P34. Pick Points

Half-a-dozen or so stories of interest.

Beginning by perusing the snippets that dribble into the Houston Chronicle blog from CERAweek, Representative Markey admitted there would be some role for coal in the future; while IHS looked to see the recession last through this year, bottom out next and rebound in 2011, in the process demand for oil will fall another 1 mbd this year. In the same session company assets were foreseen as dropping further below real value, according to an IHS analyst; and the imbalance between operating costs and commodity prices would continue to feed increasing supply volatility. The BP Chairman felt that with enough investment (a trillion dollars a year) enough energy will be found to meet global demand. If we can overcome the human problems, the geological problems will be insignificant. He called for a confident relationship between government and companies, since without it investment would not be forthcoming; an open energy market; a heavy investment in conservation and energy efficiency; a program to address global warming, through increasing the price paid for carbon fuels (cap and trade); opening up the reserve areas now off limits including the continental shelf; incentives to encourage CCS and low carbon technology; and more investment in energy research – he bragged about the model program he set up with Dr Chu. In questions he said that the industry must get costs in line so that $40 becomes a good price again; that corn ethanol is not an answer (but cane ethanol is); and before we decide on electric cars we have to decide where the power is coming from.

The Schlumberger Chair reminded the audience that before the economic collapse we were having a hard time meeting supply, and his job is to keep a viable company until those times come back, and that includes keeping R&D going. The Director General of Pemex, said that they plan on producing 2.9 mbd this year, but needs more money for investment in new resources and a refinery. The Vice Chairman of CNPC said that China had a remarkable year and were concentrating on technology, including EOR for mature fields. In questions they saw a role for gas from shale, and a need for a better image for the industry .

The lunch speaker was the Shell CEO and he also pointed out that as the recession ends so the demand for oil will return, and fast. This will require use of all resources and will raise carbon dioxide levels. But it also will require investment, even through these hard times. They are now living on past investments, but fears that in 3-4 years the cost of insufficient investment will be hurting production. They plan on continued investment in R&D, he bragged about the unmanned offshore monotowers that produce gas. He also supported cap and trade, and many of the items listed by the BP head. In questions he said that Europe, having higher taxes was equivalent to a carbon tax, and had led to more efficient cars. In other talks, they admitted Texas was in recession with the country economy expected to continue to contract all year. And then Exxon spoke out against cap-and-trade, preferring a straight tax. Finally the IEA Chair said that they expected to revise this years demand down another notch, before starting to grow next year. But he also said that energy professionals were more optimistic than financiers at this point.

The struggle between water and energy from hydroelectric projects continues to divide Tajikistan Kyrgyzstan and Uzbekistan as the situation turns bad enough that growers are burning their orchards for fuel.

In the United Kingdom the National Grid is planning on sequestering its carbon from 5 coal-fired power plants near the Humber in rock layers under the North Sea which once held natural gas. They feel they can do this within 3 years. On the other hand Brazil’s Energia hopes to trap 1- 15% of the gas from a power plant in algae that can then generate oil. Another UK Power company Centrica has upset shareholders who would rather it invested in natural gas rather than nuclear power. And in the gas business Gazprom which is anticipating a 5% cut in Western European demand is also now expecting a 15% drop in demand from Eastern Europe. But that has no stopped them denying the rumors and pledging to move forward on development of the Shtockman field, starting next year, yielding natural gas in 2013, and LNG the following year. Gazprom is also investing in LUKoil to help it repay some loans. And speaking of LNG the anticipated shipment of LNG from Sakhalin has been postponed until April In the meantime they are making up the contracted amounts by using gas from Abu Dhabi. (Unrelated but they also have a wakening volcano – just like Alaska). Gazprom are also making another move at the UK market, this time trying to sell electrical power.

Russia is considering a tidal power plant near Murmansk. And half-way around the world similar plans are being considered for the Columbia river in the Northwest USA. Rolls Royce, meanwhile are testing turbines in the UK that can generate up to 1 MW, with a sea trial for a 0.5 MW unit scheduled for this summer , they foresee up to 300 MW of tidal power being possible around the UK by 2020.

