Monday, April 30, 2012

OPEC Oil Production Rises; Oil Demand Suffering

OPEC oil production rises to a 3 year high
Production by Opec members rose by 1 per cent on the month to reach an average pumping volume of 31.405 million barrels per day (bpd), according to a Bloomberg survey of oil companies, producers and analysts.

Growth was driven by Saudi Arabia, resurgent Libyan output and rising Iraqi capacity, offsetting a decline in Iranian production, which slumped to a 20-year low.

Oil prices hit by economic gloom
Official data Monday showed Spain had tipped back into recession -- another dose of grim news for a cash-strapped economy that has been hobbled by rising sovereign debt, soaring unemployment and deeply troubled banks.

"Crude oil prices started the week in negative territory, following fairly disappointing economic data from Spain that confirmed that the Spanish economy is sliding into recession," said Sucden broker analyst Myrto Sokou.

"The data weighed on crude oil prices, confirming a slowdown in oil demand, especially from the European countries due to the lack of economic development."

Europe is being pommeled by problems with debt, demographic decline, and a growing sense of "only child" entitlement.

Meanwhile, nations from Asia to the Persian Gulf are being forced to re-evaluate unsustainable oil subsidies, which keep prices artificially low and demand artificially high from China to Dubai to Mexico to Venezuela.

Inflated oil prices are spurring innovation and substitution. Industrial societies do not run on oil -- they run on abundant energy that is easily usable. Oil is one form of energy that has qualified for a number of decades. If the price of oil enters bubble territory, free societies will find ways to substitute other forms of energy. Only fools fixate on outer appearances, instead of the deeper meanings and substance beneath.

Some analysts and journalists are even suggesting ways that one might profit from the era of artificially inflated oil costs.

But be careful. When prices are being manipulated by powerful players-behind-the-curtains, movements in prices can be unexpectedly rapid and potentially devastating.

Large new deposits of oil & gas are waiting to be found off the coasts of China, Africa, South America, and North America. Should the shackles ever be removed from the international oilcos by the energy starvationists of the west, and and corrupt nationalists of OPEC and the third world, significant downward pressure on global oil prices would result.

Saturday, April 28, 2012

BioSyn Resources Implementing Scalable Gas to Liquids GTL

Gas to liquids -- GTL -- is potentially one of the most profitable energy technologies at this time. A single GTL plant in Qatar -- the Shell Pearl GTL plant -- is expected to reap roughly $6 billion per year in profits. But a handful of companies are developing smaller, more scalable GTL installations, suitable for placing offshore or at stranded gas reserves. BioSyn Resources has recently announced its intention to jump into the scalable GTL race:
After reaching a conclusion that the likelihood of the huge price differential between natural gas and crude oil will continue for the long term, BioSyn decided to implement ahead of schedule the 4th phase of its integrated biomass-centric feedstock-flexible biorefinery project, starting with the construction of a 300-bpd fourth generation gas-to-liquids demonstration plant. The demonstration plant will provide BioSyn and its process licensors, engineering and EPC contractors with techno-economic data and operational experience to proceed with full scale commercial facilities.

A fourth generation Fischer-Tropsch technology features a much smaller plant footprint and significantly lower economies of scale. It also features a product slate characterized by more than 95% C5-C18 fraction of more than 50% isoparaffinic structure and absence of oxygenates. This obviates the need for high CAPEX hydrocracking facility that is required in 3rd generation GTL plants the Fischer-Tropsch blocks of which produce largely waxy products.

With the maturation of hydraulic fracturing and horizontal drilling technologies, the vast reserves of natural gas trapped in gas shale formations underlying vast areas of continental United States are now unlocked for long term production. With gas prices hovering south of $15.00 per barrel of oil equivalent (BOE), and crude oil prices hovering north of $100.00 per barrel, the door for technical arbitrage opportunity opened up for the conversion of natural gas to drop-in infrastructure-ready transportation fuels.

Current estimates of national inventory of gas reserves at the end of 2011 stand at about 300 trillion cubic feet (TCF). The estimated U.S. future gas supply for the year ending in 2010 was 2,170 TCF, which is equivalent to about 361 billion BOE. This is more than the proven oil reserves of Saudi Arabia, which was only 262.6 billion barrels at the end of 2011.

“Petroleum based transportation fuels are tethered to highly volatile world prices of crude oil, which we predict will continue to maintain an upward trajectory for the long term. This gives rise to an unusual local phenomenon: the unprecedented widening of the price differential between natural gas and petroleum based transportation fuels,” said Mr. Reloj, BioSyn’s CEO. _Yahoo News
While Al Fin energy analysts do not expect crude oil prices to rise as quickly as many analysts do, a significant gap between natural gas and crude oil prices is likely to continue for several years, due to improving technology in gas production.

BioSyn Resources is one of the many BTL (biomass to liquids) startups which is being forced to face the facts of cheap natural gas, and the advantages of GTL over BTL at this time. In the long run, advanced BTL is a good bet when combined with either GTL or CTL, using gen IV high temperature gas-cooled nuclear reactors as an industrial heat source.

