barrel.

However, should they wish to get more water into the area from further away, they might want to consider using some of the old hydraulic pumps and monitors left over from the recent past when coal was mined hydraulically in the Hokkaido (large pdf). These can deliver over a thousand gallons of water a minute, with sufficient power that they can mine coal from more than a hundred feet away. The reactors are slowly cooling, and it is hoped, once the water is available to accelerate the process, that those particular problems will subside.

In the intermediate term there is the loss of power from the eleven reactors that have been taken offline. Japan suffers from a lack of indigenous fuels. though it has sought to improve the efficiency of consumption, and thus lowered demand over the past decade the demand for oil and natural gas has remained high. The demand may be constrained in the short term by the disaster, since roads and infrastructure have been severely damaged, with road displacements of over a foot in places. But demands for some form of power, and the need to get the country re-mobilized may shorten any significant decline in demand. Moreover use of fuel oil has, recently, been rising reaching 151,000 bbl/day in January.

(Source EIA)

Twenty-four percent of Japanese electricity is produced from nuclear power and it is a portion of this that may now be out of commission for years.

The Japanese are reported to have shut down some 6,800 megawatts of power, and it has been calculated that, were this to be totally replaced by oil, that this would impose an additional demand of 238,000 bd on the market. On the other hand were it could be replaced by natural gas, a perhaps cheaper alternative, then demand would increase by perhaps 1 billion cu ft/day (BCF/d).

There are several ways in which the power can be replaced, but they will likely be focused on the use of fossil fuels. It should not be forgotten that five coal-fired power stations were shut down by the quake and tsunami, and cargoes for those stations are now being picked up by other stations in Japan.

According to market sources, the five affected power plants are the Tepco and Tohoku Electric joint venture 2,000-MW Soma Kyodo plant; Tohoku Electric's 2,000-MW Haramanchi plant; Joban's 1,600-MM Nakoso plant, and Tepco's 600-MW Hirono and 1,000-MW Hitachinaka plants.

Analysts said the equivalent of 10% of Japan's installed coal-fired generation capacity for electricity was currently offline.

The coal-fired plants will likely prove faster and simpler to repair and bring on line than the nuclear plants.

(Source EIA)

Until the recent events occurred, it was anticipated that the large use of coal in the country would fall, and be replaced by nuclear power. That trend is likely over, and the coal markets are already anticipating the switch back. As noted on Seeking Alpha, the question that arises, in part, is just where it will come from.

No matter the outcome of the current problems with the three old-style reactors in Japan, all of which need pumps to be secure from damage so water can be pumped up into the reactor core to cool the fuel rods (vs. the newer designs that use gravity to let water fall down onto them), one thing is certain: Other coal-fired plants in Japan will be working overtime to make up for this loss of power in order for re-building to be able to take place.

One additional reminder: It isn't as if China isn't already desperate for US and Canadian coal. It isn't as if Australia hasn't already had to reduce coal production as a result of the flooding there. It isn't as if India doesn't need more of both types of coal to power and build infrastructure there.

Utilities in Japan were already taxed, before the earthquake, given that January was the coldest in 25 years.

The 10 main utilities consumed 5.21 million tonnes of thermal coal last month, up from 4.55 million tonnes a year ago. They burned 698,385 kl of direct-burn crude oil (Ed. Equivalent to 141 kbd), rising from 440,534 kl a year ago. LNG burn also climbed to 4.12 million tonnes from 3.71 million tonnes.

With the cold weather diminishing (although it snowed around the damaged reactors yesterday) fuel demand would normally decline, but the balance between what supply is available and that which can be delivered is, in places now as much as a 25% shortfall. This has meant rolling blackouts that may well last into April. Some of this can be alleviated by load shedding by customers, and a re-distribution of load through scheduling. That will, however, take some time to organize,

Repair of the nuclear power stations is going to take a long time, and some may not be replaced by the current means of generating the power. It is perhaps likely that the emphasis will switch to natural gas, since there are spare turbines available, and a plentiful supply of the fuel. Since Japan would be importing LNG this has already given rise to an increase in price.

South Korea said on Sunday it will supply LNG to Japan's utilities after Tokyo made a request on Saturday. It added that Japan was likely to import an additional one million to 1.5 million tonnes of LNG per month after April.

However Korea, which also buys in that market is not as concerned with the rise in gas prices longer term, instead it worries about the rising price of coal, if this is used to replace the lost nuclear power. Coal is a likely intermediate-term answer that Japan may have little alternative but to adopt. But it will depend on who can get the most power available the fastest that may ultimately decide how the Japanese energy picture now changes.

