The debate over the mixture of sources that will make up the supply portfolio from which America will draw its energy in the next twenty years is just beginning. Until now there has been a general acceptance of the need to find less polluting technologies. When this is combined with its flexibility, this has meant that for the past few years new fuel-fired power stations have focused on the use of natural gas. At the same time the growth of the renewable energy component, while small, has continued, most particularly for wind. Wind and gas-fired power sources tend, to a degree, to compliment one another, given that wind has to have a back-up that is flexible, for when it is not producing and this can be achieved relatively simply with a gas turbine. At the same time, the increasing cost of natural gas, means that the savings from the wind turbines will popularize their use.
In a world where energy demand has continued to grow, this meant that there was, given their initial small size and growth capacity, a continuing demand for both new gas power plants and for new wind farms and solar power plants. However we are now at a point of transition, and the new Administration has a different concept of the way to the future. Part of this new message is predicated on the need to conserve, and to use more efficient appliances. It has come out of a successful application in California, where demand has been kept down, by such changes. It is a message that has been adopted by many utilities that do not have to build new facilities if their growing customer base, instead of growing demand improves the efficiency of power usage, and can hold their overall demand steady. Because of the way that the utilities must sell this program, and the incentives that they provide for customers to conserve or change to more efficient appliances, there is a cost for this power. A local utility suggested that it was around $0.04 per kWh, considerably less than the cost to build new generating plant. Thus, at present, the movement to increase conservation and efficiency will be hailed as a benefit by both parties.
Unfortunately, if the power consumption level is held steady, then with no growth, the need can be met with existing power generation systems (recognizing there will still remain some small market for replacement). This means that the demand for new facilities and new power generation systems is diminished. This is particularly likely to be true in a time of recession. So if there is to be no business through growth in the economy and the power demand therefore, then if we are to sustain the demand for, and integration of, renewable sources into the grid we need to start replacing some of the older power plants, with different sources of energy.
Now this is where we bump into another problem. Much is made of the potential jobs that would be created if renewable energy systems were installed. A wind farm here, a solar farm there, and the jobs mount up. But in relative terms, once these farms are in place, the number of folk required to maintain and repair them will be small. Contrast that with say the natural gas industry where, as I tried to show yesterday, if you are not continuously drilling for gas these days, then the supply will drop. Thus we need a continuous supply of drill crews, someone to make and supply the steel for the drill strings, someone to mine the sand and treat it, and to make and mix the polymers for the hydro-frac, and then the folk in the storage facility etc etc.
It gets even more labor intensive if one goes into coal mining. There are miners, those that run the cleaning plants where the waste rock is removed, those that haul the coal around (pipelines are not nearly that popular) as well as those that make and maintain the machines (which have a high wear rate and rate of attrition). The mines need tires for the trucks and oil for the machines, and soak up a lot of electric power along the way. A study done on potential economic loss has been quite blunt on what some of these impacts might be. Rose and Wei found that on current rates of supply the coal industry would contribute roughly $1 trillion in the decade leading up to 2015, with some $362 billion in household income and some 6.8 related jobs. The then looked at both a 33% and a 66% replacement of the energy the coal produced with renewable or alternate power. At the 33% replacement rate they saw a drop in gross economic output of $166 billion, $64 billion drop in household income per year, and a loss of 1.2 million jobs. (These losses more than doubled with greater reduction in coal use).
Now there is a train of thought that rejoices in the change, and the simplicity of the new technology. But, on the other hand, it is going to put a fair number of people out of work. At a time when job creation is a vital need if we are to work our way out of this global recession, we may well see a drop in employment if the transition is enforced too dramatically.
I was born and raised in the North of England where the mining industry was the major employer. I would take the first bus of the morning to the mine, passing as I did in the half-hour journey, over a dozen mines. The mines were still in the transition from hand-won mining (see the Sunday Tech Talks) to machine-won coal. Thus each mine would employ around a thousand people. As North Sea oil displaced coal in the UK these mines closed. There was not nearly enough work to go around, and while the social compact in the UK meant that no-one starved, and most had housing, unemployment rates stayed very high for decades. The pubs, where miners congregated in the evenings suffered badly, as did all the other supports that a community grows, the stores, the sports, the entertainment, all diminished.
But as wages decline, and jobs, so other aspects of a society also diminish. Crime and violence often increase, and community health declines. As the debate over future energy policy increases in intensity the voices of those that will be thrown out of work by the changes, a community until now relatively silent, will begin to be heard. And then perhaps the debate over relative costs and benefits will be joined with more vigor, and fact from each side. This may, in the end, make the passage of some legislation more difficult than it now appears, it will likely depend on how deeply the recession bites, and how long before it starts to lift.
Wednesday, March 4, 2009
Tuesday, March 3, 2009
P47. Pick Points
Half-a-dozen or so stories of interest:
Up in Canada Suncor expects to produce around 300,000 bd of crude from its operations in Alberta. But all is not well in those operations. The rise and then fall in petroleum prices has had a significant impact on the oil sands industry.
In order to help the industry the Alberta Government is slashing royalty rates. The Alberta Government has also set aside $2 billion for work on carbon capture and storage for the oil sands and coal. There are however some doubts that the effort will result in any significant benefit. The current article in National Geographic has stimulated debate on the issue. But it has also brought a note that, if America does not want oil sand crude, (or makes it difficult to buy through CCS legislation) then China is ready to move in and take the oil instead. In Australia, meanwhile, a company has suspended its work on underground sequestration due to the plunging prices of permits (the problem that Europe also has).
While wandering around the various websites looking for comment on the demonstration at the Capitol Power Plant yesterday (which was a lot less dramatic that the organizers had intended I suspect, and a lot less well attended, I came on a couple of other folk that had been watching the video feed. One of them was OpenMarket who quoted a couple of interesting reports about some of the downside of moving from coal to other renewable fuels. The Reports were: M. Harvey Brenner, Ph.D., “Health Benefits of Low-Cost Energy: An Econometric Case Study,” AWMA Environmental Manager, November 2005, and Adam Z. Rose, Ph.D., and Dan Wei, “Economic Impacts of Coal Utilization and Displacement in the Continental U.S., 2015” (Penn State University, supported by a grant from CEED, July 2006). These looked at the conditions that would occur with different coal future production levels. The results were along the lines of
Pemex is sticking to its target of 756,000 bd from Cantarell this year, even though apparently their own figures are showing production is dropping at 7% pa. They are having some success with the Tsimin-1 exploratory well that came in with 4,400 bd of oil, while the Cali-1 well in the Burgos project is producing at 9 mcf/d.