The power crisis in Bangladesh is likely to continue until at least mid-May when the Monsoon starts, since the current drought has dropped the water levels needed for hydropower and at present they are drawing down the existing gas fields so fast that they risk damaging the rock structure, and still don’t have enough. Chittagong, a major city, now only has power for half the demand.

For more stories see The Energy Bulletin or Drumbeat at The Oil Drum

P28 Pick Points

Half-a-dozen or so stories of interest:

As up to seven new LNG ports and a number of carriers are completed this year it is expected that supplies will increase to the United States. The projects have been planned for so long, and cost so much that gas must flow and be sold. The Federal Energy Regulatory Commission has had to develop policies on LNG , but even they defer to the market. Given this potential for over-supply the Freeport LNG terminal is looking into the potential for re-export, and local storage, since peak demand and supply may not be in phase. On the other hand recognizing that the time might be ripe to gain access to a cheaper source of power, Japan’s Tokyo Gas is looking at installing a new LNG terminal. To ensure supplies they have agreed to extend buying contracts for LNG supplies from Alaska. The Japanese, who are the largest users of LNG, need to do this to replace supplies that have been lost due to export reductions from Indonesia. The Alaskan gas sells for roughly 4/7ths of what the Japanese would have to pay for gas from Qatar.

In the lower 48, gas producers from shale are moving to stabilize supplies to the network. A new “Tiger Pipeline” is planned to collect and deliver for Haynesville shale gas into the interstate network. A new well is going into the Haynesville, that will run 17,000 ft horizontally. The Marcellus shale is also seeing some investor interest. XTO expects that gas (natural) prices will head back up before the year is out.

Hopes for energy price increases are hitting the wind industry, just as it comes out of a year where the USA added 8.5 GW of wind power. Of the major states adding wind power, California has seen the smallest recent growth, and in part that is because all the “easy” sites have now been taken, and the costs of permitting are now beginning to bite in the sites that are now in development. As a result Iowa is now second in wind power in the nation and has six manufacturers. But it turns out that the claim that the wind industry had more employees than coal mining relied on skewed counting (they counted everyone in wind, but only the miners in coal mining. But older wind farms are refurbishing with larger turbines and this also helps economically.

There will be a new 500 MW farm in Iowa, if they can get enough land, but construction will start in 3-5 years. In Rhode Island they plan on starting an offshore plant in 2010, they have enough wind for utility size operations which is level 3 on land (out of 7 with 1 being poorest), but have higher levels offshore, which is where the farm will go. In inland Northwest Missouri they now have a town (albeit only 1300 people) that receives all their power from the 4 nearby wind turbines.

The disruption caused by Total giving a contract to an outside, rather than domestic company in the UK may spread to other refineries and include nuclear power plants.

High temperatures in Australia, and particularly Melbourne played some considerable havoc with the Australian Open . Even as that ended, rolling blackouts are anticipated today because of the closure of the power link from Tasmania (due to overheating) . About 20,000 homes in the state (Victoria) are without power and the rise in the demand for energy has reached the limits of what can be provided. Bush fires are also threatening power lines, and a local coal company operation , while the drought is draining local water supplies . Locals are also concerned because of the secrecy of the order of priorities for load shedding.

It is not only in California and Australia that water supply is a problem. In the Central Asian republics Russia is stepping in to sort out possible conflicts since the countries from which the main water supply comes (Tajikistan and Kyrgyzstan( want to develop hydropower, while those downstream (Uzbekistan, Kazakhstan, and Turkmenistan) want the water for agriculture. The Tajiks are willing to offer the Uzbeks water for energy. Turkmenistan is also involved since they send out electric power that must pass through other countries to the end user.

Uzbekistan is demanding 10 per cent of the $0.03 per kilowatt paid by Tajikistan to Turkmenistan.
This year the Uzbeks are also charging Kyrgyzstan and Tajikistan US$ 240 per 1000 m3, up from 145 dollars last year.

And the Tajiks are not taking kindly to the Russian intervention.

For more stories go to The Energy Bulletin or Drumbeat at The Oil Drum

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.