The Natural Gas Revolution: Creator and Destroyer

The natural gas revolution is currently spreading out from North America to creatively impact countries from China to the Ukraine to Poland to Israel. These are countries that are likely to benefit from the development of their newly discovered energy riches.

In North America itself -- where the bonanza began -- innovative technologists are finding new ways to substitute cheap natural gas in place of expensive diesel:

1. The biggest, baddest engines in the world, long chained to diesel fuel, are on the verge of a mass transformation because of cheap natural gas - with oil field equipment holding particular potential, executives said Thursday during a summit of heavy fuel users and producers.
   
   "Here's the first reason that large engines are going gas," said JoelFeucht, director of gas engine strategy for Caterpillar's energy and power systems division. "Large engines burn the most fuel. I could try to make it harder, but that's pretty straightforward."
   
   Oil companies alone use nearly 1.2 billion gallons of diesel fuel a year just for pressure pumping equipment that supports hydraulic fracturing, said David Hill, vice president of natural gas economy operations for Encana Corp. Adding the diesel used to power drilling rigs themselves, the total is more than 2.8 billion gallons annually, said Pierce Dehring, a project engineer for Baker Hughes.
   
   A single fracturing job can involve 7,800 gallons of diesel, at a cost of as much as $5 a gallon at some oil field operations, said Pat Osachuk, an engineer for Encana.
   
   The savings of natural gas, which now is around $2 cheaper for the energy-equivalent of one gallon of diesel, inspired a wave of interest at the High Horsepower Summit 2012, a conference dedicated to natural gas use in high-horsepower applications. Hundreds of company representatives packed into conference rooms at the Royal Sonesta Hotel in Houston to hear about developing engine technology and various uses of natural gas in large engines. ___Chron




2. ...natural gas fuelled locomotives are testing on the 300-mile run north of Edmonton to Fort McMurray, rail gateway to the oil sands region of northern Alberta. Fueling and maintenance take place in Edmonton. ___Heraldonline

All types of engines are being converted to run on cheaper natural gas, from automobiles to long range diesel trucks to heavy construction equipment. The savings will eventually be transformed into profits, jobs, and new expansions and ventures.

Most politicians of the world have forgotten where economic prosperity comes from: The Ultimate Resource. Without the ultimate resource, human societies cannot prosper.

For example, countries that suppress the ultimate resource are likely to suffer from the new natural gas bonanza:

Gazprom, the natural gas company controlled by the Russian state, is in crisis. It is likely to fall victim to the shale gas revolution that is under way across the US. The shale gas revolution will probably have telling consequences for Russian state capitalism and President Vladimir Putin’s power.

This crisis erupted suddenly. With its surge in shale gas production the US has become self-sufficient in natural gas. It has overtaken Russia as the biggest natural gas producer. Crucially, US natural gas is cheap. Domestic US natural gas prices are only a quarter of Gazprom’s oil-linked eastern European prices. Such large price differentials cannot possibly last for long.

...Curiously, in 2011 Gazprom was formally the most profitable company in the world with purported net profits of $46bn, but these profits were hardly real. Investment analysts opined that no less than $40bn disappeared through inefficiency or corruption. Gazprom’s cash flow was barely positive.

In their 2010 booklet Putin and Gazprom , Boris Nemtsov and Vladimir Milov, the opposition politicians, detailed how assets were being stripped from Gazprom through large kickbacks on pipeline construction and cheap sales of financial and media subsidiaries to Putin cronies. Since shareholders have realised that only their dividend yield is material, Gazprom’s market value has plummeted by two-thirds from $365bn in May 2008 to $120bn today.

For years, many analysts have said that Russia will reform only when the oil price falls because Gazprom seems to be the Kremlin’s main slush fund, which is now being drastically reduced. The Kremlin will have little choice but to forsake its mega-projects. It has already abandoned the mastodon Arctic Shtokman field. The next steps should be to back out of South Stream, the superfluous and exceedingly expensive pipeline project, as well as the planned gigantic sky-rise headquarters in St Petersburg. But that will hardly suffice. This dysfunctional former Soviet gas ministry will have to be cut up into real companies, which need to be privatised. _Anders Aslund in FP via TheGWPF

Energy and Its Sworn Enemies in Government

Brian Westenhaus presents an interesting look at natural gas prices around the world, and wonders why the US government is dragging its feet on LNG exports to the gas-hungry nations of Asia and Europe.

For one answer to that question, one needs to look at the policies and behind-the-scenes machinations of the Obama administration and the US Democratic Party controlled Senate.

One must assume that the Obama DOE and the US Senate have good reasons for obstructing policies that would increase prosperity for companies in the US private energy sector, but rational reasons for Obama's actions do not readily jump into the conscious mind.

New Energy and Fuel

North America and much of the rest of the world are poised to begin producing significant new hydrocarbon resources -- beginning somewhere around the year 2020 -- assuming that today's governments (such as Obama's) move away from current policies of "energy starvation":

By 2020 or so...a flood of new oil and gas production will begin to wash over the world. Rather than general economic mayhem, there will be an economic shift: some rich countries will weaken, and hitherto marginal nations will take center stage.

Under this new scenario, oil prices could average $80 a barrel, compared with $110 for Brent benchmark crude today. Gulf monarchs untouched by the Arab Spring could face unrest, as shrinking oil revenues limit their scope for giving handouts. Mozambique—yes, Mozambique—could become one of the most important petro-states on the planet. China could more congenially assume a top rung among global powers. And the US could untether itself from some tyrants.

This vision of energy abundance stems from a series of new finds. Already, a natural gas revolution is under way in the US, where drillers armed with the new technology of hydraulic fracturing, or “fracking”, are pumping enormous volumes of natural gas from dense shale rock. America, on the verge of a gas deficit a few years ago, now has a century-long supply of the fuel. And fracking has now spread to shale oilfields. In states like North Dakota and Texas, it has brought an astonishing boost to US petroleum production.

But shale is only the beginning. There has been a flurry of discoveries and new production elsewhere—in Canada’s oil sands, the deepwater Gulf of Mexico, the Equatorial Margin of eastern South America, in offshore Brazil, deepwater Angola, west and east Africa, the eastern Mediterranean waters offshore from Cyprus and Israel, and more. Some of these new reserves may not start producing oil and gas until the 2020s, but when they do, they could spark the types of geopolitical disruption described above. _Quartz

Obama is closing hundreds of coal powered electricity generating plants in the US -- creating the potential for dangerous instabilities in the 3-part national power grid structure. Obama has devastated the US offshore oil & gas industry, has stonewalled pipeline projects that would boost energy production from new US shale oil and Canadian oil sands projects, and has blocked a large number of proposed energy projects on federal lands. While talking in favour of shale gas out of one side of his mouth, his EPA is moving to make shale oil & gas production much more expensive.

Across the board, the US Obama administration has blocked viable energy projects from hydrocarbons and nuclear sources -- while wasting many billions of stimulus dollars on big wind and big solar crony companies that are either already bankrupt or soon to become so.

