P19. Pick Points

Half-a-dozen or so stories of interest.

Well the Russian:Ukrainian dispute may be over, though nobody is as yet certain that the agreement will hold. The expectation is that the deal will help Prime Minister Tymoshenko’s image, as she runs for the Presidency this year, and so they cut the price of gas by 20%, though holding Ukraine to the same transit fee for the gas. (On the other hand the NYT is reporting that Ukraine will only pay somewhere around $230 per tcm). The fate of the $700 million that Ukraine owes for gas is not mentioned, however, and the deal requires the two national gas companies (Gazprom and Naftogaz Ukrainy) sign an agreement – supposedly on Monday, both Prime Ministers will be there. Ukraine is still saying it needs 8% of the transmitted gas in order to run the compressors on the pipeline. Speaking of which it is reported that the valves that remained closed last week were actually in Russia. And the fear in Ukraine grows that Gazprom’s ultimate objective is to gain control of the Ukrainian pipelines.

Oh, and given that some of the gas comes from Turkmenistan, it should be noted that the President thereof has just fired a third of his Cabinet, including the head of the state oil company . The Slovaks are now getting natural gas from the Czech Republic . Bulgaria, on the other hand is getting emergency supplies from Turkey and Greece. Russia is planning on supplying Bulgaria through the South Stream pipeline in future, and sweetened the deal that puts another nail in the Nabucco pipeline coffin, by also agreeing to build a nuclear power plant for Bulgaria (which is in the EU). The pipeline will go from Bulgaria up into Hungary.

As an aside, you may remember that I mentioned that Putin was painting – well the painting went for $1.1 million.

In the ongoing problems of under-developed power supplies, and consequent drop in power that South Africa can supply to nearby countries, Zambia is increasingly being courted by Indian and Chinese investors, both of whom realize that to maintain supplies and power in their own countries, they must find a reliable exporter of coal, in the meanwhile the country has started exploring for oil and natural gas, is improving the generators at Kafue Gorge hydro-electric plant, and is looking to expand the coal-fired power generation in the country; all to reduce the current load shedding that has been required by the cut back on South African supplies.

In the short term it does not look good for wind generated power supplies for Maine. Aroostook Wind Energy which as trying to get transmission lines so that it could connect into the Maine Power Grid has filed a letter stating that it will stop system impact studies due to the changes in the power market making the project currently uneconomic.

Meanwhile in Utah a federal judge has blocked the exploration leases on federal land that had previously been agreed by the outgoing Bureau of Land Management folk. To become final the Bureau of Land Management had to cash the checks for the bids, but that has yet to happen. Originally the BLM wanted to sell leases to much more of the land, but this was scaled back from 360,000 acres to the current 110,000 acres in 77 land parcels. The delay is for several weeks, and gives time for the Administration to change in Washington. At present natural gas production in Utah is valued at $5 per 1,000 cu. Ft. (to compare with the stories on Russian gas that is $135 per tcm.) Compressed natural gas, which is used to fuel vehicles in the state, has just seen a price rise to $1.14 a gallon with a further rise to $1.43 coming in July.


There are more stories over on the Energy Bulletin, or on Drumbeat at The Oil Drum

P17. Pick Points

Half-a-dozen or so stories of interest:

Well that’s a turn up for the book, Cesar Chavez is looking for help in the Venezuelan oilfields. With declining production and low prices, new technical help is needed to reverse the trend that has led to a fall of around 100,000 bd/year down from 3.4 mbd to 2.3 mbd. This is about the amount, actually 90,000 bd, that Venezuela ships to Cuba. There is hope that new projects in the Orinoco Belt might yield 1.2 mbd. Certainly the industry could use the work with the rig count falling so that there are 1,589 still out there, of whom 1,239 are drilling for natural gas. Horizontal drilling comprises 552 rigs, and directional drilling 315. Maybe they can start drilling for water in Southern California, as the threat of water rationing down there has been raised.

