Thursday, September 29, 2011

OGPSS - Pipelines through Canada

If one looks at the countries that are major importers of oil into the United States, Canada currently easily tops the list exporting 2.085 mbd of crude (2.524 mbd of total petroleum products) for example in June. Interestingly Saudi Arabia was in second place at 1.164 mbd and Mexico had fallen to third place at 1.108 mbd. In light of the countries that used to occupy places on earlier lists and no longer do, it is worth noting that places such as Chad and the Congo are now on the list.

Top 15 countries sending crude oil to the United States in June (EIA )

Since that summary review Canada has gone on to post some of the highest volumes of the recent past:

Weekly imports of crude from Canada into the United States (EIA)

This increase has occurred as the amount imported from Mexico has seen some of its lowest numbers.

Weekly imports from Mexico into the United States (EIA )

The numbers suggest a growing importance for that oil coming from the North. It was, for example, interesting to note that in the recent report reviewing available United States oil and natural gas, authored by the National Petroleum Council, (which I discussed earlier) and which had Daniel Yergin as Vice Chair, that Canadian oil has begun to get counted with that of the United States in the more generic classification of North America thereby acting as an anticipated aid in solving some of the “domestic” supply problems in the near future. Following that report, Dr Yergin wrote an article in the WSJ denouncing the idea of peak oil. Euan Mearns has provided his usual detailed and well-argued rebuttal to this (as does this entire series) so I will not go into that further at this point.

I briefly looked at Canada when I was writing the earlier summary posts on the top 30 producers in the world, Looking at the reported and projected production for this year, production is anticipated to steadily climb once the summer months have passed.

Production of Crude Oil and Equivalent in Canada in 2011 (Canadian National Energy Board)

The increase reflects a steady increase in the component from Western Canada, which started the year at 91% of the total, but is anticipated to reach 93% by the end, largely on the basis of an increase in production from the bitumen of the oil sands.

In passing it should be noted that not all the oil that will come from Canada necessarily started there, since, for example, there is currently a move to lay a pipe that would carry oil from the Bakken formation in North Dakota and Montana through Saskatchewan to the Enbridge terminal in Manitoba, and thence to refineries in the United States. Further not all future Canadian oil exports can be assumed to come to the United States. Two pipelines also being proposed are to run the 727 miles from Bruderheim, Alberta to Kitimat in British Columbia. The first of these would carry an average of 525 kbd west, while the second would transport back some 193 kbd of condensate, which would help to thin the crude going through the larger pipeline. Not surprisingly this $6.6 billion project is getting considerable support from China.

Not that this would be a totally new investment by China in Canadian oil,
Earlier this year, for example, five companies signed up for so-called firm service, or guaranteed access, to a portion of the Trans Mountain pipeline, which carries oil from Edmonton to a port at Burnaby, B.C. Among them is PetroChina International (America) Inc., a subsidiary of Chinese energy giant China National Petroleum Corp.
The investment is not just in the pipelines to get the crude to China, there has also been a growth of Chinese acquisitions of shares in the companies extracting the oil. Recognizing that, in contrast with many exploratory operations, the presence of the oil in Alberta is much more certain, the risks of investment are reduced and a return, or in this case the oil itself is a much more certain outcome. As a result there are now more Asian companies entering the oil sand business.

It is not unwelcome news in Canada. Bear in mind that at present 99% of Canadian oil exports go the United States, and as the President of the Enbridge Northern Gateway noted recently:
I challenge any of you to name one other country in the world that only has one market for its largest export. Right now our most valuable resource is landlocked in North America and isolated from the world market. That means it is often isolated from world price. The August spread between West Texas Intermediate and Brent Crude, the world price, was $22 per barrel. Canadian heavy crude has more often than not sold at a discount to U.S. light crude that goes well beyond the quality differential – simply because of lack of market.
In perhaps the same way as they acted to provide a second market for the natural gas of Turkmenistan (other than Russia) thereby allowing the Turkmen to be able to sustain higher prices, so now they can, to some eyes, be seen to be riding to the rescue of Canadian prices.

And then there is the controversial Keystone XL pipeline set to run from Alberta down to Houston and refineries south, and which is generating some high-level opposition.

Planned route for the Keystone pipeline

There are some current indications that the State Department will approve the pipeline, permission needed since it crosses an international border. It may not hurt those chances that the chief lobbyist for TransCanada was, apparently, the deputy manager of Secretary Clinton’s 2008 campaign. The latest step by the opposing forces has been to challenge the permit that TransCanada has to carry out construction on the Canadian side. Apparently the delays that are holding up the start of construction of the 700 kbd pipeline have carried the project beyond the year during which TransCanada had permission to start construction, without such construction beginning. On the other hand TransCanada are pointing to preparations for river crossings and the laying of foundations for oil storage tanks as evidence of such construction.

It is expected that with this increased demand production from the oil sands will double by 2020. This expansion is not without demands of its own, since the use of natural gas in the mining process (see earlier posts) will lead to an increase in demand from 1.1 bcf to 3.0 bcf to help in that production gain. And so I will take another glance at the plans for the oil sands in the next post in this series.

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Friday, September 23, 2011

Another quake at Katla, and some thoughts on Geothermal in Iceland

There are times when I think that the volcanic activity under Myrdalsjokull is coming to an end, then activity flares again, and a threat again becomes apparent. In the last few hours there has been another 3.2 quake in the region of the Katla caldera.