The long term effects of such energy starvation policies will result in widespread economic slowdowns and unnecessary human suffering. Is that what the Obama administration wants to happen? No one knows, or if they do, they are not telling.

Useful Article on "The Pricing of Crude Oil"

The Reserve Bank of Australia provides a useful article on "The Pricing of Crude Oil," by Stephanie Dunn and James Holloway.

The article provides a basic introduction into how crude oil fits into the overall global commodities hierarchy, and into how crude oil prices are determined for the important benchmarks Brent and WTI. Intriguing hints as to how futures prices can sometimes affect spot prices in crude, are also provided. Worth a look:

Arguably no commodity is more important for the modern economy than oil. This is true in terms of both production and financial market activity. Yet its pricing is relatively complex. In part this reflects the fact that there are actually more than 300 types of crude oil, the characteristics of which can vary quite markedly. This article describes some of the key features of the oil market and then discusses the pricing of oil, highlighting the important role of the futures market. It also notes some related issues for the oil market.

Introduction

The crude oil market is significantly larger than that for any other commodity, both in terms of physical production and financial market activity (Table 1). The value of crude oil production is more than twice that of coal and natural gas, 10 times that of iron ore and almost 20 times that of copper. Crude oil is the most widely used source of fuel, supplying around one-third of the world's energy needs. It is also used to produce a variety of other products including plastics, synthetic fibres and bitumen. Accordingly, changes in the price of crude oil have far-reaching effects.

Table 1: Physical and Financial Market Size of Major Commodities
2011, US$ billion

	Physical market(a)		Financial market (exchange-traded)
	Annual production	Annual exports	Annual turnover	Open interest (b)
(a) RBA estimates based on volumes and indicative world prices (b) Open interest is the total dollar value of futures and options contracts outstanding that are held by market participants at the end of each month; averaged over the year (c) Physical market data are for 2011/12 US financial year (d) Includes exchange-traded swaps (e) Export data are for 2010 Sources: ABARES; Bloomberg; BP (2012); Bureau of Resource and Energy Economics; Commodity Futures Trading Commission; International Copper Study Group; RBA; United Nations Comtrade; United States Department of Agriculture
Oil	3,250	2,211	40,194	288
Natural gas	1,578	530	3,160	38
Coal	1,203	187	40	3
Iron ore	318	164	8(d)	1(d)
Rice(c)	285	22	58	1
Corn(c)	245	27	2,865	48
Wheat(c)	200	43	1,257	27
Copper	173	51(e)	13,726	93
Gold	139	156(e)	9,362	85
Soybeans(c)	119	45	6,540	70
Sugar(c)	93	32	3,614	28

The pricing mechanism underlying crude oil is, however, not as straightforward as it might appear. Almost all crude oil sold internationally is traded in the ‘over-the-counter’ (OTC) market, where the transaction details are not readily observable. Instead, private sector firms known as price reporting agencies (PRAs) play a central role in establishing and reporting the price of oil – the two most significant PRAs being Platts and Argus Media.

Much more at RBA

It is important to understand the ways in which oil prices reflect fundamentals of supply and demand -- and the ways in which oil prices can at times swing away from the basic fundamentals.

All mechanisms of pricing are subject to manipulation by persons of vested interest. While safeguards can certainly be built into systems to try to minimise such manipulation, even the safeguards on the safeguards are subject to manipulation and circumvention by sufficiently motivated and savvy groups and individuals.

Investors and interested observers must keep all of that in mind as they monitor the states of various markets.

Substituting for Crude Oil: Bio-Feedstocks to Petrochemicals

One of the main themes of the Al Fin Energy blog is the development of substitute and alternative feedstocks to use in place of crude oil, in the production of fuels, high value chemicals, polymers, lubricants, fertilisers, and more.

For example, RheTech Inc. is developing a new high volume composite material derived from sugar cane feedstock, which will replace oil derived materials in automobiles, construction, and consumer products:

RheTech, Inc. has developed a new grade of biocomposite using sugarcane-based, high-density polyethylene supplied by Braskem, the largest thermoplastic resins producer in the Americas and a leader in biopolymers. The new grade adds to RheTech’s line of RheVision biocomposites for application in the automotive, consumer and construction industries.

... Braskem is the Americas’ top thermoplastic resins producer. With 35 industrial plants spread across Brazil, United States and Germany, the company produces more than 35 billion pounds of thermoplastic resins and other petrochemicals per year. Braskem is also the world’s leading biopolymers producer with its 440 million pound Green PE plant that produces polyethylene from sugarcane-based ethanol.

RheTech, Inc. is a leading producer of filled and reinforced polypropylenes and color concentrates and additives for the automotive, truck, electronics, construction, and consumer markets. RheVision is a line of bio-reinforced polyolefins that currently uses wood, rice hull, flax, agave and coconut shell waste as reinforcement. _GCC

Substitution of alternative materials in place of crude oil, frees up more crude oil for global oil markets. Another example from the US DOE's NREL:

Scientists at the US Department of Energy’s National Renewable Energy Laboratory (NREL) have developed a new photo-biological process for the sustained production of ethylene from CO2. The NREL team introduced a modified gene sequence encoding an ethylene-forming enzyme from Pseudomonas syringae pv. into a cyanobacterium—Synechocystis sp. PCC 6803—and demonstrated that the organism remained stable through at least four generations, producing ethylene gas that could be easily captured. Research results were published in the RSC journal Energy & Environmental Science.

Ethylene—a valuable commodity two-carbon chemical that can be oligomerized into transportation fuels—is the most widely produced petrochemical feedstock globally. The organism produced ethylene at a high rate and is still being improved. The laboratory demonstrated rate of 171 milligrams of ethylene per liter per day is greater than the rates reported for the photosynthetic production by microorganisms of ethanol, butanol or other algae biofuels. _GCC

Most crude oil being used today was originally created by micro-organisms, over geologic time scales. Humans are merely attempting to optimise microbes for much quicker, high volume production of fuels, high value chemicals, and other materials, so as to turn hydrocarbons into renewable chemicals and fuels, rather than "fossil fuels."

Wind Power is a Scam; Hydrocarbons Must Bridge the Gap to Advanced Nuclear

Germany is way ahead of us on the very path our politicians want us to follow – and the problems it has encountered as a result are big news there. In fact, Germany is being horribly caught out by precisely the same delusion about renewable energy that our own politicians have fallen for. Like all enthusiasts for “free, clean, renewable electricity”, they overlook the fatal implications of the fact that wind speeds and sunlight constantly vary. They are taken in by the wind industry’s trick of vastly exaggerating the usefulness of wind farms by talking in terms of their “capacity”, hiding the fact that their actual output will waver between 100 per cent of capacity and zero. In Britain it averages around 25 per cent; in Germany it is lower, just 17 per cent.

