Half-a dozen or so stories of interest:
India is continuing to struggle through an ongoing power crisis that seems to be getting worse. The problem at present seems to stem from a lack of coal, and even importing significant volumes does not seem to be helping. It is not as though the problem was not predicted. Of course riots that close mines don’t help either.
Daniel Yergin says that oil prices will stay below $100 for at least a couple of years and they fell a little today, in part because of full storage capacity (inventory). It is unlikely that the OPEC and Russian cuts will have a biting impact for a month or so yet.
In non-news Exxon is looking at seismic data from a survey team in West Greenland (perhaps only of interest since Robin Mills, in “The Myth of the Oil Crisis” quotes the USGS as thinking that there is a 50% chance of there being 50 billion barrels of oil there, of which 31.4 billion are in the northeastern corner. While there has been no success yet, the presence of oil seeps has a number of companies interested and investing.
Further to my concern yesterday about deforestation in India, the concern is spreading to Bhutan, where the demand for firewood is three times the available supply, which is predicated on how much can be regrown. At the moment it is a regional, rather than a national problem. Bhutan has the highest per capita wood consumption in Asia, and it is suggested that they use wood worth ten times the price of equivalent natural gas to cook. Trials last summer using solar power to replace wood and kerosene were judged successful, and are being adopted by the yak herders.
Just when you though that the Russian:Ukrainian debacle was over, the Ukrainian Prime Minister is talking about going back to Moscow to negotiate a discount on the prices they have agreed. Ukrainians are left desperately trying to find a silver lining to the result.
Russia is anticipating that Gazprom will increase their reserves from the Arctic regions by 5.6 billion tons of fuel this year, On the other hand their financial reserves have dropped another $30 billion, while rail transport in Russia has dropped 39% y-o-y, reflecting drops in industrial production. And the Shtokman field, currently slated for production to begin in 2013 is increasingly likely to be postponed. And Kazakh oil production is back
Two companies are seeking roughly $2 billion each to build lithium battery plants for cars, a significant part of the move towards plug-in hybrids, however GM has chosen a South Korean firm for the batteries for the Volt. The Volt remember will do 40 miles before needing a battery recharge; having made that choice GM are still working on the price but believe they have the safety issues in hand. At the same time New York has been using sodium-sulphur batteries to store cheap night-time power, and then use it to compress the natural gas for its bus fleet since April.
Thursday, January 22, 2009
The White House Plan
After having posted yesterday on the actions in the House to re-start the economy, the White House has a new set of Web pages up, listing the changes that it hopes to implement. Similarly over at the Department of Energy, the front Web page has changed. These tell us the plans for the moment. Obviously they will adjust as circumstances change.
The overall goals set out at the White House include:
* Help create five million new jobs by strategically investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future.
* Within 10 years save more oil than we currently import from the Middle East and Venezuela combined.
* Put 1 million Plug-In Hybrid cars -- cars that can get up to 150 miles per gallon -- on the road by 2015, cars that we will work to make sure are built here in America.
* Ensure 10 percent of our electricity comes from renewable sources by 2012, and 25 percent by 2025.
* Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050.
These are all ambitious targets. The first is aimed at industrial support to, among other things, move the Clean Coal program forward.
In regard to lowering oil demand, the current import sum of crude oil from the Middle East and Venezuela (from November includes 1.49 mbd from Saudi Arabia, and 1.16 mbd from Venezuela – but if the target is for all petroleum products, and we add Iraq and Kuwait to the list, then the total import from the Middle East and Venezuela becomes 3.44 mbd. With current consumption of around 19.12 mbd – a drop of 2 mbd from this time last year, this gives a target which is a 18% target reduction in consumption. (I suspect that they may have originally been planning 10% but the supply numbers are swinging and the imports from the Middle East have been rising as domestic and Mexican numbers have been falling). (Note that the DOE Web page gives percentage imports not volumes, for 2007).
For the plug-in hybrids, while they may be built in America, I would suspect that the manufacturers will not all be historically domestic.
For 10% of the electric supply – if we, again, look at the October 2008 figures (in million megawatt-hours) Coal provided 153; Petroleum liquids 1.85; Petroleum coke 1.3; Natural gas 72.5; Other gases 0.8; Nuclear 62.8; Hydro-electric 16.4; other renewables 9.75; for a total of 318 million megawatt-hours. So the target of 10% comes to 31.8, and the current production of renewables is 26.15, so the increase is roughly 5 million megawatt-hours, or just over 50% more renewables over today’s production, assuming that hydro stays the same.
So how are these targets to be met – first the White House site, which gives only a little more detail:
Provide Short-term Relief to American Families
Crack Down on Excessive Energy Speculation.
Swap Oil from the Strategic Petroleum Reserve to Cut Prices.
Eliminate Our Current Imports from the Middle East and Venezuela within 10 Years
Increase Fuel Economy Standards.
Get 1 Million Plug-In Hybrid Cars on the Road by 2015.
Create a New $7,000 Tax Credit for Purchasing Advanced Vehicles.
Establish a National Low Carbon Fuel Standard.
A “Use it or Lose It” Approach to Existing Oil and Gas Leases.