But such sophisticated XTL technologies are still a decade or so away. Advanced scalable GTL, on the other hand, is mere years away from profitability. Expect significant profits from a number of scrappy small GTL startups, as the technology improves and shakes out in the marketplace.


Friday, April 27, 2012

Doctors for Disaster Preparedness Take a Hard Line on Frivolous Energy and Climate Policy

Apparently the group "Doctors for Disaster Preparedness" is concerned about the humanitarian danger of slashing back on reliable energy supplies in the name of carbon hysteria and green energy starvation. Such policies are beginning to devastate European industry and the European economy, with Australia and the US firmly in the sights of green energy starvationists and carbon hysterics.

Most of the "Doctors for this" and "Doctors for that" groups are trumped up green energy starvationist groups. But the Doctors for Disaster Preparedness appear to be concerned about genuine potential disasters -- chief among which would the a long term loss (or diminution) of reliable energy and fuel supplies to the advanced world. It is unfortunate that much of the leadership of the advanced world does not share similar concerns.
unreliable energy supply is now “the top risk for Germany as a location for business, says Hans Heinrich Driftmann, president of the Association of German Chambers of Industry and Commerce (DIHK). All industrial sectors are threatened. The metal industry is already migrating to countries with cheaper electricity (Spiegel Online 2/24/12). In an attempt to fill the gap created by the post-Fukushima shutdown of eight nuclear power stations, Germany is developing its lignite resources (Impulse 3/6/12). That is “brown coal,” the most carbon-intensive fuel known (Lawson, op. cit.). It also imports large amounts of power generated at nuclear stations in France and the Czech Republic, and had to fire up an old oil-fired plant in Graz, Austria, when solar panels were generating virtually no energy last December (Spiegel Online 1/18/12).

Because of its “green” policies, the UK faces an energy shortfall by 2015 if not before. In a cold winter, factories would be closing, and elderly people swathing themselves in blankets (Alex Brummer, Daily Mail 3/27/12). The economy as a whole is flat-lined. Business-wrecking energy policy includes a 20% “stealth tax” on the electricity bills of business consumers, which could rise to 70% by 2020. Green policies threaten some 30,000 existing British jobs; there is no net job creation, and the subsidy for “new” jobs averaged £54,000 per worker in 2009-2010 (Conservative Home 9/18/11).

A growing backlash against the £400 million annual subsidies for wind technology is causing many companies to place wind investments on hold (Daily Telegraph 2/27/12, cited by CCNet 2/27/12). Yet a vast expansion of wind power, bankrolled by taxpayers, is required to meet the pledges in the Climate Change Act, in which Britain signs up for emissions cuts by 2050—the only country in the world to do so. Even the site heralded as “the birthplace of democracy in England”—the battlefield on which Oliver Cromwell defeated King Charles I in 1645—is slated for devastation by a wind farm.

“It is unbelievable that one planning inspector can overrule all elements of democracy,” stated MP Heaton-Harris (Sunday Express 1/22/12, CCNet 1/23/12).

In Scotland, mandated wind energy will cost consumers £120 billion by 2020; the same amount of electricity from gas would cost £13 bn. Carbon emissions might drop 2.8% with wind—or they might increase owing to the need for inefficient back-up power. Household energy costs now take an average of 14% of household income, up from 8% in 2005; 900,000 families are now in “energy poverty” (Scotland on Sunday 3/11/12).

Placing the needs of their people above the EU’s carbon allowance, Poland, Estonia, Latvia, Bulgaria, the Czech Republic, Hungary, Lithuania, and Romania challenged the European Commission’s ceilings on greenhouse gas emissions. In 2009, the European Court of First Instance ruled that the ceilings should be scrapped, but the Commission appealed.

Poland may be “riding to the defense of Europe again” (TWTW 3/10/12, In 1683, King Jan Sobieski led a cavalry attack on Ottoman forces that were assaulting Vienna, saving European civilization. On Mar 9, Poland was the sole holdout against the EU demand in “Energy Roadmap 2050” for reducing CO2 emissions to 80%–95% of 1990 levels. Coal is used to generate 90% of Poland’s electricity. _Doctors for Disaster Preparedness

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Thursday, April 26, 2012

Is Mexico Ready to Emerge from Its Self-Induced Energy Slump?

Mexico's energy production has been steadily falling, despite massive new discoveries of hydrocarbons. In order to develop its assets and allow its people to profit from its natural resources, Mexico must step back from its self-imposed energy isolationism. The curse of oil nationalism has made Mexico corrupt and lazy. The country needs outside investment and expertise in a very bad way.
For the first time in 74 years, Mexico may allow private investment in its oil and gas, the third-largest reserves in Latin America.

...Selling shares in the largest oil supplier to the U.S. will open a Mexican industry experiencing an eighth year of declining output, hurt by faltering investment and lack of technology and experience for the deepest offshore wells. The cash can fund Gulf of Mexico and shale gas production using techniques Brazil and the U.S. employed to revolutionize their energy markets.

