Sunday, January 30, 2011

OGPSS - Oil tankers in the wake of the Egyptian crisis

Gail Tverberg’s analysis of some of the underlying causes of the current Egyptian crisis is cogent, but it one of the other consequences that caught my attention today. For, as was noted in Forbes
While most equity-related assets got battered, a select group of stocks, oil shippers, were corking champagne bottles. Apart from Overseas Shipholding, Frontline Ltd. had a killer day, gaining 7.8% or $1.96 to $27.10.

An analyst for a shipping hedge fund explained that the spike is connected to fears surrounding the continued operations of the Suez Canal, amidst social unrest caused by massive riots against President Hosni Mubarak’s 30 year rule. “While Suez closure is not much of a threat, shippers are refusing to load in the Red Sea and transit the Canal,” explained the trader. “What’s probably going to happen is that they re-rout ships to the Cape [of Good Hope],” he noted.

“[Re-routing] makes voyages longer, which ties up ships and in turn diminishes supply,” said the analyst, “[this] is positive for the tanker market.”
The change involved is not just giving a tanker captain a different map and saying “get on with it.” Because of the relative size of the Suez Canal, there are different sizes of tankers involved, and so I thought it useful to talk about the different sizes of tankers, how fast and where they go, (and what the cost of that re-routing might be) in the post today.

To begin with let’s look at the traffic along the Suez Canal itself. Note that there is no immediate port of access into the Mediterranean, and thus to Europe, from Saudi Arabia or the nations of the Gulf.

Overview of the Suez Region (EIA)

The EIA, in writing about the Canal noted that
Almost 35,000 ships transited the Suez Canal in 2009, of which about 10 percent were petroleum tankers. With only 1,000 feet at its narrowest point, the Canal is unable to handle the VLCC (Very Large Crude Carriers) and ULCC (Ultra Large Crude Carriers) class crude oil tankers. The Suez Canal Authority is continuing enhancement and enlargement projects on the canal, and extended the depth to 66 ft in 2010 to allow over 60 percent of all tankers to use the Canal.
There are restrictions on the tanker size that can fit through the canal. This is mainly based on draft, or the depth of the tanker underwater, which has to be less than the 66 ft depth of the Canal, but there is also a bridge over the canal that the tankers must pass under. Those that fit into this range are designated as Suezmax tankers. In terms of the classification of tanker sizes they lie in the mid-range of those available. In a typical day about 1.8 mbd of oil passes through the Canal, which is about 5% of the global oil tanker trade.

The smallest of the tankers are those that act as coastal tankers. Typically from 300 to 670 ft long, with a draft that can go from 20 to 52.5 ft, they are used locally for the trans-shipment of refined fuel products. Ranging from 1,000 to 50,000 tons deadweight they are, most typically, the small local vessels that are often the only tankers that folk will see coming into harbor.
The design objectives for coastal tankers are demanding and sometimes contradictory, maximum volume in minimum dimensions. Operation in coastal service means frequent harbor calls, often through very restricted waterways having high currents and winds. Good manoeuvring capabilities are thus also required and, of course, high system availability to avoid incidents and accidents in case of system malfunction.
One of the more modern ones is fitted to carry either oil or liquefied gas.

The coastal tanker Seychelles Paradise.

But before I go on, I now need to define deadweight (DWT). It is not the weight of the empty tanker, but rather the weight of the cargo and fuel that the ship carries. In other words almost everything but the weight of the ship (which, just to be confusing, is known as the lightweight). Put them both together and you get the displacement of the vessel. So, that a tanker with a 50,000 ton DWT, with 6.3 barrels to the ton, would carry 315,000 barrels of oil. Now this is not all cargo since perhaps 5% of that total would be the fuel oil to drive the ship, which in this case would be around 15,000 bbl, giving a capacity of around 300,000 bbl. The density of the oil varies, and I used a value from one of the shipping companies, rather than the 7.3 value I have used in the past when converting shipped product.

And remember that bridge over the Canal that I mentioned? Well that brings in the other measure, known as “air draft.” This is the head room that the tanker needs, and for Suezmax this is 223 ft.

The next significant size category up are known as Aframax, and for a long while I thought that this related to some African capability. However it actually refers to the Average Freight Rate Assessment (AFRA) for the classification. A typical tanker will have DWT range from 80,000 to 120,000 tons (i.e. typically a useful cargo of around 690,000 bbl), a draft of 49 ft and a length of 820 ft. It has a typical speed of 14.7 knots. For those interested, Venezuela just bought 10 of these for $70 million each from Russia. Lloyds see a continuing oversupply of this category, to the point that (until this weekend) they projected rental costs of $10,000 a day or less, below operating costs. However there is a current hope in the industry that the rates may now rise (hence the champagne).