Russia is signing energy deals with Spain that include renewable energy collaboration. This might bring the Spanish oil company Repsol into working on the Yamal fields. Given that investors have been lukewarm to the latest news of Gazprom profits this agreement, and the promise of some Shtokman gas for Spain supplied as LNG starting in 2014, may be helpful, since it may bring in Spanish investors.
And a quick note on the coal situation in Bangladesh. Apparently the Chinese company that has been working on the Barapukuria coal mine has told the authorities that if the mine does not start this week, they would pull out. The operation is tied up in compensation claims.
More stories can be found at The Energy Bulletin and Drumbeat at The Oil Drum.
Up in Canada Suncor expects to produce around 300,000 bd of crude from its operations in Alberta. But all is not well in those operations. The rise and then fall in petroleum prices has had a significant impact on the oil sands industry.
Companies financing oil sands projects out of cash flow have been relatively unscathed, besides suffering substantially lower stock prices and having to delay projects due to lower revenue. Companies financing oil sands projects on credit are up for sale at bargain basement prices. The most likely buyers of those credit-short companies are supermajors and sovereign wealth funds.The article goes on to discuss the significant costs of a cap and trade rule for the oil sands, and the potential serious consequences to the industry if it chooses to ignore that coming freight train. The report anticipates a cost of $80 a ton for carbon from operations on the scale of the oil sands.
The Canadian and Albertan governments have lost substantial tax revenue because of rapidly rising project costs eating into corporate profits. Relatively more upgrader projects being delayed or cancelled compared to mining and in-situ projects contributes to less value-added in Canada and a lower tax base for those governments.
In order to help the industry the Alberta Government is slashing royalty rates. The Alberta Government has also set aside $2 billion for work on carbon capture and storage for the oil sands and coal. There are however some doubts that the effort will result in any significant benefit. The current article in National Geographic has stimulated debate on the issue. But it has also brought a note that, if America does not want oil sand crude, (or makes it difficult to buy through CCS legislation) then China is ready to move in and take the oil instead. In Australia, meanwhile, a company has suspended its work on underground sequestration due to the plunging prices of permits (the problem that Europe also has).
While wandering around the various websites looking for comment on the demonstration at the Capitol Power Plant yesterday (which was a lot less dramatic that the organizers had intended I suspect, and a lot less well attended, I came on a couple of other folk that had been watching the video feed. One of them was OpenMarket who quoted a couple of interesting reports about some of the downside of moving from coal to other renewable fuels. The Reports were: M. Harvey Brenner, Ph.D., “Health Benefits of Low-Cost Energy: An Econometric Case Study,” AWMA Environmental Manager, November 2005, and Adam Z. Rose, Ph.D., and Dan Wei, “Economic Impacts of Coal Utilization and Displacement in the Continental U.S., 2015” (Penn State University, supported by a grant from CEED, July 2006). These looked at the conditions that would occur with different coal future production levels. The results were along the lines of
An econometric model was applied to a hypothetical regulatory case study, whereby U.S. coal was replaced by alternative higher-cost fuels such as natural gas for the purpose of electricity generation. The model was used to estimate the premature mortality associated with increased unemployment and reduced personal income. The adverse impacts on household income and unemployment due to the substitution of higher-cost energy sources were estimated to result in 195,000 additional premature deaths annually.Somehow I doubt if we will hear much of those findings.
Pemex is sticking to its target of 756,000 bd from Cantarell this year, even though apparently their own figures are showing production is dropping at 7% pa. They are having some success with the Tsimin-1 exploratory well that came in with 4,400 bd of oil, while the Cali-1 well in the Burgos project is producing at 9 mcf/d.
Russia is signing energy deals with Spain that include renewable energy collaboration. This might bring the Spanish oil company Repsol into working on the Yamal fields. Given that investors have been lukewarm to the latest news of Gazprom profits this agreement, and the promise of some Shtokman gas for Spain supplied as LNG starting in 2014, may be helpful, since it may bring in Spanish investors.
And a quick note on the coal situation in Bangladesh. Apparently the Chinese company that has been working on the Barapukuria coal mine has told the authorities that if the mine does not start this week, they would pull out. The operation is tied up in compensation claims.
More stories can be found at The Energy Bulletin and Drumbeat at The Oil Drum.
Read more!
Natural Gas and some worrying numbers
Their Website will tell you that they are the number one independent producer of natural gas in the country. When Boone Pickens needed a natural gas partner as part of his plan to change the mix of American Energy Supplies, he turned to Chesapeake. And yesterday they issued a statement that included the following:
This got me thinking about how much we use, who produces it, and issues such as the understanding of the different units that are used. So I am working on a standardized presentation of units – and see the sidebar for conversions etc.
Putting the Chesapeake statement in context, the CEO is quoted
To put the price in context Atlas Energy just reported that their drilling costs in the Marcellus Shale where they are currently developing production in the Applachian Basin, were $1.49 per kcf.
In 2008 the United States consumed a total of 23,241,512 mcf of natural gas, of which 21,328,916 mcf is delivered to customers (91.7%). This averages 63.6 bcf a day of total consumption, with 58.4 bcf going to customers. This is not an even consumption, but as you might imagine, is a function of the month (as shown below).
Natural Gas Consumption by month for 2008 (Source EIA )
And for those curious as to whether the weather was exceptional in those months, the average heating degree days for the regions of the country were higher in the 2008-2009 heating season over the previous season by over 7% on average.
Natural gas is supplied to four main markets electrical power generation (18.2 bcf/d); industrial use (18.2 bcf/d); Residential (13.4 bcf/d) and Commercial (8.6 bcf/d) use. The natural gas that goes to power generation now produces roughly 25% of US electrical power, and has the advantages of being both cleaner than coal, and also more flexible. This is particularly useful as more renewable sources such as wind and solar come into the grid, where their fluctuating power needs to be balanced, and natural gas is better at doing this.
