Energy shortages in Texas, and China

Load shedding is one of the issues that I annually brought before my mining students, in discussing electric power within the mines that they will work at, and in time run. Load shedding means dealing with interruptible power through voluntary reduction in demand at the supplying power companies request. Because it is likely to be a feature of a future mine superintendent’s life I spent a little time on some of the things that need to be planned for before the phone rings and a voice at the other end says “your power is being cut 20% in 15 minutes, good luck!” At one time in that class about a third of those in it had already worked at a mine where it had happened.

And in Texas, it happened again this week.

The Electric Reliability Council of Texas, Inc. (ERCOT), system operator for the state’s bulk transmission grid, initiated Energy Emergency Alert Level 2 at 2:26 p.m. today (August 4th) due to responsive reserves below 1,750 megawatts (MW).

“Interruptible loads – large customers paid to be dropped in a level 2 emergency have been deployed,” said Kent Saathoff, vice president of system planning and operations.

“Capacity is expected to be very tight over the peak today – particularly between 4 and 5 p.m. We are asking consumers and businesses to reduce their electricity use as much as they are able during peak electricity hours from 3 to 7 p.m.,” Saathoff said.
Consumers can help by shutting off unnecessary lights and electrical appliances, minimizing the use of air conditioning and delaying laundry and other activities requiring electricity-consuming appliances until later in the evening.

It has since been noted that the state was one power station outage away from rolling blackouts (a Level 3 emergency). The last of those occurred last February, when severe cold caused power plant failures.

The emergency conditions have continued through today (Friday) where a level 1 emergency was declared at 3:10 pm.

At Level 1, ERCOT asks all available power plants to come online, begins drawing on power from neighboring grids, including Mexico, and asks consumers to cut back usage through 7 p.m.

Two major users were dropped from the network, releasing 1,500 MW of power, but demand still exceeded that anticipated, with the projection at 4 pm exceeding the levels on Thursday.

Texas power demand, relative to estimates at 4 pm (The situation returned to a more normal condition later in the evening, but I was out to dinner at the time).

It is difficult, given unanticipated failures (the ice storms in February, two coal-fired plants totaling 4,800 MW are currently offline for unplanned maintenance) for power suppliers to balance available supply against actual demand. In this case Texas is buying power from Mexico, and has requested that all producers come on line (and those at the margin are the most expensive). Unfortunately hot days are not that windy, and less than a quarter of the wind turbine potential is currently available. (1,400 MW out of 9,000 MW).

And this inevitably also raises the question as to how much additional power should be built into the network to provide insurance in times such as this. Part of the problem lies in the lead time that it takes to permit and then construct a power plant, and more recently in trying to decide the politics of choosing between the different fuels available. Much has been made of the decision by the power industry to cancel or change fuels away from coal at over 100 planned plants over the past few years. At present the alternative fuel of choice, as I have noted in earlier posts, has been to move towards natural gas. Certainly if demand rises sufficiently for this then the increased price will help balance the books for a number of companies who currently see the price that they sell the gas at being below the price of production. (See Art Berman’s piece on shale gas on TOD today.) But there is a catch in that if prices remain as low as the EIA project, then the supply may fall at critical times such as this week, and may not be restocked in time to keep the generators at full power. At least with coal, nuclear and oil the fuel can be stockpiled at the plant for use as needed.

Yet having said that, China is currently seeking one of the worst power shortages in their recent history. Up to 30% of demand cannot be met by the Guangxi power plants, with a shortage of some 3.5 to 4 gigawatts. That for the entire country is estimated to be around 30 to 40 gigawatts. The problem is that the coal supply has not kept up with demand, and some stations have already exhausted supplies and shut down. Over a thousand factories have been affected. Whle there are, in other parts of the country a surplus of power, distribution remains an intractable problem.

As the crisis spreads around the country it seems likely that more factories will close, and more workers laid off. That in turn leads to significant popular unrest, with consequent political impacts. As a consequence it is unlikely that China will do anything other than continue to aggressively purchase coal on the world market that it can ship back and provide the power sources that the country demonstrably needs.

Power reduction and its consequence are easy to theorize over, but when those harsh realities of what it truly means become evident, and the crisis does not have a short term resolution then as we are seeing in Pakistan things can start to get ugly.

It appears we can still have bad winters, right Texas?

