Tech Talk - Thatcher, Putin, Coal and Gas

Back some forty years odd years ago when Edward Heath was Prime Minister of the United Kingdom, and the coal industry was still nationalized, the miner’s union went on strike, just after the Christmas Season. This followed an overtime ban that had started the previous November. The strike began on January 9, 1972 and lasted 7 weeks. Tellingly, just after it began some 17 schools had to close, as they had no heat in their buildings, without coal. Within a month the Government had to declare a state of emergency, and factories began to close due to a lack of power. Sensibly the Government of the day gave in to miners’ demands and they went back to work at the end of February.

Two years later there was a relatively similar series of events, with an overtime ban, followed by a three-day workweek as power cuts and blackouts developed, but this time Edward Heath also called a General Election, assuming he had the national sympathy. He was wrong, he lost.

These lessons were not lost on Margaret Thatcher, who had noted that it was not smart to offend the miners when the nation still relied on coal for much of its power, and when, in the winter, there was not a lot of coal in reserve at the power stations (because of the preceding overtime bans leading into winter). Thus, in 1984 when she, in turn, had to face the wrath of the National Union of Mineworkers (NUM), she had made sure that the situation was much different. Prior to the strike she had arranged for coal stockpiles to be built up over a period of three years. In addition the strike began on March 5th. It started because of the Coal Board decision to close 20 mines (since the earlier strike the number of miners had already fallen from 250,000 to 187,000 and the closures would cut another 20,000 from that number). It crumbled a year later, with a vote to return to work on March 3, 1985. The mining industry never recovered, and by the turn of the century the NUM was down to around 5,000 members.

I was reminded of those days by the latest clash between Gazprom and the Ukrainian government. In the past, when the Russians demanded that Ukraine pay its gas bill, the timing usually took place at the beginning or in the heart of winter. The problem that this gave the Russians was that they were supplying Western Europe through Ukraine, and any shut-off in the supply of natural gas to Ukraine had immediate consequences in Europe, which has become increasingly dependant on that gas. The result of the timing of the disputes was, therefore, generation of considerable diplomatic pressure leading to a relatively rapid resolution, without Russia getting all the deals that it wanted.

This time, however, it may be that Russia has learned, as Margaret Thatcher did, that timing is critical in this type of situation. Instead of waiting to November to call in the bill, Gazprom has presented it in June, when European demand for natural gas is lower. In addition the Nord-Stream gas pipeline is in place. This carries roughly 2 trillion cu. ft. a year of natural gas 760 miles into Germany, without passing through Ukraine. The twin pipes were completed and on line by October 2012.

Figure 1. Nord-Stream (Baltic Sea pipeline) bypassing Ukraine with 55 billion cu m of natural gas a year, (Daily Mail), out of a total sale of 262 billion cu m.(Spiegel)Note a second major pipeline from Yamal goes through Poland.

And while there has been talk about bringing in natural gas through Nabucco, that has slowly faded in the face of reality. Gazprom (as Brenda Shaffer has noted) has done remarkably well in gaining control of the different feeds and pipelines that come out of the East and head west into Europe. For example:

Moscow has taken steps to block the entrance of Iran into European gas markets; in 2006, the Russian company Gazprom bought a pipeline from Iran to Armenia and limited its size to ensure that it could be not be used to carry Iranian gas into Europe.

Consistently supplies have been confined to pipes that are under Russian control. It has a percentage of the Interconnector that carries natural gas into the UK and there has been little regard paid as it stepped in and took interests in other national pipeline companies across Europe.

So Gazprom can now wait while Ukraine exhausts its own reserves. It is reported to have some 13.5 billion cu m on hand, but it needs to have 18-20 billion at the start of the winter, if it is to get through. By stopping the flow now, Russia is having Ukraine burn those reserves between now and winter, while keeping the nations further west supplied. This means that the pressure will become that much more intense on Ukraine as winter starts to approach, and there is no alternate source of supply.

Gazprom has not hesitated to profit from this in the past, and is already in a position to demand whatever price it sees fit.

