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Energy Politics & Science
Topic: Energy Politics & Science (Read 75940 times)
Re: Energy Politics & Science
Reply #500 on:
September 19, 2013, 12:28:58 PM »
Besides opposing transportation fuels, liberals oppose 87% of current electricity sources.
Good luck with job growth under current leadership.
...a pending regulation aimed at limiting global warming pollution from new power plants that Republicans and the coal industry say will doom the fuel source.
What is U.S. electricity generation by energy source?
Fossil fuels 68% + Nuclear power 19% = 87% of current electricity sources
Carbon capture and CO@2 for gas recovery
Reply #501 on:
September 20, 2013, 07:17:26 AM »
There was a piece on 60 minutes or a comparable program a few years ago that explored pumping carbon emissions into the ground. It is feasible but at that time would cost a trillion dollars to convert to this.
With regards to pumping carbon into frack wells I just posted that using nat gas itself would reduce costs of fracking by 70%. So that said I still don't know what will happen to coal of which I own some stock in.
Good summary from Forbes on this stuff:
Ken Silverstein, Contributor
I write about the global energy business.
9/20/2013 @ 8:00AM
Coal Could Be Resurrected If Carbon Could Be Buried
It’s a big day for coal-fired power plants, which will formally learn the Obama administration’s plans on how they are to be regulated. The proposal, which if enacted, would set strict limits on carbon dioxide releases that would essentially nullify the future construction of coal facilities.
That’s at least until carbon capture and sequestration (CCS) would become commercial. That’s not possible now. But what is possible is to capture the carbon dioxide (CO2) from power plants and to it use for enhanced oil recovery. That tool, however, is not without controversy: Critics say that pumping such heat-trapping emissions into the ground only so that they could be used to extract a product that releases even more such global warming pollution is a bit silly.
“Leaving the CO2 underground is of no ultimate benefit for climate stabilization when additional hydrocarbons have been extracted in exchange,” says Jeffrey Michel, an MIT scholar and environmental professional living in Germany. Michel, who is a contributor to EnergyBiz Insider, goes on to say that injecting 1 ton of carbon dioxide will yield 3.6 barrels of crude oil. That, in turn, creates 1.4 tons of carbon dioxide when refined and burned.
That said, the thinking among some climate scholars is that taking the CO2 and using it to retrieve oil deposits is a better solution than letting it into the atmosphere. And, it is the best answer until the releases can be captured and permanently buried, which the U.S. Department of Energy Secretary Ernest Moniz told a congressional panel this week that this happen before 2020.
U.S. lawmakers from coal-producing states are expressing reservations about the Obama administration’s proposals, which would require all future coal plants to be as clean as combined cycle natural gas facilities. Or, technically speaking, today’s coal units spew out about 1,850 pounds of carbon per megawatt hour while the proposal is expected to cap that at 1,000 pounds. To do so, they would need to have the ability to employ CCS.
Moreover, coal producers in the United States, such as Alpha Natural Resources ANR -0.3%, Arch Coal and Peabody Energy BTU -0.74%, will find that oversea’s markets won’t provide long-term refuge. China and India, for example, are also developing much stronger coal regs. China’s coal-burning is to peak at 4 billions tons by 2015, say news reports. After that, it will begin a gradual descent, relying instead on hydro, nuclear and renewables.
Here in the United States, 112 coal plants have been retired since 2010, or soon will be, says Beyond Coal, totaling more than 48,000 megawatts. Doyle Trading Consultants generally agrees, saying 42,000 megawatts are vulnerable to retirement by 2020, 90 percent of which will fade away by 2015. That’s 18 percent of the existing coal-fired fleet.
Domestically, coal’s share of the electric generation market has fallen from 50 percent in 2007 to 40 percent now. But, globally, it is still expected to fuel the developing economies, supplying 60 percent of the power markets through 2035. If the coal sector, however, wants to prevent a precipitous decline in its overall status, it must embrace CCS, and Secretary Moniz says that this country will partner with U.S. utilities and their coal providers.
To that end, CCS for applications related to coal and gas-powered electricity remain hugely expensive, necessitating further research development. So, the Center for Climate and Energy Solutions is pushing carbon capture and utilization — to increase oil finds.
“CCS is a critical technology for reconciling our continued dependence on fossil fuels with the imperative to protect the global environment,” says Judi Greenwald, vice president for technology at the Center for Climate and Energy Solutions. “Our best hope at the moment for CCS advancement is carbon capture, utilization and storage,” which takes the captured carbon and uses it for enhanced oil recovery.
She points to two projects: Air Products’ Port Author and Southern Company’s Mississippi venture. The U.S. Department of Energy helped support the Air Products project, where carbon dioxide is captured from a refinery and then used to enhance oil recovery. In late 2012, it began operations. The Energy Department pumped in $284 million of the total $430 million cost. Similarly, the agency is working with Southern Co SO -0.77%. at its facility in Mississippi. Here, the public’s contribution is $290 million. The project is more than 80 percent complete.
The ultimate goal is to permanently bury the carbon. The Energy Department is putting up $1.1 billion or 80 percent of the money to build “FutureGen.” The facility is expected to be 200 megawatts that will retrofit an oil-fueled unit in Meredosia, Illinois. The project is now focused on its preliminary design and engineering. It will capture at least 90 percent of the CO2 emitted, and it will inject all of that underground, the organization explained.
For their part, utilities say that they would eagerly participate with the federal government while it is investing $8 billion in CCS. But they also note that over the last 40 years that they have collectively spent $100 billion on such things as scrubbers and coal gasification. To that end, the industry says that the attention should be on advancing those technologies that are currently commercial — not in forsaking the progress that has been made.