While conventional oil production in the US dropped below 5 mbd in December, the need to find alternates sooner than that from biofuels will be available is leading Total to take a 50% share of a project that involves in-situ combustion, just as new leases become available in Colorado. However the incoming Secretary of the Interior is against the idea. Incidentally there are still some 334 offshore platforms that are still shut down as a result of Hurricanes Gustav and Ike.

Patience is now definitely wearing thin as the Russian;Ukrainian dispute continues. It is not clear if the monitors have much to do other than “sit in hotel rooms and drink horilka.” (Ukrainian vodka). In Serbia they now run the risk of overloading the electricity circuits, as the lack of natural gas is causing a switch to electric heaters, although, over the weekend Serbia had enough that it shipped some over to Bosnia, to help out there where over 100,000 households have no heat and the temperature is down to – 29oC. The latest Russian move is to suggest a Gas Summit in Moscow this weekend, however since Ukraine still doesn’t have a contract to purchase gas for itself for this year, it is unlikely that much progress will be made. Well at least Prime Minister Putin can paint while he waits. The visits of the Slovak and Bulgarian Prime Ministers to Moscow had no effect, and questions as to who gets paid what for the gas are circulating.

Given that UK Coal is planning on putting wind turbines on old coal mine sites and that plans are moving ahead to open 58 new or enlarged surface mines, half of which have already been approved, despite the furor over building new coal-fired plants. Northumberland seems to be the main place they plan the mines. (And for those that wonder I have seen one site turned into a golf course so you would never know the mine had been there), and there are 6 new coal-fired power stations being planned. Current underground mines are producing at up to 3 million tons/year, however the recent decline in demand for power has led some countries to cut back.

You would have thought that with the gas crisis, coal mining in Bulgaria would be seeing good times, but the Bobov Dol mine, in Bulgaria unable to sell coal to power plants is being closed this month. The story is a little more complex that it first appears, however, since it turns out that the local power plant was privatized, and the new owner had other mines that he owns and wants to get the coal from.

There are more stories over at The Energy Bulletin, or on Drumbeat at The Oil Drum.

P15. Pick Points

Half-a-dozen or so stories of interest.

Further to the post yesterday on Bulgaria and Slovakia’s options to find natural gas, one of the suggestions has been to see if Turkey could let them have some. Slovakia’s problems have also got worse, since a fire in a coal-fired plant has caused a partial shut-down. Russia has said that the problem with the Ukrainian codicil’s to the agreement have been resolved, and they are going to start pumping today , though it will take until late Wednesday for the gas to reach Western Europe. And there is still the matter of the 12 million cu m/day which now it transpires is claimed to be needed to power the pumps that drive the gas through Ukraine, and which Ukraine thinks Gazprom should provide. However, unless there is a prolonged cold spell, it is anticipated that gas prices may drop by as much as 40% this summer. It is suggested that part of the reason this is over so soon is that Gazprom needs the revenue to service its debt, and it wants to get the current good price, before it collapses. Current losses are estimated to be in the $127 - $141 million a day range. (Prices are thought likely to fall from the current $418 per tcm to $180 in the third quarter).

Uganda is facing more rationing of electricity (read load shedding and power outages) as they continue to have problems getting enough fuel for their power stations. Power is very limited, and so they are considering using geothermal energy to help out.

Power shortages in Nepal are now threatening the drinking water supplies. Volumes of water that can be pumped have been cut in half as the power outages limit how long the pumps can run. The company is trying to bring in diesel generators to help solve the problem in the short term. The local rickshaws are electric powered, and no longer can be charged because of the outages, which is causing outrage. So relying on electricity to power cars can also have problems.

Stanford has created a new energy center to look into such problems, starting with $100 million, the center is headed by a petroleum engineer, and funded by successful graduates. Meanwhile the Gulf states are also looking for good investments in green energy and will be hosting a World Future Energy Conference in Abu Dhabi, which will soon have a satellite campus of MIT.