Ukrainian and Russian officials have been fighting about gas pricing since Yanukovych was ousted. After Russia annexed the Crimean Peninsula, it hiked gas prices for Ukraine 81 percent, from $269 per 1,000 cubic meters of gas to $485. That price was the highest in Europe, and Ukrainian officials refused to pay, calling it politically-motivated retaliation.

Gazprom has since lowered its price demand to $385, broadly in line with prices for other European countries. Ukrainian officials have sought to pay less and have said the way Russia was structuring the deal meant they would remain vulnerable to price hikes if they did anything to displease the Kremlin.

“Any price they offer is in the form of a discount that can be undone at any time,” said Pierre Noel, an energy security expert at the International Institute for Strategic Studies.

Don’t hold your breath waiting for this to be resolved.

Tech Talk - Fast destruction and slow reconstruction

Underlying many of the projections of future energy supply that are now being made there are, as mentioned earlier, a lot of assumptions that are beginning to appear more questionable as time passes. Much of the concern has to focus on the instability in the Middle East and North African nations (MENA) that are now increasingly unsettled by civil conflict. While optimism in many reviews anticipates that the turmoil will decline and nations will return to pre-conflict levels or higher, particularly in the case of Iraq, unfortunately this conflicts with much of what we have learned from recent history. Sadly there is also the history of Gazprom, which now also suggests that rosy visions of the future are only that, and what is coming is likely to be much grimmer.

Considering first Libya, once the infrastructure of an oilfield and its links to the outside world, and the operators that run it have been destroyed, seriously damaged or dissuaded from being there, then, particularly where conflict continues over time, restoration of pre-conflict volumes can take more than a decade. Once combatants become embittered by the realities of civil war, so their willingness to subsume the hatreds and other burdens brought on by loss becomes more difficult to engage, and conflict drags on with its continued losses for society. Libya is a sad example of how rapidly production can collapse.

Figure 1. Libyan oil production pre-current conflict (SEPM strata )

The country has now reached as low a rate of daily production (around 240 kbd) as it has seen in recent years.

Figure 2. Recent Libyan oil production (from OPEC MOMR)

For some time the powers that be have continued to hope and even project that Libyan production can return to levels of around a million bd, but those hopes seem dubious at best.

Just a week ago the National Oil Corporation announced that it was lifting the “Force Majeure” designation for the Oil Harbor at Zuetina. The first tanker was to load on Friday. According to a Bloomberg report the Ottoman Tenacity was to pick up a cargo of 600,000 barrels from Zuetina and carry it to Europe. The ship was reported to be loading on Friday and is currently just off Cagliari in Sardinia.

Figure 3. Location of the Ottoman Tenacity on Wed May 7th (Marine Traffic )

A second ship was supposedly loading up to 850,000 barrels at Haringa destined for France. Yet according to Marine Traffic it is now (Wednesday) off the coast of Tunisia, and does not, in the end, appear to have revisited Haringa.

The situation in Libya is not really stable, despite the hopes. On Sunday the Parliament swore in a new Prime Minister but his support is not strong, and factions continue to challenge his election. Attacks on the military are also on the increase. Meanwhile the blockade of the Sharara oilfield continues. It is hard to see oil production increasing much above the current levels, despite the optimism.

Yet if this effectively has removed a million bd from the global market, where can this be made up? In the short term Saudi Arabia increased production to cover the shortfall, and is still producing around 9.7 mbd. OPEC production overall remains at around 30 mbd, and is projected to remain at this level over the year.

OPEC notes that the Former Soviet Union is expected to increase production by around 200,000 bd this year, of which almost half will come from Russia itself, but OPEC are careful to include a word of caution in their predictions of Russian output.

The risk to Russia’s supply forecast remains high on technical, political and natural decline grounds.

It is the increasing political risks associated with Russian production, and the supply of that fuel to Europe that are perhaps of most concern. An article in Der Speigel points out that the Russian grip on German fuel supplies is only increasing. One of the Russian oligarchs has just bought one of the German oil and gas production companies for $7.1 billion, and now controls a fifth of German natural gas production and a quarter of its oil production. Another fifth of the German natural gas market, provided by Wingas, is also now Russian as Gazprom bought the company, and its distribution network, in a sale to be finalized this summer. And while Europe is seeing more LNG receiving facilities being constructed there is still a global shortage of export facilities to match that demand. As a result current facilities are significantly under-utilized.