The more a country depends on such sources of energy, the more there will arise – as Germany is discovering – two massive technical problems. One is that it becomes incredibly difficult to maintain a consistent supply of power to the grid, when that wildly fluctuating renewable output has to be balanced by input from conventional power stations. The other is that, to keep that back-up constantly available can require fossil-fuel power plants to run much of the time very inefficiently and expensively (incidentally chucking out so much more “carbon” than normal that it negates any supposed CO2 savings from the wind).

Both these problems have come home to roost in Germany in a big way, because it has gone more aggressively down the renewables route than any other country in the world. Having poured hundreds of billions of euros in subsidies into wind and solar power, making its electricity bills almost the highest in Europe . . . . the problem for the German grid has become even worse. Thanks to a flood of subsidies unleashed by Angela Merkel’s government, renewable capacity has risen still further (solar, for instance, by 43 per cent). This makes it so difficult to keep the grid balanced that it is permanently at risk of power failures. (When the power to one Hamburg aluminium factory failed recently, for only a fraction of a second, it shut down the plant, causing serious damage.) Energy-intensive industries are having to install their own generators, or are looking to leave Germany altogether. _Christopher Booker -- Telegraph

More at link above (via thegwpf)

Modern industrial nations cannot count on the intermittent unreliable energy sources -- big wind and big solar. And they have been slow to support the development of new generations of safer, cleaner, cheaper, factory-produced, scalable nuclear power reactors. This means that they will be forced to use coal, natural gas, oil, bitumens, kerogens, gas hydrates, GTL, CTL, and every other energy resource they can find, to bridge the gap between the hydrocarbon economy and the nuclear economy.

Europe is mired particularly deeply in the green dysfunction, and is slow to recognise its self-made energy peril. It remains badly divided over shale gas, for example. This sluggishness to adopt necessary energy resources is particularly stupid, on the part of European governments.

Europe is making itself increasingly vulnerable to a predatory Russia, just at a time when Russia's energy infrastructure is so desperately in need of Eureopean, North American, and East Asian expertise.

But Russia never did learn to work and play well with others. It has always been the schoolyard bully, and has covered up its vulnerability with bluster and threats. This is a make or break time for Europe as a whole, and for western Europe in particular.

It is obvious that the "green dysfunction" -- the lefty-Luddite dieoff.orgiast mentality of carbon hysteria, anti-nuclear hysteria, and resource scarcity hysteria, holds European governments in its grip, and threatens to paralyse governments in the UK, North America, and Oceania. Anyone concerned about the human future, will do whatever is necessary to prevent that political activist movement from grabbing enough control to widely enact its quasi-genocidal agenda.

Besides learning to build resilient communities, we also need to learn to build formidable networks of influence. These are treacherous times, but remember: It is never too late to have a dangerous childhood.

Coal to Chemicals via MTO: Methanol to Olefins

Several leading industrial nations are beginning to substitute cheaper coal and and natural gas -- in place of more expensive crude oil -- in the production of high value "petrochemical" products, including valuable polymer feedstocks.

UOP LLC, a Honeywell company, announced today that China s Jiutai Energy (Zhungeer) Co. Ltd. has licensed Honeywell s UOP methanol-to-olefins (MTO) technology to convert methanol from coal into key plastics building blocks. Honeywell s UOP/Hydro MTO process converts methanol from gasified coal or natural gas to produce high yields of ethylene and propylene, building block materials used in the production of films, packaging, plastics and other petrochemicals. The breakthrough technology allows producers in countries such as China to tap abundant coal resources, rather than more expensive petroleum, to produce petrochemicals. _Equities.com

I. Overview of MTO Process

The Methanol to Hydrocarbons process was discovered at Mobil Oil in 1977. This process is used to convert methanol to products such as olefins and gasoline. The methanol can first be obtained from coal or natural gas. In the Methanol to Olefins (MTO) process, the methanol is then converted to olefins such as ethylene and propylene. The olefins can be reacted to produce polyolefins, which are used to make many plastic materials. An MTO process flow diagram advertised by Honeywell is shown below.

__UC Berkeley

Substituting cheaper and more abundant coal and natural gas, in place of crude oil, will make crude oil supplies go much further. Such substitution will also place a de facto ceiling, of sorts, on intermediate to long-term oil prices.

The real energy prospect is the world now faces a problem of newly found, or newly developed, and ever increasing energy resources and supplies - not a crisis of energy scarcity.

The turnaround has been lightning rapid, in at most 5 to 7 years, and has wrongfooted many analysts, most politicians, and the world's "historic major" energy corporations, as well as the green movement and "ecology politicians" who still claim energy supplies are rapidly declining and we face an inexorable energy crisis - very like their residual attempts to peddle global warming apocalypse. In fact the prospect of us facing energy penury, shortage and scarcity has been turned upside down. _The Energy Crisis that Wasn't

Besides displacing crude oil from the petrochemicals business, coal and natural gas will be displacing more and more crude oil from the petrofuels business. Gas to liquids (GTL) and coal to liquids (CTL) are gradually becoming more economically profitable, at the same time that crude oil prices have been creeping upwards.

As biomass to liquids (BTL), kerogens to liquids (KTL), and gas hydrates to liquids, become ever more viable, conventional crude oil will find itself competing with massive hydrocarbon resources amounting to many trillions of barrels of oil equivalent.

Yet another story about Russia's Gazprom being forced to confront the global reality of tight gas resources.

Russia's national oil & gas companies had been growing fat and lazy, not to mention corrupt. It looks as if Russia will be forced to ask for outside help to develop its huge tight oil & gas resources -- before it gets priced out of European and some Asian markets.

Regarding Nuclear Power: Japan May Not Be as Stupid as Germany

Japan's government is suggesting that it may not be ready to shut down its nuclear power plants by the year 2040, as was previously suggested.

The Japanese government backtracked Wednesday on its aspirations to go nuclear-free, refusing to give full cabinet approval to a plan to phase out nuclear energy by 2040 following sharp criticism from the pronuclear business lobby.

Japan's Economy Minister Motohisa Furukawa told reporters that the cabinet has decided to take the nuclear-free plan unveiled last week "into consideration" when formulating the country's long-term energy policy rather than giving the entire plan formal cabinet approval. _WSJ

Europe is a stronghold for the irrational green dysfunction, but few other parts of the world have become quite so deranged and divorced from reality.

Nuclear power is set to grow over the next four decades even after Japan shuts down its reactor fleet, the International Atomic Energy Agency says.

Global installed capacity is set to rise to at least 469 gigawatts of energy by 2050 from 370 GWe today, according to the IAEA's most pessimistic scenario. Nuclear capacity may reach as much as 1,137 GWe in a more favorable investment climate, the Vienna-based agency said.

There are presently 435 nuclear reactors in 30 countries worldwide, according to the IAEA. Sixty-four additional nuclear power plants are under construction. _NorthJersey Bloomberg News

The technology of nuclear power continues to advance, leading toward advanced reactors which are cleaner, safer, cheaper, more scalable, and more reliable with longer useful lifetimes.