The “historic” winter storm that is now heading East and then out of the country has had some significant effects, beyond just forcing folk like us out to shovel our driveways clear. Utilities in Texas were forced to impose rolling blackouts because of the shut-down of some of its generating power. This affected as many as 1 million homes. The problem was caused, in part, by broken and frozen pipes which shut off cooling water, and thus operation, at one coal-fired and one natural gas-fired electricity generating plant in the state. (SInce it "never gets that cold" in the state, the pipes were routed outside and installed without adequate insulation for the current weather, apparently.) At the same time, however, the exceptionally cold weather was causing a reduced flow of natural gas from local sources, so that backup power could not be brought on line.

Dewhurst said he was told that water pipes at two plants, one of which is Oak Grove , forced them to cut electricity production. Natural gas power plants that should have provided back up had difficulty starting due to low pressure in the supply lines, also caused by the cold weather.

(The other plant was Sand Hill).

While the system could normally buy enough compensating power from adjacent states, the large size of the storm system means that the power from those states was already being used, and even though spot prices rocketed (from $50 to $3,000 per megawatthour it was not enough to meet demand, and thus the power companies first imposed load shedding requirements, and then started the rolling blackouts. They have, at least for now, served their purpose, and ERCOT is reported as having ended them, at least for today. There remains a “strong possibility” that they will be re-imposed on Thursday.

Oh, and a minor comment, I was complaining to the Engineer (who is in Mass) about our weather and he laughed. He lives on the main street in Somerville, and they have had so much snow already that he doesn’t know where there is room to put what fell today, and which he has to move to get to his car. So far they have had, apparently, twice the amount of snow they get in a normal winter.

Climate scientists appear to have become so fixated on the likelihood of a continuing warming trend, and all the possible disasters that this might bring, that they leave Governments unprepared for any possible alternatives. Thus grit supplies were not increased this winter in either the UK or USA, dam levels were kept full in Australia, so that when a flood came there was nowhere to put the water, except down river – thus negating one of the very reasons the dams were put there in the first place. If it is not now apparent that colder weather can be at least as damaging as warmer, if not worse, then observational science, which used to have a considerable worth, has now yielded place to science by computer model, where the old GIGO rubric has been forgotten.

And if this post seems more like a rant, perhaps it is to do with the 3 hours it took to dig out my drive today, and the aches and pains that this has left in the aging corpus.

Pakistan load shedding, IPI, TAPI and what chance of change

While for many in the West the thought of fuel shortages is a “sometime” future thing, and there is enough energy supply around that there is little short term concern about, for example, having enough heat this winter. That, sadly, is not the case for many parts of the world, but in writing about them I have some caution in case I seem to be harping on the conditions in some countries, relative to the plight of others. The “Energy Shortage” website does not update information every day (looking at it on Dec 8th it was last updated on Nov 23rd) but the woes that it documents around the world consistently bear the same country names. And of these Pakistan is all too frequently at the top of the list. In the headline that day was the news that Karachi Electric Supply Company had confessed that it was load shedding customers for three hours every day. It had previously threatened to cut off power to local police stations if their power bill was not paid.

Yes this is that Karachi, Pakistan’s commercial center and also where

“Terrorists are fleeing to areas that are as far away as possible from the conflict and populated enough to hide,” Syed Mazhar Mashwani, Karachi’s senior superintendent of investigations, said in an interview. “In Karachi, they find places to shelter and it will take a couple of months to clean them out after the operation ends.”

It is apparently possibly soon to see fighting again. Yet they are having consistent problems with power supply!


Part of the problem has arisen with the need to maintain the power stations that supply the area. Two stations are currently down for “preventative maintenance” but as they return to power, they will be followed in succession by others.

the KESC has planned closure of two more units for overhauling in January for at least two months. The annual overhauling of Units 2 and 5 of the Bin Qasim plant will begin in January and continue into mid-February.

In March, the annual overhauling of Units 3 and 6 will be initiated and by the end of March all the six generation units of the plant will be available and be giving more than 900MW electricity for the next summer, said the sources.

The stations are largely powered by natural gas, which has not, locally, come down in price. For some years Pakistan has been seeking additional supplies, since they continue to come up short, and next year the anticipated shortfall is projected to be around 2 billion cu ft (BCF)/day . The hope has been for a pipeline coming from either Turkmenistan or Iran, with India being included as the customer at the end of the line in both cases. The Iranian project, which is likely to cost around $7.4 billion has had a fitful life. It has not been popular with the previous Administration because of the support that it would give Iran. It is now however, moving forward, with the Indian government sounding more positive.