Gazprom has, in the past, shown that it can, when necessary, play hard ball to ensure that it owns and controls the market for natural gas (just ask BP or Turkmenistan), and with the demise of the Nabucco pipeline is in increasing control of natural gas supplies into Europe. That condition cannot change in the short term, LNG facilities take years to plan, permit and construct, and thus the control which Russia exerts over Europe through this grip on the various supply pipelines is likely to continue to influence European opinion and, more realistically, actions in the next few years.

What this all means for the future of Ukraine is rather unfortunate – regrettably it is not clear that Russian ambition will end there and one would suspect that, given the limitations in response to the current and earlier (Georgia) Russian activity, that it will not. How this will affect overall oil and natural gas supply is unclear. OPEC concerns over future Russian production levels appear justified, especially since future developments in Russia will require increasing levels of capital, which might instead be directed at supporting Russian foreign policies – reducing overall volumes available, and more particularly the volumes that Europe has come to depend on. It could make for a couple of interesting years, since there are few alternatives that can be developed within that time frame. And certainly there is, at present, little will to make the capital investments that might bring them about.

Sadly history suggests that the outcome will not be a good one, there are few precedents that would show how one might get out of the increasing messes caused by political instability.

Turkmenistan, Nabucco, Azerbaijan and Russian natural gas

Robert Cutler has an interesting article in Gundogar this week in which he asks, concerning the recent articles questioning the size of Turkenistan’s gas reserves “Who stands to gain?” from the imbroglio. His conclusion is that it is likely the Russians, and certainly not the Turkmen.

The story, in brief, is that after a steadily rising projection of the size of the gas reserves in the country, the Turkmen President called in a Western auditing firm to look over the books and validate that the projections were real. The British firm, Gaffney Cline & Associates, came, looked at two fields, South Yolaton and Yashlar and certified, a year ago that they held probably 6 and 0.7 Tcm each. To put this in context, it would make South Yolaton the fourth or fifth largest gas field in the world, and would mean that Turkmenistan might have reserves as large as 80% of those reserves in the entire Russian nation. Turkmenistan is currently getting its gas from the Dovletabad field and it is this that was supplying natural gas to Russia and points west prior to April this year.

Two stories one Russian and one German recently suggested that the information on which the audit was based was bogus – a claim that the auditing firm disputes. They pointed out

”There is a very considerable volume of data to be assessed on a project of this nature. This data [comes] in a wide range of types and from a range of sources," Gillet (Jim Gillet of Gaffney Cline - ed) explained. "Therefore, in practical terms, it would be impossible to falsify it all [in a way] such that it could still appear to be coherent and could mislead an expert team. This is why companies like [Gaffney Cline] are used by organizations, such as stock exchanges and banks, to provide independent and expert opinion on such issues."

The current context is that Turkmenistan is moving away from the relatively expensive dependence on Russia to handle all its exports of natural gas. It is therefore seeking help in building a gas pipeline that would tie into Nabucco, the pipeline that would circumnavigate Russia and bring natural gas into Western Europe.

So far the Nabucco pipeline has not been able to generate enough natural gas supply to justify its existence.

Nabucco aims to diversify gas supplies by bringing Caspian and Middle East gas to Austria via Turkey. The pipeline venture, led by Vienna-based OMV, is vying with Asian and Russian projects for access to Azeri, Turkmen, Iranian and Iraqi gas.

Nabucco, set to start operating in 2014, will get its first gas from Iraq and Azerbaijan, Dolezal said. Reinhard Mitschek, the project’s managing director, said earlier this month that 8 billion cubic meters of gas would come from Iraq in 2015, more than a quarter of the pipe’s total volume, and that Shah Deniz would provide the same amount.

The link, which will send as much as 31 billion cubic meters of Caspian-region gas a year to Europe, has been delayed by a lack of commitments from customers, suppliers and transit nations. First deliveries were originally planned for 2013.