Promote the Responsible Domestic Production of Oil and Natural Gas.
Create Millions of New Green Jobs
Ensure 10 percent of Our Electricity Comes from Renewable Sources by 2012, and 25 percent by 2025.
Deploy the Cheapest, Cleanest, Fastest Energy Source – Energy Efficiency.
Weatherize One Million Homes Annually.
Develop and Deploy Clean Coal Technology.
Prioritize the Construction of the Alaska Natural Gas Pipeline.
Reduce our Greenhouse Gas Emissions 80 Percent by 2050
Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050.
Make the U.S. a Leader on Climate Change.
(I note that Former Vice President Gore will be appearing in the Senate to talk about this - but it is really a Saturday topic.)
Moving on therefore to the Department of Energy we find that the Department is still buying oil for the SPR, starting in February, however given the current price of $43 a barrel this might be the smart time to buy.
The rest of the web site does not appear to have any of the new initiatives in place yet, so perhaps we will leave it there for now, and come back for a more detailed look as the information becomes available.
.
The overall goals set out at the White House include:
* Help create five million new jobs by strategically investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future.
* Within 10 years save more oil than we currently import from the Middle East and Venezuela combined.
* Put 1 million Plug-In Hybrid cars -- cars that can get up to 150 miles per gallon -- on the road by 2015, cars that we will work to make sure are built here in America.
* Ensure 10 percent of our electricity comes from renewable sources by 2012, and 25 percent by 2025.
* Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050.
These are all ambitious targets. The first is aimed at industrial support to, among other things, move the Clean Coal program forward.
In regard to lowering oil demand, the current import sum of crude oil from the Middle East and Venezuela (from November includes 1.49 mbd from Saudi Arabia, and 1.16 mbd from Venezuela – but if the target is for all petroleum products, and we add Iraq and Kuwait to the list, then the total import from the Middle East and Venezuela becomes 3.44 mbd. With current consumption of around 19.12 mbd – a drop of 2 mbd from this time last year, this gives a target which is a 18% target reduction in consumption. (I suspect that they may have originally been planning 10% but the supply numbers are swinging and the imports from the Middle East have been rising as domestic and Mexican numbers have been falling). (Note that the DOE Web page gives percentage imports not volumes, for 2007).
For the plug-in hybrids, while they may be built in America, I would suspect that the manufacturers will not all be historically domestic.
For 10% of the electric supply – if we, again, look at the October 2008 figures (in million megawatt-hours) Coal provided 153; Petroleum liquids 1.85; Petroleum coke 1.3; Natural gas 72.5; Other gases 0.8; Nuclear 62.8; Hydro-electric 16.4; other renewables 9.75; for a total of 318 million megawatt-hours. So the target of 10% comes to 31.8, and the current production of renewables is 26.15, so the increase is roughly 5 million megawatt-hours, or just over 50% more renewables over today’s production, assuming that hydro stays the same.
So how are these targets to be met – first the White House site, which gives only a little more detail:
Provide Short-term Relief to American Families
Crack Down on Excessive Energy Speculation.
Swap Oil from the Strategic Petroleum Reserve to Cut Prices.
Eliminate Our Current Imports from the Middle East and Venezuela within 10 Years
Increase Fuel Economy Standards.
Get 1 Million Plug-In Hybrid Cars on the Road by 2015.
Create a New $7,000 Tax Credit for Purchasing Advanced Vehicles.
Establish a National Low Carbon Fuel Standard.
A “Use it or Lose It” Approach to Existing Oil and Gas Leases.
Promote the Responsible Domestic Production of Oil and Natural Gas.
Create Millions of New Green Jobs
Ensure 10 percent of Our Electricity Comes from Renewable Sources by 2012, and 25 percent by 2025.
Deploy the Cheapest, Cleanest, Fastest Energy Source – Energy Efficiency.
Weatherize One Million Homes Annually.
Develop and Deploy Clean Coal Technology.
Prioritize the Construction of the Alaska Natural Gas Pipeline.
Reduce our Greenhouse Gas Emissions 80 Percent by 2050
Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050.
Make the U.S. a Leader on Climate Change.
(I note that Former Vice President Gore will be appearing in the Senate to talk about this - but it is really a Saturday topic.)
Moving on therefore to the Department of Energy we find that the Department is still buying oil for the SPR, starting in February, however given the current price of $43 a barrel this might be the smart time to buy.
The rest of the web site does not appear to have any of the new initiatives in place yet, so perhaps we will leave it there for now, and come back for a more detailed look as the information becomes available.
.
Read more!
Wednesday, January 21, 2009
P21. Pick Points
Half-a-dozen or so stories of interest.
When the normal supplies of fuel are cut-off, as electricity has become intermittent in Pakistan, and gas supplies are also restricted, then those that need the heat will find and use what is available. So now the nation is beginning to be worried about deforestation. As the Crown Prince of Belgium noted at the World Future Energy Summit, this has happened in Europe in the past.
Over in Bengal the situation is no better, with coal, of which India has plenty in the ground, running short to the power stations even as more come back on line, after being down for maintenance. Part of the problem appears to be delays in getting environmental permits for the increase in coal production.