To get some sense of where this came from, consider that Devon Energy drilled 2,441 wells in 2008, with a claimed 98% success rate. 659 of these were in the Barnett Shale, where the company now has a total of 3,809 wells, which produced 398 bcf in 2008. By the end of 2008 company gas production was nearly 1.2 bcf/day. Devon actually produces both oil and gas and so I can’t do the following calculation using their numbers, but let me instead set up a hypothetical company, but using some similar numbers.
Let us assume that this company is producing 1.2 bdc/day of natural gas. It only produces natural gas, and it got this production from 4,000 wells in 2008. If it drilled 2,500 wells in 2008 of which 90% were productive, then it would have 2,250 new productive wells. If one divides the daily volume among the producing wells that gives a daily average production of 300 kcf/day. However it is important to remember that in the gas shales some 60% of production comes from the well in the first year, and if, for simplicity we say that 36% comes in year 2, and that the remainder can be neglected, then I can illustrate the drilling need with a very crude calculation.
Let us say that wells come on stream at the first of the next year. Then at the beginning of 2009 1,750 wells were entering the second year of production while 2,250 were just starting up, then the production number changes so that in their first year the new wells will produce an average 363 kbd and this drops to 218 kbd in the second year, and the well is then done. Now we move forward to the start of 2010, so the original wells drop out of production, and the new wells drop down to second year production values. In order to sustain gas production the company will have to drill an additional 2,167 wells this year, at the assumed new production rate and success rate.
However the price of natural gas having fallen the company which drilled last years wells with say 160 rigs decides to cut back to 110 rigs in the same vein as Chesapeake. Then if the 160 rigs drilled 2,500 wells in 2008, the rig production is about 15.6 wells/year. So the number of wells drilled this year at that rate, but with the lower number of rigs, will be 1,718. At 90% success rate this gives 1,546 new wells at 363 kbd and 2,250 old wells at 218 kbd. The total is roughly 1.0 bcf/day. In other words the company will see a 20% drop in production next year. It gets a little worse in 2011. Consider that if the same number of wells are generated in 2010, then we have 1,546 wells at 363 kbd and 1,546 wells at 218 kbd, so the production drops to 0.9 bcf, at which it stabilizes, if the success rate and well production rates remain constant. As a matter of reality it is likely that they will drop.
To revert back to real numbers the Baker Hughes rig counts for 27 Feb, 2009 had 1,243 rigs operating in North America, of which 78% were gas (970). Of the total some 37% (460) were drilling horizontal wells. Incidentally the site presents these in a rather informative graphic:
Source Baker Hughes
It is interactive and, for example, by selecting for the Williston Basin find that there are 34 rigs drilling, that they are all drilling for oil, and that 89% of them (30) are drilling horizontal wells.
Source Baker Hughes
This is a much faster and more visual understanding of the data than the old way of downloading spreadsheets, which is the way you still have to look to find, for example, that in January Saudi Arabia had 46 rigs drilling for oil, and 28 drilling for natural gas. But it still leaves me wondering what that one rig is doing drilling a geothermal well in Illinois.
Well enough for crystal gazing for today, as I mentioned this is just an illustrative example of what might happen in the none-too-distant future. It is not accurate since some companies are cutting back harder on rig counts than I have suggested, success rates are not all the same (it has been suggested that as an industry average only 28% of the gas shale wells make a profit at a reasonable price for gas). But it might help understand why it is very unlikely that gas prices will remain as low as they are now for very long.
Chesapeake has elected to curtail approximately 240 million cubic feet of natural gas equivalent (mmcfe) per day ( 0.23 bcf/day) of its gross natural gas and oil production due to currently low wellhead prices in the Mid-Continent region. The company has curtailed approximately 200 million cubic feet per day of gross natural gas production and approximately 6,000 barrels per day of gross oil production for at least the month of March 2009. The curtailed production represents approximately 7% of Chesapeake’s current gross operated production capacity. Additionally, the company is considering a further 10% reduction in its drilling activity during 2009 if natural gas and oil prices remain low during the next few months. The company’s attractive hedges and cash availability provide it with the operational and financial flexibility to curtail production during periods of unusually low prices, such as the current market environment. The company believes conditions are developing that will support higher prices for natural gas and oil later this year and in 2010.
This got me thinking about how much we use, who produces it, and issues such as the understanding of the different units that are used. So I am working on a standardized presentation of units – and see the sidebar for conversions etc.
Putting the Chesapeake statement in context, the CEO is quoted
During March 2009, most Mid-Continent natural gas prices at major interstate pipeline delivery points will average around $2.70 per thousand cubic feet (kcf), a price at which most natural gas production is unprofitable. We believe low wellhead prices combined with constrained capital availability will likely cause U.S. drilling activity to decline well beyond the 40% drop already seen since August 2008. As a result, U.S. natural gas production will begin to dramatically decline before the end of 2009 and consequently natural gas markets will regain better supply/demand balance by the end of 2009, if not sooner. …… In addition, we have reduced our drilling activity from 158 operated rigs in August 2008 to 110 currently. We are considering a further 10% reduction in our drilling activity, which if implemented, will be in areas where we do not have joint venture drilling carries.
To put the price in context Atlas Energy just reported that their drilling costs in the Marcellus Shale where they are currently developing production in the Applachian Basin, were $1.49 per kcf.
In 2008 the United States consumed a total of 23,241,512 mcf of natural gas, of which 21,328,916 mcf is delivered to customers (91.7%). This averages 63.6 bcf a day of total consumption, with 58.4 bcf going to customers. This is not an even consumption, but as you might imagine, is a function of the month (as shown below).
Natural Gas Consumption by month for 2008 (Source EIA ) And for those curious as to whether the weather was exceptional in those months, the average heating degree days for the regions of the country were higher in the 2008-2009 heating season over the previous season by over 7% on average.