General Atomics is working hard to develop one such type of advanced nuclear reactor:

The EM2 uses helium to cool the reactor and directly drive the turbine with gas heated to 856 degrees Centigrade — more than twice the light water temperature. The helium will turn an enclosed turbine at an incredible 6,000 to 12,000 revolutions per minute for 30 years before the reactor has to be shut down. By contrast, conventional reactors have to be shut down and refueled every 18 months.

...The EM2 is designed to produce 240 megawatts of electricity, but a smaller 71-MWe version will come first. The cost of EM2 electricity is expected to be about half that from today's water reactors. Most light water reactors are in the 1200-MWe range.

...It will use uranium as a starter fuel, enriched to 12 percent of fissile uranium 235 to get a neutron flux going, but after that it will burn nuclear waste or depleted uranium. It will effectively eliminate the nuclear waste issue and multiply the power gained from uranium fuel by a factor of 262 times over today's water-cooled reactors.

The essence of a fast reactor is the high energy of the neutrons, ergo their ability to react with the fissile material left in nuclear waste and depleted uranium. Being a fast reactor, EM2 will both burn up nuclear waste and generate enough radioactive "seed" during its operational cycle to refuel another reactor. _WHChronicle

With new nuclear technologies such as the EM2 coming along, the way will soon be clear to burn conventional LWR waste and/or depleted uranium for fuel. In addition, the ability to use high temperature heat for both electrical generation and for industrial processes will free up hydrocarbons for more lucrative uses -- such as the creation of high value chemicals, lubricants, polymers, fertilisers, jet fuels, and other materials.

Societies have been steeped in dysfunctional philosophies of resource scarcity and unlikely eco-catastrophe. Instead, children should be trained to develop their problem-solving ingenuity in ways that will make resource scarcity most unlikely and costly eco cleanups unnecessary.

Instead of indoctrinating our young in negativity -- as the green lefty-Luddite dieoff.orgiast stasists are apt to do -- we should be training them to use their minds in positive, creative, and productive ways. But then, if that were to take place, 90% of college administrators, politicians, attorneys, lobbyists, environmentalists, and other parasites, would be out of work.

Global Demand for Coal Skyrocketing

The coal plants in India's pipeline -- almost 100 more than China is preparing to build -- would deliver 519,396 megawatts of installed generating capacity. That is only slightly less than pending new capacity in China, which remains the undisputed king of coal consumption.

...The research found 1,231 new coal plants with a total installed capacity of more than 1.4 million MW proposed worldwide. Beyond the biggest users -- China, India and the United States -- the assessment finds a heavy coal demand building up in Russia, Vietnam, Turkey and South Africa.

...According to the WRI analysis, more than 34,000 MW of coal capacity is slated to come online in Vietnam, 30,000 MW in Turkey, and 22,000 MW in South Africa.

China, which has been on a coal binge for the past 15 years, still has the largest pipeline in the world in terms of megawatts. The WRI assessment notes that China's 12th five-year plan approved 16 giant coal-power bases, mainly in northern provinces and close to mining fields.

...Catelin of the World Coal Association argued that so far this century, half the world's incremental primary energy needs have been met by coal. _Scientific American _ via _ GWPF

While US President Obama's EPA is working behind the scenes with faux environmental groups such as the Sierra Club to shut down the building of new, clean coal power plants, the rest of the world's appetite for coal is growing to binge level.

This means that US coal exports are likely to continue growing.

Thinking persons will not take long to realise that the carbon hysteric energy starvationist tactics of the Obama EPA and global faux environmental groups -- no matter how well intended -- will not reduce the global burning of oil, coal, or other hydrocarbons. They are merely shifting the location from areas where the energy would be burned cleanly -- the advanced world -- to areas where the hydrocarbons will contribute the maximum pollution to the Earth's atmosphere.

Considering the unspoken subtext of the faux environmental movement, such an achievement may well amount to a big "mission accomplished."

Rapid Buildup in North American Oil Production Expected

Global capacity for production of liquid hydrocarbon fuels is immense -- far beyond what was imagined by Hubbert or any of his peak oil cohorts. To produce most of those hydrocarbons, humans will need to create improved technologies from scalable high temperature nuclear reactors to improved mining and drilling robots to improved exploration technologies.

But even with today's technologies, oil production could be rapidly geared up -- if the economic need and the political will were both present. Here is a look at what might happen in the near future with North American oil production (h/t Brian Wang):

Technological breakthroughs are freeing up oceans of black gold from plays in the United States and Canada. Couple that with rising production from Alberta’s oil sands and North American markets are flush in domestic oil, which is leading many giddy Americans to think they are on the cusp of achieving a treasured goal: energy independence. CIBC World Markets Inc. agrees with that view and says that North American oil production can grow by 800,000 to 900,000 barrels per day (bpd) annually through 2016. And the production growth will come from the onshore, offshore and the oil sands. _Alberta Oil Mag

Political will is every bit as important as technological advances. Policies of energy starvation under European, US, Australian, Japanese, and other governments tend to slow down energy exploration and production in those countries. Political corruption and policies of neglect of oil production technologies tends to slow down production in Russia, Venezuela, Iran, and many oil producing African nations.

The largest conventional oil deposits of the world lie under countries that restrict access by international oilcos -- which has the effect of artificially dampening oil production in those countries. In other areas, political and social turmoil lead to sabotage, kidnappings of oil personnel, hijacking of oil shipments, theft of oil, and several other ways in which oil delivery to international markets is artificially reduced and suppressed.

The effect of all of this suppression of production is additional elevation of oil prices, beyond other artifactual influences on oil prices.

These artificially high oil prices make it more economical for North American producers to expand production in unconventional and marginal oil fields. As long as oil prices stay high, expect to see a ramping up of unconventional oil & gas production in the more politically stable parts of the world.

Betting Against Shale Gas is a Dummy Play

We know that Russia's Gazprom and President Putin would like for the rest of the world to forget all about fracking for shale gas -- despite the fact that Russia is beginning to develop what is perhaps the most massive tight oil & gas play on the planet. France and Germany seem to be prohibiting fracking for oil & gas -- for now -- and Exxon has walked away from a chance to frack for shale gas in Poland.

But other big companies are moving into Poland and Eastern Europe almost faster than Exxon can remove itself.

Oil and gas investment is flooding into the region in amounts not seen since the fall of the Berlin Wall. Anglo-Dutch giant Royal Dutch Shell RDSB.LN -0.32% PLC, France's Total SA TOT -1.01% and ConocoPhillips COP +0.15% of the U.S. have acquired exploration rights in Poland, where current estimated reserves equal 35 to 65 years of the country's demand for natural gas, according to the Polish Geological Institute.