While the immediate dispute between Russia and Ukraine appears over, Pravda wants you to know that Ukraine is near default on its loans. And others doubt that stability will last. Nevertheless gas has now arrived in Germany and so this years crisis is over.
But for those who think that this disturbance might help move the Nabucco pipeline forward, which includes a fair number of Eastern European countries there is good news and less good. With the discovery of gas in a lower field below the existing reservoir in the Shah Deniz field in Azerbaijan the prospects for a second stage is being contemplated and Iran (with 10% of the first phase) has some interest in investing in this production. It would also feed into the Nabucco pipeline, if Russia has not tied up the additional production, by purchase. And while Russia is supposedly buying all available Turkmen gas, one might note that General Petraeus did just happen to drop by there last week. Still Kazakhstan has caught on to the game, and has now raised the price for transiting the gas from Turkmenistan to Russia by 21%.
More information is available on the interesting conditions that will be met when the Shtokman field off Russia is developed. In the last 48 years a total of 220 icebergs have been registered, and the ice thickens to about 2 meters in winter. Production is thus being anticipated as being from a ship. Its impact on the Norwegian economy is expected to be small.
Hmm and h/t to WUWT it turns out that the switch to a portion of biodiesel in the tanks of the school buses in Minnesota brought some grief last week, at least to some, as the fuel gelled in the tanks in the bitter cold. However the reports may have the wrong cause, since some of the problem seems to have come from the petroleum part of the fuel, although many of the buses that did not have problems seem to have been left running all night. The explanation of gel points in biofuels can be seen on Youtube.
As usual more stories can be found at the Energy Bulletin and in Drumbeat at The Oil Drum.
When the normal supplies of fuel are cut-off, as electricity has become intermittent in Pakistan, and gas supplies are also restricted, then those that need the heat will find and use what is available. So now the nation is beginning to be worried about deforestation. As the Crown Prince of Belgium noted at the World Future Energy Summit, this has happened in Europe in the past.
Over in Bengal the situation is no better, with coal, of which India has plenty in the ground, running short to the power stations even as more come back on line, after being down for maintenance. Part of the problem appears to be delays in getting environmental permits for the increase in coal production.
While the immediate dispute between Russia and Ukraine appears over, Pravda wants you to know that Ukraine is near default on its loans. And others doubt that stability will last. Nevertheless gas has now arrived in Germany and so this years crisis is over.
But for those who think that this disturbance might help move the Nabucco pipeline forward, which includes a fair number of Eastern European countries there is good news and less good. With the discovery of gas in a lower field below the existing reservoir in the Shah Deniz field in Azerbaijan the prospects for a second stage is being contemplated and Iran (with 10% of the first phase) has some interest in investing in this production. It would also feed into the Nabucco pipeline, if Russia has not tied up the additional production, by purchase. And while Russia is supposedly buying all available Turkmen gas, one might note that General Petraeus did just happen to drop by there last week. Still Kazakhstan has caught on to the game, and has now raised the price for transiting the gas from Turkmenistan to Russia by 21%.
More information is available on the interesting conditions that will be met when the Shtokman field off Russia is developed. In the last 48 years a total of 220 icebergs have been registered, and the ice thickens to about 2 meters in winter. Production is thus being anticipated as being from a ship. Its impact on the Norwegian economy is expected to be small.
Hmm and h/t to WUWT it turns out that the switch to a portion of biodiesel in the tanks of the school buses in Minnesota brought some grief last week, at least to some, as the fuel gelled in the tanks in the bitter cold. However the reports may have the wrong cause, since some of the problem seems to have come from the petroleum part of the fuel, although many of the buses that did not have problems seem to have been left running all night. The explanation of gel points in biofuels can be seen on Youtube.
As usual more stories can be found at the Energy Bulletin and in Drumbeat at The Oil Drum.
Read more!
The first investments?
The new Administration may already be moving to take control of the various levers of Government, but the reality is that it must work, to a great extent, within the existing state of affairs for some time. So, as it begins work, the dominant piece of legislation that is moving forward is the America Recovery and Reinvestment package that is coming out of the House Appropriations Committee.
In terms of Energy Investment, it is therefore interesting to see where the planned bill intends to make the investment. There is some $550 billion in targeted priority investments. And the sections that might have reference to Energy investments can perhaps be confined to three overall divisions. These primary areas are investments in Clean and Efficient American Energy (a total of $54 billion); Science & Technology ($16 billion) and Infrastructure Construction ($90 billion). But the devil is in the details, so lets burrow down a couple of levels.
With the aim of the program largely being directed at creating new jobs, it is not surprising that when the entrails are examined, that this is largely where the focus is. Thus the Energy budget is broken down into:
Reliable, Efficient Electricity Grid:
$11 billion for R&D, pilot projects, and matching funds to modernize the Electric Grid under the Smart Grid Investment Program including new power lines to transmit clean, renewable energy.
Renewable Energy Loan Guarantees:
$8 billion for loans for renewable energy power generation and transmission projects.
GSA Federal Buildings:
$6.7 billion for renovations and repairs to federal buildings including at least $6 billion focused on increasing energy efficiency and conservation.