Natural gas is supplied to four main markets electrical power generation (18.2 bcf/d); industrial use (18.2 bcf/d); Residential (13.4 bcf/d) and Commercial (8.6 bcf/d) use. The natural gas that goes to power generation now produces roughly 25% of US electrical power, and has the advantages of being both cleaner than coal, and also more flexible. This is particularly useful as more renewable sources such as wind and solar come into the grid, where their fluctuating power needs to be balanced, and natural gas is better at doing this.
To get some sense of where this came from, consider that Devon Energy drilled 2,441 wells in 2008, with a claimed 98% success rate. 659 of these were in the Barnett Shale, where the company now has a total of 3,809 wells, which produced 398 bcf in 2008. By the end of 2008 company gas production was nearly 1.2 bcf/day. Devon actually produces both oil and gas and so I can’t do the following calculation using their numbers, but let me instead set up a hypothetical company, but using some similar numbers.
Let us assume that this company is producing 1.2 bdc/day of natural gas. It only produces natural gas, and it got this production from 4,000 wells in 2008. If it drilled 2,500 wells in 2008 of which 90% were productive, then it would have 2,250 new productive wells. If one divides the daily volume among the producing wells that gives a daily average production of 300 kcf/day. However it is important to remember that in the gas shales some 60% of production comes from the well in the first year, and if, for simplicity we say that 36% comes in year 2, and that the remainder can be neglected, then I can illustrate the drilling need with a very crude calculation.
Let us say that wells come on stream at the first of the next year. Then at the beginning of 2009 1,750 wells were entering the second year of production while 2,250 were just starting up, then the production number changes so that in their first year the new wells will produce an average 363 kbd and this drops to 218 kbd in the second year, and the well is then done. Now we move forward to the start of 2010, so the original wells drop out of production, and the new wells drop down to second year production values. In order to sustain gas production the company will have to drill an additional 2,167 wells this year, at the assumed new production rate and success rate.
However the price of natural gas having fallen the company which drilled last years wells with say 160 rigs decides to cut back to 110 rigs in the same vein as Chesapeake. Then if the 160 rigs drilled 2,500 wells in 2008, the rig production is about 15.6 wells/year. So the number of wells drilled this year at that rate, but with the lower number of rigs, will be 1,718. At 90% success rate this gives 1,546 new wells at 363 kbd and 2,250 old wells at 218 kbd. The total is roughly 1.0 bcf/day. In other words the company will see a 20% drop in production next year. It gets a little worse in 2011. Consider that if the same number of wells are generated in 2010, then we have 1,546 wells at 363 kbd and 1,546 wells at 218 kbd, so the production drops to 0.9 bcf, at which it stabilizes, if the success rate and well production rates remain constant. As a matter of reality it is likely that they will drop.
To revert back to real numbers the Baker Hughes rig counts for 27 Feb, 2009 had 1,243 rigs operating in North America, of which 78% were gas (970). Of the total some 37% (460) were drilling horizontal wells. Incidentally the site presents these in a rather informative graphic:
Source Baker HughesIt is interactive and, for example, by selecting for the Williston Basin find that there are 34 rigs drilling, that they are all drilling for oil, and that 89% of them (30) are drilling horizontal wells.
Source Baker HughesThis is a much faster and more visual understanding of the data than the old way of downloading spreadsheets, which is the way you still have to look to find, for example, that in January Saudi Arabia had 46 rigs drilling for oil, and 28 drilling for natural gas. But it still leaves me wondering what that one rig is doing drilling a geothermal well in Illinois.
Well enough for crystal gazing for today, as I mentioned this is just an illustrative example of what might happen in the none-too-distant future. It is not accurate since some companies are cutting back harder on rig counts than I have suggested, success rates are not all the same (it has been suggested that as an industry average only 28% of the gas shale wells make a profit at a reasonable price for gas). But it might help understand why it is very unlikely that gas prices will remain as low as they are now for very long.
Read more!
P46. Pick Points
Half-a-dozen or so stories of interest:
I watched a little of the demonstration outside the Capitol Power Plant this afternoon, in a line feed from the CapitolClimate Action site . There was not that much snow visible, just a little on the bushes, and everything was relatively peaceful. (About 7 inches fell apparently). There was some sort of march, but the video was live and without a commentator, so much of what I saw was very unscripted. Apparently some of the demonstrators came from a conference that was being held in town.
The first thing shown (at about 1:30 pm when I tuned in) was a group of demonstrators outside the CPP gates chanting, and being encouraged to do so by a man with an electronic bullhorn. The chants were along the lines of “no coal, no gas, no compromise.” You may remember from my note yesterday that the plant is fired with a mix of 65% natural gas, and 35% coal, so they obviously want to shut the plant down. How to provide for the energy needs of the Capitol and surroundings? The next chant was “Coal is over, coal is done, get your power from the sun!” Well for those not paying attention Washington is just coming out of a major snowstorm, so any solar panels would be covered with snow, as the bushes were behind the demonstrators. So sun would not be an option today – how about nuclear – no carbon dioxide – next chant “no coal, no gas, no nukes, no kidding”. I think no kidding is right, where are they going to get the power to supply heat and light to the east coast? Remember that it is very cold in the region at the moment, and there was no visible wind in the afternoon. James Hansen was there and the Congresswoman that represents DC in the House, and one of the Kennedys. I had other things to do, but it all seemed very low key in the time that I watched it. They are playing the highlights again at the website, and are promising to go back to Coal Mountain again.
Plans are moving in Iraq to restart a drilling program that will yield 60 wells a year at 5,000 barrels/day/well.
The transcript is out for the API telecon I participated in on Friday. The transcript can be downloaded here.
Those taking part included:
The Bear, The Absurd Report
Brian Westenhaus, New Energy and Fuel
Dave Summers, Bit Tooth Energy
Devil’s Advocate, Copious Dissent
Gail Tverberg, The Oil Drum
Geoff Styles, Energy Outlook
James Shott, Observations
Nate Hagens, The Oil Drum
Peter Carlock, OPNTALK (which has the transcript posted -
Stephen Rhodes, The Republican Temple who also has some video from the Capitol demonstration today.