Russia badly wants to ensure that this regional natural gas continues to flow west through its gateway. Thus it has been bringing pressure to bear on both Turkmenistan and Azerbaijan to continue to direct all their deliveries to them. And so, to date, while the Turkmen has continued to speak favorably about Nabucco, for over a year, through July and to date Turkmenisan has yet made no firm commitment, even while claiming that it has the resource to supply Nabucco :

The Turkmen president pointed to the newly discovered gas fields, Yolatan and Othman, in the southern parts of his country, and said that huge gas reserves of the two fields have made it possible for Turkmenistan to join major international gas pipeline projects. 

Reminding that the Nabucco pipeline is at the center of the international community's attention, he added that development of gas and oil fields, construction of new facilities for refining oil and gas, construction of gas terminals, employment of modern technologies in his country's oil and gas sectors are among Ashgabat's priorities.

Ashgabad (the Turkmen capital) needs more Western support, and must convince investors that it has the long-term supplies to be able to do so.

Having made a commitment to China for up to 40 bcm per year, and having committed 20 bcm to Iran, and with commitments of up to 50 bcm to Russia, could Turkmenistan also be able to provide the gas for Nabucco? (As I noted production for the Chinese is coming from a different set of gas fields).

And here, as Robert Cutler points out, there is a benefit to Russia (or Gazprom) sowing some disinformation. If investors can be caused to doubt the credibility of the long-term supply to Nabucco, then it won’t get built, and Turkmen gas will continue to flow West through Russia.

Gasprom also has a secondary claim in that it cites a prior agreement that Russia be able to buy all of the Turkmen supply.

In fact, it complements what Russian media and officials have now insisted for many months, to wit, that Moscow has already contracted all future gas from Turkmenistan. There is a contract in principle signed under Niyazov (the former Turkmen President - ed) to provide Russia with 50 billion cubic meters per year (bcm/y), but that is subject to continual negotiations and re-negotiations over price.

Russia is also trying the same approach to the natural gas that will come to Nabucco from the Azerbaijan production from Shah Deniz - a field with about 1 Tcf of reserves). Robert Cutler notes:

For example, ever since the signature of the contract for Azerbaijan to send 0.5 bcm of gas from Shah-Deniz Phase 2 to Russia in 2010, Russian media and officials have stated at every opportunity that they will have what amounts to «first refusal» on subsequent Shah-Deniz Phase 2 production. However, no legal documents binding the Azeri side to such a bargain exist.

The Russian struggle to deny supplies to Nabucco sufficient to stall its construction, while more successful until now, appears to be fraying a bit at the edges. The very size of the natural gas deposits would indicate that Turkmenistan can meet all its current and anticipated commitments, and that the doubts raised about the reserves are meeting more questions than immediate acceptance. (Though firing the guys in charge didn’t help bolster the credibility of the Turkmen argument).

In the meanwhile Turkey has been negotiating with Iran, and it appears that some of the natural gas in the South Pars field (one of the three larger – at 14 Tcm - than South Yolaton) may come to Turkey (around 35 bcm) with Turkey sending forward what it does not use into the Nabucco line.

In short in this continuing saga the current week looks to have been better for the Nabucco pipeline and the West, and not so good for Gazprom – but don’t even think of counting them out yet!!

Nabucco, or is the Great Gas Game turning into a waltz?

It seems as though, whenever things are relatively quiet in the energy world, which they currently seem to be, then all one has to do is type Gazprom into Google search box, and there will be some interesting snippet.

And lo, it appears that Gazprom is looking into a take-over one of the Hungarian gas pipeline networks. Now that is not what the initial part of the post says, where it notes that the Hungarians are switching their gas purchases from a company (RosUkrEnergo) (RUE) that purchased Russian gas through Ukraine, to a company known as Rosgas AG. As part of the fallout from the January dispute between Russia and Ukraine RUE lost that business, and now Hungary has found a new middleman, Rosgas.