“Perhaps the federal government should first focus on ensuring the coal industry can economically build second generation plants rather than put a halt to the innovative progress made to date,” says Laura Sheehan, spokeswoman for the American Coalition for Clean Coal Electricity. “If the EPA acts as expected, the United States, which is the current global leader of CCS technology, will fall to the back of the innovation race.”
Obama’s immediate plan is to apply the CO2 limits to all prospective coal plants. His eventual aim is to impose similar caps on the existing coal-fired fleet. And all this is taking place in an electric generation market where natural gas is quickly gaining market share because of its abundance and cost.
In other words, both the regulatory and economic climate are evolving. That is why the coal industry and its utility partners have to stop stalling and start allocating the necessary resources to allow their offerings to remain relevant. Gasifying coal is a potential answer. Carbon capture is another.
While using CO2 to enhance oil recovery is within reach, it remains controversial. Nevertheless, it is an essential first step to permanent sequestration*****
Reply #502 on:
September 20, 2013, 12:22:32 PM »
Energy nominee Ron Binz undergoes a confirmation conversion.
Ron Binz faced the Senate Energy Committee on Tuesday, and the event was something of a miracle. President Obama's nominee to run the Federal Energy Regulatory Commission (FERC) declared heretofore undetected devotion to natural gas and regulatory restraint.
Mr. Binz's nomination is in trouble because of a record and philosophy hostile toward fossil fuels of any kind. As recently as March he derided natural gas as a carbon-heavy "dead end," and he showed as a Colorado regulator that he's willing to stretch the law and manipulate companies to promote wind and solar over other kinds of power.
Thus the confirmation conversion. On Tuesday Mr. Binz said that he had spoken "probably uncarefully" about natural gas, and "that was a relatively inartful way of saying it." Now he says that "I fully embrace the use of natural gas," which he also called "the near-perfect fuel for the next couple of decades."
In case that wasn't enough enthusiasm, he added that natural gas is "a very great fuel," "a very important fuel" and "a terrific fuel. It's needed right now, and maybe in the permanent energy mix." He touted "a boom in jobs in the gas industry" and "a great resource" that's "getting larger by the minute as we discover more and more opportunities to develop shale gas." Tom Steyer, the anti-carbon billionaire pushing Mr. Binz for the job, must have cringed at all that.
Mr. Binz must have found it even more painful to disavow any policy-making role at FERC. He has written extensively about how regulators should go beyond the confines of the law to dictate "desired societal outcomes," and he has mused that as Colorado public utility commissioner from 2007-2011 he saw himself "not simply as an umpire calling balls and strikes, but also as a leader on policy implementation."
On Tuesday Mr. Binz flipped and promised he wouldn't even lead from behind. FERC's duty is only "to promote the appropriate infrastructure investments" like gas pipelines and electric transmission, he said. "Now that's not just a passive process. It is mainly passive in the sense that we—at the FERC, if I'm appointed at FERC, we'll receive applications from businesses to build things."
Energy Chairman Ron Wyden also tried to help the nominee by suggesting no fewer than eight times that Mr. Binz's views are irrelevant because of FERC's narrow legal powers. Mr. Binz has said he wants 80% of U.S. electricity to come from renewables, but Mr. Wyden said "Mr. Binz would have absolutely no authority to do anything on this matter."
Too bad that's not true. FERC can pick electricity winners and losers because a grid that is designed for, say, natural gas and nuclear power works very differently from one that primarily moves solar and wind. FERC is already starting to discriminate in favor of the latter when it reviews applications for power lines. Mr. Binz will almost certainly perpetrate more such abuses to punish fossil fuels.
The White House is worried that Mr. Binz may lose on an 11-11 tie in committee, so it is leaning on Louisiana Democrat Mary Landrieu to vote in favor. Ms. Landrieu is thus caught between her state's fossil-fuel economy and the green money she needs from the likes of Mr. Steyer to win re-election. We assume she knows that the original Ron Binz is the real one.
Biofuels - DOA?
Reply #503 on:
October 02, 2013, 08:55:22 AM »
Diesel engine come back?
Reply #504 on:
October 02, 2013, 09:11:33 AM »
Second energy post today also from the Economist:
from yahoo news
Reply #505 on:
October 04, 2013, 08:47:30 AM »
Fill it up in your garage!
Never thought of this.
My first thought is this safe?
I notice the tank is not shown. I am guessing the entire trunk is the fuel tank:
Reply #506 on:
October 16, 2013, 11:13:42 AM »
I didn't know Exxon holds the most patents in this area. From Scientific American.
Re: Carbon capture
Reply #507 on:
October 16, 2013, 11:52:54 AM »
Quote from: ccp on October 16, 2013, 11:13:42 AM
I didn't know Exxon holds the most patents in this area. From Scientific American.
As always, Big Regulation will take from the freedom and choice of the little guy and give to the corporate profits of the largest, entrenched contributors. I hope it is worth it.
Al Gore's stock advise
Reply #508 on:
October 19, 2013, 10:55:04 AM »
Israel an international energy market disrupter?
Reply #509 on:
November 03, 2013, 10:54:42 AM »
Of course the Palestinians will lay claim to this source of wealth.
Personally, and sadly I am hesitant to invest in anything Israeli. Too much political uncertainty.