Brian Westenhaus had a post on Friday about a new way of getting light into the photobioreactors for algae growth. Several folk had forwarded it to me for review. It is way of distributing the light that we looked at a couple of years ago but doesn’t really address a couple of the problems relating to the drop off in intensity with distance, though it helps get light to the bottom of deeper ponds. He also writes about the Petroalgae operation in Florida. This is getting closer to a target of 5,000 gallon/acre/year yield which is the target set as a break-even point for algae. (There are lots of caveats to that number). Biovenitas has more coverage over this past weekend, The potential for green energy technologies to provide jobs is becoming more of an issue and certainly when we talk of research projects it is something that is brought up in almost every discussion with potential outside partners.
OPEC is still pumping about 780,000 bd of oil above the targets they have earlier set, but are down to 25.62 mbd, which takes them to abot 81% of the targeted cuts. Venezuela would like the target to be enforced, and more cuts made to bring the price up to $70 a barrel. I think it will likely get there this summer anyway, though, as noted last week Secretary Chu is not as concerned with OPEC oil as he is with the longer-term issues of cutting energy demand and dealing with the climate issues of energy production
.
Pakistan approved a wind farm in Sindh. Power will be provided to Karachi and Hyderabad. The 50 MW wind facility may also be joined by a similar sized solar farm. Details of a wind survey around Pakistan are available.
More stories can be found at The Energy Bulletin and Drumbeat at The Oil Drum.
I watched a little of the demonstration outside the Capitol Power Plant this afternoon, in a line feed from the CapitolClimate Action site . There was not that much snow visible, just a little on the bushes, and everything was relatively peaceful. (About 7 inches fell apparently). There was some sort of march, but the video was live and without a commentator, so much of what I saw was very unscripted. Apparently some of the demonstrators came from a conference that was being held in town.
The first thing shown (at about 1:30 pm when I tuned in) was a group of demonstrators outside the CPP gates chanting, and being encouraged to do so by a man with an electronic bullhorn. The chants were along the lines of “no coal, no gas, no compromise.” You may remember from my note yesterday that the plant is fired with a mix of 65% natural gas, and 35% coal, so they obviously want to shut the plant down. How to provide for the energy needs of the Capitol and surroundings? The next chant was “Coal is over, coal is done, get your power from the sun!” Well for those not paying attention Washington is just coming out of a major snowstorm, so any solar panels would be covered with snow, as the bushes were behind the demonstrators. So sun would not be an option today – how about nuclear – no carbon dioxide – next chant “no coal, no gas, no nukes, no kidding”. I think no kidding is right, where are they going to get the power to supply heat and light to the east coast? Remember that it is very cold in the region at the moment, and there was no visible wind in the afternoon. James Hansen was there and the Congresswoman that represents DC in the House, and one of the Kennedys. I had other things to do, but it all seemed very low key in the time that I watched it. They are playing the highlights again at the website, and are promising to go back to Coal Mountain again.
Plans are moving in Iraq to restart a drilling program that will yield 60 wells a year at 5,000 barrels/day/well.
In 2008 Iraq produced 2 million b/d, which the ministry is eager to boost to 3 million b/d as soon as possible and to 4.4 million b/d within the next 4 years. Iraq wants to achieve 6 million b/d of production by 2013.Iraq has had to redo its budget twice already, due to the falling price of oil, and thus is anxious to reinstate itself as a producer.
"The parties to the joint venture intend to invest a total of $400 million to enable [IOSC] to purchase and operate 12 new drilling rigs and for provision of logistical support and working capital in order to deliver state-of-the-art performance in its operations," MPC said. IOSC also wants to improve local Iraqi expertise and integrated drilling technology.
The transcript is out for the API telecon I participated in on Friday. The transcript can be downloaded here.
Those taking part included:
The Bear, The Absurd Report
Brian Westenhaus, New Energy and Fuel
Dave Summers, Bit Tooth Energy
Devil’s Advocate, Copious Dissent
Gail Tverberg, The Oil Drum
Geoff Styles, Energy Outlook
James Shott, Observations
Nate Hagens, The Oil Drum
Peter Carlock, OPNTALK (which has the transcript posted -
Stephen Rhodes, The Republican Temple who also has some video from the Capitol demonstration today.
Brian Westenhaus had a post on Friday about a new way of getting light into the photobioreactors for algae growth. Several folk had forwarded it to me for review. It is way of distributing the light that we looked at a couple of years ago but doesn’t really address a couple of the problems relating to the drop off in intensity with distance, though it helps get light to the bottom of deeper ponds. He also writes about the Petroalgae operation in Florida. This is getting closer to a target of 5,000 gallon/acre/year yield which is the target set as a break-even point for algae. (There are lots of caveats to that number). Biovenitas has more coverage over this past weekend, The potential for green energy technologies to provide jobs is becoming more of an issue and certainly when we talk of research projects it is something that is brought up in almost every discussion with potential outside partners.
OPEC is still pumping about 780,000 bd of oil above the targets they have earlier set, but are down to 25.62 mbd, which takes them to abot 81% of the targeted cuts. Venezuela would like the target to be enforced, and more cuts made to bring the price up to $70 a barrel. I think it will likely get there this summer anyway, though, as noted last week Secretary Chu is not as concerned with OPEC oil as he is with the longer-term issues of cutting energy demand and dealing with the climate issues of energy production
.
Pakistan approved a wind farm in Sindh. Power will be provided to Karachi and Hyderabad. The 50 MW wind facility may also be joined by a similar sized solar farm. Details of a wind survey around Pakistan are available.
More stories can be found at The Energy Bulletin and Drumbeat at The Oil Drum.
Read more!
Monday, March 2, 2009
Some monthly production statistics
The start of a new month brings with it a quick look at the amounts of different fuel sources being produced in Russia and the amount of oil produced in Mexico, since it is the changes in these supplies that may have significant impact on European and American consumer interests. The current figures can be compared with last month’s numbers and to some degree with the situation this time last year. The latest data from Russia is from Thursday of last week. In a simple list,:
Total production of Crude and other liquids is at 9.765 mbd , this is up 2.5% on last month, but down 0.3% on this time last year. The greatest contributor remains Rosneft, whose production remained stable at 2.25 mbd, though down 1.2% on the year, and Lukoil at 1.87 mbd which is up 1% on the month, but 4% on the year.