Recent activity in the region of the Katla volcano. (Icelandic Met Office)

A couple of years ago there was a paper suggesting that many of the small quakes are more likely to be due to ice movement, rather than volcanic activity and magma movement. While that may be true of many of the small events that have occurred recently (and bearing in mind that it is the end of the summer, over which temperatures are warmer) the lineation of some of the quakes seem, to me, to be more evidence of more significant activity.

One can look, for example, at the aligned quakes that occurred around Sept 8th, Sept 20th and Sept 21st.

Earthquake activity for Sept 8th, 20th and 21st (Icelandic Met Office).

The question of how seriously to take all this activity is made more difficult to answer by similar levels of earthquake activity that is occurring further west around Hellisheiðarvirkjun. This is the more westerly of the two starred earthquakes on the map below. (The star indicates that the levels are at a magnitude 3 and above).

Location of recent earthquakes in Iceland (Icelandic Met Office)

However the activity at Hellisheiðarvirkjun is not totally natural since there is a nearby geothermal plant at Hengill which is in the process of being expanded from 213 MW to 300 MW of electrical power and 400 MW of thermal energy. Although there bave recently been a considerable number of small earthquakes (as today’s map would indicate) in the region, and the larger one today, the history of the region shows that it has been 2,000 years since the last major eruption there. The plant is about a 20-minute drive from Reykjavík.

I wrote about some of the problems of water injection into the stressed rock of a geothermal site, and the earthquakes that can be induced, some time ago. Jón Frímann has noted that water injection is currently taking place at Hengill, and thus that many of the quakes are man made. In the earlier piece that I wrote I noted that earthquakes up to 4.6 in size had been induced around the Geysers in California, but with the high incidence of quakes that they see, this has not been considered a problem. I have quoted Ernie Meyer on the work at the Geysers in California where he has said that the largest quake they have seen there was a 4.6, and that "there has never been a damaging geothermal earthquake anywhere in the world."

Iceland is a little different, given the more active ground movement, and that the water may induce larger scale ground movement if it lubricates too many of the potential failure surfaces. The plant apparently intends to continue injecting the process water after the heat has been removed, so that it can recycle and regain heat before again reaching the wells for extraction. Earthquakes up to a level 3 are expected, and are not considered of concern. Though as Denise-Marie noted there have now been a couple of quakes that are a little more than that.

Hengill drilled wells down to 250 m from 50 to 70 years ago, but then with more advanced technology drilled down into the higher temperature zone that can be found down to 2,500 m.

Difference between Low Temperature and High Temperature geothermal deposits in Iceland (Sverrir Thorhallsson )

The wells at Hellisheiði are High Temperature, and it has been calculated that the average well flows at 35.5 liters/sec with a power production of 8.7 MW.

Apparently even geothermal wells can blow out, and blow-out preventers can fail to work. One of the wells at the Krafla geothermal plant in northern Iceland blew-out, although the environmental consequences are much less, since the escaping fluid is largely steam and water.

Geothermal Blowout at Well KR-4 (GeoThermHydro )

Time to wait and see again, how things progress.

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Thursday, September 22, 2011

OGPSS - Can Alaskan coal be considered a reserve?

When I originally started to write about the Alaskan fuel sources I had intended to write only about the oil and gas reserves in the state, as I have done over the past few weeks. I was, however, since asked also about the coal in the state. And then, to reinforce the need to at least look at this fuel, there was this recent quote from the Chancellor of the University of Alaska-Fairbanks, Dr. Brian Rogers.
Rogers said he has heard objections to the construction of a coal-fired plant, but that it was the only cost-effective way to heat the campus in interior Alaska.
Until now, I have had only one chance to visit an Alaskan coal mine, the Usibelli mines near Fairbanks. Further honesty compels me to admit that I played hookey that day and took myself and my grad student off to have look at the Yukon River, the Dawson Highway and the Arctic Circle (certificates provided) instead. Not that the coal mining in Alaska is not important, and coal’s presence not also visually obvious, but I had seen a lot of strip mines in my time.

Coal outcrop Alaska (DNR)

The coal seams of the region are clearly rich, and thick, and near the surface, and so it is relatively easy to remove the overlying rock, mine out the coal, and reclaim the surface, after the mine has passed. I have written about the evolution of the mining shovels used to remove the coal and rock and the use of explosive to break the rock and coal in earlier posts, there are also, at the Usibelli Web site, video and animations to show how they mine the seams of coal shown in the outcrop above.

As the University Chancellor noted, coal provides a considerable power benefit to the state, though it also has created several bodies that are opposed to its growth, particularly the operation of a new mine at Wishbone Hill. This opposition comes in a region where, in the past, mining operations have removed some 7 million tons from some 18 different operations. But again, in this series I don’t want to argue the pro’s and con’s of individual sites. Usibelli currently mines more than 1.5 million tons of coal a year, with about 1 million tons being used domestically, and half-a-million tons is shipped to the Pacific Rim (mainly Korea). Usibelli make the point that one of the reasons that power costs in Alaska remain high is that coal plays a smaller part in power generation than it does in other states.

Relative electricity price in comparison with the coal mix in providing electrical energy (UCM )

If problems arise in bringing natural gas to more of the state, then coal’s fraction of the mix may well increase. Certainly the amount of coal within the state is vast. It has been suggested that there is as much as 5 trillion tons of coal in Alaska, some 40% more than in the lower 48 states combined. The coal is found in three provinces Northern Alaska-Slope, Central Alaska-Nenana, and Southern Alaska-Cook Inlet.