****The Motley Fool
This Natural Gas Find Could Completely Change the World As We Know It
By Tyler Crowe
November 3, 2013
One thing that makes the energy sector so intriguing is the constant overlap between markets and politics. In many ways, energy security is synonymous with national security, and the supply and demand needs of the oil market can make the most unlikely bedfellows. One country that has been at the center of energy and politics for decades has been Israel. For years the country has been dependent upon foreign energy sources, but a major discovery by Noble Energy (NYSE: NBL ) and its partners has turned this situation on its head. Let's look how this massive natural gas find could affect both the political landscape and the pockets of major oil companies like ExxonMobil (NYSE: XOM ) .
With a name like Leviathan, it has to be big
In 2010, Noble Energy and its partners found something in Israel's offshore region that the country had been looking for since the oil embargoes of the 1970's; its own hydrocarbons. You might say that the company and the country found more than they could have hoped for. The Tamar and Leviathan fields are estimated to have as much as 30 trillion cubic feet of natural gas, which is enough gas to supply Israel for decades even if it were to convert all of its energy consumption from coal and oil to natural gas -- with enough left over to export. Noble Energy estimates that this gas field and the planned export projects could net the country more than $130 billion in energy savings and government revenue from gas royalties.
Of course, Israel isn't the only one making out from this deal, either. The nation's proven reserves account for more than 30% of Noble's proved reserves, and will likely be one of the company's premier energy plays for decades to come. On top of that, the U.S. Geological Survey estimates there are more than 600 million barrels of recoverable oil in the Leviathan field, which could boost the company's reserves by another 17%.
Game of Therms
Thirty trillion cubic feet of natural gas and 600 million barrels of oil is not a monumental amount in terms of the global energy landscape. But the combination of the size of the find, its proximity to a major demand center (Europe), and the fact that it's found in Israel could lead to several issues that might leave some major oil and gas powers not too happy.
Israel could disrupt the energy markets via liquefied natural gas terminals or a combination of pipeline and electricity cables. Noble has brought on Australian partner Woodside Petroleum to develop an LNG terminal for the Leviathan gas field and potentially a second site for an adjacent gas field in Cyprus. The Leviathan LNG terminal is projected to export about 0.85 billion cubic feet per day. Again, not much, but enough to displace 15% of the LNG market in Western Europe.
More importantly, though, Noble estimates that Israeli and Cypriot LNG terminals could together undercut both American and Australian LNG export prices, which could drive down natural gas costs for Europe. This could reduce the profitability of major LNG players like Qatar, where ExxonMobil has a 25%-30% working interest in two of that nation's largest LNG terminals.
An even more significant impact would revolve around the idea of supplying natural gas to Europe via pipeline. It may limit the market for Noble's natural gas, but it would probably generate higher profits per thousand cubic feet of gas because of the cost savings from skirting the liquefaction process. Also, since 40% of Europe's natural gas comes from Statoil (NYSE: STO ) and Gazprom through very lucrative long-term pipeline contracts, Noble could carve out a nice position by displacing either the more expensive pipeline gas from one of these two players or expensive LNG imports.
Not being an expert in geopolitics, I'm not going to try to venture a guess as to how the political landscape will change in the Middle East. It is pretty fascinating, though, that Israel will go from an extremely energy-import dependent nation to a big-time exporter almost overnight. The country has plans to build pipelines to Jordan, the West Bank, and Turkey, which could improve both economic and political ties to these energy-starved regions. Then again, it could also go in the exact opposite direction and could be a prime target for groups or nations who may scuffle with Israel.
What a Fool believes
Noble Energy may have found a very large oil and gas field that could boost its bottom line for decades, but it found that asset in a place that has been the epicenter for religious and ethnic conflict for millennia. Even more, it may find that other companies are reluctant to join the project. Oil services giants Schlumberger (NYSE: SLB ) and Halliburton (NYSE: HAL ) have major contracts across the Middle East, and they are not likely willing to potentially lose those contracts in order to work with Noble in Israel.
Noble Energy investors and geopolitical watchers should be captivated by this story, because the next couple of years could be a wild ride. ****
Wesbury: US to become net petroleum exporter by 2018
Reply #510 on:
December 04, 2013, 02:22:40 PM »
The Trade Deficit in Goods and Services Came in at $40.6 Billion in October To view this article, Click Here
Brian S. Wesbury - Chief Economist
Bob Stein, CFA - Deputy Chief Economist
The trade deficit in goods and services came in at $40.6 billion in October, slightly larger than the consensus expected $40.0 billion.
Exports increased $3.4 billion in October, led by gains in petroleum products, artwork, diamonds, and nonmonetary gold. Imports increased $1.0 billion, with a drop in autos offset by gains in pharmaceuticals, nonmonetary gold and petroleum products.
In the last year, exports are up 5.5%, led by a 19.4% gain in petroleum exports. Imports are up 3.6% in the past year, held down by a 7.3% decline in petroleum imports.
The monthly trade deficit is $2.1 billion smaller than a year ago. Adjusted for inflation, the trade deficit in goods is $0.2 billion smaller than a year ago. This is the trade indicator most important for measuring real GDP.
Implications: The trade deficit got smaller in October, but was revised higher in September. As a result of the September revisions, it now looks like real GDP grew at a 3% annual rate in Q3. However, the improvement in October suggests net exports should add to real GDP in Q4. Over the past year total exports are up 5.5% while total imports are up a smaller 3.6%. The trend shrinkage in the trade deficit is largely due to US energy production, driven by horizontal drilling and fracking. Petroleum product exports are almost eight times higher than they were in October 2005. During these same eight years, petroleum product imports are only up 26%. If these trends continue and the US fixes its pipeline and refinery issues, the US will be a net petroleum product exporter by 2018. Usually, when the US economy is growing, the trade deficit tends to expand relative to the size of our economy. However, given recent energy trends and plow horse economic growth, the trade deficit has been in a gradual shrinking trend for the past two years. In other recent news, automakers reported car and light truck sales at a 16.4 million annual rate in November, up 7.7% from October, up 7.1% from a year ago, and the fastest pace since early 2007. It’s early, but it appears real (inflation-adjusted) consumer spending is growing at a 2.5 – 3.0% annual rate in the fourth quarter, which would be the fastest pace since early 2012. On the jobs front, the ADP Employment index, a measure of private sector payrolls, increased 215,000 in November. As a result, we are now forecasting that the official Labor Department report will show payroll gains of 194,000 nonfarm and 191,000 private.