Local Government Energy Efficiency Block Grants:
$6.9 billion for state and local governments to invest in more energy efficient and reduced carbon emission projects.
Energy Efficiency Housing Retrofits:
$2.5 billion to upgrade low-income housing to increase energy efficiency, including insulation, windows, and furnaces.
Energy Efficiency and Renewable Energy Research:
$2 billion for energy efficiency and renewable energy research, development, demonstration, and deployment activities to foster energy independence, reduce carbon emissions, and cut utility bills.
Advanced Battery Loans and Grants:
$2 billion to manufacturers for the Advanced Battery Loan Guarantee and Grants Program.
.
Energy Efficiency Grants and Loans for Institutions:
$1.5 billion for energy sustainability and efficiency grants and loans to help school districts, institutes of higher education, local governments, and municipal utilities become more energy efficient.
Home Weatherization:
$6.2 billion to help low-income families reduce their energy costs by weatherizing their homes.
Smart Appliances:
$300 million to provide consumers with rebates for buying energy efficient Energy Star products to replace old appliances.
GSA Federal Fleet:
$600 million to replace older vehicles owned by the federal government with alternative fuel automobiles.
Electric Transportation:
$200 million for a new grant program to encourage electric vehicle technologies.
Cleaning Fossil Energy:
$2.4 billion for carbon capture and sequestration technology demonstration projects.
Department of Defense Research:
$350 million for research into using renewable energy to power weapons systems and military bases.
And then under Encouraging Science and Technology one finds:
Wireless and Broadband Grants:
$6 billion for broadband and wireless services in underserved areas to provide business and job opportunities in every section of America.
National Science Foundation:
$2 billion for expanding jobs in fundamental science and engineering, in the area of environmental challenges.
$400 million to build major research facilities that perform cutting edge science,
$300 million for major research equipment.
$200 million to repair and modernize science and engineering research facilities
$100 million to improve instruction in science, math and engineering.
National Institutes of Health Biomedical Research:
$1.5 billion for expanding good jobs in biomedical research.
$500 million for the repair and improvement strategic plan.
University Research Facilities:
$1.5 billion for NIH to renovate university research facilities.
Centers for Disease Control and Prevention:
$462 million to enable CDC to complete its Buildings and Facilities Master Plan.
Biomedical Advanced Research and Development, Pandemic Flu, and Cyber Security:
$900 million to prepare for a pandemic influenza, develop medical countermeasures for NBC threats, and for cyber security.
Department of Energy:
$1.9 billion for basic research into high-energy physics, nuclear physics, and fusion energy sciences at DOE laboratories.
$400 million is for the Advanced Research Project Agency – Energy to support high-risk, high-payoff research into energy.
NASA:
$400 million jobs on climate change research, including Earth science, satellite sensors to measure solar radiation, and for water management;
$150 million for R&D to improve aviation safety .
$50 million to repair NASA centers damaged by hurricanes and floods.
National Oceanic and Atmospheric Administration Satellites and Sensors:
$600 million for satellite development and acquisitions, including climate sensors and climate modeling.
National Institute of Standards and Technology:
$300 million for grants for research science buildings at colleges, universities, and other research organizations
$100 million to coordinate research efforts of laboratories and national research facilities by setting interoperability standards for manufacturing.
Agricultural Research Service:
$209 million for agricultural research facilities across the country.
U.S. Geological Survey:
$200 million to modernize U.S.G.S. science facilities and equipment.
Industrial Technology Services:
$70 million for the Technology Innovation Program to accelerate research in potentially revolutionary technologies with high job growth potential,
$30 million for the Manufacturing Extension Partnerships to help small and mid-size manufacturers compete globally.
DTV Conversion Coupons:
$650 million for coupons used for converting TVs from analog to digital.
And in Infrastructure, just focusing on those investments that might improve the energy usage.
Highway Infrastructure:
$30 billion for highway and bridge construction projects.
Public Transport:
$1 billion for new commuter rail or other light rail systems.
$2 billion to modernize existing transit systems.
$6 billion to purchase buses and equipment for public transportation.
$1.1 billion to improve Amtrak speed and capacity.
In terms of Energy Investment, it is therefore interesting to see where the planned bill intends to make the investment. There is some $550 billion in targeted priority investments. And the sections that might have reference to Energy investments can perhaps be confined to three overall divisions. These primary areas are investments in Clean and Efficient American Energy (a total of $54 billion); Science & Technology ($16 billion) and Infrastructure Construction ($90 billion). But the devil is in the details, so lets burrow down a couple of levels.
With the aim of the program largely being directed at creating new jobs, it is not surprising that when the entrails are examined, that this is largely where the focus is. Thus the Energy budget is broken down into:
Reliable, Efficient Electricity Grid:
$11 billion for R&D, pilot projects, and matching funds to modernize the Electric Grid under the Smart Grid Investment Program including new power lines to transmit clean, renewable energy.
Renewable Energy Loan Guarantees:
$8 billion for loans for renewable energy power generation and transmission projects.