Oman’s unrest may be a domino, not just to suppliers, but also to customers

There are reports that the unrest in the Middle East has spread to the Sultanate of Oman. While at the moment there has only been one, or perhaps two deaths, small in number relative to the much larger number of fatalities in countries such as Libya, nevertheless such a milepost is sadly likely to indicate that the situation will get much worse. Oman lies East of the United Arab Emirates (UAE) South of Saudi Arabia, and North of Yemen. It is therefore within the region that is now in turmoil. And as the consequences of the unrest begin to compound, the consequences grow beyond the point where simple answers will be sufficient.

Location of Oman (CIA)

Oman is not a member of OPEC, but contains the largest oil reserves of any country outside that group in the Middle East.

Oman produced 863,000 barrels per day (bbl/d) of total petroleum liquids in 2010, 860,000 bbl/d of which was crude oil. Average oil production in Oman has increased by over 20 percent for the past three years, from a low of 714,000 bbl/d in 2007.

Oman oil statistics (EIA )

At the moment production is growing a little faster (865 kbd) than consumption (115 kbd) so that exports have increased a little. The EIA seems cautiously optimistic that this growth can be sustained in the short term, with the potential for Enhanced Oil Recovery technologies (miscible gas injection, steam and polymer flooding are the ones listed) to give a greater boost to these numbers. The main market for the oil is in Asia, with China and Japan as primary customers.

The EIA estimates that Oman has 30 Tcf of natural gas reserves, ahead of both Iran and the UAE. It consumes a fair portion of this so that when one compares production (2.4 bcf/day) with consumption (1.42 bcf/day) there is a smaller percentage available for export.

3 Natural gas statistics for Oman (EIA )

South Korea and Japan are the main customers.

As the turmoil continues to spread it is difficult to assess what effects it will have on the different exporting countries. (And thus in turn on the world market). Saudi Arabia has said that it can cover the possible lapses in delivery from Libya, and is willing to increase output to balance any losses. The full scale of that need is not yet, however, likely apparent. If I look at the numbers for February:

Total OPEC production slipped 285,000 barrels, or 1 percent, to an average 29.11 million barrels a day, according to the survey of oil companies, producers and analysts. Daily output by members with quotas, all except Iraq, decreased 335,000 barrels to 26.515 million, 1.67 million above their target.

Libyan output fell 200,000 barrels a day to 1.385 million this month, the lowest level since January 2003.

Unfortunately it may well be that Libyan production is cut in half, which would bring the loss closer to 800 kbd. Since the Saudi’s have been talking of just raising production to 9 mbd this may not be sufficient to make up for the loss. (They were running at around 8.6 mbd in January). If one adds to the drop in Libya any additional losses that might come from the falling dominoes around them, such as Oman, then it may become too much of a strain to rely on KSA by itself. Current additional flow is apparently coming from Abqaiq as well as Khurais.

One of the worries in the present situation has been the increase in violence in Iraq. At the end of last year OPEC had reached a two-year high of production at 29.85 mbd and the increase was largely due to an increase in Iraqi production. And while the refinery that was attacked on Saturday is now back in partial production it will be at least 6 weeks before the plant can be fully restored, and in the interim the company is searching for supplies from neighbors that could be used to meet the national demand. (Iraq's refined product stays in country to meet domestic demand).

Of course there are other available sources short term. Gazprom has increased gas supplies to Italy to help cover shortfalls that have arisen due to the supply pipe from Libya being closed. The replacement is a flow of some 1.7 bcf/day, up from the pre-crisis Gazprom supply of 1 bcf/day. And certainly Russia which is producing at equivalent levels to KSA must be considered as a possible additional source. But there is not a lot of spare capacity in their oil production numbers, there has been talk that they might even decline slightly this year – so that while gas supplies might increase, it is hard to see much of a rescue coming from them at this time to meet any oil production shortfalls.

Individually all these individual areas of concern could be relieved by some compensatory change in supply – as the KSA and Gazprom responses to the Libyan declines illustrate. Unfortunately this is not the greatest concern. The spreading popular uprisings are continuing to develop in additional countries and the changes in government that will result (and the conflicts presaging them) will impact fossil fuel production and export over a much longer interval. Particularly if, as might be the case in Iraq, foreign instigators (perhaps Iranian) foment attacks on the distribution networks, then it will not take many incidents before the short-term stability between supply and demand is threatened. The irony there is that Iran itself is not invulnerable to a similar threat, both to the regime, and to their production of fossil fuels. And unfortunately the victim of any fall in production would again be Asia, with over half the Iranian 2.6 mbd of exports going to China, Japan and India.