POTH struggles with concept of market forces
Reply #511 on:
December 29, 2013, 02:43:48 PM »
New Energy Struggles on Its Way to Markets
By MATTHEW L. WALD
Published: December 27, 2013
WASHINGTON — To stave off climate change, sources of electricity that do not emit carbon will have to replace the ones that do. But at the moment, two of those largest sources, nuclear and wind power, are trying to kill each other off.
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In the electricity market, both are squeezed by pressure from natural gas, which provides some carbon reductions compared with coal but will not bring the country anywhere near its goal for reducing greenhouse gas emissions. Natural gas has a carbon footprint that is at least three times as large as that goal.
Energy companies announced this year that five nuclear reactors would be closing or not reopening, and the owners blamed competition from natural gas and wind. In the Pacific Northwest, wind and hydroelectricity — neither of which produce carbon — are sparring to push each other off the regional power grid.
Output from the two has sometimes forced the Columbia Generating Station in Washington State, the region’s only surviving nuclear reactor, to cut back its production. One recent study found that shutting down the reactor would save consumers $1.7 billion, partly because it cannot run full time, and partly because its costs are higher than some other technologies.
If electricity prices were slightly higher, renewable sources of energy would flourish and even some reactors would be built, experts say, lowering carbon emissions. But electricity prices are being forced down by federal subsidies for wind energy production and by cheap natural gas.
“Gas is raining on everyone’s parade; gas is ruining it for everybody in most electricity markets,” said one expert, Michael Webber of the University of Texas at Austin. In 2012, production of electricity from natural gas rose 10 times as fast as production from wind.
Wind energy is being added to the grid mostly because of state requirements, called renewable portfolio standards, but production would grow faster than the standards required if electricity prices from other sources were slightly higher, experts say. At the Electric Power Research Institute, a nonprofit utility consortium, Anda Ray, the group’s vice president for environment, said the electric system would incorporate more zero-carbon sources if natural gas rose to the level of few years ago.
Adding to the clean energy industry’s cannibal behavior, wind farms are being built in places where there is lots of wind but not much demand for power, some experts argue.
Experts say a more intelligent use would involve dispersing the wind farms. Travis Kavulla, a member of the Montana Public Service Commission, said putting the wind machines in one place created an “all-on, all-off” problem. If the wind machines were spread more widely, he said, there was a far better chance that at any moment some would be running and some would not be, with less chance of a local useless surplus.
Montana has a cluster of wind machines near the town of Judith Gap, and Mr. Kavulla’s commission has set up connection fees that charge extra for building in Judith Gap and reward developers for building elsewhere.
The nuclear industry makes the same complaint, but louder. David C. Brown, a Washington representative for Exelon, the Chicago company that operates the nation’s largest network of nuclear reactors, said that the main subsidy for wind, the production tax credit, which pays operators about 2.3 cents per kilowatt-hour for the first 10 years of production, “has been very effective at getting generation built.”
“It’s getting built without regard to whether it’s actually needed for power supply purposes, and it distorts the market,” he said. Existing nuclear plants do not get a subsidy per kilowatt-hour produced.
Wholesale energy prices fluctuate throughout the day. Exelon, he said, is “seeing this tipping point developing” when several of its zero-carbon reactors may have to be retired because wind power is suppressing those prices around the clock, and at some hours producers must pay the grid operator if they put energy on the grid. Wind operators still make money, though, through the production tax credit.
It is not clear how this struggle will play out over the next few years. At the moment, according to Mr. Webber, natural gas is so cheap that it is stunting construction of even new plants that would burn natural gas.
US gas exports being delayed by Panama Canal problems
Reply #512 on:
January 03, 2014, 08:18:04 AM »
Energy Politics & Science: Pipelines are safer
Reply #513 on:
January 04, 2014, 11:44:11 AM »
Stymied by special interests, our President thinks we are better off moving our energy by the least safe means. So what does that mean when the expected disaster happens in your town? 300 ft fireballs exploding in the Casselton, ND derailment, take a look at the news video - or this picture:
By not drilling, not refining, not transporting oil we will get off oil. Meanwhile, how did the Pres. get to and from Hawaii, does anyone know? What powered the 'Global Warming - Missing Antarctic Ice" expedition? What powered the rescue? It is 2014 and...
WE USE OIL
. How about making it available, affordable,
and clean until we move on shortly to other power sources? We know the stats, why not make things as safe as economically possible. Trucks and trains are less safe than pipelines.
Pipelines Are Safest For Transportation of Oil and Gas
When it comes to transporting oil, pipelines are the safest option, trumping trains and trucks
Pipelines are the safest method for the transportation of petroleum products when compared to other methods of transportation. Steel pipelines provide the safest, most efficient and most economical way to transport crude oil.
Pipeline systems are recognized as both the safest transportation mode and the most economical way of distributing the vast quantities of oil from production fields to refineries and from refineries to consumers.
