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.

The Russia:Belarus oil dispute and Western Oil supplies

I hadn’t actually been paying much attention to the Russian:Belarus dispute over oil supplies. After the annual debacles that we are used to over natural gas supplies that flow from Russia to Western Europe through Ukraine, and which seem somewhat quiescent at the moment, I had failed to grasp how much Western supplies of oil from Russia flow through Belarus. But as is pointed out in Foreign Policy the flow is significant, and this is a more far-reaching conflict than I grasped. As a brief review:

In 2001, Belarus unilaterally canceled a contract that mandated the sharing of these revenues, leading to substantial losses for Russian pipeline monopoly Transneft and the Russian state budget. Now, Transneft is demanding that Belarus pay full import duties for the portion of Russian oil that it resells on the European market, a demand that could cost Belarus as much as $5 billion per year. The Belarusian government argues that the Russia-Belarus customs union obviates the need for Minsk to pay duty on imports from Russia. Although deliveries through the Druzhba pipeline have not, as of mid-January, been cut off, the prospect that Transneft (whose chairman is Russian Deputy Prime Minister Igor Sechin, a close confidant of Prime Minister Vladimir Putin) will turn off the taps to force compliance from Minsk is clearly one that has European leaders worried because the European Union imports about a third of its oil from Russia, mostly via Belarus. Already, the prospect of supply disruptions has driven U.S. crude oil prices to a 15-month high, presumably to Moscow's delight.

Well, as my post yesterday showed, I am not convinced that this conflict had a lot to do with the rise in oil prices (which actually dropped a little today, on their overall march upwards). But that does not lessen the longer-term impact of what is going on. It is, as it was with the Ukraine dispute, to with control, with Russia seeking to control fuel distribution in these countries, and through supply controls also influence the directions in which the country moves.

Russia is now warning that it will reduce oil flows to Belarus even further and wants the duty on the roughly 290,000 bd that is refined in Belarus and then exported to the West. At the moment the refineries in Belarus have a relatively short reserve (between a few days and a week, reportedly - depending on source) and the current contracts have expired.

Germany and Poland are believed to be hit hardest once Russia halts shipments through the Druzhba pipeline. Germany depends on Russian crude for about 15 percent of its total consumption, and Poland buys from Russia to meet 75 percent of its market demands.

Minsk has threatened to raise the transit fee for its European customers more than tenfold, from 3.9 dollars to 45 dollars per metric ton, should Moscow not agree to its conditions, RIA Novostinews agency quoted an unidentified expert close to the talks as saying.

At the moment the talks appear to be stalled. However they are not limited to the transit of oil. There is also a dispute over the transmission of electric power. Belarus acts as a transit country for power both to Kalingrad and to the countries of the Baltic. It has assumed somewhat greater urgency with the closure of the Ignalina nuclear power plant in Lithuania. The plant closed on December 31, and there are fears of greater dependence on Russia for future power. Russian complacency about the situation is not, I suspect, exactly helpful.

“It is inevitable that Russia is going to become a bigger supplier of energy to Europe and particularly to the Baltic countries. Ultimately there comes a point where you have to let the old days go,” Chris Weafer, chief strategist on Moscow’s Uralsib bank, told New Europe on 5 January, adding that the Baltics, which sorely need energy supplies, should adopt a pragmatic approach and rely on their eastern neighbor and forget the legacy of the Soviet Union. As long as Russia continues to try and build a modern and diversified economy with greater global integration, then it needs the goodwill of the West just as much as the West needs Russia’s energy.

Bids for construction of a new plant are due to be submitted by the end of this month, with the hope of getting the new plant on line by 2018. (Kalingrad is hoping to have its own reactor in about the same time frame).

In the interim the Baltic states are going to be dependent, not only on Russia for their electricity and oil, but also on satisfactory conditions to allow the transit of both through Belarus on their way.

Meanwhile, over in Ukraine, there is an election underway, with initial voting to take place on Sunday. It is perhaps for that reason that there have been no major gas disruptions so far this year. Anger with the current administration is giving a bit of a boost to a third candidate, so perhaps it is in Russia’s best interests to retain a low profile at this point. In fact Russia is claiming credit for keeping the UK supplied with gas as supplies from Norway dropped due to bad weather at some of the production sites. However Russia is also being nice to Turkey as insurance just in case it will still need to do some bypassing around Ukraine to supply Western Europe after the election is over.