The Aframax tanker Tamara (currently for sale )

The next category will be the Suezmax category which has the restrictions that I mentioned above. They range up to 160,000 tons DWT.

Tanker in the Suez Canal (photo by Bob Wallace )

In addition to the air draft, the vessels are limited to a maximum width of 230 ft. Such a tanker might consume 410 barrels of oil a day, and travel at about 15 knots.

Those vessels that are too large for the Suez Canal, (and for that matter many ports) divide into two categories. The smaller is the VLCC (very large crude carrier) which are those carriers above 200,000 tons DWT, and then there are the ULCC (Ultra Large Crude Carriers) carriers, which are those above 320,000 tons DWT. These are large enough that they have been used for oil storage, as well as for transport. Just over a year ago there were more than 30 such supertankers parked around the globe. At that time rates of up to $75,000/day were being charged for the use of those tankers. In September 2010 Lloyds reported that the number was around 57, holding around 70 million bbl. These are the vessels that are very hard to turn, and take a long time and distance to stop. (Don't for example try throwing out an anchor.)

VLCC at sea

Once one gets to this size of vessel, the amount of fuel that is used in making a voyage becomes a significant factor in deciding how fast the ship will steam. Though that, in turn, is controlled by how valuable and necessary the cargo is at the time. For example in 2007 spot rates went from $30,000 a day to $300,000, but more recently have fallen steadily.

Recent VLCC market (after Devanney )

According to Devanney VLCC move at between12.5 knots, (50% power) and 18 knots, though at increasing fuel demand (which at top speed and loaded may reach up to 800 barrels of fuel oil a day.) As he notes in one example:
Once we get to 12.5/14 kts, we note that by speeding up another half knot, we can save 1.53 days at a cost of $63,000. This is a good idea if and only if we can earn $44,000 per day (about WS53)) or better with the days saved.
The 12.5/14 knot selection refers to the difference in speeds between when running loaded, and when in ballast (i.e. empty).

If one knows the intended travel speed, then one can look up the relative distances to be travelled (remembering that the vessel has to go both ways to complete one trip). The distance from Ras Tanura in Saudi Arabia to Port Sucre in Venezuela, for example, is 10,245 nautical miles. At 12.5 knots this would take 35.6 days at sea, each way (providing that the tanker was small enough to fit through the Suez Canal).

Going from Ras Tanura to Rotterdam via the Cape of Good Hope adds an additional 74% of the miles traveled going through the Suez Canal (from 6,399 to 11,109) while adding 20 days (from 41 to 61) to the round trip .
The costs incurred from going round the Cape is related to the extra fuel consumption but also to the extra capacity required and related insurance premium increase in order to lift the same quantum of cargo in the same amount of time. Conversely, the costs incurred in going through the Suez Canal consist of canal tolls, extra insurance risk premium and the use of services such as tugs, pilotage and mooring. Canal costs have decreased by 5% over the last five months.

The break-even point at the moment is related to the cost of bunker fuel. Should this be below $370 a tonne, then it is cheaper to go around the Cape, should it be over $370 a tonne then it is cheaper to go through the Canal. (It is currently well above that price). However the break-even is a function of charter rates and other values, and so varies with time.

There is one other way of shipping oil through Egypt and that is to put some of the liquid in a Suezmax vessel to transship the canal, and send the surplus up through the Suez-Mediterranean pipeline. With the enlargement of the canal this option is less favored, and the EIA note that volume in the pipeline dropped from 2.3 mbd in 2007 to 1.1 mbd in 2009.

I have not written much on ULCC since they have proved unpopular.
As of 2010, only 12 tankers above 320,000 dwt remain. Of this, only two "true" ULCC of around 430,000 dwt are left in operation, the TI Europe and the TI Oceana, which were part of a group of four ships constructed between 2002 and 2003. The other two ships, TI Africa and TI Asia were converted into floating storage and mooring units in 2010.
The TI Europe

The vessel TI Europe was built in 2002. It is 1,246 ft long, it is 223 ft wide and has a draught of 80 ft. It can carry 3.2 mb of oil. (DWT 441,893 tons.) The optimal speed of TI Europe is 16.5 knots laden and 17.5 knots in ballast.