Re: Energy Politics & Science
Reply #514 on:
January 04, 2014, 11:59:03 AM »
But then BO's supporter Warren Buffet, who IIRC has invested heavily in rail, won't get richer-- indeed, if I am not mistaken, he has a position in the player(s) in this accident.
Wesbury on energy and US Balance of Payments
Reply #515 on:
January 08, 2014, 12:00:57 PM »
Implications: Fracking and horizontal drilling continue to transform not only the US energy industry but also our trade with the rest of the world. The US trade deficit fell to $34.3 billion in November, coming in much smaller than the consensus expected. With the exception of 2009, when a weak economy temporarily shrank trade around the world, this is the smallest trade deficit since 2002. Plugging these figures into our GDP calculations, it looks like real final sales (real GDP excluding inventories) will be up at a robust 3.9% annual rate in Q4, even if an inventory drag keeps real GDP growth down around 2.5%. Eight years ago, back in November 2005, the US imported 14 times as much petroleum product as it exported. Since then, petroleum product exports are up almost eight times higher while imports are up only 15%. So now, petroleum product imports are only twice exports. If this trend continues, the US will be a net petroleum product exporter by late 2016, sooner if we fix our pipeline and refinery issues. Outside of energy, the trade deficit has generally grown over the past four years of recovery, but has recently leveled off. Non-petroleum exports are at a new record high. Normally, when the US economy grows consistently, our trade deficit tends to expand. However, as a large producer of natural gas, the US has an energy cost advantage versus many of the advanced nations around the world. In the years ahead, this advantage plus the direct effect of more energy exports and fewer imports should help suppress any expansion in the trade deficit relative to the size of the economy.
A huge find in Australia?
Reply #516 on:
January 11, 2014, 11:14:14 AM »
Re: Energy Politics & Science
Reply #517 on:
January 11, 2014, 09:57:31 PM »
I saw this some months ago. There is no infrastructure there. It will take years to develop from what I read.
Re: Energy Politics & Science - Coal
Reply #518 on:
January 15, 2014, 10:40:19 AM »
While we were all fighting against fossil fuel pipeline, fracking, refusing to build refineries, making faux-investments in solar and wind and closing down nuclear plants in the name of safety around the world, guess what happened...
Coal was the fastest growing energy source in the world in 2013.
Does someone want to tell me that is cleaner or safer than nuclear, gasoline or natural gas? Good luck.
Germany closes nuclear, opens coal:
Keystone Pipeline limbo
Reply #519 on:
January 29, 2014, 11:07:56 AM »
The war on our friends continues. Not unlike the war on America:
*****By Charles Krauthammer, Published: January 23 E-mail the writer
Fixated as we Americans are on Canada’s three most attention-getting exports — polar vortexes, Alberta clippers and the antics of Toronto’s addled mayor — we’ve somewhat overlooked a major feature of Canada’s current relations with the United States: extreme annoyance.
Last week, speaking to the U.S. Chamber of Commerce, Canada’s foreign minister calmly but pointedly complained that the United States owes Canada a response on the Keystone XL pipeline. “We can’t continue in this state of limbo,” he sort of complained, in what for a placid, imperturbable Canadian passes for an explosion of volcanic rage.
Canadians may be preternaturally measured and polite, but they simply can’t believe how they’ve been treated by President Obama — left hanging humiliatingly on an issue whose merits were settled years ago.
Canada, the Saudi Arabia of oil sands, is committed to developing this priceless resource. Its natural export partner is the United States. But crossing the border requires State Department approval, which means the president decides yes or no.
After three years of review, the State Department found no significant environmental risk to Keystone. Nonetheless, the original route was changed to assuage concerns regarding the Ogallala Aquifer. Obama withheld approval through the 2012 election. To this day he has issued no decision.
The Canadians are beside themselves. After five years of manufactured delay, they need a decision one way or the other because if denied a pipeline south, they could build a pipeline west to the Pacific. China would buy their oil in a New York minute.
Yet Secretary of State John Kerry fumblingly says he is awaiting yet another environmental report. He offered no decision date.
If Obama wants to cave to his environmental left, fine. But why keep Canada in limbo? It’s a show of supreme and undeserved disrespect for yet another ally. It seems not enough to have given the back of the hand to Britain, Israel, Poland and the Czech Republic, and to have so enraged the Saudis that they actually rejected a U.N. Security Council seat — disgusted as they were with this administration’s remarkable combination of fecklessness and highhandedness. Must we crown this run of diplomatic malpractice with gratuitous injury to Canada, our most reliable, most congenial friend in the world?
And for what? This is not a close call. The Keystone case is almost absurdly open and shut.
Even if you swallow everything the environmentalists tell you about oil sands, the idea that blocking Keystone would prevent their development by Canada is ridiculous. Canada sees its oil sands as a natural bounty and key strategic asset. Canada will not leave it in the ground.
Where’s the environmental gain in blocking Keystone? The oil will be produced and the oil will be burned. If it goes to China, the Pacific pipeline will carry the same environmental risks as a U.S. pipeline.
And Alberta oil can still go to the United States, if not by pipeline then by rail, which requires no State Department approval. That would result in far more greenhouse gas emissions — exactly the opposite of what the environmentalists are seeking.
Moreover, rail can be exceedingly dangerous. Last year a tanker train derailed and exploded en route through Quebec. The fireball destroyed half of downtown Lac-Megantic, killing 47, many incinerated beyond recognition.
This isn’t theoretical environmentalism. This is not a decrease in the snail darter population. This is 47 dead human beings. More recently, we’ve had two rail-oil accidents within the United States, one near Philadelphia and one in North Dakota.