Coal regions of Alaska (USGS )

More recent estimates have had a tighter focus.
Previous coal resource assessments attempted to assess the total coal in the ground in the United States and Alaska, but those estimates tended to be high and included coal deposits that are either not available (contain coal beds that are too thin and (or) too deep to be economically mined using present mining technology) or that are not of sufficient quality to serve as a fuel for electrical power generation. Thus, a new assessment was required that focused on coal resources likely to be utilized in the next 30 years, which are for the most part coal beds currently being developed in existing mines or in areas that are currently leased in Alaska.
As a result the 5 trillion ton estimate from the 1977 study has been trimmed to consider just the 160 billion short tons which includes the coal defined in the quote.

However coal can only be considered a reserve if it is likely that it will be mined. At the moment it is the coal in the region around Fairbanks where the need is sufficient for coal to contribute to the state energy budget. But there has been exploratory activity in both other regions as well, and mines have existed in the past.

North of the Brooks Range, and lying over the National Petroleum Reserve, the Arctic Coal deposits hold the likely majority of the Alaskan coal. Unfortunately for those who would use it, it is not the easiest place in the world to reach, and operate in. And although there was coal mining in the region as far back as 1879 (when it was used to supply whaling ships) it is not active presently. BHP Billiton have been and looked, and while not abandoning the idea completely, do not currently seem active. On the other hand the state has been looking to approve prospecting permits in the Nanushuk region, which lies north of the Brooks Range, yet only just off the main haul road that runs up to Deadhorse and Prudhoe Bay. The request for a permit was approved by the state board, though there has been an objection from the Naqsragmuit Tribal Council (though I could not find a current web page for the Council).

However, in order for any coal to be mined above the Brooks Range, there has to be a viable method of transport. And though it has proved relatively straightforward to move coal by rail from the Powder River Basin in Wyoming, conditions are considerably different above the Arctic Circle, and the Brooks Range is a tad hillier than the Upper Great Plains. There is talk of moving the coal to the terminal where the Red Dog Mine ships out zinc concentrate, but that facility is only open from July to October - which might help China build up stocks in the summer, but does little for the global high winter demands for fuel. Further the haul road is not such that I can see it being able to handle heavy consistent loads of coal. (On the September day we went up that short distance a haul truck went off the road ahead of us on one of the many snow-covered bends that snaked up and down the mountains).

There is active consideration of a mine at Chuitna, which is just north of Cook Inlet, in the Southern of the three provinces. About 45 miles from Anchorage the project would mine up to 12 million tons of coal a year for an initial period of 25 years. At present it appears that the Division of Mining, Land and Water is awaiting an updated proposal before moving ahead to make a ruling, possibly in a preliminary form next year.

Put altogether, although there is a lot of coal in Alaska, in relative terms it is unlikely that any significant volumes of that resource will be brought to the market in the near future. As a consequence, unless and until the demand pattern changes, (and I think that it likely will) it is impractical to think that Alaskan coal will remain more than a resource. Further, given the need for a supporting infrastructure itseems unreasonable to expect that even after global demand starts to rise, that the coal could come to the market, and become a reserve in less than an additional 5 – 10 years.

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Tuesday, September 20, 2011

The Temperature fall and the Chickadee

Yesterday (Monday) I was reading the Boston Globe and came across an article by David Abel about a recent report by the Audubon Society on their Breeding Bird Survey, and how it was showing that the changes in the climate was influencing bird ranges and populations. The surveys, which looked at the state of Massachusetts, only went back to 1965, and so, being curious, I wrote to Mr Abel pointing out the drop in temperature (about 4 deg F over 1950 - 1965) for the state that I wrote about a couple of weeks ago. I was, sort of hoping that he might look at the survey data before that date, and see if the bird populations had fallen with that temperature drop. Also I wanted to know if the numbers had returned the the 1950 level. However he merely sent me a note thanking me for my note.

But I was now curious to know the answer, and so I had a look for the data on which the Audubon article and the resulting newspaper story were based. And it turns out that the reason that the data only went back to 1965 is that when the BBS started to be implemented). So where could I go to get earlier data?

The answer turns out to be the Audubon Christmas Bird Count (CBC) But the count is very species specific, and since I have only a limited amount of time I decided that I would just pick one bird (at least initially) and see what the results showed. And if the story was about Massachusetts, then it seemed sort of logical to use the state bird, which turns out to be the Black Capped Chickadee .(And as it happens, though not told until tonight by the Bishop, this is also the Maine State Bird - about which more anon .)

So the first thing to do was to get the basic information on the population with time, looking at the annual counts for the different states along the Atlantic shore from the Audubon site. And that showed the answer to one of my questions. Let me begin by repeating the temperature plot for Massachusetts over the last hundred years from my look at the state. (I am using the USHCN numbers for this particular study) so that you can follow how I got there.

Average temperature as a function of time for the state of Massachussets

You can see the significant drop in average state temperature that occurred in the 1950 - 1965 time frame. So how did the bird population respond?

It has only been in the last few years that the state has returned to those 1950 temperature, so did the bird population change, and has it made it back? The Audubon page allows you to plot a graph:

Black Capped Chickadee population in Massachusetts using the Audubon CBC

The count doesn’t look that valid before 1940, and when I checked other states I had the same problem, so I am going to restrict the rest of this to the years after 1940.