GSA Federal Buildings:
$6.7 billion for renovations and repairs to federal buildings including at least $6 billion focused on increasing energy efficiency and conservation.
Local Government Energy Efficiency Block Grants:
$6.9 billion for state and local governments to invest in more energy efficient and reduced carbon emission projects.
Energy Efficiency Housing Retrofits:
$2.5 billion to upgrade low-income housing to increase energy efficiency, including insulation, windows, and furnaces.
Energy Efficiency and Renewable Energy Research:
$2 billion for energy efficiency and renewable energy research, development, demonstration, and deployment activities to foster energy independence, reduce carbon emissions, and cut utility bills.
Advanced Battery Loans and Grants:
$2 billion to manufacturers for the Advanced Battery Loan Guarantee and Grants Program.
.
Energy Efficiency Grants and Loans for Institutions:
$1.5 billion for energy sustainability and efficiency grants and loans to help school districts, institutes of higher education, local governments, and municipal utilities become more energy efficient.
Home Weatherization:
$6.2 billion to help low-income families reduce their energy costs by weatherizing their homes.
Smart Appliances:
$300 million to provide consumers with rebates for buying energy efficient Energy Star products to replace old appliances.
GSA Federal Fleet:
$600 million to replace older vehicles owned by the federal government with alternative fuel automobiles.
Electric Transportation:
$200 million for a new grant program to encourage electric vehicle technologies.
Cleaning Fossil Energy:
$2.4 billion for carbon capture and sequestration technology demonstration projects.
Department of Defense Research:
$350 million for research into using renewable energy to power weapons systems and military bases.
And then under Encouraging Science and Technology one finds:
Wireless and Broadband Grants:
$6 billion for broadband and wireless services in underserved areas to provide business and job opportunities in every section of America.
National Science Foundation:
$2 billion for expanding jobs in fundamental science and engineering, in the area of environmental challenges.
$400 million to build major research facilities that perform cutting edge science,
$300 million for major research equipment.
$200 million to repair and modernize science and engineering research facilities
$100 million to improve instruction in science, math and engineering.
National Institutes of Health Biomedical Research:
$1.5 billion for expanding good jobs in biomedical research.
$500 million for the repair and improvement strategic plan.
University Research Facilities:
$1.5 billion for NIH to renovate university research facilities.
Centers for Disease Control and Prevention:
$462 million to enable CDC to complete its Buildings and Facilities Master Plan.
Biomedical Advanced Research and Development, Pandemic Flu, and Cyber Security:
$900 million to prepare for a pandemic influenza, develop medical countermeasures for NBC threats, and for cyber security.
Department of Energy:
$1.9 billion for basic research into high-energy physics, nuclear physics, and fusion energy sciences at DOE laboratories.
$400 million is for the Advanced Research Project Agency – Energy to support high-risk, high-payoff research into energy.
NASA:
$400 million jobs on climate change research, including Earth science, satellite sensors to measure solar radiation, and for water management;
$150 million for R&D to improve aviation safety .
$50 million to repair NASA centers damaged by hurricanes and floods.
National Oceanic and Atmospheric Administration Satellites and Sensors:
$600 million for satellite development and acquisitions, including climate sensors and climate modeling.
National Institute of Standards and Technology:
$300 million for grants for research science buildings at colleges, universities, and other research organizations
$100 million to coordinate research efforts of laboratories and national research facilities by setting interoperability standards for manufacturing.
Agricultural Research Service:
$209 million for agricultural research facilities across the country.
U.S. Geological Survey:
$200 million to modernize U.S.G.S. science facilities and equipment.
Industrial Technology Services:
$70 million for the Technology Innovation Program to accelerate research in potentially revolutionary technologies with high job growth potential,
$30 million for the Manufacturing Extension Partnerships to help small and mid-size manufacturers compete globally.
DTV Conversion Coupons:
$650 million for coupons used for converting TVs from analog to digital.
And in Infrastructure, just focusing on those investments that might improve the energy usage.
Highway Infrastructure:
$30 billion for highway and bridge construction projects.
Public Transport:
$1 billion for new commuter rail or other light rail systems.
$2 billion to modernize existing transit systems.
$6 billion to purchase buses and equipment for public transportation.
$1.1 billion to improve Amtrak speed and capacity.
Read more!
Tuesday, January 20, 2009
The Inauguration
People came by bus and car, by plane and train* to act as witness, and to be a part of a historic moment, as President Obama was sworn in. There can be little doubt that the change has arrived, and that the thought process in Washington is going to be completely different. And tomorrow the work will begin again, though in another direction, and in a new set of hands.
The brilliance that President Obama’s team displayed in bringing us to this day, and in uniting so many people in helping them get to that stage today, has earned them the right to tackle some of the hardest problems that this nation has faced in quite a while. I was reminded, watching the crowd on the Mall, of July 4th, 1976 when we went to the Gateway Arch in St Louis for the celebration (along with about three-quarters of a million others) and streaming away afterwards with everyone chatting socially and happily about the event. That mood back then, I think, was similar to the mood today for those that braved the seasonal temperature to be there. That euphoria lasted quite a while back then, and one can hope that a similar spirit will allow progress to be made in many of the more difficult areas, while the desire to collaborate and serve remains strong.