Add to this the slam-dunk strategic case for Keystone: Canadian oil reduces our dependence on the volatile Middle East, shifting petroleum power from OPEC and the killing zones of the Middle East to North America. What more reliable source of oil could we possibly have than Canada?
Keystone has left Canada very upset, though characteristically relatively quiet. Canadians may have succeeded in sublimating every ounce of normal human hostility and unpleasantness by way of hockey fights, but that doesn’t mean we should take advantage of their good manners.
The only rationale for denying the pipeline is political — to appease Obama’s more extreme environmentalists. For a president who claims not to be ideological, the irony is striking: Here is an easily available piece of infrastructure — privately built, costing government not a penny, creating thousands of jobs and, yes, shovel-ready — and yet the president, who’s been incessantly pushing new “infrastructure” as a fundamental economic necessity, can’t say yes.
Well then, Mr. President, say something. You owe Canada at least that. Up or down. Five years is long enough.
Read more from Charles Krauthammer’s archive, follow him on Twitter or subscribe to his updates on Facebook. ******
Reply #520 on:
January 29, 2014, 09:07:20 PM »
A Canadian view of all this:
Reply #521 on:
January 29, 2014, 10:26:49 PM »
Shale/fracking boom is not the panacea some suggest
Reply #522 on:
March 07, 2014, 06:32:52 PM »
Arthur Berman continues to maintain:
Wells do not have long drilling life and drilling companies have to keep searching and drilling more just to maintain. Capital expenditures are so enormous for these hard to get liquids that companies are spending more than they make to get the stuff. Prices have to be high to make it profitable and most supplies estimates are exaggerations and not realistic. Similar issues with oil in sands:
*****Shale, the Last Oil and Gas Train: Interview With Arthur Berman
March 6, 2014
This article was written by Oilprice.com -- the leading provider of energy news in the world. Also see our previous interview with Arthur Berman.
How much faith can we put in our ability to decipher all the numbers out there telling us the US is closing in on its cornering of the global oil market? There's another side to the story of the relentless US shale boom, one that says that some of the numbers are misunderstood, while others are simply preposterous. The truth of the matter is that the industry has to make such a big deal out of shale because it's all that's left. There are some good things happening behind the fairy tale numbers, though—it's just a matter of deciphering them from a sober perspective.
In a second exclusive interview with James Stafford of Oilprice.com, energy expert Arthur Berman discusses:
• Why US gas supply growth rests solely on Marcellus
• When Bakken and Eagle Ford will peak
• The eyebrow-raising predictions for the Permian Basin
• Why outrageous claims should have oil lawyers running for cover
• Why everyone's making such a big deal about shale
• The only way to make the shale gas boom sustainable
• Why some analysts need their math examined
• Why it's not just about how much gas we produce
• Why investors are starting to ask questions
• Why new industries, not technologies will make the next boom
• Why we'll never hit the oil and gas 'wall'
• Why companies could use a little supply and-demand discipline
• Why 'fire ice' makes sense (in Japan)
• Why the US crude export debate will be 'silly'
Arthur is a geological consultant with thirty-four years of experience in petroleum exploration and production. He is currently consulting for several E&P companies and capital groups in the energy sector. He frequently gives keynote addresses for investment conferences and is interviewed about energy topics on television, radio, and national print and web publications including CNBC, CNN, Platt's Energy Week, BNN, Bloomberg, Platt's, Financial Times, and New York Times. You can find out more about Arthur by visiting his website:
Oilprice.com: Almost on a daily basis we have figures thrown at us to demonstrate how the shale boom is only getting started. Mostly recently, there are statements to the effect that Texas shale formations will produce up to one-third of the global oil supply over the next 10 years. Is there another story behind these figures?
Arthur Berman: First, we have to distinguish between shale gas and liquids plays. On the gas side, all shale gas plays except the Marcellus are in decline or flat. The growth of US supply rests solely on the Marcellus and it is unlikely that its growth can continue at present rates. On the oil side, the Bakken has a considerable commercial area that is perhaps only one-third developed so we see Bakken production continuing for several years before peaking. The Eagle Ford also has significant commercial area but is showing signs that production may be flattening. Nevertheless, we see 5 or so more years of continuing Eagle Ford production activity before peaking. The EIA has is about right for the liquids plays--slower increases until later in the decade, and then decline.
The idea that Texas shales will produce one-third of global oil supply is preposterous. The Eagle Ford and the Bakken comprise 80% of all the US liquids growth. The Permian basin has notable oil reserves left but mostly from very small accumulations and low-rate wells. EOG (NYSE: EOG ) CEO Bill Thomas said the same thing about 10 days ago on EOG's earnings call. There have been some truly outrageous claims made by some executives about the Permian basin in recent months that I suspect have their general counsels looking for a defibrillator.
Recently, the CEO of a major oil company told The Houston Chronicle that the shale revolution is only in the "first inning of a nine-inning game". I guess he must have lost track of the score while waiting in line for hot dogs because production growth in U.S. shale gas plays excluding the Marcellus is approaching zero; growth in the Bakken and Eagle Ford has fallen from 33% in mid-2011 to 7% in late 2013.
Oil companies have to make a big deal about shale plays because that is all that is left in the world. Let's face it: these are truly awful reservoir rocks and that is why we waited until all more attractive opportunities were exhausted before developing them. It is completely unreasonable to expect better performance from bad reservoirs than from better reservoirs.
The majors have shown that they cannot replace reserves. They talk about return on capital employed (ROCE) these days instead of reserve replacement and production growth because there is nothing to talk about there. Shale plays are part of the ROCE story--shale wells can be drilled and brought on production fairly quickly and this masks or smoothes out the non-productive capital languishing in big projects around the world like Kashagan and Gorgon, which are going sideways while eating up billions of dollars.