You can see that there was a drop in the count at around the period that the temperature fell, and this was confirmed when I looked at the numbers for the other states sitting close to Massachusetts. But, as you can see, the question that I had asked David Abel as to whether the numbers had returned to the values back before the temperature fell, was answered with a Yes!

However we can now go on from there. Having numbers and a temperature plot, the question can be answered as to whether the population was affected by the temperature, as the two plots above seemed to indicate. So I re-plotted the data as count versus temperature. And this is what I got for the state:

Chickadee count as a function of average annual Massachussets temperature

The plot showed, when I fitted a polynomial, that there was an optimal temperature for the population. I checked this with similar plots for the states along the Atlantic that I covered in the earlier post. Some states didn’t get that warm, and some didn’t get that cold. But for New Jersey, Connecticut, Pennsylvania, Rhode Island and perhaps New York, the data plots showed about the same peak in population at around 51 deg F.

Here is the plot, for example, for Connecticut:

Chickadee count as a function of average annual Connecticut temperature

And similarly for New Jersey

Chickadee count as a function of average annual New Jersey temperature

So with Massachusetts temperature hovering around that level at the moment (as back in 1950) we’ll have to hope for no more change in state temperature, since too much fluctuation either way may cause the population to drop.

So the next question would be whether the population drop is because the birds died off, or moved, if the temperature fell off. I don’t have enough data to answer that part of the question, but I have an indication. If one looks at North Carolina (below which the more Southern states don’t see this species apparently) then when that cold spell hit, further North, the state suddenly saw birds appear. (And having discovered the state they came back when it was colder up North).

Black Capped Chickadee counts for North Carolina (Audubon Society CBC)

So it appears that, not only did I get an answer to my question, I also discovered another temperature index through the birds, and so maybe I’ll do some more correlations from time to time. (I was thinking about doing wild turkeys since they are common around much of the country, but there is the problem that they are harvested also so that the numbers are more artificial).

Oddly the plot of optimal temperatures for the Chickadee did not work for Maine, where the temperatures are cooler. Wonder if the Maine version is turning into a slightly different creature – given that it is the Maine state bird too.

Black Capped Chickadee counts for Maine (Audubon Society CBC)

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Sunday, September 18, 2011

Temperatures in the Flat Middle of the USA

Last week I noted the curious drop in temperature along the Eastern Seaboard in the period from around 1950 to 1965. The question then arises as to whether there are other pieces of information in the data that I have accumulated, and so, out of curiosity, today I will look at the strip of states in the middle of the country and compare their average temperature with that of the East Coast. (Checking to see if my memory that there wasn't quite the same drop is, in fact, true).

I am trying to stay away from mountains in this strip, so I will pick Minnesota, Wisconsin, Michigan, Iowa, Illinois, Indiana, Kansas, Missouri, Oklahoma, Arkansas, Texas, Louisiana, Mississippi, and Alabama. And, while there are some hills in the selection, just for simple characterization I am going to call these the “Flat Mid States.”

Interestingly all these months since I first looked at Arkansas, there is still a problem downloading the data for Rohwer from the USHCN, so I used the GISS values instead (recognizing that they are a little manipulated, but since I am averaging over 15 stations, reckoning that the “adjustment” won’t make that much difference.)

Looking at the average plot just averaging the state average values, calculated in earlier posts, one gets, for the homogenized data:

Averaged temperature in the Mid States using state average homogenized temperatures

When one uses the TOBS data, rather than the homogenized values, then the curve changes to

Averaged temperature in the Mid States using state average TOBS temperatures

If I weigh the results by the stations in the state (there are a total of 405 stations in this series), then the result, using TOBS data becomes:

Averaged temperature in the Mid States using state average TOBS temperatures, weighted by number of stations

The effective result of the weighting in the above plot is just to average all the station data. When, however, the area of the states is considered, bearing in mind that apart from Texas they are all much the same size, then the result becomes:

Averaged temperature in the Mid States using state average TOBS temperatures, weighted by state area.

It should be noted that the trend over the range of data is sensibly zero, i.e. there has been no temperature increase on average for these states, over the past 110 years.

The drop in temperature, so clear in the data for the Atlantic States is not as prolonged here, falling from 57.9 deg F in 1954 to 55.1 deg in 1960. Comparing the two plots:

Average temperature in the Flat Mid states (upper green) , relative to those of the Atlantic Shore states (lower red), averaging states weighted by area.

Note that there is a definite rise in temperature along the sea siding states. Also the larger size of Texas tends to give a larger weight to the south here, and thus the overall higher average.

Looking at the individual trends for each state in this set, I have again divided it into two sets to make it easier to distinguish the individual lines.

Average temperatures for the Northern set of states in the Flat Mid region

Note that Wisconsin and Michigan virtually overlap.

Average temperatures for the Southern set of states in the Flat Mid region
Here it is Arkansas and Oklahoma that are almost superimposed.

I will go on to look at other regions and compare them to see how temperature averages differ around the country, but will leave you with the usual comparison.

Difference between the average value for the USHCN homogenized values after the original TOBS values have been subtracted.

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Friday, September 16, 2011

A gentle cough for CBS and the National Petroleum Council

I was flipping through the news channels last night and came in on the tail end of a CBS story about billions of barrels of oil in Texas. Having missed the introduction, it was not until this morning that I discovered that it was a story about the Eagle Ford Shale.
Energy companies are rushing to the area to tap deposits that could produce up to 12 billion barrels of oil, and enough natural gas to power every American household for at least five years.