We will need a lot of that research since there are a fair number of questions, already on what the new Aministration is going to be able to do to switch over to sustainable fuels. And the President of Exxon Mobil has expressed doubt, given that there are increasing questions on the ability of biofuels to meet targets, while there isn’t enough manufacturing capacity to build the wind turbines in the numbers needed. POET the “top” ethanol producer has just opened a plant to produce 20,000 gallons a year (that’s 1.3 barrels a day, folks) as a pilot scale demonstration of their first plant capable of producing at a commercial scale that will hopefully be on stream in 2011, given that the mandate is 16 billion gallons a year by 2022, we need that progress. The goal is for about the same amount of corn ethanol, but with today’s futures price being $4.26 and it costing between $0.80 and $1.20 per bushel to run the plant, there’s not a lot of profit in the 2.5 gallons per bushel the average plant produces, when it sells for $1.68 a gallon. However Pursuit Dynamics is working with Iroquois Bio-Energy on a new system that should come on line next month, and which should increase yield by 8-12%., and there is hope that they can increase yield to 3.3 gal/bushel. Not that this will help the Russian farmers who brought in a record harvest, and had to watch their prices fall.

For more energy related news visit the Energy Bulletin or Drumbeats at The Oil Drum.

Should Soviet-style nuclear plants be reactivated?

Providing fuel is critical to generate power that keeps people warm, cooks their food, provides them light, and runs the tools they need to hold a job. But what happens when the fuel source they all rely on is no longer there? This is a growing problem around the world, both in underdeveloped and developed nations. The most recent examples show up on Energy Shortage, but the one that is currently drawing increasing attention is the fallout from the shut-off of gas by Russia. The government of Slovakia, given their responsibility for the welfare of their people, have decided to go ahead and re-start a nuclear power plant that had been mothballed. The European Union is concerned, and has said that it will “take action”, if the reactor is re-started.

The problem is a little complicated, since back when Slovakia applied for membership of the EU, one of the entry conditions was that this reactor at the Jaslovske Bohunice nuclear plant be closed. The plant was closed at the end of last year and, as the Austrian Environment Minister stated:

"We cannot accept the reopening of this unsafe reactor . . . Now it's up to the European Commission to strongly urge compliance with the accession agreement," said Nikolaus Berlakovich, Austrian environment minister.

In Brussels, officials made clear there could be "no legal basis" for Slovakia to reopen the plant.

Now this raises an interesting question – how else are the Slovaks going to be able to provide power to the people? Is the European Union telling them to freeze to death in the dark?

One presumes that there is not a whole lot of choice out there – and although this could be a case of the “Admiral’s Barge syndrome?” (In which, when the Navy is told to cut their budget, they never get rid of the barge, but always propose getting rid of a critical element such as an aircraft carrier battle group, and everyone says “gosh we can’t do that” and so the budget, and the barge, survive) the press stories seem to tell a different tale.

Clearly in Bulgaria and other Eastern European countries it is hard to deny that there is considerable hardship, since all gas was cut off to the country last Tuesday. To help the EU has offered them funds to put in a 70-km pipeline to tie the Bulgarian grid into the networks of Greece and Rumania. But that pipeline won’t be built in a day! So what are the people supposed to do in the interim?

In this particular case Ukraine has offered Bulgaria some 2.5 million cu m per day of the gas that is stored in Ukraine to help, but apparently there is not enough driving pressure in the pipeline to allow the gas to get through. In Bulgaria, in the meanwhile they are using the last remaining amounts that were in storage, and that is expected to run out this week. The small remaining gas producing field has virtually ceased production, and was planning on re-using the reservoir to store imported gas, but that change has been postponed. However the Galata field can only produce about 5% of that needed and hundreds of thousands of people have no power.

Bulgaria is also talking about re-opening a nuclear reactor, though again EU pressure may well keep it closed. There will be a small gas field, Kavarna, brought on stream at the end of this year, but that will not be enough, although with the addition of the Kaliakra field, which may also to come on stream this year, production may be sustained at around 20% of the country’s needs. (Though there may be some environmental issues).