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Saturday, January 29, 2011

North Dakota combined temperatures

Wow! If those folk that were putting in the weather stations in Wyoming didn’t want to get too far from a decent highway, that situation is even more the case in North Dakota. It is not exactly a symmetrical spread across the state.

Location of the USHCN stations in North Dakota.

As well as the 24 USHCN stations, there are 3 GISS stations in ND, according to Chiefio, and they are at Fargo, Williston and Bismark. Which of these, I wonder, will turn out to be only from 1948? (answer below the fold).

Well Bismark has a full set of data.

Bismark ND GISS temperature record

And Fargo has a full set of data:

Well, minor surprise, we also have a full set of data for Williston. So I am wrong in North Dakota.

So having got all that information tabulated, we need to go and get the population data. Moffit was too small for citi-data, but exists in Fizber. Other than that all the populations were available, and, as has become evident in other states, the GISS stations are in the places with the largest populations relative to the USHCN stations. The average of the USHCN stations is a population of 5,313, though there are only four above 10,000. The GISS stations are in cities that average ten times that size.

Comparing the GISS average to that of the USHCN stations (using the homogenized data) the average difference is some 1.2 degrees.

Difference between the average GISS station temperature and that of the average USHCN station in N Dakota.

Looking at the overall trend of the temperature in the state, the temperature has been relatively steadily increasing since temperatures were first recorded.

Interestingly the TOBS data suggests that the rise is some 2.7 deg per century, the homogenized data suggests that the rise is only 2.4 degrees.

Time to take a look at the geographical information for the state, which is 340 miles long and 211 miles wide. It runs from 97 deg to 104 deg W, and sensibly 46 deg to 49 deg N. North Dakota has an average elevation of 579 m, with the lowest point being at 228 m, and the highest 1,068 m. The average of both the the USHCN stations is 503 m, that of the GISS stations 455 m.

So moving on to the effect of changing geography on the temperature in North Dakota:

Change in temperature in North Dakota as a function of Latitude

Change in temperature in North Dakota as a function of Longitude

As I have discussed before, this correlation is potentially an artifact of change in elevation, though when I look at this correlation for North Dakota . . . .

Change in temperature with elevation in North Dakota.

Now that is interesting – it gets warmer as the elevation rises – which is counter intuitive and counter to most of the rest of the states. And there is a reasonable correlation coefficient – most strange.

Looking at the effect of population:

With most of the stations in towns of about the same size, but scattered around the state, there is not a correlation with population for this state;

And, as with Wyoming, the difference between the homogenized and TOBS data is getting less in this state, over time. It has however been increasing since the 1970’s.

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Wednesday, January 26, 2011

Fuel for America's transport needs

When groups such as OPEC try to predict the future demand for oil and petroleum products, one of the significant factors in that analysis lies in the demands of the US transportation sector. I have intermittently tracked those numbers, through the Vehicle Miles Travelled plot which the FHWA publishes each month, and here is the latest plot, which includes figures through last November. Bear in mind that this is a rolling 12-month total of miles travelled.

12 month rolling total of vehicle miles travelled in the USA (FHWA )

It is becoming increasingly evident that the plot has returned to a steady increase that has now been sustained at about the same rate as being maintained up to the earlier peak.

The question now comes, as evidenced by the remarks of London’s Mayor, as to how much higher the price of gasoline/diesel fuel will rise before it, once again, has an impact on overall growth. Overall growth was around 1.1% in November, up more than the annual average increase of 0.7%.

Driving is, to an extent, seasonally controlled, as this plot of the last three years driving, by month illustrates.

Travel on US Urban Highways by Month (FHWA)

Thus the bitter cold and poor driving conditions of the last couple of months may have had a negative impact on the overall totals, moving forward from the end of the plot, yet overall the recovery seems to be being well maintained.

This return to a higher level of demand is the subject of the front page comment on This Week in Petroleum which the EIA issued today (Wednesday). They note that transportation accounts for 72% of US petroleum consumption, at 12.9 mbd out of the current national total demand of 18 mbd. In the latest Energy Outlook the EIA has projected that GDP will grow steadily at 2.7% over the next 25 years, including a steady growth in transportation fuel use.

DOE projections for energy distribution (Energy Outlook )

As an aside it is interesting to note the EIA comment:
Although the situation is uncertain, EIA’s present view of the projected rates of technology development and market penetration of cellulosic biofuel technologies suggests that available quantities of cellulosic biofuels will be insufficient to meet the RFS targets for cellulosic biofuels before 2022, triggering both waivers and a modification of applicable volumes, as provided in Section 211(o) of the Clean Air Act as amended in EISA2007. The modification of volumes reduces the overall target in 2022 from 36.0 billion gallons to 25.7 billion gallons in the AEO2011 Reference case, equal to the AEO2010 Reference case.5
Well I don't think that is much of a surprise. In regard to more conventional ethanol production, it appears to have reached a current plateau at 0.9 mbd.