The immediate suspicion is that RosGas AG is yet another in a long line of shadowy intermediary companies created by Firtash and Gazprom. However, in the case of RosGas this may mask a possible attempt by Gazprom to cut gas supplies to Firtash's Emfesz, as a precursor to a company takeover - vastly increasing its share of the Hungarian domestic gas distribution network.

This becomes of some importance when one looks at the relative prospects of the two alternate paths for new gas to reach Western Europe – South Stream and Nabucco. South Stream is being increasingly pushed by Gazprom. The pipeline will bring gas under the Black Sea, and pass through Serbia and Slovenia before reaching Austria. However Eni, who is a 50% partner with Gazprom in this stage of its development, is upset that Gazprom is keeping it out of the negotiations with Serbia and Slovenia. Both countries are anticipated to sign agreements with Gazprom in the near future, without Eni, for gas supplies from South Stream.

And this may be where Hungary comes in, since the competing Nabucco pipeline goes through Hungary to get to the Austrian hub. So that if Gazprom controls the Hungarian pipelines, and can stop competitors’ gas flowing through them (a fact they used to get TNK-BP out of the rich Kovytka field after TNK-BP had developed it.) It is yet another couple of nails in the Nabucco coffin.

Earlier this week, with a fanfare celebrating the coming signature of the Nabucco agreement to run gas through the pipeline across Turkey it looked as though the pipeline was moving rather rapidly forward. However, buried within the story is the backing off of European funding

The European Commission is proposing to scale back its support for the Nabucco project to 200 million euros ($268 million) from 250 million euros, Tarradellas said in February. The aid would be channeled through the European Investment Bank.

At the same time, the last paragraph is interesting.

Friday's statement, signed by leaders of the EU, Azerbaijan, Georgia, Turkey and Egypt, also said the EU and Egypt should "agree on specific projects in developing Egypt's gas reserves and export potential for the EU." It said it was signed "in the presence of the representatives of Kazakhstan, Turkmenistan and Uzbekistan."The statement also called for a memorandum of understanding on energy between the EU and Iraq "as soon as possible." Barroso said a preliminary energy accord with Iraq was "imminent."

There are nuggets in that paragraph – first the pipeline cannot be effective without the gas from Kazakhstan, Turkmenistan and Uzbekistan. But none of them signed the document. Further Azerbaijan does not think that the project is feasible without Turkmenistan. The Turks will get paid for their trouble

The Turkish government has been driving a hard bargain, insisting on collecting a "tax" on the gas being pumped and demanding 15 percent of the transit gas at discounted prices. These requests have been rejected by the European Commission, the executive branch of the 27-nation bloc, delaying the 9 billion-euro project. More than half of the pipeline is to be located in Turkey.

But getting them on board helps negate the pressure that Russia (read Gazprom) is applying to discourage the “stans” from selling Nabucco their gas.

So as steps in the Great Game you could say that Europe took the first by planning Nabucco, then Russia took the second by stopping an adequate supply availability through pressure on Turkmenistan etc. Europe now gets the third, since with the pipeline running through Turkey they can (if politics allows) run connections into Iran, Egypt and Iraq. And before the step is completed Russia moves to step on their toes and gain control of the Hungarian section, thereby taking the fourth.

With Austria involved, maybe this part of the game is turning into a waltz – but with constantly changing partners - we shall see.

P56. Pick Points

I see that Jerome is a little upset with the NYT story about coal and renewable energy costs. In the story the question is raised as to how much extra the average consumer is willing to pay to switch from coal to renewable fuels. There are several aspects to the story – the first is that the Administration can raise the relative cost of burning coal by imposing some additional cost for generating carbon dioxide (whether by tax directly or through cap and trade). The second is that, by regulation, it can make it so expensive to build a new coal powered station that the alternatives become more attractive. Or, by driving improved efficiency and conservation (especially in a time of recession) it can lower the need for additional power. However if costs are raised, then the utilities will pass these additional costs on to the consumer, and as I have noted before, running as the candidate who doubled electricity costs is not a sure election ticket. The article does, however, question the veracity of some of the estimates for coal-fired power

One big question is how much it currently costs companies to produce coal-fired energy, and the answers are often colored by ideology or self-interest. Companies that sell coal or rely on coal-fired electricity often pick a low number; environmentalists cite the indirect costs to society, like strip mining or spills of coal ash. And since the electricity industry became more competitive, the utilities, even municipal ones, have become more secretive about their costs.