"Not our problem" you might say – as those countries seem to be the customers to a number of the nations at risk – well it might be wise to note that this problem has not gone un-noticed, and both China and India have been purchasing more from Mexico, which given its falling production status, means that the traditional markets for that oil might not be getting as much in the near future. Wonder who that might be??

OGPSS - The trade in LNG

Just before the Christmas break the United Kingdom was going through some concerns over natural gas supply. Stored gas levels were falling and the National Grid posted a “Gas Balancing Alert” for only the second time since they were instituted. But there is no more urgent talk of such a problem – what happened?

Well the answer is that rescue, in the form of Liquefied Natural Gas (LNG) tankers came trundling over the horizon. Just this week the UK opened an expansion of the terminal at the Island of Grains that can now accommodate larger tankers, at the rate of 5 a week. LNG from the tankers to this terminal can now supply up to 20% of the national need for gas. But that is a little late for the past crisis (due to scheduling problems the first tanker won’t dock until next week) so where did the LNG come from, and where did it go ashore?

LNG tankers arriving at the Island of Grains and at the LNG terminals at Dragon and South Hook fed additional supplies into the grid.

Flows of LNG were at a total 100 million cu m/d Tuesday after South Hook ramped up 10 million cu m/d to 55 million cu m/d, Dragon was at 15 million cu m/d and Isle of Grain contributed 30 million cu m/d to the system. That is a total increase of 25 million cu m/d on levels Monday.

LNG is also going to be backed up by fresh deliveries in the next week, with UK port data showing three fresh LNG cargoes expected to berth at South Hook from Qatar in the next week, including the Umm Al Amad expected sometime Tuesday, the Mozah on December 23 and the Aamira on Boxing Day.

(The UK used 468 million cu.m. on Monday Dec 20th).

There is a growing global trade in LNG, and while most of this is committed to long-term contracts there is sufficient flexibility in the system so that when, unexpectedly, a nation may run short or a strike close a port, a tanker may be diverted. The South Hook terminal is 67.5% owned by Qatar Petroleum, and is part of a supply net that takes LNG from the Qatargas 2 train, and sends it to the Welsh terminal where it is re-gasified and fed into the National Grid. Dragon, which is also at Milford Haven, is a smaller terminal, and came on line in August 2009. The term “train” is used to describe a single processing line that produces LNG within an overall plant. Thus, for example, when BP expands its facility in Indonesia, the new plant will be called Train 2, to distinguish it from the existing line, which is train 1.

LNG tanker at the Dragon terminal

Once natural gas is produced from a well it must first be processed, and the non-gas liquids (NGLs) as well as water, carbon dioxide, and other contaminants removed so that a dry commercial gas can be sent on. Where the customer is not easily served by a pipeline (such as the case with gas from Qatar being supplied to the UK), the only viable option is to send the gas by ship. Given, however, that gas in its natural state is of low density, it is most practical to cool the gas down to the point where it liquefies. By lowering the temperature to -260 degF the gas turns into a liquid, and occupies 1/610th of the volume. This makes it much easier to store and transport, though it requires that the liquid be kept at that low temperature for the duration of the voyage.

Because the process involves three steps, liquefying the gas, transporting it in special tankers, and then feeding it through a re-gasification plant into a distribution network, the investment in each requires some assurance of a pre-existing market and agreement between the parties before the investments are made. Thus, for example, NTPC in India is now negotiating with Qatar on the supply of LNG in the future as insurance that, when a pipeline is laid from the re-gasification plant at Kochi to power plants at Kayamkulum, that a supply will be available for it. As with the Welsh plant, this can, to a degree, be assured by having Qatar as one of the partners in the project.

The parties likely agree, when making such a deal, to a fixed-price over a considerable time frame. South Korea, for example, is paying roughly $10 per kcf, somewhat above the current rate, but it will have that price for 20-years. Such an agreement may, however, make it difficult for the buyer to initially find customers in the years when that is a high price, as CNOOC found.

Qatar is the largest producer of LNG, having just announced a capacity for delivering 77 million tonnes of the liquid a year, which it currently delivers to 23 countries. This trade has grown from nothing to its current level in 14 years, with production centered around the port of Ras Laffan. (A tonne of LNG converts into 1,460 cu m of NG, or 51,600 cu. ft).