Turning to the more usual look at the charts, the anticipated decline in demand over the quarter has led to a drop in refinery activity.

Refinery inputs (EIA)

However the production of crude dropped even faster:

US crude oil production (EIA)

The difference has come from increasing imports. We will see whether this is a transient or more permanent change.

Retail gas prices now average $3.11 per gallon in the US (locally we are still hovering around $3.00), still a fair way below the $7.75 of the UK, but one wonders whether the steady ramp up in price will continue for another year or so, and if it does, what the consequences will be.

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The Mayor and the Monthly OPEC Oil Report

A couple of days ago Boris Johnson, the Mayor of London, had a column in the Biritish Telegraph about his shock at having to pay just over 80 English Pounds (EP) ($126), to fill up his Toyota Previa (at roughly $7.75 a US gallon). With the UK Treasury taking about 60% of that, he notes that the costs are likely soon (as they continue to rise) to have a significant impact o the growth of the UK economy.
It's not just that it's inflationary. If Britain's businesses cannot afford to run their vans, then they will stop hiring, they will stop expanding, and tax yields will go down. It is not just for environmental reasons but for cost reasons that I am starting physically to ache for the age of the electric car. In theory, it should all be kicking off this year. Mitsubishi, Peugeot and Smart are offering electric models this month; next month it is Citro├źn; in March, Nissan and Tata come to market, and in April we in London are launching our Source London network of charging points.
As I mentioned last week, BP does not think that the market for electric and hybrid vehicles will have a material impact of liquid fuel demand within the next 20 years. And, despite the Mayor of London putting charging points around the town, and a friend of mine telling me that condo’s in Florida are already rewriting their bye-laws so that electric car owners will be billed for charging (at present power is within the condo fee) I suspect that they may be right. But BP also said that we must, increasingly, rely on OPEC. And, since OPEC puts out a monthly report on the situation, I thought it might be interesting to look at the most Monthly Oil Market Report.

The January Monthly Oil Market report (MOMR) from OPEC aims to predict the changes in the world market this year, rather than taking the longer view of either API or BP. However, since OPEC are the folks that potentially have the additional oil to bring to the market to match the growing levels of demand, their views, even in the short term, are critical.

They do expect demand to continue to grow, and just as we saw, in their estimate, a growth of 1.6 mbd in demand in 2010, they now see an additional growth of 1.2 mbd in 2011. However, in 2010, most of the growth (1.1 mbd) came from non-OPEC sources, whereas in 2011 the growth in that supply (to an average of 87.3 mbd) is expected to be only 0.4 mbd. They see demand for OPEC crude rising to 29.4 mbd from 20 mbd, for an increment of 0.4 mbd for y-o-y average changes. Which leaves the interesting question, , as to where that additional 0.4 mbd is going to come from? And the answer is that it is expected to come from an increase in the NGL from OPEC of that volume.

The OPEC executive believe that there is some 6 mbd in spare capacity within the member countries of the organization, and that this could “quickly” be made available to the market. They see OPEC production currently totaling 29.2 mbd, but expect that while that level will be sustained as we move into the spring, end user demand will fall below that level so that stocks will rise, in the short term. (They expect second quarter demand to be the lowest of the year). Looking back at last year, they report that the largest growth in demand was for diesel, with gasoline as second.

OPEC summary of global consumption for 2010.

Interestingly OPEC notes that sales of diesel powered vehicles have risen in Europe from 22% to just over 52% of all sales in 2010, though there was a drop of around 6% in the total number of cars registered in Europe.

Part of the need for a revision in the original estimates comes from the more severe winter that has happened this winter, beyond initial predictions. This has led to higher heating fuel demands.

Change in heating degree-days as a percentage of a normal winter (OPEC)

In India, because of a switch to natural gas from fuel oil, there has been an overall drop in oil demand, and while gasoline demand held steady other fuels fell.

Changes in Indian consumption over 2010 (OPEC)

Note that the above plot shows changes in demand over the year, the total Indian consumption is around 3.3 mbd.

Consumption within the Middle East, which tends to detract from exports, was seen as rising, overall by 2.3% or 160 kbd in 2010. That may rise to 200 kbd in 2011, largely driven by increased use in Saudi Arabia.