Yet if the backup power to wind is natural gas (and most new power stations are planned to be fueled that way) and costs pick up around the end of they year, then the combined cost of new power generated that way will still argue for coal.


The debate between natural gas and coal continues in Mississippi where utilities with underutilized gas production are arguing against a new coal fired power station. At the same time there is a claim from Canada of a process that can burn any coal to generate electricity with a negative carbon dioxide balance. The Canadian Government is investing in ways to improve carbon capture

In the world of oil and gas pipelines there continues to be the sound of change, if not yet the certainty. The Nabucco pipeline (the one that will bring natural gas to Southern Europe without going through Russia) is getting some favorable publicity with the anticipation of an intergovernmental agreement in June to get the program running. However some of the gas is anticipated to come from Azerbaijan and the Shah Deniz field, and that production is being delayed. Stage 2 of the program is being delayed from 2013 to the 2014-15 time frame, though given the potential current glut in natural gas as more LNG tankers become available, this may be smart timing. It could also use another pipeline, the Turkey-Greece-Italy one, rather than Nabucco, since Azerbaijan is on the west side of the Caspian and thus does not have to go through Russia.

Nearer home there is a question as to whether the natural gas pipeline through the Mackenzie Valley might be built before the Alaskan natural gas version. ConocoPhilips thinks they are ahead. There is not, however, universal support for new pipelines north of the border. China, meanwhile has signed a deal, which gives it the natural gas production off-shore Burma, as well as a pipeline to deliver it.

It is a little hard to grow the feedstock for conventional corn ethanol in Alaska, but a more traditional fermentation near Governor Palin’s home has created “Permafrost” (which is a vodka). The Mt Redoubt volcano continues to rumble nearby, and snow was used to help Anchorage airport remove ash and get the place back running after the volcano had gone through a total of 18 eruptions (The snow helps hold the ash together, so that it can be moved by plow). There are some oil storage facilities in the area that might be threatened.

Kansas is coming out of a record year for oil and gas production with production valued at $6.58 billion. This was up 10% over 2007, with most of the gain coming from oil. Unfortunately thefts of power (electricity and natural gas) are also up. The story is unlikely to be repeated this year, as the national rig count drops below numbers last seen in 2003. The question becomes when this decline will be seen in a production drop, given the short lives of most wells these days. The article suggests before the end of the year. In Colorado, where much production drilling has occurred, the rules are being tightened to include the Colorado Division of Wildlife in those deciding on new oil and gas location assessments. At the same time two new gas-powered plants are moving forward in the region.

Looking at alternate energy New Jersey is moving ahead with solar generation that will develop 42 MW of solar power by 2012. Meanwhile India appears to be opening up as a market for the technology. This goes beyond just building PV cells in country, a new plant will increase one companies production from 12 – 42 MW, The new Solar Cities Initiative will ultimately affect 60 cities, but will soon start with 2, including Nagpur.

Wind Energy, however, to return to Jerome’s topic, is becoming more recognized as the renewable to beat. The report by the Royal Society for the Protection of Birds (RSPB) this week stated

The RSPB believes wind energy has an important role to play in tackling climate change. Consequently we only oppose those windfarms that pose a significant threat to wildlife.

The title “Positive Planning for Onshore Wind,” also suggests the bent of the report – available as a pdf of 57 pages.

P48. Pick Points

Half-a-dozen or so stories of interest:

There has been considerable debate about fossil fuel producers being given tax breaks to encourage production. Treasury Secretary Geithner has suggested that those days should be over, since the companies contribute to global warming. It is perhaps an indication of things to come.

"We don't believe it makes sense to significantly subsidize the production and use of sources of energy (like oil and gas) that are dramatically going to add to our climate change (problem). We don't think that's good economic policy and we think changing those incentives is good for the country," Geithner told the Senate Finance Committee at a hearing on the White House's proposed budget for the 2010 spending year.