None of this is meant to be negative. I'm all for shale plays but let's be honest about things, after all! Production from shale is not a revolution; it's a retirement party.
OP: Is the shale "boom" sustainable?
Arthur Berman: The shale gas boom is not sustainable except at higher gas prices in the US. There is lots of gas--just not that much that is commercial at current prices. Analysts that say there are trillions of cubic feet of commercial gas at $4 need their cost assumptions audited. If they are not counting overhead (G&A) and many operating costs, then of course things look good. If Walmart were evaluated solely on the difference between wholesale and retail prices, they would look fantastic. But they need stores, employees, gas and electricity, advertising and distribution. So do gas producers. I don't know where these guys get their reserves either, but that needs to be audited as well.
There was a report recently that said large areas of the Barnett Shale are commercial at $4 gas prices and that the play will continue to produce lots of gas for decades. Some people get so intrigued with how much gas has been produced and could be in the future, that they don't seem to understand that this is a business. A business must be commercial to be successful over the long term, although many public companies in the US seem to challenge that concept.
Investors have tolerated a lot of cheerleading about shale gas over the years, but I don't think this is going to last. Investors are starting to ask questions, such as: Where are the earnings and the free cash flow. Shale companies are spending a lot more than they are earning, and that has not changed. They are claiming all sorts of efficiency gains on the drilling side that has distracted inquiring investors for awhile. I was looking through some investor presentations from 2007 and 2008 and the same companies were making the same efficiency claims then as they are now. The problem is that these impressive gains never show up in the balance sheets, so I guess they must not be very important after all.
The reason that the shale gas boom is not sustainable at current prices is that shale gas is not the whole story. Conventional gas accounts for almost 60% of US gas and it is declining at about 20% per year and no one is drilling more wells in these plays. The unconventional gas plays decline at more than 30% each year. Taken together, the US needs to replace 19 billion cubic feet per day each year to maintain production at flat levels. That's almost four Barnett shale plays at full production each year! So you can see how hard it will be to sustain gas production. Then there are all the efforts to use it up faster--natural gas vehicles, exports to Mexico, LNG exports, closing coal and nuclear plants--so it only gets harder.
This winter, things have begun to unravel. Comparative gas storage inventories are near their 2003 low. Sure, weather is the main factor but that's always the case. The simple truth is that supply has not been able to adequately meet winter demand this year, period. Say what you will about why but it's a fact that is inconsistent with the fairy tales we continue to hear about cheap, abundant gas forever.
I sat across the table from industry experts just a year ago or so who were adamant that natural gas prices would never get above $4 again. Prices have been above $4 for almost three months. Maybe "never" has a different meaning for those people that doesn't include when they are wrong.
OP: Do you foresee any new technology on the shelf in the next 10-20 years that would shape another boom, whether it be fossil fuels or renewables?
Arthur Berman: I get asked about new technology that could make things different all the time. I'm a technology enthusiast but I see the big breakthroughs in new industries, not old extractive businesses like oil and gas. Technology has made many things possible in my lifetime including shale and deep-water production, but it hasn't made these things cheaper.
That's my whole point about shale plays--they're expensive and need high oil and gas prices to work. We've got the high prices for oil and the oil plays are fine; we don't have high prices for the gas plays and they aren't working. There are some areas of the Marcellus that actually work at $4 gas price and that's great, but it really takes $6 gas prices before things open up even there.
OP: In Europe, where do you see the most potential for shale gas exploitation, with Ukraine engulfed in political chaos, companies withdrawing from Poland, and a flurry of shale activity in the UK?
Arthur Berman: Shale plays will eventually spread to Europe but it will take a longer time than it did in North America. The biggest reason is the lack of private mineral ownership in most of Europe so there is no incentive for local people to get on board. In fact, there are only the negative factors of industrial development for them to look forward to with no pay check. It's also a lot more expensive to drill and produce gas in Europe.
There are a few promising shale plays on the international horizon: the Bazherov in Russia, the Vaca Muerte in Argentina and the Duvernay in Canada look best to me because they are liquid-prone and in countries where acceptable fiscal terms and necessary infrastructure are feasible. At the same time, we have learned that not all plays work even though they look good on paper, and that the potentially commercial areas are always quite small compared to the total resource. Also, we know that these plays do not last forever and that once the drilling treadmill starts, it never ends. Because of high decline rates, new wells must constantly be drilled to maintain production. Shale plays will last years, not decades.
Recent developments in Poland demonstrate some of the problems with international shale plays. Everyone got excited a few years ago because resource estimates were enormous. Later, these estimates were cut but many companies moved forward and wells have been drilled. Most international companies have abandoned the project including ExxonMobil, ENI, Marathon and Talisman. Some players exited because they don't think that the geology is right but the government has created many regulatory obstacles that have caused a lack of confidence in the fiscal environment in Poland.
The UK could really use the gas from the Bowland Shale and, while it's not a huge play, there is enough there to make a difference. I expect there will be plenty of opposition because people in the UK are very sensitive about the environment and there is just no way to hide the fact that shale development has a big footprint despite pad drilling and industry efforts to make it less invasive.
Let me say a few things about resource estimates while we are on the subject. The public and politicians do not understand the difference between resources and reserves. The only think that they have in common is that they both begin with "res." Reserves are a tiny subset of resources that can be produced commercially. Both are always wrong but resource estimates can be hugely misleading because they are guesses and have nothing to do with economics.