China, consumed some 8.7 mbd in November 2010. OPEC sees that for 2011 demand will average 8.8 mbd a growth of 0.6 mbd over the 2010 annual average, ending the year with a demand of 9.34 mbd. But they admit that the growth in Chinese demand has been significantly greater than their analysts had anticipated. Car sales in 2010 were an increase of 31% over 2009 numbers (some 13 million vehicles).

And in the countries of the FSU, where oil production is significantly increasing, so also is demand, with growth in demand of 2.2% being expected for 2010, or 0.1 mbd. Overall as the world economies recover OPEC anticipates that demand will also strengthen, and has had to raise its estimate both of consumption over the past year, and that predicted, in consequence.

Turning to the growth in supply, the largest increments in 2010 came from Russia (0.33 mbd), and the United States (0.44 mbd) but in 2011 those growths will sensibly be over. OPEC are also more inclined to assess future supplies with a degree of risk assigned to the estimates, and they see the risk of the estimates for Russia being erroneous as higher than for other non-OPEC countries. And they are not optimistic, at this time, over seeing large gains in production from Azerbaijan (40,000 bd) and Kazakhstan (70,000 bd), which is where BP anticipates growth.

OPEC supply relative to global demand

OPEC noted the relative inputs of petroleum products to the United States, and (going to the EIA ) that list, for last October, is:

Origin of US imports (in thousands of barrels/day (EIA)

Imports to China were led by Saudi Arabia, at 0.88 mbd, followed by Angola at 0.81 mbd and Iran at 0.43 mbd.

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Monday, January 24, 2011

OGPSS - Some closing (for now) thoughts on Venezuela

I had not intended to start my new series of Tech Talks by looking at Venezuela, but that is how is has worked out, with three posts now on their crude oil and natural gas prospects. But Venezuelan production is not just tied in the oils of the Orinoco, most of it still comes from the more conventional oilfields of the country. As Jonathan Callahan noted, Colin Campbell has previously written on the geology, and equally important history and politics of Venezuelan production in his newsletter of July 2006. He takes us back to the first well that was drilled south of Lake Maracaibo in 1878, and outlines developments since that time. I looked through Daniel Yergin’s “The Prize” to see if it could cast a bit more light on the development of production through the country – but it is really a book more about the politics than the geology.

The book did, however, suggest that perhaps some of the developments of the industry were due to steps imposed on Venezuela and others. Thus, for example, up to 1932 Venezuela was supplying between 9 and 12% of US demand, but Congress then imposed a tariff on imports, leading to their being cut in half, and initially playing havoc in Venezuela, since about 55% of its production had been sent to the US. Within a few years they had, however, found an alternate market in Europe, and pre-war (WW2) were supplying 40% of the UK oil demand. In 1943 they decided that they weren’t getting a fair share of the profits and passed a law initially to nominally split the profit from the oil 50:50 with the oil companies. When President Betancourt came to power he first adjusted the rule to ensure that it really was 50:50 (and not realistically 40:60) and then was the first to ask for his percentage in oil, which the country could sell itself. Since the profit was set by the sales price of the oil, when Standard Oil of New Jersey on August 9, 1960 unilaterally cut the price of oil by fourteen cents, this led others to also cut their prices, and the economies of the oil exporting countries immediately suffered. The year before representatives of Venezuela, Saudi Arabia, Kuwait, Iran, and Iraq had met and signed a “Gentlemen’s Agreement” at the Arab Oil Congress in Cairo, which included language agreeing to “defend the price structure” and with the hope of switching the profit ratio to 60:40 in their favor. The drop in the posted price led to a meeting of the five initial signatories in Baghdad on September 10th, and by September 14th OPEC was formed. The oil companies then apologized and tried to re-establish control, but from such small beginnings . . . . (And The Prize was written in 1991). Venezuela nationalized their oil industry in 1975-76, creating Petroleos de Venezuela S.A. (PdVSA) as the operating company.

Well, with that bit of history behind us, and moving forward to 2006, when Colin wrote his piece, at that time the conventional fields in Venezuela were producing around 1.8 mbd, largely from the Lake Maracaibo conventional wells, and he anticipated that they could hold this level until about 2015, when it would drop to around 1.6 mbd. The unconventional production from the Orinoco was producing at around 650 kbd, for a total of around 2.45 mbd. He expected that the Orinoco flow would be stable until 2015, and would then rise at 3% pa through a peak in 2030, and then decline at 2% a year.