By 2020, that number (of new jobs) is expected to increase to 66,000.
I remember writing a short post on the Eagle Ford last December pointing out that the field was currently being more actively developed in the “wet gas” region where the Natural Gas Liquids (NGL) content is high, since this was more profitable than the deeper “dry gas” sections. But I did not remember the numbers being that high.

Being curious about them, a check at the EagleFordShale Web site suggests that the CBS report was triggered by a report from the National Petroleum Council, which was released yesterday. That report had been requested by Energy Secretary Chu to
reassess the North American natural gas and oil resources supply chain and infrastructure potential, and the contribution that natural gas can make in a transition to a lower carbon fuel mix . . . . .(provide) advice on policy options that would allow prudent development of North American natural gas and oil resources consistent with government objectives of environmental protection, economic growth, and national security (and) the United Sates sees a future in which valuable domestic energy resources are responsibly produced to meet the needs of American energy consumers consistent with national, environmental, economic and energy security goals, ... [and the United States] has the opportunity to demonstrate global leadership in technological and environmental innovation. Accordingly, I request the Council’s advice on potential technology and policy actions capable of achieving this vision.
The report notes that “The United States and Canada together produce 4% more oil than Russia, the world’s largest producer.”

Leading World Oil Producers (NPC using BP Statistical Review).

Further, together with Canada, the report points out that the United States produces over 25% of global natural gas production, with the arrival of shale gas being the game changer that may provide over 100 years of supply at today’s demand rates.

Leading World Natural Gas Producers (NPC using BP Statistical Review)

Yet it is in the discussion of those reserve numbers that the shaky timber on which the NPC case is build becomes apparent. When discussing future oil production it notes:
One source is tight oil, found in geological formations where the oil does not easily flow through the rock, such as in the Bakken formation of North Dakota, Saskatchewan, Montana, and Manitoba. Tight oil has also benefited from technologies similar to those used for shale gas, including hydraulic fracturing. Over the next 20 years, tight oil production could continue to grow. A second potentially large supply source is in new offshore areas, particularly in the Gulf of Mexico and the Atlantic and Pacific coasts of the United States and Canada. Access to and potential development of these new U.S. areas would require an Executive Branch level directive to include such areas in the 2012–2017 Leasing Program. New offshore areas could provide both natural gas and oil in significant quantities to supplement the continuing strong production in the Gulf of Mexico. Third, new Arctic oil and natural gas supply have a potential of the equivalent of over 200 billion barrels of oil. This is in addition to existing oil supply and proven natural gas reserves on the Alaska North Slope. The new Arctic resources could yield significant supply after 2025. Fourth, another very large long-term oil supply source lies in the shale oil deposits of Colorado, Utah, and Wyoming. The development of these billions of barrels of oil from these new resource areas will require sustained investment, substantial advances in technology, and environmental risk management systems and approaches.
The report also supplies this estimate of the available natural gas, showing several estimates.

Estimates of the Technically Recoverable Natural Gas Available in the United States. (NPC )

I have recently written of the Bakken Shale, and the problems that I see with its long term production. I have also similarly discussed some of the problems with the Arctic development and the potential size of the reserves available. ) In the later case I noted that the recent USGS report had downgraded, as an illustration, their initial estimate of 10 billion barrels of oil being technically recoverable from the National Petroleum Reserve, to a current estimate of 500 million barrels of economically recoverable oil. That percentage difference between the actual recoverable, relative to the technically recoverable is in line with a 6.9% estimate of the economically recoverable (relative to technically) volumes of natural gas, which I pointed out when I reviewed the EIA Shale Gas report.

If one were to look at these numbers in that light (though the actual detailed resource section with its break down is not yet available from NPC) then the numbers become more credible. Unfortunately it makes the estimates of the contributions that the industry will make to national energy security and job creation a whole lot weaker, if the numbers are only one-twentieth of those which are currently being thrown around.

Unfortunately the report goes on to spend much more time discussing the environmental aspects of oil and gas recovery, and emphasizing such things are the reduction in pad size in the Arctic:

Change in Arctic Pad Size with Improved Technology (API

There is not that much that is encouraging in the way of new technology that is anticipated to come on line to increase the percentages of natural gas and oil that can be recovered, and the report does comment on the need for more graduates as the current work force retires – a need that is not being adequately filled.

It is a weak straw on which to build the projections that CBS used.

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Sunday, September 11, 2011

OGPSS - pipelines from the North

Art Berman commented, in regard to my last post on the oil and gas reserves offshore Alaska, that at one time companies looked for an estimated 1 billion barrels in reserves, before they would consider starting down the long road to bringing them to market. With the rising price of oil, that number may have declined a little, but for natural gas a similar need for a long-term assured market is currently potentially raising barriers to progress. As I mentioned in that post, there is a considerable sum involved, not just in acquiring the leases for the sites, but in all the preparatory work needed before the first drill even hits the surface. But even after the wells have come in, the hydrocarbons must still be moved down to the customer, and as the Trans-Alaska Pipeline System (TAPS) showed, it takes time, money and a considerable commitment before that connection can be made.