Those developments are however a sidetrack from the original question of how a government deals with the lack of fuel that it populace has to have if it is not to start dying off. And that brings me back to the issue of the nuclear reactors, whether Bulgarian or Slovakian.

Slovakia anticipates that the re-start of their reactor can be completed this week, and power restored.

(Prime Minister) Fico told reporters that reneging on the terms of its EU membership was better than taking the risk that his country's electricity grid would collapse.

"We are facing a blackout here, therefore we have to act fast," said Fico, adding that the government would shut the reactor down again "as soon as the situation is stabilized."

The situation was made easier for Slovakia since the plant had only just been shut down at the end of last year. Opinions in the EU are more divided.

In Brussels, the European Commission said there was "no legal basis" for the nuclear re-launch, but conceded that Slovakia had a "real problem" with the gas shortage.
The Czech Republic, which was the other half of the former Czechoslovakia and just kicked off its current six month EU presidency, was even more sympathetic to Slovakia's plight.

Czech Prime Minister Mirek Topolanek rejected all criticism on Sunday, pointing out the shortcomings of the EU's energy and security policies.

"At the moment, I take it rather as a demonstration of (Fico's) readiness to tackle an issue that the European Union cannot resolve for Slovakia -- a looming blackout," he said in Prague.

The question of providing adequate power is thus likely to become more of an issue over the next year, since once the reactor is shut down again it will likely take more effort to start it next time, and the EU in the interim might require some steps that would make it impractical for future restarts to occur. And they are certainly pressuring Bulgaria already not to follow this example.

But should a government have a fall-back energy source in case the primary supply fails? And if it should, what, and how much should there be, and who is going to pay for it? The Bulgarian reactor was closed down two years ago, but can be brought back to power in a month. If the crisis lasts that long, then by that point I expect that the power will be well received and the unpopularity of the government might be a little appeased. But what if those preventing the availability of power were shown to be doing so purely on environmental grounds? This may be a situation that strikes closer to home in the years ahead.

P12. Pick Points

Half-a-dozen or so stories of interest.

The main one continues to be the Russia:Ukraine dispute, the parties in which are going to sit down with a Czech official and Andris Piebalgs, the EU Energy Commissioner tomorrow, the dispute comes as relative Russian consumption is taking a larger fraction of their overall production. However the thought of higher gas prices in general has led Uzbekistan to also increase the price of its natural gas to $240 per tcm, from $145, making life harder in Tajikistan, which has also just lost its electric feed from Turkmenistan. Last year they had the same sort of problems and went through a lot of the winter without power Lots of folk may have died. This year there are folk in Bulgaria who have already lost all power and heating from the current dispute even as Europe faces bitter cold.

On the other side of the World China braces for their Spring Festival, last year disrupted by bad weather, even as the same sort of disruptions start again. To help prevent future problems, the Chinese plan to double natural gas production by 2015, as well as upping coal production by 30% and oil production by 7%. (They also hope to get 10 billion cu m of methane from coal mine drainage each year).

Citgo Petroleum has decided to continue the distribution of free oil to the US, which may be a relief to Joseph Kennedy and his salary, even though Venezuela is cutting production by 189,000 bbl/day, 166,000 bbl of which comes to the US, earlier it was reported that the program would end.

Wandering the sites on the blogroll I note that Luis de Sousa is reviewing the European Commission’s Second Energy Review (SER-2), wonder if it includes the new plan for a nuclear reactor in Wales, while Jerome has been on France 24.

Pakistan, which you may remember is having gas supply problems, has agreed to a new price formula for the gas that it will buy from Iran. They currently buy 10,000 bbl/day but wish to increase this to 50,000 bbl/day , and they are still talking about putting in the Iran-Pakistan-India Pipeline (the Peace Pipeline), despite Indian concerns.

And for those who remember the disruptions in South Africa last year, due to a drop in coal-fired power production, the situation is better this year, though largely because of the world-wide recession, and overall production is still down.

There are more stories to be found at the Energy Bulletin, and at Drumbeat on The Oil Drum.