Ukraine is heating up as well. TNK-BP Holding, a joint venture of BP BP.LN +0.29% PLC and a group of Russian investors, plans to invest $1.8 billion in shale projects at a half-dozen sites around Ukraine. In June, Italy's Eni SpA E -1.37% paid an undisclosed amount for a stake in Ukraine-based LLC Westgasinvest, which holds about 1,500 square miles of land with potential shale-gas reserves. And Chevron Corp., CVX -0.09% which has acquired more than 6,250 square miles of potential shale gas leases in Central Europe since 2009, says it is working with Ukraine to negotiate a production-sharing agreement. _WSJ

It is rather clear that what happened with Exxon is that Russia offered it a piece of the huge Bazhenov fracking play if Exxon would abandon its Eastern European fracking -- at least the part of it that lies outside of Russia.

Gazprom is suffering some reverses due to mismanagement and a corrupt involvement with the Russian government. It will be more difficult for top Russian government functionaries to siphon profits from Gazprom as profit levels drop in response to more competitive gas prices offered to Europe from other suppliers. Gazprom's (and Putin's) hellfire sermons against fracking are being exposed as self-serving ways of trying to cover up a worsening balance sheet.

Germany is beginning to pay a price for its rejection of shale gas and nuclear power. German industry is falling behind in global competitiveness and is being forced to move more and more plants overseas as a result of its government's horrendous Energiewende policy.

South Africa first banned fracking, but is now rapidly back-stepping from its earlier stance. As noted before, Russia is now adopting fracking for its huge tight oil & gas resources after first condemning it. More and more nations are certain to follow suit.

North America was first out of the gate adopting newer, more efficient methods of getting at tight petroleum resources. But the technology is spreading rapidly, and is likely to significantly impact global energy markets for at least 2 to 3 decades.

By the end of that time, several new advanced nuclear fission reactors -- safer, cleaner, cheaper, scalable, factory - produced to order -- are likely to be coming onto the market internationally. These new sources of high quality industrial heat & power are likely to radically change the energy landscape, and push oil, gas, and coal to the margins -- more suited as chemical feedstocks for the future.

As for big wind and big solar? They were never a good match for modern industrial societies, and should probably be limited to third world villages and remote island locations.

Solar Power Industry Is a Bust Worldwide

Everyone wants to blame China for the collapse of the global solar industry, but the fact is: big commercial-scale solar is an incredibly stupid, crap-headed idea. More from Peter Glover:

The global solar power industry is in crisis. The industry blames widespread national subsidy cuts and over productivity; China, in particular, being widely vilified on the second count. However, the real cause of the solar industry’s malaise runs deeper, rooted, as it is, in the inescapable fact that, in terms of current technology, commercial scale solar energy remains a non-viable proposition.

Wherever you look the solar power industry is mired in financial problems, all of which lead back to the (life support) of public subsidy, the impact of market-skewing regulations (creating the appearance of commercial viability) and, ultimately, protectionist trade wars (US and Europe v China). In economic good-times, three natural consequences of government-sponsored global industries that can be obfuscated by a network of feed-in tariffs, levies and other ‘green’ taxes to pay for them. But in leaner economic climes, the real cost of ‘free’ energy becomes all too clear.

...China itself is suffering from precisely the same market problems as all its competitors. While Beijing will attempt to stave off decline through government stimulus, it is only a question of time before the loss of European and US markets for cheap Chinese goods, including solar panels, causes an economic downturn there, too.

...China’s over production only came about because Beijing’s economic stimulus for its solar industry led to explosive growth and, ultimately, unfettered over production. Given enormous government subsidies there was literally no incentive to slow production down. In the game of who could sustain massive public subsidy longest, cash-rich China clearly won. But the fact is that the sun looks to be setting on China’s solar industry, too. Beijing has also become aware it cannot go on subsidizing its solar and renewable industries.

...Taken as a whole, government incentive schemes around the world have created a glut of suppliers that the capitalist free market would never have sanctioned. The eclipse of Europe’s solar industry is in truth down to simple economic realities hitting home as commercial scale solar power is simply too expensive a proposition to attract serious private sector investment and end massive public subsidies.

In January, Spain’s economic crisis forced it to cut its renewable subsidy regime entirely. In April, a near-bankrupt Italian government estimated that its subsidy regime left it facing a $60 billion bill to photovoltaic generators over the next 20 years. In The Great British Solar Scam I wrote about how the UK’s bid to cuts its ludicrously generous solar subsidy regime saw it prevented from making subsidy cuts by a European court after the UK solar industry inevitably claimed widespread bankruptcies would result(1).

What marks out both the entire renewable energy sector for economic decline above all else is the fact that it is effectively an expensive government-sponsored enterprise, not a child of the free and democratic marketplace. Consider again the elements colluding to produce the current crisis: the lifeline of public subsidy, energy levies and taxes and market-skewing regulation dove-tailing with incentivized over-capacity, protectionism and, ultimately, trade wars. All marks of an industry kept afloat by ideological fiat and not free market capitalism geared to meeting actual market need. _Peter Glover

All too true.

In fact, Al Fin energy analysts frequently state that even if photovoltaic were 100% efficient and given away free, PV would still not be viable for large scale grid power. Readers who do not understand how that could be very close to the case probably do not understand how the power industry works.

The attempt to match contemporary high voltage AC power grids with intermittent low voltage DC power that requires vast amounts of landscape for minimal amounts of power, could only be a dystopian fantasy dreamed up by the most impractical of persons. Germany's attempts to base its industry on solar power are particularly laughable.

Fortunately for North America, it has other options which have not yet been completely shut off by the incompetent green buffoons within the various governments. It is up to the more knowledgeable to make sure that such a suicidal energy shutdown in N. America never happens.

Algae Biomass to Natural Gas Conversion 65% Yield

There are different ways that algae can be used to create fuels and chemicals. The conventional way that most people talk about -- the conversion of algal oils to fuels -- will not be perfected for roughly a decade or so. A much better and more timely way of converting algae to fuels, is via thermochemical conversion such as pyrolysis or gasification. Swiss Scientists are attempting to perfect one method of converting algal biomass to methane: catalytic hydrothermal gasification and methanation, or SunCHem, pictured below.

SunCHem Process of Catalytic Hydrothermal Gasification Methanation

Algae have one notable advantage over other sources of biomass: they "grow" much more rapidly. In favorable conditions, they can generate 30-55 tons of dry matter per hectare per year – five to ten times more than sources such as corn, soy, or sugar cane. "And above all, they can be cultivated without soil, simply in bioreactors exposed to sunlight, thus avoiding the use of fertile croplands that are needed for food production," Ludwig adds.