Tomorrow the first statements of the new Administration will appear, and the new directions and directives will start to define the new path and begin the very slow task of switching the nation toward that future.
For tonight it is most appropriate to give the new President, and Administration best wishes for success in their time, and in bringing prosperity back both to the nation and the world.
*(though the Metro was running packed and lost two stations for a while due to an accident when a train hit a lady at a station).
The brilliance that President Obama’s team displayed in bringing us to this day, and in uniting so many people in helping them get to that stage today, has earned them the right to tackle some of the hardest problems that this nation has faced in quite a while. I was reminded, watching the crowd on the Mall, of July 4th, 1976 when we went to the Gateway Arch in St Louis for the celebration (along with about three-quarters of a million others) and streaming away afterwards with everyone chatting socially and happily about the event. That mood back then, I think, was similar to the mood today for those that braved the seasonal temperature to be there. That euphoria lasted quite a while back then, and one can hope that a similar spirit will allow progress to be made in many of the more difficult areas, while the desire to collaborate and serve remains strong.
Tomorrow the first statements of the new Administration will appear, and the new directions and directives will start to define the new path and begin the very slow task of switching the nation toward that future.
For tonight it is most appropriate to give the new President, and Administration best wishes for success in their time, and in bringing prosperity back both to the nation and the world.
*(though the Metro was running packed and lost two stations for a while due to an accident when a train hit a lady at a station).
Read more!
Monday, January 19, 2009
P20. Pick Points
Half-a-dozen or so stories of interest.
So is the Russian:Ukrainian story over for another year, or ten? Certainly it has lost the press coverage, but there will remain caution until the gas finally arrives. But one part of the deal is that RosUkrEnergo will be cut out of the action. Gazprom is reported to have set 0700 on Tuesday to resume supplies However it is estimated to take another 36 hours before gas will make it to Western Europe. The domestic situation in Ukraine is a little more complicated, since the coal and steel plants (that heavily use Russian gas) are in the east of the country, which has been a strong Russian supporter. But the gas problem has alienated some of the region, even though it is leading to a potential increase in the use of coal, which is locally mined. (pdf). The mines also contain natural gas, and this can be recovered as a separate fuel. (pdf), and such work appears to be under way.(pdf)
Here is the beginning of my post.
The British – oops! – Scottish coal industry has started to move into profit, after having been in the red a year ago, Scottish coal mining has become profitable. This occurred as sales dropped from 3.1 million tons to 2.9 million, and is encouraging the firm to open new and some old sites, though all will be surface mines, or opencast. The market will now be able to use 4 million tons/year, and so the prospects for a new deep mine at Canonbie are looking up. (Small personal note – back over a hundred and twenty years ago my ancestor was blacksmith in that village. It is a beautiful setting).
Speaking of coal there is a strange story up in Alaska about the power plant and a utility company.
I had mentioned the other day that CNG prices had gone up in Pakistan, the result has been that out of 250 stations in Rawalpindi and Islamabad that sold the fuel, over 150 were not in the cities and some 400 were out in the region, and those who had CNG were only working limited hours . It freed taxi drivers to raise rates. But it also appears that there were differences in the rates in different cities, and though the lack of supply was blamed on low gas pressure price may have also played some part. The current situation seems to be getting worse.
Speaking of reviews of the situation Energy Shortage points to a broad review of the problems that Nepal are having with hydro-electric power generation.
Investors seem to be pulling back from wind power investments, just as the plug was pulled in Maine, so it appears that the large London Array project, some 341 turbines which would generate some 1,000 mW of electricity, and which Shell backed out of, is now being reconsidered by the Abu Dhabi State owned Masdar company, again because of questionable economics. Though the drop in steel prices might help. Apparently wind driven power generation is still costing three times that of a conventional gas-fueled station, though how long that will last is likely a Russian decision.
As usual there are more stories at the Energy Bulletin and Drumbeat at The Oil Drum.
So is the Russian:Ukrainian story over for another year, or ten? Certainly it has lost the press coverage, but there will remain caution until the gas finally arrives. But one part of the deal is that RosUkrEnergo will be cut out of the action. Gazprom is reported to have set 0700 on Tuesday to resume supplies However it is estimated to take another 36 hours before gas will make it to Western Europe. The domestic situation in Ukraine is a little more complicated, since the coal and steel plants (that heavily use Russian gas) are in the east of the country, which has been a strong Russian supporter. But the gas problem has alienated some of the region, even though it is leading to a potential increase in the use of coal, which is locally mined. (pdf). The mines also contain natural gas, and this can be recovered as a separate fuel. (pdf), and such work appears to be under way.(pdf)
Here is the beginning of my post.
The British – oops! – Scottish coal industry has started to move into profit, after having been in the red a year ago, Scottish coal mining has become profitable. This occurred as sales dropped from 3.1 million tons to 2.9 million, and is encouraging the firm to open new and some old sites, though all will be surface mines, or opencast. The market will now be able to use 4 million tons/year, and so the prospects for a new deep mine at Canonbie are looking up. (Small personal note – back over a hundred and twenty years ago my ancestor was blacksmith in that village. It is a beautiful setting).