I suspect the days of being able to separate the debates on peak oil and climate change may be coming to an end. And yet, at the same time he spoke of the need to reduce the national dependence on foreign oil. The proposed budget would also charge $4 per acre for leases in the Gulf that are nonproducing. But the core proposal is to raise money from the cap-and-trade system that could be used to help pay for the middle class tax cut. The apparent rate for carbon dioxide production that is being bruited about is $20 a ton.

German Chancellor Merkel has said that the Nabucco gas pipeline should not be subsidized by public money. She sees the problem as being one of getting enough gas to supply the pipe, rather than raising the cash, since she anticipates enough private investment.. Germany has long been suspicious of the pipeline. Former Chancellor Schroeder, who is on the Board of the Nordstream pipeline to bring Russian gas to Germany, (as well as the TNK-BP Board) was today in Yugra, visiting the Kamennoe field, where TNK-BP get 70% of their production (40 million tons in 2008 or roughly 800,000 bd). The ex-Chancellor noted that it was one of the most modern fields he had seen, despite the economic conditions they hope to hold production at current levels this year. Italy meanwhile is calling for a high-level meeting with Turkey and Azerbaijan to discuss getting gas from the Shah Deniz field. This is some of the gas that might end up in the Nabucco pipeline.

On a slightly worrisome note, there was an interview with Kate Watters of Crude Accountability about Turkmenistan’s oil production. Worrisome since it has been through ecological concerns that Eastern European governments have sought control of Western investments. And there are areas where concerns are now being raised

Unfortunately, we have seen serious problems with IFI-financed projects in the Caspian region to date. The Karachaganak Field in Kazakhstan is one example where a recent audit by the IFC's own compliance mechanism found it to be out of compliance with numerous air monitoring requirements. Numerous complaints have been filed against the EBRD and IFC for their investments in the Baku-Tbilisi-Ceyhan pipeline, and we have grave concerns about the environmental impacts of EBRD financing at the Bautino Port in Aktau, Kazakhstan, which services the Kashagan field. Among other concerns at Kashagan are threats to the habitat of the Caspian seal.

Completion operations are underway on a well to test multiple prospective intervals in theHaynesville shale. The first fracture stimulated a fourteen-foot interval with 78,000 pounds of proppant. This zone is currently testing at approximately 400 thousand cubic feet per day (kcfd). The Company plans to test this first stage for three to four additional weeks before testing additional intervals. (Note these are vertical wells in the Haynesville gas shale).

One of the big targets for the stimulus package is to improve the national electricity grid, and its ability to distribute power. There are some growing concerns that the investment alone might not be enough. One problem is a recent court ruling said that states could over-rule the Federal Energy Regulatory Commission regarding putting these lines in place. Another is that there are not yet enough standards established for the new grid components, although with encouragement these could be developed relatively quickly. Standards are needed, since there are a number of competing products, for example in the smart electricity meters that are used to optimize domestic electricity use, and legislation may end up favoring one over others.

The TVA is spending over $1 million a day in cleaning up the coal ash spill in Tennessee, with the ultimate bill being expected to be in the $500 - $800 million range.

The Department of Energy is already starting to post some of the steps they are taking to spending their portion of the stimulus package. The initial breakdown into ten overarching programs is first defined and then the subdivisions are broken down into the sub-divisions, each with their own web page. These ultimately lead to the Funding Opportunity Announcements, two of which came out today, as an example:

The first FOA offers $35 million for component research, development, and analysis. The funding will support 20 to 30 projects to develop advanced technologies that will address important aspects of creating, managing, and using engineered geothermal reservoirs. The second FOA offers $49 million to support 5-10 domestic EGS demonstration projects. DOE seeks projects in a variety of geologic formations that will quantitatively demonstrate and validate reservoir creation techniques that sustain sufficient fluid flow and heat extraction rates for 5-7 years and produce at least 5 megawatts of electricity.

More stories can be found at The Energy Bulletin and Drumbeat at The Oil Drum.