Russia refined 4.49 mbd of crude, down some 6.4% over the month, and down 4.2% over the year, so this may be some temporary abberation (the numbers can fluctuate quite a bit, and I am just taking a snapshot of one day a month – but we will see as the numbers accumulate over the year).
In terms of natural gas, the total was 1.71 billion cu m (bcm) of which Gazprom produced 1.38 bcm. The volumes were down 13% overall and 16% for Gazprom over the year, with the monthly change being down 5.4% for the total, and down 5.8% for Gazprom. (There may still be some reduced shipments going into Eastern European countries such as Poland).
Daily coal production has risen to 880,000 tons, up 12.8% on the year, but down 11% over the month.
Looking at the amount of power generated: nuclear is 469 million kWh, down 1.9% over the year, but up 3.5% over the month. Hydro is at 470.5 million kWh, up 2.1% on the month, and up 11% on the year. Thermal (coal, oil and natural gas combined) power generation was 2,020 million kWh down 11.2% on the year, and down 5.3% on the month. This could well reflect the drop in production from Russian industry being reflected in lower power needs.
The other country whose production gives some concern (we will, for now assume that OPEC can raise their production as needed over this next year) is Mexico. With the falling production from Cantarell it is worth noting that Mexican production was at 3.05 mbd in January down 7.4% over the figures from a year ago, and off 1% from the December number. Marine production (in which province Cantarell lies) was down 11.3% y-o-y and 1.5% for the month. Mexico exported 1.223 mbd to the Americas, up from 1.14 mbd in December, and up from the 1.216 mbd of last January. (Overall exports were however down, the loser being Europe).
Since the whole world is seeing the impacts of the recession, it is impossible to tell how much of the changes were due to a reduction in demand, relative to the capacity of the industry to produce. Even the natural gas figures may have been influenced by political decisions.
Total production of Crude and other liquids is at 9.765 mbd , this is up 2.5% on last month, but down 0.3% on this time last year. The greatest contributor remains Rosneft, whose production remained stable at 2.25 mbd, though down 1.2% on the year, and Lukoil at 1.87 mbd which is up 1% on the month, but 4% on the year.
Russia refined 4.49 mbd of crude, down some 6.4% over the month, and down 4.2% over the year, so this may be some temporary abberation (the numbers can fluctuate quite a bit, and I am just taking a snapshot of one day a month – but we will see as the numbers accumulate over the year).
In terms of natural gas, the total was 1.71 billion cu m (bcm) of which Gazprom produced 1.38 bcm. The volumes were down 13% overall and 16% for Gazprom over the year, with the monthly change being down 5.4% for the total, and down 5.8% for Gazprom. (There may still be some reduced shipments going into Eastern European countries such as Poland).
Daily coal production has risen to 880,000 tons, up 12.8% on the year, but down 11% over the month.
Looking at the amount of power generated: nuclear is 469 million kWh, down 1.9% over the year, but up 3.5% over the month. Hydro is at 470.5 million kWh, up 2.1% on the month, and up 11% on the year. Thermal (coal, oil and natural gas combined) power generation was 2,020 million kWh down 11.2% on the year, and down 5.3% on the month. This could well reflect the drop in production from Russian industry being reflected in lower power needs.
The other country whose production gives some concern (we will, for now assume that OPEC can raise their production as needed over this next year) is Mexico. With the falling production from Cantarell it is worth noting that Mexican production was at 3.05 mbd in January down 7.4% over the figures from a year ago, and off 1% from the December number. Marine production (in which province Cantarell lies) was down 11.3% y-o-y and 1.5% for the month. Mexico exported 1.223 mbd to the Americas, up from 1.14 mbd in December, and up from the 1.216 mbd of last January. (Overall exports were however down, the loser being Europe).
Since the whole world is seeing the impacts of the recession, it is impossible to tell how much of the changes were due to a reduction in demand, relative to the capacity of the industry to produce. Even the natural gas figures may have been influenced by political decisions.
Read more!
Sunday, March 1, 2009
P45. Pick Points
Talking with the utility companies the other week, they had noted that, while there was still a planned growth in using natural gas for new power stations, the rising cost was giving some of them second thoughts. Well on Friday Speaker Pelosi noted on her blog that she and Senator Reid had sent a letter to the Acting Architect at the Capitol, asking that the Capitol Power Plant (CPP) switch from burning both coal and natural gas to just natural gas. Turns out it is not that easy – the plant now burns 65% natural gas and 35% coal (down from 49% in 2007). There are cost, technical and political problems in making the changes, but Dr James Hansen is pressing them hard. (isn’t he still a civil servant?). But even the Guardian seems to having the odd second thought
Tehran looks as though it may be getting into the LNG business, with talks progressing with Total. At present LNG seems to be moving from shortage to surplus, making it tougher for those in the business to succeed. Remember that Russia has just become a supplier (though mainly to Japan) but there are markets developing in India, for example, who are looking to double deliveries this year, as the Gujarat terminal expands. It will help if the global surplus lowers price for India.
Meanwhile the Russians are beginning to invest more in floating nuclear power plants. Four more are to be built to bring power to the northern coast region of Siberia. Although delays are reported, the first plant is scheduled to be ready in May 2010. The region for which the plants are destined has large deposits of uranium. Elkon being reported to have about 6% of the worlds reserves. Production is planned to reach 3,000 tons by 2015. But some of that production may be needed for the upgrade of Russian nuclear forces . Don’t forget that the Miss Atom 2009 contest is coming up.
Russians are also investing in coal, with the purchase of the Bluestone Coal Corp, although the domestic industry appears to be in some trouble. Bluestone currently mines coal around Beckley, W. Va and has estimated sales of around $23 million, with 180 employees. The price was $425 million plus shares for a $4 billion deal.
Senator Lisa Murkowski of Alaska has introduced a bill to permit oil production in the Arctic National Wildlife Refuge, from directional wells that are drilled outside the refuge's borders. The state is also considering supporting renewable energy with a new line of credits.
It was only last week that the thought of a pipeline across the Sahara was floated, but it is already getting threats from a major Nigerian militant group .