One of the recent changes that I noted a couple of posts ago, is that more of the reserve in the North Slope is now known to be natural gas, rather than oil. With the current relative natural gas glut in the contiguous United States, that reduces the immediate market, and the potential current price that the gas could bring in. This, in turn, slows lease development. But times change, and with an increase in natural gas demand there will be a growing demand with time. One can also see an increased future need for natural gas in Alberta, where it helps in the production of the heavy oils from the shallow sands around Fort McMurray. And that brings us to the current controversy over the building of another pipeline, this time for natural gas, down from the Arctic.

Possible TransCanada gas pipeline routes from the North Slope, showing connecting pipeline networks, both for it and the MacKenzie River pipeline. (TransCanada)

More particularly I thought I would tie in the problems that the MacKenzie Valley Pipeline has had in Canada, with the debate about the Alaskan pipeline. This is not so much to argue either side, but rather, in showing some of the delays that have arisen, to underscore one of the points that these last few posts have been hopefully suggesting. This is that when somebody says that all we have to do is go out there and drill to solve our energy problems, they really don’t understand the complexities of the real world. The MacKenzie River flows into the Beaufort Sea just to the East of Alaska, in the Canadian Northwest Territories.

Proposed path for the MacKenzie River Pipeline

The recent application for approval of the MacKenzie River pipeline was originally filed in August 2004. But by then the project was already old. Back in 1977 Mr. Justice Berger (a Canadian Judge) who had examined the project over a three-year period, recommended that it be put in abeyance for 10 years, following his Inquiry. A major concern of the time was the expressed opposition of many of the native tribes (First Nations) through whose land the pipeline would run.

Move forward some 34 years, and some of those tribal leaders are now in favor of the project. And while, in that time frame, the Canadian Government had pledged billions to the First Nations of Canada, with recent emphasis being on schools, water and community services, a more likely reason is because of the work of settling land claims, (all the land belongs to the First Nations) and, for example, that the Inuvialuit now own the company that runs the barges up and down the river. At the same time, through the Aboriginal Pipeline Group, the First Nations will now also own a third of the pipeline itself.

At the time that the National Energy Board approved the project it included the development of three natural gas fields (Niglintgak, Taglu and Parsons Lake), about 120 miles of gathering pipelines and an almost 300-mile natural gas liquids pipeline as well as the 743-mile pipeline itself, which will carry 1.2 Bcf/day of gas down to Alberta.

With construction now scheduled to begin in 2014, (and to occur mainly during the winter months) it is expected that the pipeline will be in operation by the end of 2018, at a cost of $16 billion. It will take some $800 million to develop the Niglintgak field with 6 - 12 wells started from 3 pads. It will take some $2.5 billion to develop the Taglu field, with 15 producing wells extended from a single pad, but requiring a compressor and more wells as the field ages. And the cost of the Parsons Lake field is anticipated to be around $2,5 billion with two drilling pads that will hold from three to nineteen wells.

Now move West a tad, and Alaska also has those significant gas resources that I have mentioned in previous posts. They are, however, not quite as far along in the process of getting a pipeline in place to move it to where it becomes a real reserve. I will forego exploring the idea (mentioned in comments on earlier posts) of converting the natural gas to methanol and sending it down TAPS to Valdez, where it would be separated from the oil, and converted into gasoline. (Although, because methanol is corrosive to pipes, the plan is moving toward doing the conversion to gasoline near Deadhorse, and mixing the gasoline with the crude.) The initial target for the project would produce 63 kbd of gasoline, with an original estimate of the cost being around $7.7 billion.

Moving the natural gas itself through a new pipeline, however, requires customers, and while a number of different proposals have been put forward, the lack of such customers at this time recently caused Denali to discontinue their efforts to build a 48-inch diameter pipe that would carry up to 4.5 Bcf/day from the North Slope to Alberta.

Path of the proposed Denali Natural gas line from the North Slope. (Denali )

TransCanada, who remain in the hunt, is also finding it hard to find any firm customers. Given that they estimate that the cost of a similar sized pipeline would run between $20 and $41 billion, depending on whether the line feeds an LNG plant in Valdez, or runs over into Alberta, they are hesitant to move forward, even though they will receive $500 million for planning the project, and getting the regulatory approvals. (The top map shows both alternatives)

The TransCanada/ExxonMobil option to Valdez. (Alaska Pipeline Project)

Nevertheless TransCanada and Exxon, who are now partnering in the Alaska Pipeline Project have held meetings with the project communities likely to be affected by the project, offering refreshments and door prizes for the present and potential feeder lines in the future. Their presentation can be found here, and notes that under the current schedule first gas will flow in 2021.

By that time it is quite likely that there will be more of a demand for natural gas supplies in the anticipated market, but convincing investors and potential customers of that is likely to be an uphill task in the more immediate term, and the project will likely not be able to make headway until those folk show up. And so, while it may not take the almost 40-years of the MacKenzie River pipeline (which isn’t started yet) the current Alaskan effort is likely to take longer than currently hoped.

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Saturday, September 10, 2011

The Four degree temperature drop along the Atlantic Seaboard

During the time that I was acquiring the data for the different USHCN stations around the country (the list for which is down on the right-hand side of the column) I found that there seemed to be a consistent drop in temperature along the East Coast of the United States that wasn’t seen in other states. So today I thought I would consolidate a few graphs from that series and see if my week-to-week observations were as consistent as they seemed at the time. The time period that I am looking at is in the 1948 to 1965 time frame, and you can see the drop in temperatures that I am referring to most clearly and as an illustrative example, using the average of the three GISS stations in Georgia. You may note that the temperature drop was over 4 deg F in that time period , peaking at 65.4 deg in 1949, and falling to 61.2 deg F in 1967. (There was a temperature of 65.1 deg in 1957).