...The process presented this week, which goes by the name SunCHem, transforms the algal biomass into methane via catalytic hydrothermal gasification. "This device doesn't require any solvents and can use non-potable water," adds Mariluz Bagnoud, a scientist from EFPL's Environmental Engineering Institute. "In addition, the nutritive elements the algae need, such as phosphorus, are recycled in the process and re-injected into the culture medium. It is an important breakthrough because these resources are limited, too." Although the environmental impact is thus minimal, the yield is enormous: 60-70% of the potential energy of the biomass produced in these "photo-bioreactors" can be recuperated in the form of natural gas, with all the advantages that this represents in terms of transport and use – it can simply be injected into an existing gas distribution network. "We have examined the entire length of the chain, from the choice of algae type and how it's cultured to its transformation into natural gas, in order to identify the best solutions at every stage," explains Ludwig. "We're currently working on the regeneration of our ruthenium-based catalyzer." _Phys.org

Phys.org

The process depicted above is similar in many ways to the approach preferred by Al Fin bioenergy engineers: IH2 catalytic pyrolysis.

The biggest problem Al Fin analysts see with the SunCHem approach, is its plans to use expensive bioreactors, rather than much cheaper troughs or ponds. Growing algae for its biomass is much different than growing algae for its oil. With the biomass approach, you do not need to use expensive genetic engineering or maintain isolation of specific algal species. Instead, you are aiming for maximisation of biomass production, which may well occur with wild strains or mixed strains of algae.

Another problem with the process as pictured, is the dependency on methane to provide energy to the process. This parasitic use of methane to produce methane reduces yields and potential profits. Much better to find another, cheaper source of energy to drive the process.

As long as geological methane is relatively cheap, producing bio-methane makes little sense. Much better would be to produce diesel, gasoline, jet fuel, and high value chemicals from the algae. That is the approach taken by those who plan to utilise IH2 pyrolysis and similar approaches.

Since algae is one of the most prolific producers of biomass known, and since we have the technology to convert biomass to methane at relatively high yields, it makes sense to optimise this technology for the future, when methane is likely to become a key centre-piece for the energy economies of many nations -- at least in nations that reject nuclear energy.

But how much more efficient it would be to utilise nuclear process heat to carry out biomass to fuels or biomass to chemicals conversions! The antinuclear hysteria which has infested Germany, Switzerland, Japan, Italy, and other advanced nations, is incredibly destructive to their future well-being.

Much better for them to embrace the inevitability of nuclear power for the long term, and to work hard to develop cleaner, safer, more affordable and scalable forms of advanced nuclear power -- both fission and fusion.

Fusion Fission Hybrid Patent to Burn Nuclear Waste

In the aftermath of the Fukushima meltdown, widespread superstition and primal fear regarding nuclear energy has gripped the hearts and minds of politicians, pundits, and faux environmentalists across the planet. But while tens of thousands were killed by the massive earthquakes and tsunamis in Northern Japan, no one was killed or seriously hurt by radiation from the Fukushima reactors. Of course, no one ever said that human beings were rational.

Nuclear power is actually the safest form of power generation in existence, including all forms of renewables and hydrocarbons. Scientists and engineers, meanwhile, are working hard to make nuclear energy even safer than it already is.

UT Patent

The innovation, which will not be tested for at least a couple more years, could lead to the efficient incineration of [nuclear] waste and a safer way to generate nuclear-powered electricity.

The problem of radioactive waste, along with safety anxieties among the public, has long vexed the nuclear industry. The United States has wavered on whether to set up a long-term repository for long-lasting waste in remote spots such as Yucca Mountain, Nev.

The UT scientists received a patent in August for technology that allows the pairing of nuclear fusion and fission to incinerate nuclear waste. Fusion produces energy by fusing atomic nuclei, and fission produces energy by splitting atomic nuclei.

...Called a Super X Divertor, the innovation is the sort of heat exhaust system only a nuclear physicist could dream up: It reconfigures electromagnetic fields within a fusion reactor, allowing the reactor to handle much hotter temperatures in more compact spaces.

That innovation can allow fusion reactors to be built much smaller and allow them to be coupled with a traditional fission reactor for on-site incineration of radioactive waste.

...The byproducts of the incineration of radioactive waste should be far less radioactive, with a half-life of only several decades, compared with the half life of at least 10,000 years of reactor waste that has not been incinerated, said UT senior research scientist Mike Kotschenreuther.

Mahajan said less toxic waste would be a boon in the U.S. and elsewhere.

...The innovation has broader consequences beyond the destruction of waste, Kotschenreuther said. In the long-term, reactors, made safer, smaller and cheaper to build by dint of the divertor, could help displace fossil fuel plants that contribute to global warming. _UT Fusion Fission Patent

China is turning to large scale battery backup power for nuclear power plants. If the Fukushima plant had been using such forms of backup power as these batteries, it is unlikely that the word "Fukushima" would evoke such primal fear and pathological anxiety as it appears to elicit among the political, journalistic, faux environmental, and academic classes.

And despite all the superstitious fears and fallacies that abound, post-Fukushima, several countries are moving ahead to install nuclear power or to expand pre-existing nuclear power plants. Poland, for example, is preparing for the construction of its first nuclear power plant.

The UK is looking to China for help in expanding its own nuclear power infrastructure. Both China and Russia are planning massive expansions of their nuclear power. Several nations near the Persian Gulf and middle east are also looking to either build their first nuclear power plants, or to expand a pre-existing nuclear industry.

Nuclear power -- including advanced, scalable fission, as well as scalable fusion -- is the only viable long-term, large scale power source that humans will be able to tap safely and cleanly for some time. Eventually, more exotic forms of power generation will become available to next level humans.

Since advanced nuclear fusion and fission are not yet well developed, humans must use the energy sources which are available -- conventional and unconventional oil & gas, coal, geothermal, conventional fission, kerogens, bitumens, gas hydrates, geothermal, hydroelectric, etc. -- until the technology for scalable, safe, affordable, abundant, clean, advanced nuclear power is ready.

Poor Hubbert: He Just Didn't Know . . .

[M. King Hubbert's] estimate for the world's total reserve was only 1.2 trillion. We know today that estimate was woefully wrong. Today, the proven world reserves are more than 1.6 trillion barrels, despite 56 years of increasing production. Just one example of the supplies Hubbert didn't foresee: The average estimate of the Orinoco heavy oil reserve in Venezuela is more than 500 billion barrels.

Why Hubbert was (and still is) wrong has nothing to do with the price system – although that explains why we will never actually run out of oil. Hubbert was wrong because he didn't understand how technology would greatly increase the size of the total reserves. As Hubbert's own calculations would show you, increasing the size of the known reserves has the impact of pushing off Peak Oil.

Today, known reserves are larger than they were in 1956, when he first published his theory. Thus, Peak Oil is, at the very least, decades away.

But the reality is, our ability to discover new reserves continues to increase. That means it's much more likely the risk of Peak Oil will continue to recede.

...As long as the oil industry has been tracking known reserves, we've seen that reserves tend to keep pace with, or slightly exceed, production. That's counterintuitive. You'd think that as production increases rapidly, reserves would get consumed and the total amounts would fall. But that's simply not what's happened. That's why we have more reserves now than we did 56 years ago, despite the huge increases to production. _Peak Oil is Intellectual Fraud

One version of peak oil states that humans are running out of oil. That particular version of peak oil is certainly an intellectual fraud.