Speaking of coal there is a strange story up in Alaska about the power plant and a utility company.
I had mentioned the other day that CNG prices had gone up in Pakistan, the result has been that out of 250 stations in Rawalpindi and Islamabad that sold the fuel, over 150 were not in the cities and some 400 were out in the region, and those who had CNG were only working limited hours . It freed taxi drivers to raise rates. But it also appears that there were differences in the rates in different cities, and though the lack of supply was blamed on low gas pressure price may have also played some part. The current situation seems to be getting worse.
Speaking of reviews of the situation Energy Shortage points to a broad review of the problems that Nepal are having with hydro-electric power generation.
Investors seem to be pulling back from wind power investments, just as the plug was pulled in Maine, so it appears that the large London Array project, some 341 turbines which would generate some 1,000 mW of electricity, and which Shell backed out of, is now being reconsidered by the Abu Dhabi State owned Masdar company, again because of questionable economics. Though the drop in steel prices might help. Apparently wind driven power generation is still costing three times that of a conventional gas-fueled station, though how long that will last is likely a Russian decision.
As usual there are more stories at the Energy Bulletin and Drumbeat at The Oil Drum.
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SEC Rules Changes for Oil & Gas Reserves
Yesterday I was talking about the calculation of reserves for coal mines, and the calculation of what a reserve holds is a critical part of raising the capital to put a mine in place. The same holds true about oil and gas wells, as their price rises above $5 million a well, and at the end of last year the SEC changed the rules on Oil and Gas Reserve Reporting. It is interesting to read the rationale for the changes. Part of the problem has been that the industry has been developing technologies that make it easier to economically extract oil from tar sands, and also to get natural gas from coal seams and from shales that had previously been uneconomical to develop. However, where the rules that define reserves do not allow a full accounting of the volumes that can be recovered, then it becomes harder to raise capital for the operation. The rules were last written in the time that most extraction came from the historic vertical wells that drilled down into a deposit and extracted the gas. With both coal and shale extraction the new technologies have advanced considerably beyond this, and to make the situation more realistic the rules had to be changed.
In the extraction of gas from shale beds, for example, the rock is normally made up of very fine grains, which provide very poor permeability (or passageways) for the gas to work through the rock to get to any well that is there. Rates of flow to the well would thus be too slow to be economic. To enhance the flow operators therefore drill long horizontal holes along the layer of rock holding the gas. Pressure in the well is then raised, until cracks are created in the wall of the well, and with more pressure these are extended out into the rock providing a path for the gas to flow back to the well. While this technique (of which more some future Sunday) creates passages through the rock that allow the gas to flow to the well in larger volumes, and makes the well potentially economically viable it has put artificial connections into the rock. Part of the old definition of reserves was that the oil/gas already had the connections in place in the rock to ensure that the fluid could flow to the well if it was drilled. Further the presence of oil had to be proved by drilling a well into the rock and actually showing that it was there. Thus the term “proved oil and gas reserves.”
To recognize that there are more sophisticated tools that can now tell much more about the presence of oil/gas in a rock without needing to drill that proving well, the SEC have changed the rules to read:
Since the companies no longer have to actually drill into a formation and prove the oil is there the old fashioned way, the big question transfers to the reliability of the technologies that are used to determine that oil is actually present. And here, since technologies continue to change, the words have been generalized
And while changing the rules to include production from tar sands can be readily easily accomplished:
However it does require a definition of bitumen, which they provide
And to address the point that I began with about accumulations of gas in unconventional places the regulations will change:
I think it is a fair comment to note that these relaxations of the rules will allow companies to claim significantly larger reserves, than heretofore allowed, although it should be born in mind that it actually won’t change the actual volumes of oil and gas in the ground by one molecule.
In the extraction of gas from shale beds, for example, the rock is normally made up of very fine grains, which provide very poor permeability (or passageways) for the gas to work through the rock to get to any well that is there. Rates of flow to the well would thus be too slow to be economic. To enhance the flow operators therefore drill long horizontal holes along the layer of rock holding the gas. Pressure in the well is then raised, until cracks are created in the wall of the well, and with more pressure these are extended out into the rock providing a path for the gas to flow back to the well. While this technique (of which more some future Sunday) creates passages through the rock that allow the gas to flow to the well in larger volumes, and makes the well potentially economically viable it has put artificial connections into the rock. Part of the old definition of reserves was that the oil/gas already had the connections in place in the rock to ensure that the fluid could flow to the well if it was drilled. Further the presence of oil had to be proved by drilling a well into the rock and actually showing that it was there. Thus the term “proved oil and gas reserves.”