Average temperature with time for the three GISS stations in Georgia

I have, in the state temperature series, compared the GISS temperatures reported for each state (blue lines) with the USHCN average temperatures, both using the homogenized data where NOAA has interpolated results to infill missing and “errant” values (the purple data lines), and with the original temperatures recorded, corrected only for the time of observation (the TOBS series, which are shown with a green line).

The series established that there was a change in temperature with latitude, with elevation and with population, and I recognize that all states differ in all three variables, as well as in their area. In time I will, hopefully, get around to discussing those findings in more detail, but this exercise is more just to look at that fall in temperature in the 1947 – 67 time frame. Inserting the individual average temperature data for each of the states that border the Atlantic, but discounting Florida because of the possible influence of the Gulf, the list includes fourteen states:- Georgia, South Carolina, North Carolina, Virginia, Maryland, Delaware, Pennsylvania, New Jersey, New York, Connecticut, Rhode Island, Massachusetts, New Hampshire and Maine.

ADDENDUM: I had initially not included the individual state plots over the time in question, I have now added those plots (combined on two graphs) at the end of the post.

By just taking the average temperature I had calculated for each state, and then averaging those each year, using the USHCN homogenized data I get this plot:

Average temperature with time for the USHCN stations along the East Coast, averaged by state and then collectively, using homogenized data.

If one uses the TOBS data rather than the homogenized version, then the plot becomes:

Average temperature with time for the USHCN stations along the East Coast, averaged by state and then collectively, using TOBS data.

In both of the above plots the fall in temperature between the 54.3 deg F temperature in 1949 and the 50.9 deg F temperature in 1967 (TOBS temps) is clear.

The problem with doing that simple average, however, is that not all states are equal. Of the 250 station total, some states have only 3, and others as many as 57, but I have used a single average for each state. And the reason in part for the different number of stations is that the areas of the states are different, ranging from roughly 1,000 sq miles to almost 60,000 sq miles. As a result the area that a station covers ranges from roughly 300 sq miles to 2,500 sq miles. The area of each state was obtained from the netstate site for each of the states.

Does it make a difference, well, using the TOBS data as an example, and weighting first by the number of stations in the state, the curve changes to:

Average East Coast Temperatures with state averages weighted by station density in the state.

The alternative is to weight the average in terms of the area of each state, and when one does this, then the plot changes to:

Average East Coast Temperatures with state averages weighted by the area of the state.

If one looks at the change in plot through doing the weighting (and the areal plot seems to be the more logical) it is clear that the shape of the graph changes, particularly after 1960, and further that if one looks at the rate of temperature increase this also falls.

When the original USHCN homogenized data plot, just averaging the state temperatures is used, then the rate of temperature increase is 1.67 deg F per century. If that data is weighted by station density (which turns out to mean just averaging all 250 station data) then the homogenized rise falls to 1.24 deg F per century, and if the state average data is weighted by the state area when calculating the average then the temperature rise falls to 1 degree per century.

If the TOBS raw data is used instead of the homogenized values then just averaging the state values gives a temperature rise of 0.8 deg F per century, while taking the station density into consideration lowers that to 0.56 deg F per century, and when the state values are averaged based on the individual state areas, then the temperature rise over the century falls to 0.3 deg F.

None of this tells us why the temperature fell so dramatically along the East Coast in the 1949-1963 time frame – the area weighted TOBS data suggests that the fall was from 56.1 deg F in 1949 to 52.5 deg F in 1963, it would be interesting to find out why.

Looking at the other possible trends in the data, plotting the average state temperature against latitude

Correlation of average state temperature with latitude along the East Coast

There does not appear to be much correlation with elevation:

Correlation of average state temperature with elevation along the East Coast

Nor, and both of these may be caused by a fault of the way in which I have calculated averages, is there a correlation with population.

Correlation of average state temperature with local station population average along the East Coast

Well the it seems pretty clear that there was indeed, along the East Coast from Georgia to Maine, a fall in temperature of 3.6 degrees from 1949 to 1963. I don’t remember seeing such a drop in other regions of the country, but I suppose I had better check those out next.

Oh and the difference between the USHCN homogenized curve and the TOBS data is interesting (I used the areal weighted average values).

Correction applied by NOAA to the original TOBS data for stations along the East Coast, bear in mind that this is averaged over a total of 250 stations.

I stated at the beginning that I was checking that the drop held true for all states, but actually just summarized them without showing the individual state values imposed on one another. My apologies, and because there are 14 states I have broken the plots down into two parts, first the more southerly states:

Variation in average state temperature in the period 1940 to 1980 for the Southern half of the Eastern Seaboard states

Variation in average state temperature in the period 1940 to 1980 for the Northern half of the Eastern Seaboard states

The temperature drop between roughly 1950 and 1965 can be seen in each plot, validating the opening thought, but since the lower curves reflect a more northern position, it is worthy of note that the drop seems to move to the right over time, and the variation gets more jagged as one moves north.

Yet more questions!!