There are seven separate plants (trains) at Ras Laffan with the last having come on stream last February.

Ras Laffan 3 Train 7 is the fourth 7.8 million tons per year LNG plant brought online by Qatar Petroleum and ExxonMobil joint ventures within the past 12 months. It matches the capacity of Ras Laffan 3 Train 6, one of the largest operating LNG production facilities in the world, inaugurated in October 2009. These mega facilities have sufficient scale to competitively reach markets around the globe. Qatar's giant North Field, which is estimated to contain in excess of 900 trillion cubic feet of natural gas, will supply both trains.

Once the gas is liquefied it is transferred to one of a fleet of ships. The earlier ones had the characteristic spheres on board, as shown above, and, for example, Train 1 at Qatar uses a fleet of 10 of these to carry LNG to Japan, with a round trip taking a month. The more recent fleet is 80% larger and more efficient, this 32-vessel fleet carries LNG from Qatar trains 2, 3 and 4.

While there has been a growing market for LNG around the world, and re-gasification plants, such as those in Wales, are being developed in many countries (note the 23 countries that are customers to Qatar) the availability of LNG, with new facilities being planned in countries such as Australia likely means that there will be a continued relatively cheap supply available for a number of years. The consequences to the profitability of domestic production, such as shale gas in the USA, may become more questionable as a result.

The fields and development of Sakhalin 1

Browsing Drumbeat, my eye was caught by a comment by Darwinian about Sakhalin Island production. In essence the article notes that production from the Sakhalin I project has dropped by 14.5% as a result of natural field depletion. That drop needs to be put in context.

For those of you unfamiliar with Russian oil production, and I would recommend Grace’s Russian Oil Supply in that case, Sakhalin Island is the most Easterly of the Russian oil fields.

Location of Sakhalin Island just north of Japan (Google Earth)

It has been just over a year since a new export facility at the island (see map below) transformed oil exports from being a seasonal affair, closing with the ice of winter, into an all-year effort. This was due to completion of an offshore loading facility and thus by July it was possible to report:

“Our 200th oil cargo is clear evidence of Sakhalin’s emerging role as a key energy hub for the Asia-Pacific region,” said Sakhalin Energy Chief Executive Officer Ian Craig. “The increasing frequency of oil cargo shipments will also be matched and then exceeded by the frequency of LNG shipments as we build up to plateau in the second half of this year”.

The oil is from platforms on the north-east end of the island, and the oil is brought onshore, and then piped 500 miles to the southern tip of the island where it is loaded onto tankers at a single point mooring facility at De Kastri. The main markets have been in South Korea and Japan. And, as an aside, the use of tankers does not mean that there is much warming up there (temperatures can reach -40C), there are two ice breakers available to help and guide the tankers.

Sakhalin Island was originally a penal colony and is relatively inhospitable but yet has been seen as promising as an area for further development.

An estimated 45 billion barrels of oil equivalent lie beneath the icy seas off its shores, a figure rivaling what remains in the U.S. or Europe. But developing those resources is proving lengthy, difficult, and expensive. Cost overruns have been huge, and no one knows if the Russians will end up controlling the assets now being built. "This is a frontier project like the North Sea or Alaska [was]," says Ian Craig, CEO of Sakhalin Energy Investment Co. "The industry doesn't know how to do everything" here yet.

It is not that easy to reach.

The island is located seven time zones, and a nine-hour flight, from Moscow. That's the first part of the journey. Expatriate oil workers and visitors then board the train that runs north from Yuzhno-Sakhalinsk to Nogliki, the snowy gateway to the offshore oil fields. Sakhalin Energy maintains its own sleeping car with wood paneling, rugs, and burly, tattooed guards to fend off bandits. Passengers board in the evening and toss and turn on narrow bunks in steamy cabins while the train bumps and clatters for 15 hours through the snowy wastes. Sakhalin Energy's operations in the north are so remote that it had to build a 43-mile road to get there. Bears roam the woods, and the weather is so bad that construction manager John Burn hires 70 people to keep the area clear of snow and ice six months a year.

The development of the fuel fields has been divided into a number of parts. The largest is Sakhalin II which began with the first oil platform Molikpak located at the Piltun-Astokhskoye field in 1999. That set of fields lies north of the Sakhalin I set of fields.

The Molpak rig ( air1Okuzya at Google Earth 52 37’31.77” N 143 26’02.91E)

Sakhalin I - the subject of the Reuters piece I quoted at the top of the post - is located on the north-east side of the island.