Venezuela claims to now have the world’s largest oil reserves, at 297 billion barrels, mainly in the Orinoco. In seeking to develop that oil, Venezuela is now actively working with Chinese companies (as I mentioned earlier) to the tune of a $40 billion investment, and the intent to raise production from the Orinoco by perhaps 800 kbd (with Venezuela still retaining that 60:40 split) . This gives Venezuela a target of producing 4 mbd by 2015. However that assumes that they are producing the “official volume” which is 3 mbd at the moment. The EIA put it closer to Colin’s total, or around 2.5 mbd in 2008, averaged 2.2 mbd in 2009, and it was falling. OPEC, in their January 2011 Monthly Oil Market Report notes that Venezuela has a production of 2.26 mbd in December. However this may not include the NGLs that are produced with the natural gas, and this has been estimated at around 300 kbd by the EIA. At the end of the year rains hit the Paraguana Refining Center refineries that process half of Venezuela’s crude, collectively around 1 mbd. The Amuay refinery (which processes around 650 kbd) was closed for a couple of days, while the Cardon refinery was closed for about two weeks.

If the Chinese loan of $20 billion last April is requiring Venezuela to ramp up deliveries to them from 400 kbd last summer, to 1 mbd by 2012 then this may explain why they are now having some difficulty making promised deliveries elsewhere, and are needing the helping hand that I mentioned in earlier posts. It might also explain why deliveries to the US have been falling off.

One way in which energy might be saved is to use renewable power to replace oil in the refineries. With most of the electric power in the country coming from hydro, it would have been thought that this could be a source of replacement. Unfortunately there are significant problems in the power systems of Venezuela – which I am going to forego discussing, other than giving the reference to a more comprehensive story. Cuba has, however, been instrumental in helping out with some of those problems, which were exacerbated by the severe drought. As a result thermal power stations were used to generate electricity, and it is this that Venezuela is considering to replace with wind energy.

The idea of using wind to provide some power for the refinery and thus release oil, was first bruited in 2005, it has apparently not yet worked out.
Venezuela's state oil company PDVSA aims to boost fuel oil exports by about 100,000 barrels a month through the increased use of wind for electric power generation, Nervis Villalobos, the president of state-owned electricity firm Cadafe and deputy energy and oil minister, told BNamericas

It was not until March 2010 that an agreement with the Spanish firm Gamesa was reached to build the first wind farm, And while plans for a significant development of some 100 MW in Falcon have been announced , this is partly now to reduce the reliance on hydropower. The overall intent is to generate 1500 MW in the next five years, but construction of that first farm, initially slated for last year, is now not projected to start until this July.

It is quite difficult to get accurate numbers on oil and gas production from Venezuela, so perhaps it is time to move on to a different place.

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Sunday, January 23, 2011

Wyoming combined temperatures

As with New Mexico, Wyoming has 29 USHCN weather stations, however it has two GISS stations at Casper and Lander, WY, rather than just the one. (Should I hypothesize that there is only going to be one with a record before 1947?) Interesting that about a third lie along the interstates.

Well, bless my socks, I’m right! Casper has only data since 1947, while Lander has the full record from 1892. Another tug of the forelock to Chiefio, who first noticed this pattern.

GISS plot of temperatures for Casper WY

GISS plot of temperatures for Lander WY (GISS)

So with the temperatures, both homogenized mean and TOBS (Time of Observation corrected) data collected, and tabulated, it is time to get the station populations.

First question is as to whether Bates Creek is part of the 5,834 folk in Hell’s Half Acre, which citi-data suggests is the community. A quick glance at Google Earth, and the answer is no!

View of the location around the weather station at Bates Creek (Google Earth)

So there are maybe 3 houses? Say 20 folk.

Google would have me believe that Diversion Dam is in Kinnear (Pop 272). Checking with an aerial view, however there are only a couple of buildings, and it is right by the river – even the highway is on the other side. So I give it a population of 10.

View of Diversion Dam station (Google Earth)

I have to go to zip-codes to get that Moran has a population of 1.

There are two different values for Yellowstone and two sites, (Mammoth and Lake) with one population of 64, and the other (citi-data) 377, so I should check and see relative construction around both. As luck would have it there is a cloud over part of the Lake site, but I can see a few buildings so I give it the 64, and Mammoth – wow it has even more, so perhaps I will use 377 for this one. (But we don’t know the effects of the geothermal heat in either place).

Looking at the difference between the average of the GISS data and the USHCN homogenized average values over the years.

The trend lines seems to be stronger than the curves, so I checked it twice, and that is what the data shows.