Possible supply pipelines for India and Pakistan (Source EIA)

Perhaps this has been due to some pressure from Iran since they have already started the project with Pakistan with more than 60 miles of the 1,725 mile project already completed in Iran. The pipe will use 44-inch diameter tubes through Iran and Pakistan, dropping down to 36-inch in India, with a terminus in New Dehli. The target delivery is some 5.25 BCF/day, with initial supplies starting at around 1 BCF/day to both India and Pakistan scheduled initially for delivery in 2011.

In terms of Indian need this is anticipated to meet about 16% of demand, but with the possible current world glut, there are both positive and negative aspects to the deal (ppt presentation) and there is some concern that Iran does not have enough available gas to meet both this commitment and one of about 2/3 this size to the Nabucco pipeline.

The other likely source of gas (for both Pakistan and Nabucco) is Turkmenistan. That pipeline (shortened to TAPI) has had a long and varied history.

The 48-inch diameter pipeline will extend 790 miles (1,271 kilometers) from the Afghanistan-Turkmenistan border, generally follow the Herat-to-Kandahar Road through Afghanistan, cross the Pakistan border in the vicinity of Quetta, and terminate at Multan, Pakistan where it will tie into an existing pipeline system. A potential 400-mile (644 kilometers) extension from Multan to New Delhi is also under consideration. . . . Dauletabad Field is one of the largest gas fields in the world. DeGolyer & MacNaughton, an internationally recognized petroleum engineering firm, has thoroughly evaluated the field’s reserves. These evaluations clearly show that the field’s resources are adequate for project needs, assuming production rates of roughly 1.5 BCF of gas per day (15 BCM of gas per year) for 30 years or more. The Government of Turkmenistan has guaranteed deliverability of 25 TCF (709 BCM) of natural gas exclusively for this project. . . The proposed pipeline will carry natural gas at a rate of up to 2 BCF per day (20 BCM per year/700 BCF per year).

This “alternative” has also found more favor with the American Administration, since it would cut out the Iranians.

But by itself it won’t supply all of Pakistan’s needs, and while news reports continue to tout progress it is proving hard to get that final commitment from Ashgabat (the Turkmen capital). And with the pipeline running through Afghanistan before it gets to Pakistan, and with the possible withdrawal of troops from the region now being discusses, long term security concerns may slow progress yet again. And reports out of Ashgabat suggest that the West is still viewed with suspicion.

Deliveries to Iran through a new internal pipeline within Turkmenistan are supposed to start soon (feeding from the South Yolaton field) but the concern over the conflict in Afghanistan is also seen as limiting investment interest.

As that story concludes “the game continues,” (A reference to the “Great Game, ” immortalized by Kipling, between Britain (then – the West in general now) and Russia for influence in the region – particularly historically Afghanistan.) Unfortunately as it continues to play the folk in Pakistan are going to continue to be short of natural gas, which means more load shedding in Karachi.

P61. Pick Points

A few stories of interest to start off the week.

When I wrote about the EIA Energy Conference last week I had promised that I would make a better reference to the views of others who were there. For example, I noted that Reuters had a piece on the final morning session dealing with greenhouse gases and climate change. Robert Rapier has two posts up now, one on Dr Chu’s remarks; and the second on the rest of day 1. Robert went to the session on Transport demand that I missed, and so this is a place to catch up. His take on the Renewable Energy session is also a little different, and so a trip over there would be worthwhile. Gail, at TOD, has so far, only covered the Plenary Session.

Stranded Wind also has a post summarizing the whole Conference at Daily Kos.

Moving on around the world to see what other stories have been gathering headlines, it sometimes seems that one cannot go far without bumping into Gazprom stories. It seems to have troubles on two fronts at the moment. Looking first at its supply, it has (as I noted last Sunday) run into a bit of bother with Turkmenistan. The story got worse as the week continued with a reported gas explosion in a pipeline inside Turkmenistan that was carrying natural gas to Russia. This shut down the feed to Russia.

"Turkmengaz informed Gazprom that on April 9 at 01:32 an explosion occurred at the 487th kilometer of the Davletbat-Daryalik pipeline. Since then, transport of Turkmen gas to Russia has not been carried out," Gazprom said.