Someone recently sent me a new report by the CSIS that said U.S. shale gas resource estimates are too conservative and are much larger than previously believed. I wrote him back that I think that resource estimates for U.S. shale gas plays are irrelevant because now we have robust production data to work with. Most of those enormous resources are in plays that we already know are not going to be economic. Resource estimates have become part of the shale gas cheerleading squad's standard tricks to drum up enthusiasm for plays that clearly don't work except at higher gas prices. It's really unfortunate when supposedly objective policy organizations and research groups get in on the hype in order to attract funding for their work.
OP: The ban on most US crude exports in place since the Arab oil embargo of 1973 is now being challenged by lobbyists, with media opining that this could be the biggest energy debate of the year in the US. How do you foresee this debate shaping up by the end of this year?
Arthur Berman: The debate over oil and gas exports will be silly.
I do not favor regulation of either oil or gas exports from the US. On the other hand, I think that a little discipline by the E&P companies might be in order so they don't have to beg the American people to bail them out of the over-production mess that they have created knowingly for themselves. Any business that over-produces whatever it makes has to live with lower prices. Why should oil and gas producers get a pass from the free-market laws of supply and demand?
I expect that by the time all the construction is completed to allow gas export, the domestic price will be high enough not to bother. It amazes me that the geniuses behind gas export assume that the business conditions that resulted in a price benefit overseas will remain static until they finish building export facilities, and that the competition will simply stand by when the awesome Americans bring gas to their markets. Just last week, Ken Medlock described how some schemes to send gas to Asia may find that there will be a lot of price competition in the future because a lot of gas has been discovered elsewhere in the world.
The US acts like we are some kind of natural gas superstar because of shale gas. Has anyone looked at how the US stacks up next to Russia, Iran and Qatar for natural gas reserves?
Whatever outcome results from the debate over petroleum exports, it will result in higher prices for American consumers. There are experts who argue that it won't increase prices much and that the economic benefits will outweigh higher costs. That may be but I doubt that anyone knows for sure. Everyone agrees that oil and gas will cost more if we allow exports.
OP: Is the US indeed close to hitting the "crude wall"—the point at which production could slow due to infrastructure and regulatory restraints?
Arthur Berman: No matter how much or little regulation there is, people will always argue that it is still either too much or too little. We have one of the most unfriendly administrations toward oil and gas ever and yet production has boomed. I already said that I oppose most regulation so you know where I stand. That said, once a bureaucracy is started, it seldom gets smaller or weaker. I don't see any walls out there, just uncomfortable price increases because of unnecessary regulations.
We use and need too much oil and gas to hit a wall. I see most of the focus on health care regulation for now. If there is no success at modifying the most objectionable parts of the Affordable Care Act, I don't suppose there is much hope for fewer oil and gas regulations. The petroleum business isn't exactly the darling of the people.
OP: What is the realistic future of methane hydrates, or "fire ice", particularly with regard to Japanese efforts at extraction?
Arthur Berman: Japan is desperate for energy especially since they cut back their nuclear program so maybe hydrates make some sense at least as a science project for them. Their pilot is in thousands of feet of water about 30 miles offshore so it's going to be very expensive no matter how successful it is.
OP: Globally, where should we look for the next potential "shale boom" from a geological perspective as well as a commercial viability perspective?
Arthur Berman: Not all shale is equal or appropriate for oil and gas development. Once we remove all the shale that is not at or somewhat above peak oil generation today, most of it goes away. Some shale plays that meet these and other criteria didn't work so we have a lot to learn. But shale development is both inevitable and necessary. It will take a longer time than many believe outside of North America.
OP: We've spoken about Japan's nuclear energy crossroads before, and now we see that issue climaxing, with the country's nuclear future taking center-stage in an election period. Do you still believe it is too early for Japan to pull the plug on nuclear energy entirely?
Arthur Berman: Japan and Germany have made certain decisions about nuclear energy that I find remarkable but I don't live there and, obviously, don't think like them.
More generally, environmental enthusiasts simply don't see the obstacles to short-term conversion of a fossil fuel economy to one based on renewable energy. I don't see that there is a rational basis for dialogue in this arena. I'm all in favor of renewable energy but I don't see going from a few percent of our primary energy consumption to even 20% in less than a few decades no matter how much we may want to.
OP: What have we learned over the past year about Japan's alternatives to nuclear energy?
Arthur Berman: We have learned that it takes a lot of coal to replace nuclear energy when countries like Japan and Germany made bold decisions to close nuclear capacity. We also learned that energy got very expensive in a hurry. I say that we learned. I mean that the past year confirmed what many of us anticipated.
OP: Back in the US, we have closely followed the blowback from the Environmental Protection Agency's (EPA) proposed new carbon emissions standards for power plants, which would make it impossible for new coal-fired plants to be built without the implementation of carbon capture and sequestration technology, or "clean-coal" tech. Is this a feasible strategy in your opinion?
Arthur Berman: I'm not an expert on clean coal technology either but I am confident that almost anything is possible if cost doesn't matter. This is as true about carbon capture from coal as it is about shale gas production. Energy is an incredibly complex topic and decisions are being made by bureaucrats and politicians with little background in energy or the energy business. I don't see any possibility of a good outcome under these circumstances.
OP: Is CCS far enough along to serve as a sound basis for a national climate change policy?
Arthur Berman: Climate-change activism is a train that has left the station. If you've missed it, too bad. If you're on board, good luck.
The good news is that the US does not have an energy policy and is equally unlikely to get a climate change policy for all of the same reasons. I fear putting climate change policy in the hands of bureaucrats and politicians more than I fear climate change (which I fear).*****
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