Looking at the TOBS data and the trend in the state temperature over the years:

The temperature has increased at a rate of around 1.9 degrees per century.

In terms of its geography, Wyoming is 360 miles long by 280 miles wide, stretching from 104 to 111 deg W (sensibly) and 41 to 45 N. It has an average elevation of 2,042 m, the average USHCN station elevation is at 1,965 m, and the average GISS station is at 1,600 m. Since there is a linear inverse correlation with elevation, this suggests that the GISS station will, as it does, read high. But it is, on average, 1.74 deg F above the USHCN station average, homogenized which is less than the difference in elevation would suggest (3.2 degrees).

Looking at the impact of geography on the temperatures over the years:

There is a quite weak correlation with latitude (which given that we have moved North from looking at New Mexico last week, where the elevations weren’t on average that much different (ave 1,737 m) but the temperatures were about 54 deg F on average, rather than the 43 deg here, some roughly 10 degrees of latitude further North.

There is a stronger correlation with Longitude, but this is correlation without causation, as they say:

The real cause, as we have seen so often, is the changing elevation:

The population correlatiom had a smaller number of questions over individual station populations than in the recent past, and mainly used the citi-data populations. And it also leaves me wondering if the cabins at Lake Yellowstone were only occupied in the summer, and unheated the rest of the time.

And finally there is a little surprise, the trend line is actually negative, if only just so.

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Thursday, January 20, 2011

The BP Energy Outlook to 2030 - a review

There is a significant reliance, among those who write on fossil fuels, on the statistics that BP annually compile on global energy production. For example it provides underlying information for Energy Export Databrowser, as well as many of the posts at The Oil Drum. And so when BP just released their forecast for Energy for the next 20 years (Energy Outlook 2030) it is worth having a look at to see what they predict. Bear in mind that this is only one company prediction, yet nevertheless it is an influential one.

The report is very briefly summarized in the introductory speech by Bob Dudley, the Chief Executive, who chose the following highlights:
• Global energy growth will average 1.7%, but will be generated by non-OECD nations, while demand from OECD will remain relatively stable.
• Oil supply will grow at around 1% per year, with major increases in supply coming from OPEC, particularly Saudi Arabia and Iraq.
• Coal use will grow at an average of 1.2% per year, largely through demand for power from non-OECD nations.
• Natural gas will be increasingly used as a power source, with demand growing at 2.1% per year.
• Renewable energy sources will continue to be favored, with growth being at around 8% per year, and with demand for biofuel tripling over the two decades.
• Deeepwater production of oil will rise from 7% of the global demand to 9% by 2020.

Those were the initial highlights, and there is slightly more detailed summary at the BP website. Since the booklet that summarizes the data is some 30 pages long, but uses a considerable number of graphics to show the projections, let me borrow some of these to summarize what I see as some of the critical points (and I will add a few editorial comments as I go).

The review (which is the first of its type that BP has released) recognizes that the face of energy consumption is changing. As the world population continues to grow, the shift in energy intensive industries to the developing countries has shifted the locations where demand will grow. Since industrialization also increases the energy use by their populations, there is a compounding rise in their energy use.

Projections of population and Energy Growth (BP Energy Outlook)

What is more interesting to me is how they see how this energy will be supplied. The overall projection is shown in this chart:

Projected future source of Energy Supplies (BP Energy Outlook)

The fastest growing of these segments is that of renewables (which includes biofuels). This can be seen more explicitly in this graph from the report:

Sources of Future Energy Supply (BP Energy Outlook)

The growing impact of renewable energy production will affect both electricity generation, and transportation (the latter mainly through biofuel growth).

Looking specifically at the different fuel sources, the report anticipates that oil growth, will be some 16.5 mbd over 20 years, but that this will have to also compensate for about 4.5 mbd of declines in non-OPEC producers. Non-OPEC will, however, see an increase in overall production, the gains coming from about 2 mbd of increased production from oil sands (with the assumption that this is Canadian, since it is not credited to OPEC, of which Venezuela is a member), from the FSU, and from a significant increase in biofuels, only some of which is anticipated to come from the sugar-based ethanol of Brazil.

Sources of future liquid fuel supply (BP Energy Outlook)

In looking at the above chart it is important to recognize the distinction between the FSU and Russia itself, since that country may well start into a decline in production within the year. The increased production will come from places such as Azerbaijan and Kazakhstan.