Peter Huber and Mark Mills – in their outstanding 2005 book about energy, The Bottomless Well – made this point clear, declaring: "Economic growth marches hand in hand with increased consumption of electricity – always, everywhere, without significant exception in the annals of modern industrial history." . . . The second problem with Hansen's prospective coal ban: scale. According to the latest data from the BP Statistical Review of World Energy, the countries of the world now consume the coal equivalent of about 63.8 million barrels of oil per day. That's the energy equivalent of about 7.5 times the daily oil production of Saudi Arabia. Where will the world find a replacement for such a vast quantity of energy? And how will it pay for it, particularly now, given the worldwide recession?Well there is supposed to be a march of protest tomorrow, so we will see how it goes, but the weather may snow it out. ”It's no accident that he's announced he'll be on hand to get arrested. (Hansen that is).”
Hansen doesn't offer any ideas. And frankly, aside from a huge push for increased nuclear power (a move that I favour) no one else has any reasonable ideas either.
Tehran looks as though it may be getting into the LNG business, with talks progressing with Total. At present LNG seems to be moving from shortage to surplus, making it tougher for those in the business to succeed. Remember that Russia has just become a supplier (though mainly to Japan) but there are markets developing in India, for example, who are looking to double deliveries this year, as the Gujarat terminal expands. It will help if the global surplus lowers price for India.
India is a gas deficit country. Power and fertiliser plants consume 70 per cent of the gas available in the country. Inadequate supply of gas forces them to operate at 50-60 per cent of capacity. At present, power plants in the country are getting 34-35 million standard cubic metres per day (mcmd) supply against the requirement of 70 mcmd.At the same time the disputes over coal supply also seem to be coming to an end, with supplies guaranteed at least at 90% of actual supplies last year.
Currently, spot LNG is trading at $8 per million British thermal units (mBtu), whereas naphtha is trading at $13 per mBtu in the spot market. In December, LNG was trading at $10 per mBtu, whereas naphtha was trading at $7.04 per mBtu.
Meanwhile the Russians are beginning to invest more in floating nuclear power plants. Four more are to be built to bring power to the northern coast region of Siberia. Although delays are reported, the first plant is scheduled to be ready in May 2010. The region for which the plants are destined has large deposits of uranium. Elkon being reported to have about 6% of the worlds reserves. Production is planned to reach 3,000 tons by 2015. But some of that production may be needed for the upgrade of Russian nuclear forces . Don’t forget that the Miss Atom 2009 contest is coming up.
Russians are also investing in coal, with the purchase of the Bluestone Coal Corp, although the domestic industry appears to be in some trouble. Bluestone currently mines coal around Beckley, W. Va and has estimated sales of around $23 million, with 180 employees. The price was $425 million plus shares for a $4 billion deal.
Senator Lisa Murkowski of Alaska has introduced a bill to permit oil production in the Arctic National Wildlife Refuge, from directional wells that are drilled outside the refuge's borders. The state is also considering supporting renewable energy with a new line of credits.
It was only last week that the thought of a pipeline across the Sahara was floated, but it is already getting threats from a major Nigerian militant group .
Read more!
T6. More on early coal mining
In the last Tech Note I wrote about harvesting coal along the coast, and then the shallow workings that became the first underground mining, where tunnels were driven into the sides of the hills, within the coal seam. The miners would load the coal into baskets, or corves. These corves were woven by people in the village, it was one of the early jobs that George Stephenson (he of railway fame) had at the mine. And they were small enough that they could be carried by women. (The quote at the bottom of the post says that they carried 56 lb of coal). As greater production was needed, so the corves grew larger, and were placed on sleds that women and children could drag through the mine to either the outside, or, as the seam went deeper, to shafts. At the shaft the coal baskets would be raised to the surface using windlasses, which were turned either by people, or as more power was needed by horses or oxen. You can see a corve being lowered using a horse gin in this picture .
As the workings moved away from the shaft, a layout had to be created in which pillars of coal would be left to hold the roof up. At the same time there were two gases that became feared by the miners. At the time they were using candles that were attached to spikes that could be driven into the coal wall, or a wooden prop being used to hold the roof up. One of the gases that would desorb from the coal is methane. This is the natural gas that is now, in some locations collected by drilling long horizontal holes through the coal. It is an unconventional source of gas, and usually called Coal Bed Methane (CBM). While it will come out of a pipeline at a useable concentration, when it seems out of the coal within the mine it can become diffused through the air, and in a modern mine the air speed and volume are designed to dilute it, and carry it rapidly out of the mine. In earlier years, however, they did not have such fans. The air was almost still, and so the methane could rise and collect in pockets at the roof. Holding up a candle to see ahead a miner could ignite the gas, or if it was in a concentration of 5-15% by volume it could explode. When it explodes it can kill either through the force of the blast, or by burning up all the oxygen in the mine, suffocating those not initially killed.
At the start of a miner’s day they might therefore send someone in, wrapped in wet cloth, and crawling along the floor with a candle on a stick. At each high point in the roof he would raise the candle, hoping in this way to burn out the gas, before it reached the explosive level, and while the pockets of gas were small. The person doing this was given the title “The Penitent. ” The role was also present in salt mines faced with the same problem, and there is a photo of a Polish model, the old classic picture is a bit harder to find so I must dig out and add a version of my copy.
Keeping the air churned so that these pockets of what was called Fire Damp, or just plain damp, had to be done several times a shift, generally by waving an article of clothing, in the days before mine ventilation.
The other gas that had to be watched for was carbon dioxide, which in contrast with methane, which being lighter than air collects in the roof, is heavier and thus pools on the floor. So that if you were getting down to cut the starting slot in the bottom of the coal seam, you might just drop into a pool. It was called choke damp – though that was also the name given to carbon monoxide, which could also seep out of the coal. All these gases are colorless and odorless so that without some form of detection (the canary for example, or using a candle as a test) they can lurk to catch the unsuspecting. With the invention of the safety lamp (where the heat of the flame is removed by a surrounding mesh of copper wire) it became possible to use the lamp itself as a testing tool. One of my first mining tests was to make sure that I could tell, by the height and shape of the small blue flame of the methane burning over the lowered flame in the lamp, what the gas concentration was. (Each lamp was in a separate hood, and I remember that they had two at the same concentration in the set of around half-a-dozen I had to evaluate).