"At the present time the Turkmen side is working to rapidly repair the damage.... The damage will not affect the supply of gas to Gazprom's customers," it said in a statement.

This was followed, on Friday, by a story in the LA Times where Turkmenistan blamed Gazprom

Turkmenistan's Foreign Ministry said in a flurry of statements that Russia's Gazprom decided on short notice to reduce the amount of gas it takes from Turkmenistan. Gazprom's export division gave only one day's warning, which wasn't sufficient time for Turkmenistan to reduce its flow into the pipeline network, the ministry said.

The blast, which occurred late Wednesday, "was caused by a gross unilateral violation by Gazpromexport of the norms and rules of the natural gas sales agreement," the statement said. Another statement said Gazprom's actions were "rash and irresponsible" and put lives at risk.

Turkmenistan is now reportedly angry that the Russians are, in contrast, blaming the blast on them. Repairs were scheduled to take 3 days. The story is now being carried in Moscow, where part of the blame is seen to be because of the decision of the Turkmen to seek international bids for a pipeline, instead of giving it to Russia.

There has been a significant drop in demand from Europe. In March Gazprom produced 24% less gas than the same month last year, and is down 18% over the whole quarter. Demand in Russia alone dropped 6.6%. With demand for Russian gas expected to stay depressed by 10% over the next five years. However in the short term, it does report seeing a slight upturn in demand from Europe.

Which brings us to the second side of the story, since Gazprom is now threatening to fine Ukraine for not consuming more gas, and lowering demand below expected levels. With this threat of a lack of customers it seems odd to some that Gazprom is taking the step of buying Eni’s stake in Gazprom Neft (the oil side of the house). At a cost of $4.2 billion it is considered “a strange decision” given the company’s need to cut debt. On the other hand there is now an agreement to ship some of Sakhalin gas to the West Coast of the USA. (Actually to Mexico and then into the US).

In a statement announcing the agreement yesterday, the two companies said liquefied natural gas (LNG) from the newly completed Sakhalin-2 project will be shipped to a regasification facility in Baja California, Mexico. It will then be transported to southern California by pipeline and sold to U. S. consumers by Gazprom's subsidiary in Houston, Gazprom Marketing & Trading USA, Inc.

The first tanker of Sakhalin gas arrived in Japan last Monday, after leaving the island on the 1st April. Japan is expected to take 60% of Sakhalin’s supply (about 7% of Japan’s need) with the remainder being split between South Korea and the USA.

While many eyes on Pakistan are focused on the problems with insurgents and controlling the travel of the Taliban and friends across the border into Afghanistan, it is not as widely known that the country remains in a relatively desperate energy shortage. In one of the latest moves to counter this, the country will go onto daylight saving time on April 15th, in a move that is hoped to save the country 250 MW a day. Given that the country is short around 4,000 MW, this won’t help much. In Islamabad alone the gap was 190 MW last Thursday causing 150 MW of load shedding to be imposed. By Sunday it had increased to a shortfall of 1,200 MW and after having only had load shedding of 4 – 6 hours, the city is now back to blackouts of up to 12 hours as air conditioning demand rises with the hotter weather.

In Karachi the daily shortfall of 350 MW is coming with 8-10 hours of unannounced blackouts. (Hat tip to Energy Shortage). The Prime Minister still believes that load shedding can be ended this year. Part of the problem in Karachi, apparently, is that the power company has been taken over by a Saudi company who then sold it, but the new owners have yet to take possession. None of the problems have apparently been tackled.

And just to return to Russia for a moment, I had always remembered that before things got unpleasant in Iraq, Russia had been on its way to getting a sizeable chunk of the energy in that country. Turns out that they are now back

A Russian consortium including oil group Lukoil signed a $3.7 billion deal to develop Iraq's West Qurna oil field in 1996, when Saddam Hussein was in power.

"The goal has been set to restore the contracts concluded between Russian and Iraqi companies before the war," Energy Minister Sergei Shmatko told Reuters, adding that a working group on the issue would convene in the near future. . . . .
Saddam's government tore up the Lukoil deal in 2002, months before the invasion, saying the Russian company had done no work at West Qurna since signing it and had failed to fulfil its contractual obligations.

JP Morgan said in March last year that, according to Russian estimates, production at the field was expected to peak at 700,000 barrels per day, and reserves could total between 4.5 billion and 7.3 billion barrels.