The second point is that relating to biofuels, where BP note that renewables currently provide 3% of liquid fuel for transport, but that this is expected to rise to 9%. (Within the next 20 years increased rail, electric, hybrid and CNG are not expected to make a material contribution, though CNG use is expected to be about 2%). The concern with biofuel production is that it is virtually all anticipated to come from ethanol. And, as we have just seen with the closure of the Range Fuels plant in Georgia this week, the commercial viability of cellulosic ethanol has yet to be established, challenging not only the BP view of the future, but also that of others. The practicality of further increase in corn ethanol production in the United States is doubtful, giving the rising cost of the raw feed stock (corn). However this is the projection, and increasingly BP expects that biofuels will meet increases in liquid fuel demand (rising to meeting 60% of the growth by 2030). There is, however, an allocation of 1 mbd for increases in refinery gains (which I have discussed earlier) and from natural gas and coal, which perhaps gives some indication of their opinion of this latter effort.

Anticipated size and source of Biofuel production (BP Energy Outlook)

It is the dramatic increase in transport demand, particularly in Asia, that will drive the increased demand for liquids, China alone is expected to pass the United States in oil consumption within this time frame. To further supply that growth, NGL increases of more than 4 mbd from OPEC, and crude oil production growth mainly from Saudi Arabia and Iraq is projected. (In this regard it should be noted that a year ago BP were anticipating that Iraq might be producing 10 mbd by 2020 – the current more realistic target is 5.5 mbd by 2030. And while Iraq has stated it may be able to reach 12.5 mbd by 2017, the condition of the infrastructure in the country, among other issues, would suggest that BP are now more likely correct). Whether Saudi Arabia will rise to the challenge of producing (and likely more critically exporting) at the levels BP projects, given the current age and production history of its main fields is a question, since recent pronouncements from that country suggest a more conservative production capacity of 12 mbd and a disinclination, perhaps, to produce at even that level. (BP assume that both Russia and Saudi Arabia will retain their market share of 12% over the two decades, which, with an assumed total of over 102 mbd would give them each an assumed production of over 12 mbd). To reach the Saudi target BP expect them to expand production capability after 2020.

The major change in fuel use over the next two decades is expected to come in the increasing move from coal to natural gas as the primary source for electricity generation. Because of overall increases in power demand absolute demand for both fuels will increase, but increasingly the demand will shift to NG.

Thus, for example, Chinese growth in demand will rise at 7.6% pa to 43 bcf/day, though this will still only be 9% of their total energy consumption. It is the BRIC countries, which include Brazil, Russia, India and China (and now South Africa) (H/t KLR) whose overall growth in demand, with that in the Middle East, will likely prove greatest over the next two decades.

Expected growth in NG demand in the next 20 years (BP Energy Outlook)

By 2030 BP project that most use of oil for power generation has been displaced, with coal and NG being the primary fossil sources. NG use will increase to about 40% of the market, outside of Europe, where it rises to 65%, given the European concern over climate change. However, in terms of the absolute market, Europe will see a much greater impact from renewable resources generating power, so that the percentage that NG provides will only rise to 24%. Over half the NG supply in North America will come from shale gas and coal bed methane (CBM), elsewhere the impact from those resources will, within this time frame, be much less. Whether or not these unconventional resources reach the 57% market supply by 2030 will likely depend on the development of at least one new technological breakthrough that lowers cost while increasing long-term yield from the wells, but that is a quite feasible assumption.

Electric Power generation by source (BP Energy Outlook)

The market for LNG is anticipated to grow significantly (4.4% pa), particularly in Europe and Asia. Supply is initially seen as coming from the Middle East, but this will be followed by production from Australia which will overtake Qatar by 2020, and then African deposits will come on line providing 41% of the supply by 2030. It is interesting to note the caveat that BP introduce into this projection.
We assume that policy supports the continued rapid growth of non- fossil power generation – especially renewables, which attain a global share of 10% by 2030. Where gas is available at a competitive price, it continues to displace coal.

Regional demand growth for LNG (BP Energy Outlook)

It is the response that China makes in changing their primary source of power as they continue to expand production, and thus energy demand, that will decide how far, and how fast the transition from coal will occur. BP anticipate that the market overall will continue to rise until just before 2030, at which time it will flatten. But whether that happens will likely depend on availability and price, of both coal, and its potential replacements. (Hence the caveat).

BP recognize that this is only a base case projection, and that there are many different factors that will likely change the final results. That is likely to be particularly true if there is an upsurge in interest in climate change legislation and regulation. I have made some comments on how accurately I think that the models have been developed, but that should not detract from the value of this particular document which, being freely downloadable, is well worth getting and saving.

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