As the mines grew larger air had to be circulated through them, so that these gases would not build up, and a series of temporary and permanent walls would be built between pillars in worked out areas of the mine, to make sure that the air moved around the mine, and then back out the shaft. For many years, starting in around 1810 the motive power for the air was created by having a fire in the bottom of the shaft, in a special furnace room. Usually these were underground, although there was the occasional one at the surface. Unfortunately if the fire ignited the surrounding timber that was being used for support, then a major fire could result, killing everyone underground. This was the case with the Avondale mine disaster in 1869, at the time the worst industrial accident in American history, 110 people died.
Although there are still parts of the world where this type of primitive mining still occurs, and where women and children are used to help get the coal out, in most countries they have been banned from underground work. (This was the Act of 1842 in the United Kingdom) . Taking the coal from the miner or hewer to the shaft was known as putting or hurrying. (I learned it as putting).
So I will leave this segment just as the mine transitions from families working where the man hews coal from the face, loads the baskets, which are then dragged to the shaft by his wife and children and winched to the surface. Next time I will talk about the coming of the pit pony and mechanization and the changes that made. It increased the energy cost of mining the coal almost from the beginning, but that’s next time.
Earlier posts on coal mining are:
T1. Coal – its formation and structure
T3. Coal Reserves – or what can I count as real?
T5. Historic Coal Mining.
As I get time (and practice) I will also come back and illustrate these words with some pictures using Poser.
As the workings moved away from the shaft, a layout had to be created in which pillars of coal would be left to hold the roof up. At the same time there were two gases that became feared by the miners. At the time they were using candles that were attached to spikes that could be driven into the coal wall, or a wooden prop being used to hold the roof up. One of the gases that would desorb from the coal is methane. This is the natural gas that is now, in some locations collected by drilling long horizontal holes through the coal. It is an unconventional source of gas, and usually called Coal Bed Methane (CBM). While it will come out of a pipeline at a useable concentration, when it seems out of the coal within the mine it can become diffused through the air, and in a modern mine the air speed and volume are designed to dilute it, and carry it rapidly out of the mine. In earlier years, however, they did not have such fans. The air was almost still, and so the methane could rise and collect in pockets at the roof. Holding up a candle to see ahead a miner could ignite the gas, or if it was in a concentration of 5-15% by volume it could explode. When it explodes it can kill either through the force of the blast, or by burning up all the oxygen in the mine, suffocating those not initially killed.
At the start of a miner’s day they might therefore send someone in, wrapped in wet cloth, and crawling along the floor with a candle on a stick. At each high point in the roof he would raise the candle, hoping in this way to burn out the gas, before it reached the explosive level, and while the pockets of gas were small. The person doing this was given the title “The Penitent. ” The role was also present in salt mines faced with the same problem, and there is a photo of a Polish model, the old classic picture is a bit harder to find so I must dig out and add a version of my copy.
Keeping the air churned so that these pockets of what was called Fire Damp, or just plain damp, had to be done several times a shift, generally by waving an article of clothing, in the days before mine ventilation.
The other gas that had to be watched for was carbon dioxide, which in contrast with methane, which being lighter than air collects in the roof, is heavier and thus pools on the floor. So that if you were getting down to cut the starting slot in the bottom of the coal seam, you might just drop into a pool. It was called choke damp – though that was also the name given to carbon monoxide, which could also seep out of the coal. All these gases are colorless and odorless so that without some form of detection (the canary for example, or using a candle as a test) they can lurk to catch the unsuspecting. With the invention of the safety lamp (where the heat of the flame is removed by a surrounding mesh of copper wire) it became possible to use the lamp itself as a testing tool. One of my first mining tests was to make sure that I could tell, by the height and shape of the small blue flame of the methane burning over the lowered flame in the lamp, what the gas concentration was. (Each lamp was in a separate hood, and I remember that they had two at the same concentration in the set of around half-a-dozen I had to evaluate).
As the mines grew larger air had to be circulated through them, so that these gases would not build up, and a series of temporary and permanent walls would be built between pillars in worked out areas of the mine, to make sure that the air moved around the mine, and then back out the shaft. For many years, starting in around 1810 the motive power for the air was created by having a fire in the bottom of the shaft, in a special furnace room. Usually these were underground, although there was the occasional one at the surface. Unfortunately if the fire ignited the surrounding timber that was being used for support, then a major fire could result, killing everyone underground. This was the case with the Avondale mine disaster in 1869, at the time the worst industrial accident in American history, 110 people died.
Although there are still parts of the world where this type of primitive mining still occurs, and where women and children are used to help get the coal out, in most countries they have been banned from underground work. (This was the Act of 1842 in the United Kingdom) . Taking the coal from the miner or hewer to the shaft was known as putting or hurrying. (I learned it as putting).
Six year old girl: "I have been down six weeks and make 10 to 14 rakes a day; I carry a full 56 lbs. of coal in a wooden bucket. I work with sister Jesse and mother. It is dark the time we go."
Jane Peacock Watson. "I have wrought in the bowels of the earth 33 years. I have been married 23 years and had nine children, six are alive and three died of typhus a few years since. Have had two dead born. Horse-work ruins the women; it crushes their haunches, bends their ankles and makes them old women at 40. "
Maria Gooder "I hurry for a man with my sister Anne who is going 18. He is good to us. I don't like being in the pit. I am tired and afraid. I go at 4:30 after having porridge for breakfast. I start hurrying at 5. We have dinner at noon. We have dry bread and nothing else. There is water in the pit but we don't sup it. "
So I will leave this segment just as the mine transitions from families working where the man hews coal from the face, loads the baskets, which are then dragged to the shaft by his wife and children and winched to the surface. Next time I will talk about the coming of the pit pony and mechanization and the changes that made. It increased the energy cost of mining the coal almost from the beginning, but that’s next time.
Earlier posts on coal mining are:
T1. Coal – its formation and structure
T3. Coal Reserves – or what can I count as real?
T5. Historic Coal Mining.
As I get time (and practice) I will also come back and illustrate these words with some pictures using Poser.
Read more!
Subscribe to:
Posts (Atom)
Posts