Not that conditions in Ukraine itself have been unaffected. There are some 175 towns and villages that are reported to be still without power, due to the bad weather. This is a decided improvement from the 1,598 who lost power in the Dec 29th storm. At least they are more used to the cold.

Those in Florida who aren’t, and plugged in too many heaters, are also causing power outages down there.

One impact of the cold spell

It was, perhaps, an unscripted comment but I was watching the “ABC News” with Diane Sawyer tonight, and after the story of the intense cold over the country, she turned to the reporter and asked if this was compatible with global warming. His answer was along the lines of “if it was just the United States then it might be considered to be just weather, but given that it also covers China and Europe, perhaps it is indicative of something else.”

And thus another chink in the armor surrounding discussions of climate change. It is all very well to make predictions about how warm the world is going to get, and to try and frighten politicians into changing policies on the basis of alarming predictions of the effects of global warming , but the problem comes when those predictions fail to come to pass. It is all very well for folk to state, as George Monbiot does that this is not the case.

Even their premise – that the Met Office "confidently predicted a warmer than average winter for Britain" - is wrong. Here's what it actually said:

Early indications are that it's looking like temperatures will be near or above average. But there's still a one in seven chance of a cold winter – with temperatures below average.

No confidence there, no certainty, and no single prediction.

I guess he and I don’t speak the same language, since I read the Met Office prediction as being that there is an 87% chance of a warm winter – which this surely isn’t. But when you’ve tied yourself as tightly to the global warming mantra as he has, it is going to be hard to face up to the reality that perhaps it isn’t so.

Instead we are at a point where businesses are being closed in Europe to conserve fuel.

The national grid was forced to reduce the supply to companies in the North West and East Midlands shortly after issuing its second warning in three days that the system was running out of gas. Demand in recent days has been 28 per cent above seasonal norms and is likely to increase today, when temperatures could fall to minus 22C (-8F) in some areas after what was expected to be the coldest night of the winter so far.

and in a reminder to the EPA Administrator that cold can be a killer there is the possibility of up to a million sheep being lost because of the continued cold in the Scottish Highlands.

And it is not just farm animals that suffer, again in contrast with the EPA Administrator's views, data is now available on how many folk die due to the increased cold, and why.

Last year's low temperatures saw the highest number of "excess deaths" - the number of those who perished over and above what is normal for the time of year - for nearly a decade.
The 40,000 "excess deaths" in England and Wales represented a rise of nearly 50% from the previous year. In the South East, where people were perhaps least prepared for a cold snap, deaths nearly doubled.

This is not just a theoretical debate being carried out based on computer models and controlled publication of only papers favorable to one position. But this is a real ongoing situation where those who rely on the predictions that have been made must now face the actual reality of what is happening.

Now it is true that one winter does not, alone, make the climate change story untenable. But given that there has to be a reason for this, and it is not evident in the climate models on which so much has been invested, then it is fair to ask why not? It is reasonable to ask what is causing this drop in temperature, and to question whether whatever is causing this cold has not, in the last decade, been working in the opposite sense to cause warming. And if my comment from a year ago relating the a change in attitude toward an unconditional acceptance of global warming theories is beginning to be validated, then I think that the questioning will intensify somewhat when the costs of a colder period are added up.

The problem goes beyond the immediate short-term, because the predictions for providing energy for power and heat, and the quantities of natural gas that would be required are proving inadequate in the face of the current situation. This is the “knock-on” consequence of putting too much faith in the models. There has been talk of the need to apply the Precautionary Principle, in taking steps to ensure that increases in carbon dioxide levels in the air do not lead to global warming and the consequences that are increasingly exaggerated in order to drive the debate. There has been too little talk of the precautions that should be taken if the theory is wrong and we will need more fuel rather than less. Or, in this case, more salt, since there are problems in the countries where supplies are proving inadequate.

Police in the Republic are set close a swathe of major roads over the weekend as supplies of salt to keep them open finally run out.

As the Irish government was last night accused of dismally failing to deal with the crisis, even more severe weather is forecast for the next 72 hours. Thousands of schools will not now reopen until well into next week at the earliest.

Local authorities are likely to run out of salt in just two days, raising fears that gardai may be forced to close roads.

In reality the winter will, after a while, be over, and the debate will continue. What the current weather has done, as the ABC comments illustrate, is to break the mind set that unquestioningly accepts the climate change mantra. Just how badly that break has been is going to become evident in the coming months. (Note how I become very nervous of making a prediction).

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.

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