Another version of peak oil which is growing more popular, states that humans are running out of cheap oil, and that increasing prices for oil will make it difficult or impossible for modern societies to sustain economic growth and prosperity.

But in a world where economic decline has multiple causes, it is an intellectual fraud to claim that your model of the world is able to compress all of those causes down to a single cause: the price of oil. Such an endeavour is all the more dishonest when looking at the multiple causes for why the price of oil is what it is, and compressing all of those causes down to one cause: depleted reserves.

Wherever one looks, one sees such intellectual frauds being perpetrated by vested interests who have much to gain. From carbon hysteria to peak oil to frack-hysteria to nuclear hysteria -- all of these have the effect of intentionally limiting the human future, of compressing the future into a tiny cubby hole which will satisfy the lefty-Luddite green dieoff.orgiast regressives.

I suspect these latter day crusaders will run into a number of surprises along the way to their great green garden of Eden utopia.

Electrical Power Supply and Use for Dummies

The article excerpt below uses a simple analogy to explain how power is supplied, used, and paid for on the power grid. It may help to correct some common misconceptions which many people hold about the sourcing of electrical power on the grid.

It is excerpted from a guest article on Yes, Vermont Yankee, written by nuclear engineer Howard Shaffer. The article is also featured on the 121st edition of the Carnival of Nuclear Energy Bloggers.

To get a picture of what is going on physically, think of the electric power circuit connecting all the supplying plants and all the loads using power--think of them as all connected together by a giant bicycle chain.  All the suppliers and all the loads are connected to the chain by sprockets.  There are spare sprockets for suppliers and users who are not on the grid at the moment.

Each supplier and each user has a meter that shows how much they are supplying or using.  In this system, the chain needs to run at an almost constant speed.  In the U.S., it runs at 60 hertz (cycles per second for us old-timers). On this big chain, each supplier and user knows what they are doing, and they know the chain's speed.

No user can say: “My power is coming from that supplier over there, or those suppliers.”  All any supplier can say is: “I’m supplying my power to the chain (grid)."  All any user can know is: "I am getting my power from the chain (grid)."

Supplying Power, Using Power, Paying for Power

This can be maddening to explain.

Let's start with supplying and using power. The language has gotten scrambled by the way the chain system is used and paid for.

Some users are taking power all the time, some only part time.  Some suppliers provide power all the time, some only part time.  The chain must run at a nearly constant speed, and any supplier might break down and quit at any time.

To keep the chain going, the other suppliers must have some extra capacity to make up for the loss, at least for a short time.  In addition, the manager of the chain needs to be able to tell other suppliers to start when needed.

If the chain manager can’t get enough suppliers started and supplying, the chain will slow down (brownouts and low frequency).  In severe shortages some users may have to be disconnected from the chain (dropped load, rolling blackouts).  In the worst case, the chain stops (blackout).

Paying for Power

All the suppliers need to be paid.  All the users need to pay for what they get.  The chain owner and manager needs to be paid too.

Different kinds of supply and use cost different amounts.  If you are a supplier who is always ready to start supplying if another supplier breaks down, it costs money to stay ready.  The same is true if you back up a supplier that is only available for a few hours a day.  If you are a supplier who promises to stay ready to do backup, you usually get paid more.

If you are a user and know how much you want to use over time, it is cheaper for you to have a contract with certain suppliers.  Then these suppliers are  “on the chain” for you.  If you don’t have such a contract, you take the “chain’s price”-- a complicated average price from all the suppliers.

Careless Descriptions

People in the utility industry say: “X utility has a contract with Y plant for so much power.”  In reality the contract is for Y plant to supply power to the chain while X utility is using power from the chain.  Since everyone in the utility industry knows that power is put on the grid (on the chain), not sent specifically to a user, the shorter expression ("has a contract for so much power") came to be used.

The shorter expression was OK until the public wanted to know more.  Then the short expression caused confusion about how the physical system actually works.

Big Ben at Midnight

The Midnight Accountant

If you are a user, and your contract with a supplier ends, the chain will keep you going.  The chain doesn't know about your contract.  The chain just keeps moving, and you keep taking power off the chain the same way you did before.

However, when your supplier contract ends, you must pay the chain’s price. This price includes the higher cost "stay-ready" suppliers.

On March 21, at midnight Vermont Yankee kept right on powering the chain (grid).

No physical switch shifted.  The accountants shifted -- the billing.  At midnight, Vermont utilities no longer paid specifically for Vermont Yankee.  Vermont Yankee put power on the grid, and they took power off the grid, same as before.  However, at midnight the utilities began to pay specifically for other suppliers: Seabrook for example.  They pay the chain (grid) price when they don't have enough contracts with suppliers. Some of Vermont Yankee’s power is mixed in that price.

The accountants arrange the pricing, but the power to move the bicycle chain (grid) in Vermont was the same after midnight as before midnight.  The work of the accountants changed at midnight, but the work of the power plant continued.
_Howard Schaffer in Yes, Vermont Yankee

It might be helpful to read this article by Meredith Angwin which looks specifically at the supply of power in Vermont, following a recent change in contract by Vermont Utilities.

This type of confusion is particularly rampant among fans of "green power" who believe that they can pick and choose the sources of electrical power for their business or residence.

The dumbing down of cultures and educational systems in the western world has many sad side effects. One of them is the creation of a more sheep-like and compliant citizenry, generally ignorant of the underlying mechanisms of technological society.

But remember: It is never too late to have a dangerous childhood.

Creeping Peak Oil, or Peak Oil Lite: 3 Arguments Worth Reading

Peak Oil is difficult to pin down, with as many definitions as there are believers. But the most credible version of "peak oil" asserts that over the long run, oil prices are most likely to jack themselves up as every new source of oil becomes more expensive to produce.

Proponents of this view do not argue that the world is running out of oil -- merely that it is running out of "cheap oil." This "creeping peak oil" or "peak oil lite" is a far cry from the dieoff.org style of cataclysmic collapse of oil supplies, which many other branches of the peak oil belief system tend to favour. It is worth looking at some of the arguments promoting this view:

In "Peak cheap oil is an incontrovertible fact," writer Ambrose Evans-Pritchard asserts that oil demand from China will soon explode through the roof, that old oil wells are depleting faster than is being claimed by oil optimists such as Leonardo Maugeri, and that new sources of oil are too expensive to allow oil prices to fall very far below current prices.

In "Oil's Rising Baseline," Casey Research argues that oil prices are following a series of upwardly ratcheting baselines which are only likely to ratchet upward even further. The article goes on to predict that Russia is moving into a position to control world oil & gas prices. The author suggests that a new baseline of $200 to $300 a barrel is not out of the realm of possibility for the near future.

In "The Re-pricing of Oil," Gregor MacDonald provides the most comprehensive argument for creeping peak oil, of this group of three. He makes the point that marginal oil producers operate on tight margins, and cannot tolerate significant drops in oil prices. He also points out that surplus oil production is not particularly high at this time -- compared to historical levels in periods of "oil glut" -- which influences oil markets to price oil higher in anticipation of tighter future supplies in the face of higher future demand. And he asserts that new oil discoveries will be more and more expensive to produce over time.