To recognize that there are more sophisticated tools that can now tell much more about the presence of oil/gas in a rock without needing to drill that proving well, the SEC have changed the rules to read:
The proposed revisions to the definition of “proved oil and gas reserves” also included provisions for establishing levels of lowest known hydrocarbons and highest known oil through reliable technology other than well penetrations. We are adopting those revisions as proposed.Of course having written such a statement, one has to clarify what is meant by “high degree of certainty” (since there is no longer the physical evidence of oil on the end of the “dipstick”). This they have done by definition:
We also are adopting, as proposed, revisions that permit a company to claim proved reserves beyond those development spacing areas that are immediately adjacent to developed spacing areas if the company can establish with reasonable certainty that these reserves are economically producible. These revisions are designed to permit the use of alternative technologies to establish proved reserves in lieu of requiring companies to use specific tests. In addition, they establish a uniform standard of reasonable certainty that applies to all proved reserves, regardless of location or distance from producing wells.
Therefore, we are adopting the “high degree of confidence” standard that exists in the PRMS. We also are clarifying that having a “high degree of confidence” means that a quantity is “much more likely to be achieved than not, and, as changes due to increased availability of geoscience (geological, geophysical, and geochemical), engineering, and economic data are made to estimated ultimate recovery (EUR) with time, reasonably certain EUR is much more likely to increase or remain constant than to decrease” to provide elaboration to the definition of reasonable certainty.The other change that I want to highlight comes in the estimation, knowing that an existing site has oil/gas, as to how far out from that point the field can be considered to extend, and this is known as the “undeveloped reserve.” Here the decision is based on the degree of certainty that the field actually extends into that space. And the language has been loosened to make it easier to include those more distant reserves.
In the Proposing Release, we proposed a significantly revised definition of the term “proved undeveloped oil and gas reserves.”
The most significant aspect of the proposed revision was the replacement of the existing “certainty” test for areas beyond one offsetting drilling unit from a productive well with a “reasonable certainty” test. Currently, the definition of the term “proved undeveloped reserves” imposes a “reasonable certainty” standard for reserves in drilling units immediately adjacent to the drilling unit containing a producing well and a “certainty” standard for reserves in drilling units beyond the immediately adjacent drilling units.104 All commenters on this issue supported the proposal. Three commenters noted that a single standard—reasonable certainty—should apply to all proved reserves. We are adopting this aspect of the definition as proposed.
Since the companies no longer have to actually drill into a formation and prove the oil is there the old fashioned way, the big question transfers to the reliability of the technologies that are used to determine that oil is actually present. And here, since technologies continue to change, the words have been generalized
We also proposed to define the term “reliable technology,” expressed in probabilistic terms, as technology that has been proven empirically to lead to correct conclusions in 90% or more of its applications. Several commenters expressed concern that this proposed 90% threshold would be difficult to verify and support on an ongoing basis. We agree that a bright line test would be difficult to apply to a particular technology or mix of technologies to determine their reliability. Therefore, we are not adopting the 90% threshold as part of the definition.
And while changing the rules to include production from tar sands can be readily easily accomplished:
Our current definition of “oil and gas producing activities” explicitly excludes sources of oil and gas from “non-traditional” or “unconventional” sources, that is, sources that involve extraction by means other than “traditional” oil and gas wells. These other sources include bitumen extracted from oil sands, as well as oil and gas extracted from coal and shales, even though some of these resources are sometimes extracted through wells, as opposed to mining and surface processing. However, such sources are increasingly providing energy resources to the world due in part to advancements in extraction and processing technology. Therefore, the rules we adopt today revise the definition of “oil and gas producing activities” to include such activities.
However it does require a definition of bitumen, which they provide
We are defining the term “bitumen” as “petroleum in a solid or semi-solid state in natural deposits. In its natural state, it usually contains sulfur, metals, and other non- hydrocarbons. Bitumen has a viscosity greater than 10,000 centipoise measured at original temperature in the deposit and atmospheric pressure, on a gas free basis.”
And to address the point that I began with about accumulations of gas in unconventional places the regulations will change:
Although we agree conceptually that the focus of reserves disclosure should be on the final product, we also recognize that the production of oil and gas from varying sources can have significantly different economics. Extraction of oil and gas from continuous accumulations can be much more labor and resource intensive than extraction of oil and gas from traditional wells. They often require greater ongoing efforts and expense after the initial extraction equipment is in place, making such operations more sensitive to price fluctuations.
We agree with the commenters that disclosure based on the end product sold would provide a more effective basis for distinguishing reserves that disclosure based on the type of accumulation in which the reserves are held. Therefore, we have revised the disclosure to be based on the end product that is sold by the company However, with respect to the end product, new Item 1202 makes a distinction between oil and gas, on the one hand, and synthetic oil and gas, on the other. Synthetic products require processing of the raw resource material, either while it is still in the ground (“in situ”) or after it is extracted, before it can be used as refinery feedstock or as natural gas. Such processes currently include bitumen upgrading as well as coal liquefaction and gasification. However, resources from some continuous accumulations, such as coalbed methane, do not require such processing and therefore are not associated with the same level of ongoing costs once a well has been drilled because the in-ground resource is already oil or gas (in the case of coalbed methane, the in-ground resource is methane, trapped in a coalbed). Thus, coalbed methane would not be considered a synthetic product.
I think it is a fair comment to note that these relaxations of the rules will allow companies to claim significantly larger reserves, than heretofore allowed, although it should be born in mind that it actually won’t change the actual volumes of oil and gas in the ground by one molecule.
Read more!
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