The Sakhalin-1 Project is an oil and gas development on the northeast shelf of Sakhalin Island. It was declared commercial in October, 2001. The Project area is comprised of the Chayvo, Odoptu and Arkutun-Dagi fields. Total recoverable reserves are estimated to be 2.3 billion barrels of oil (307 million tons) and 17.1 trillion cubic feet of natural gas (485 billion cubic meters).

The project is being run by a subsidiary of ExxonMobil, with current plans to start production from the Odoptu field in the second half of this year. Production to date having come from the Chayvo field.

ExxonMobil “Hawk: drilling platform at Chayvo (Superparty at Google Earth 52 29’20.08”N 143 14’13.17”E)

ExxonMobil has written a short book on the project of some 9 pdf files. It notes that Phase I of the project reached its peak production of 250,000 bd in 2007. The drilling rig shown above is 22 stories high and is being used to drill extended reach wells that reach out up to 7 miles offshore. The two other fields that are now to be developed are further offshore.

The oilfields and pipeline for Sakhalin I (ExxonMobil )

The Orlan (or Sea Eagle) platform, which is offshore, has a target of production from 18 extended reach wells that extend out to 5.6 miles from the platform. It is expected that the overall production from the three fields will continue in production for some 40 years.

The Hawk rig has just completed the first two extended reach wells reaching out some 5.6 miles with horizontal wells to the Odoptu field, and will drill another five to bring that field into production by the end of the year.

P38. Pick Points

Half-a-dozen or so stories of interest:

Until recently if you had tried to talk to me about solar cars, I would have only been able to think of the cars in the American Solar Challenge, a biennial race that takes cars built by university students in races that last started in Dallas and finished in Calgary. Our office has a small glass memento for helping Principia College, who finished second last year (well OK, our car finished 7th). But these are all flat, single person vehicles that can reach (and exceed) the speed limit, but are fragile enough to require protective chase cars. Thomas Friedman describes driving around New Delhi this weekend in an electric car, with solar panels on the roof and 3 other folk in the car. The car is a plug-in electric with a 90 mile range which had just finished a 3,500-km road tour though when you see the size of the car, rather them than me. (The car sells for Rupees 399,343. ($8,196). That does not include the modifications needed for the road trip). The Tesla electric car that is to be made in the United States is waiting for a $450 million federal loan to get started. It is expected to come from the $25 billion loan program for retooling U.S. factories and they hope to get the money in the next “four to five months.” The current plan is for cars to be on the market by 2011 – for a mere $109,000. They have a thousand customers on their waiting list. (If that’s a tad much you might want to chat with John Hendrickson, who made one out of a rusty VW, it does 50 miles per charge and uses gel batteries).

India continues to move ahead with its planned expansion of nuclear power , with two new plants as part of a 2.000 MW expansion being announced as part of a move towards 20,000 MW targeted for 2020, as a way of supplying a country that is currently short about 16% of demand at peak hours. By 2030 the target will rise to 60,000 MW. Uranium will largely come from Russia , though U.S. firms are anxious to become involved, and French firms hope to be able to do some reprocessing since some of the uranium will come from there. Apparently Pakistan was getting some help from Japan as well as China with their nuclear program. Russia is also helping Turkey with its plan for four new nuclear reactors. China is also switching its power emphasis more towards nuclear .

Even the Russians are now taking heed of energy efficiency, though at the moment it appears more of an editorial opinion than a set of programs, though the Germans have been brought in as part of a collaborative program . They also have just opened production at a new oil complex in Western Siberia at Uvat, some 1,250 east of Moscow. (You can see it on Google Earth). Collectively it will produce, in time, some 200,00 mbd roughly. Russian auto production was down 80% in January, but it should be remembered that they take their Christmas break in January, and to help with lagging demand some factories just extended the holiday. Others have been waiting for parts. But this is a y-o-y drop. Natural gas dropped 10% and coal 18%. Checking back in on the most recent numbers relative to those I quoted on the 6th: oil production on the 14th was 1,325,000 tons, (9.71 mbd) in-country refining was 658,000 tons (4.8 mbd); they produced 1,721 million cu m of natural gas, and 739,000 tons of coal. Oil is about the same, but natural gas and coal are down over the last week. Had it not been for the Yuzhno-Khilchuyu production coming on line then Lukoil production would have peaked.