These articles are part of a coalescing concept of peak oil centered around an extended undulating plateau rather than a sharp peak and drop-off model. According to this concept, oil prices will rise higher and higher from now on, while global oil supplies will gradually grow tighter and tighter. Oil will be available, but at higher and higher prices.

The problem with all of these views, is that they make predictions. It is very hard to make accurate predictions, particularly about the future. And these particular predictions are being made about the future.

The same arguments as these were made 5 to 10 years ago. Many institutional investors who bet the money of their clients according to the logic of these arguments, created spectacular losses for university endowments, institutional and governmental pension funds, mutual funds, and more, when their expectation of a monotonically increasing price of oil failed to hold up from 2008 onward.

In other words, these are all fine and reasonable arguments as long as they remain in the abstract, and one is not being held to any particular prediction results.

We will return to these ideas in the near future, to determine whether there is any solid basis for timely prediction, beyond the vague generalities.

Shell's $20 Bn Pearl Qatar GTL Plant to Earn $10 Bn per Year

Gas to liquids (GTL) is becoming a very profitable enterprise. Not everyone can invest $20 billion in a GTL plant. But to reap $10 billion per year in profits from an investment of $20 billion, is very close to true alchemy.

More on Pearl Qatar GTL:

Now gradually increasing production, Pearl sucks in huge volumes of natural gas from the gargantuan North Field under the aquamarine Gulf and — in a feat of seeming alchemy — transforms the gas into jet fuel and diesel and other liquids far more valuable than natural gas these days. Eventually, Pearl could earn Shell $10 billion per year, justifying its nearly $20 billion cost. _NYT

Notice that the $10 bn figure is for "eventual profits." For now, Shell will have to settle for a mere $4 bn free cash flow per year -- at an oil price of $70 per barrel. At higher oil prices, profits will exceed $4 bn proportionately.

Shell has said that the project would generate USD 4 billion of free cash flow a year at full production in a market with crude oil prices, the main determinant of the price of diesel, at USD 70 per barrel.

Shell will say only that returns are in line with other integrated gas projects, but given that Brent crude now sells for over USD 110 per barrel while the gas going into Pearl is effectively free, it could clearly be a significant contributor to one of the world's biggest corporate capital spending budgets at some USD 30 billion this year alone.

Analysts said that crude prices would have to fall below USD 40 per barrel before the plant loses money. The Qatari government's decision to buy a stake in Shell, reported to be approaching 3% may be further evidence of Pearl's cash delivery potential. _SteelGuru

Russia's Gazprom needs to take a long hard look at Shell's GTL achievements in Qatar -- particularly at a time when global gas prices are falling, and Gazprom's customers are pulling out the long knives for the corrupt Russian national gas company:

Gazprom said Thursday its profit plunged by a quarter due top falling gas exports and billions in back payments to EU nations now probing the Russian giant for price fixing and intimidation tactics. The world's largest natural gas company attributed its 23.5 percent drop in first-quarter net income to a sharp decline in sales to both Europe and the ex-Soviet states - two of the slowest-growing regions in the world.

It also reported a one-off $2.4 billion (78.5 billion ruble) payment to European clients who managed to negotiate a lower price after threatening to take the Russian state firm to court. The profit was still a strong $11.1 billion (357.8 billion rubles) and debt was down heavily. Brussels is formally probing Gazprom for effectively trying to bully eastern and central European nations into buying its pipeline gas at elevated prices and then preventing them from trading any excess supply.

The probe comes a year after official raids on the offices of Gazprom's European partners and amid widening EU efforts to diversify its sources of energy supplies. Gazprom on Wednesday suggested that Russia's broader national interests were being threatened by the investigation and demanded respect for its "status as a strategic organisation" under federal law. _Profits Plunge at Gazprom

Al Fin energy analysts have promoted scalable GTL for years now. While a $20 billion plant is not considered small scale, several companies are competing to provide technology for small and medium scale GTL plants -- to take profitable advantage of stranded gas, offshore gas, and currently flared gas.

These small and medium scale GTL plants will not earn $10 bn a year -- or even $4 bn a year -- but they will provide a handsome profit return on investment as long as oil prices remain high.

The best long term solution for global energy involves advanced factory-built scalable nuclear technology, along with advanced development of unconventional liquid fuels from gas, coal, bitumens, kerogens, gas hydrates, and biomass.

The move to GTL, in the light of high oil prices and low gas prices, is a good place to start.

If Robots Can Mine the Rocks of Planet Mars, Why Not Use Robots on Earth to Mine Oil, Coal, Minerals

The oil industry wants to bring robotic automation to the oil field, for safer, more precise, and eventually more economical operations.

Engineers foresee a day when fully automated rigs roll onto a job site using satellite coordinates, erect 14-story-tall steel reinforcements on their own, drill a well, then pack up and move to the next site. “You’re seeing a new track in the industry emerging,” says Eric van Oort, a former Royal Dutch Shell executive who’s leading a new graduate-level engineering program focused on automated drilling at the University of Texas at Austin. “This is going to blossom.” _BW Robots the Future of Oil Industry

The technology is being developed for both onshore and offshore drilling -- including very deep sea drilling. Up-front costs for such systems will be significant, particularly in the beginning. But over the long haul, automation is likely to bring significant savings to the oil industry, just as it has to so many other industries before it.

The theory behind automating oil exploration is derived not only taking humans out of dangerous work inherent in oil and gas drilling, but eliminating as much as possible the potential for human error. The BP Oil disaster was caused when a drilling rig opened a pocket of methane, according to a BBC story. A smart drill bit would presumably be able to avoid such pockets. If a disaster like BP happens with a robotic oil rig, there would be few if any human casualties. _Texas Looks to Robotic Oil Rigs

Deep sea oil robots are particularly intriguing, operating at depths of midnight darkness, freezing cold, and crushing pressures.

These new robotic rigs would be used for production and exploratory purposes. They have been designed to operate on the ocean floor, for safe exploration of ultra-deep water and also for exploring the arctic regions that are inaccessible by traditional rigs. Seabed Rig AS has created highly intelligent robots, which are controlled by software, coded by Energid Technologies, a Cambridge Massachusetts firm. According to Neil Tardella, Energid’s COO, the software had been developed for the National Science Foundation and NASA for controlling complex robots, and this was then used to construct the most intelligent robotic rig. _azorobotics

Engineers have been devising robotics systems to replace humans in dangerous mining environments -- such as coal mines -- for decades now. As the technology improves, the possibility of removing humans from hazardous work areas and replacing them with robots becomes more feasible.

Deep sea mining for minerals and gas hydrates represent other areas ripe for the application of robotics. The field is still in its infancy, and it is likely that most applications of robotics in energy-related enterprises have yet to be conceived.