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Friday, September 9, 2011

OGPSS - reaching the oil offshore Alaska

I have tried in the last two OGPSS posts to show some of the problems that are developing in the flow of oil from Alaska to the rest of the United States. Based on a falling volume of oil produced from the existing fields in the North Slope, the delivery pipeline from Deadhorse to Valdez is approaching levels of flow which will make it more difficult to deliver that oil. There are fields in the region that are still being developed. Alaska_geo has pointed to several developments that are likely to take place over the next year, mainly in exploration but including the development of the Umiat field. One of the mechanisms that the Alaskan Governor has proposed to help encourage industry was to provide a road up to Umiat. The oil reserve for the Umiat field is estimated at 250 mb, but the road may take another five years to finish.

As with the subjects of the last couple of posts not everyone knows where the different places are in Alaska, so, since one of the intents with this post is to look at off-shore deposits, let me put up a new map.

Locations along the North Shore of Alaska (USGS).

You will notice that the map shows Deadhorse rather than Prudhoe Bay, this is because that is the official name of the population center. There are a number of possible reasons for the name, I am partial to the one told by Deborah Bernard.
Once upon a time, a very famous, very rich man in New York set up a $6 million trust fund for his son. The only catch was this son couldn’t collect the money until he was 35 years old. The young heir went to Alaska . . . . met some people who owned some gravel hauling equipment (and) talked the father into co-signing a loan for this company. . . . . Things went from bad to worse and he found himself in possession of several dump trucks, pieces of equipment and a hauling company. He put the heir in charge of it and named it “Deadhorse Haulers.” (The) father, disgruntled that he was financially responsible for the ill- fortuned gravel company, said, “I hate to put money into feeding a dead horse.” Hence the name.
Which may also be why folk prefer saying that they work at Prudhoe Bay!

The major new exploration, however, will take place offshore, with Shell seeking to send two drilling rigs to the region to drill two wells in the Beaufort Sea and three in the Chukchi Sea, as I mentioned last time. (And I should perhaps have mentioned that of the $4 billion investment Shell is making some $2.1 billion went to the Federal Government in the lease sale). The total oil resource available in these seas has been estimated to be as much as 25 billion harrels of oil (bb) and 127 Tcf of natural gas . Alaska will be selling leases to an area of some 14.7 million acres this fall, though the sale has just been postponed until December.
It said the acreage involved, covering roughly the size of Massachusetts, Vermont and Connecticut combined, would include 2 million acres in the Beaufort Sea as well as leases adjacent to the federally controlled Arctic National Wildlife Refuge and the National Petroleum Reserve-Alaska.

The problems that will be encountered should the fields be this rich are not just limited to those involved in proving the presence of the hydrocarbons through drilling. Production and transportation of the fuel is a non-trivial exercise. Offshore wells will be located in the Arctic where the ice moves subject to wind and current.

Arctic Ocean circulation (NSIDC)
sea ice in the Beaufort Sea has more time to grow and reach the thermodynamic equilibrium thickness, so it is thicker. Also, because of the circular rotation of ice in the Beaufort Sea, ice floes frequently bump into each other. Ice deformation is common and leads to thicker and more ridged ice compared to other regions.
Unfortunately also the flow patterns are not consistent, and may on occasion reverse, thus making the design of systems to survive in those conditions more challenging.

In fact this the region around the North Pole, from the Beaufort Sea over to the Russian side and fields such as the Shtokman are where the some of the latest technical challenges lie. One problem is that there are not enough US Icebreakers, and one, the Polar Sea will be decommissioned at the end of the month, while its sister ship the Polar Star has been laid up since 2006. There will then be only one remaining, the Healy.

So how does one drill and produce in such an environment? Initially the exploration wells are drilled using drill ships, though these can only operate during the time that the sea is ice free, which varies from year to year.

Open Water availability Harrison Bay, Alaska (C-Core )

This limits the time of operation, and can be a much more restrictive problem closer inshore, and at times when larger and more permanent operations are planned. There is, after all, only so many places you can pull errant icebergs out of the way as the season develops. (The market for hauling icebergs to Arabia never developed). And the problems come in all sizes.
Support vessels servicing the rigs are also in danger, not from the big bergs, readily visible as they tower from the ocean, but from the small growlers and round-tops, often undetectable on radar and virtually impossible to see in the North Atlantic waves. In some areas, sheer numbers aggravate the problem. The drill ship West Navion had to deal with over 200 bergs and deflect more than seventy while drilling in the Davis Straight.

Towing Iceberg ( Hibernia Management and Development )

As a result ice islands are built that can give more protection to the site, and these can, if needed, be reinforced with concrete.(Though it is cheaper just to spray on more water).

The Mars Ice Island off Alaska (BOEMRE )

A number of wells can then be drilled from each island, using horizontal drilling techniques to reach out into the reservoir surrounding the island. The islands themselves can be built using a spray technology to build up the ice, since this seems to give a cost advantage over using gravel or flooded bays to form the structure. The islands can either be build over land or from a floating platform.

Builiding an ice island (US Patent 4,699,545, 1987)

The Mars Island took 898 hours to construct over 46 days, using over a million cu m of water. This island is 26 ft thick and 700 ft in diameter.

Technologies such as these will allow development of the reservoirs, though it should be remembered that the fuel has then to be brought into some sort of transport system that can move it to processing and future customers. That issue is of even greater concern with the reserves of natural gas found in the Arctic regions, and so I will move on to talk about it next. But for now I will leave you with the thought that even though there may be considerable oil reserves in Alaska that remain untapped at this time, their ability to significantly change the current and near term global supply in a positive way is realistically almost non-existent.

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