In a move to corner more of the coal bed methane properties in Australia BG Group has raised its offer for Pure Energy Resources. The gas is in north-east Australia and would provide feedstock for LNG facilities that would market the product into Asia. Shell who partnered with Arrow Energy, the BG rival in the bid, is planning a new LNG facility in the region. Japan meanwhile is signing more contracts with Indonesia for future LNG supplies and is being reassured by Gazprom that it can count on it for the supplies from Sakhalin Island. At least this doesn’t go through a Ukrainian pipeline. BG may, however, have another market in mind, since they have just leased an import terminal in India which, as noted above, is greatly in need of more energy. It should be ready to import cargoes by the end of March. In the United States, a new design has been submitted to the FERC for the terminal at Weavers Cove in Massachusetts.

The value of Norwegian gas exported in January was 29.4% higher than the comparable figure last year. And last year at this time they hit a record also. The difficulties in expanding production into the Barents Sea are not seen as a barrier.

More stories can be found at The Energy Bulletin and Drumbeat at The Oil Drum.

P28 Pick Points

Half-a-dozen or so stories of interest:

As up to seven new LNG ports and a number of carriers are completed this year it is expected that supplies will increase to the United States. The projects have been planned for so long, and cost so much that gas must flow and be sold. The Federal Energy Regulatory Commission has had to develop policies on LNG , but even they defer to the market. Given this potential for over-supply the Freeport LNG terminal is looking into the potential for re-export, and local storage, since peak demand and supply may not be in phase. On the other hand recognizing that the time might be ripe to gain access to a cheaper source of power, Japan’s Tokyo Gas is looking at installing a new LNG terminal. To ensure supplies they have agreed to extend buying contracts for LNG supplies from Alaska. The Japanese, who are the largest users of LNG, need to do this to replace supplies that have been lost due to export reductions from Indonesia. The Alaskan gas sells for roughly 4/7ths of what the Japanese would have to pay for gas from Qatar.

In the lower 48, gas producers from shale are moving to stabilize supplies to the network. A new “Tiger Pipeline” is planned to collect and deliver for Haynesville shale gas into the interstate network. A new well is going into the Haynesville, that will run 17,000 ft horizontally. The Marcellus shale is also seeing some investor interest. XTO expects that gas (natural) prices will head back up before the year is out.

Hopes for energy price increases are hitting the wind industry, just as it comes out of a year where the USA added 8.5 GW of wind power. Of the major states adding wind power, California has seen the smallest recent growth, and in part that is because all the “easy” sites have now been taken, and the costs of permitting are now beginning to bite in the sites that are now in development. As a result Iowa is now second in wind power in the nation and has six manufacturers. But it turns out that the claim that the wind industry had more employees than coal mining relied on skewed counting (they counted everyone in wind, but only the miners in coal mining. But older wind farms are refurbishing with larger turbines and this also helps economically.

There will be a new 500 MW farm in Iowa, if they can get enough land, but construction will start in 3-5 years. In Rhode Island they plan on starting an offshore plant in 2010, they have enough wind for utility size operations which is level 3 on land (out of 7 with 1 being poorest), but have higher levels offshore, which is where the farm will go. In inland Northwest Missouri they now have a town (albeit only 1300 people) that receives all their power from the 4 nearby wind turbines.

The disruption caused by Total giving a contract to an outside, rather than domestic company in the UK may spread to other refineries and include nuclear power plants.

High temperatures in Australia, and particularly Melbourne played some considerable havoc with the Australian Open . Even as that ended, rolling blackouts are anticipated today because of the closure of the power link from Tasmania (due to overheating) . About 20,000 homes in the state (Victoria) are without power and the rise in the demand for energy has reached the limits of what can be provided. Bush fires are also threatening power lines, and a local coal company operation , while the drought is draining local water supplies . Locals are also concerned because of the secrecy of the order of priorities for load shedding.

It is not only in California and Australia that water supply is a problem. In the Central Asian republics Russia is stepping in to sort out possible conflicts since the countries from which the main water supply comes (Tajikistan and Kyrgyzstan( want to develop hydropower, while those downstream (Uzbekistan, Kazakhstan, and Turkmenistan) want the water for agriculture. The Tajiks are willing to offer the Uzbeks water for energy. Turkmenistan is also involved since they send out electric power that must pass through other countries to the end user.

Uzbekistan is demanding 10 per cent of the $0.03 per kilowatt paid by Tajikistan to Turkmenistan.
This year the Uzbeks are also charging Kyrgyzstan and Tajikistan US$ 240 per 1000 m3, up from 145 dollars last year.

And the Tajiks are not taking kindly to the Russian intervention.

For more stories go to The Energy Bulletin or Drumbeat at The Oil Drum