“The taboo has been broken” on private investment, Pemex board member Hector Moreira said in an interview. “People talking about private stakes -- it’s a first step. And it’s a step that’s not prompting a negative reaction from the public.”

...Energy Minister Jordy Herrera said last month that the company’s budget to tackle all the challenges is “notoriously insufficient.” Pemex needs to change the law to get more funds and create a “model similar to Petrobras (PBR) (PBR) or whatever we decide,” he said, referring to the state-backed oil company in Brazil.

While Pemex wanted to invest more than $30 billion this year, the federal government cut its plans to about $23 billion, and even those funds are not available at the speed or with the flexibility that the company requires. Pemex paid almost 60 percent of its revenue in taxes, cash used to finance a third of the nation’s public budget. _BusinessWeek
Mexico's corrupt and inept national energy system has prohibited outside investment for almost 75 years. And Mexico has paid the price in lost opportunity and in the national laziness that infests all governments and societies that become overly dependent upon a nationalised industry such as oil.

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Shell is Pushing the GTL Envelope for Massive Profits

When the price of a commodity drops in the middle of a production glut, the smart money will find a way to turn the cheap commodity into something more valuable. That is what Shell is doing globally, with natural gas.
Shell is moving ahead with plans to build plants in the U.S. that could convert dirt cheap natural gas into high-valued diesel fuel, hoping to profit from an almost tenfold mark-up in prices that many analysts say is the biggest prize in the world of energy today.

With U.S. natural gas trading at the equivalent of $12 per barrel of oil, and crude oil at over $100 a barrel, the opportunity for profit is huge, but not without its risks. Building a gas-to-liquids facility would cost billions of dollars and take most of this decade to complete. The U.S. is already littered with money-losing long-term investments that fell victim to unexpected shifts in natural gas supply and demand.

Shell is the world’s leading operator of gas-to-liquids (GTL) facilities, which chemically convert natural gas into premium diesel, lubricants and chemical feedstocks. It operates the world’s largest GTL plant in Qatar and a smaller one in Malaysia.

The profitability of these GTL plants was a major contributor to Shell’s consensus-beating first quarter profits of $7.28 billion.

Similar plants in the U.S. could be potentially very profitable, said Shell’s Chief Financial Officer, Simon Henry. The company is looking at sites in Louisiana and Texas as the possible location for a plant producing at least 70,000 barrels a day of liquids from natural gas. _WSJ

Natural gas prices will not always be this low, but the huge price gap between gas and liquid fuels is likely to remain for at least a decade, and probably longer. The smart money will find a way to take all that cheap gas and turn it into valuable liquid chemicals, polymers, fuels, lubricants, and other materials.


Wednesday, April 25, 2012

Canadian Oil & Gas Coming On Strong

Canada's growing oil & gas production is driving the economy. The recent elections in Alberta reflect the oil sands' growing importance.

Image via NBF

The slideshare presentation below provides an extended look at near to intermediate term developments in Canada's oil & gas industry.

h/t Brian Wang

Canada and Australia are developing into two powerhouse energy and mineral exporting nations of the Anglosphere. Being blessed with abundant resources, the rule of law, ample human capital, and relative proximity to large markets, these two countries should have long and prosperous futures -- at least to the mid-century mark. This is true as long as they can avoid ruinous policies of carbon hysteria and energy starvation, and as long as they can develop and maintain sound immigration policies.

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Vast Energy Bonanza Challenges Global Geopolitical Status Quo

The global shale boom is working its way into more and more parts of the world. Very few analysts have given voice to the true seismic threat of the shale revolution -- the earth-shaking effect it will have on global energy markets and the global geopolitical infrastructure once it truly kicks into gear.
Russia...will probably be forced into serious political and economic reforms or face decline. Its government spending is too high, its non-hydrocarbon economy too anemic, and now its oil and gas sectors under challenge.

...We already know, for example, that the heft of the U.S. shale gas boom has challenged Russia's natural gas grip on Europe. Saudi Arabia also fears shale gas, whose abundance could ultimately contribute to the erosion of U.S. oil demand, as Chris Weafer said last week on this blog (also see remarks below by oil scholar Philip Verleger.).

Saudi has valid reasons to worry, as it seems almost-certain that the fresh big oil finds on other continents will whittle away at the centrality of the mighty nations of OPEC, the bain of Western economies for 35 years. OPEC seems far less likely to call the shots in global oil and, according to Citigroup and other analysts, the per-barrel price its members earn could be much-reduced. The wild card will be demand, meaning China's future oil appetite, and the continued progress of energy efficiency. _FP
Not only Russia and KSA have reason to worry. All the corrupt, inefficient oil dictatorships who have come to rely on inflated oil bubble prices to power their economies are going to come under threat.

From the Persian Gulf to Venezuela to the Russian steppe to darkest Africa, oil dictatorships will begin to see their iron-clad grip on customers begin to loosen, one by one, as more and more countries develop their native shale resources, and some of them begin to export product on their own.

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Tuesday, April 24, 2012

Global Oil Production Hits Yet Another New Peak

Peak oil prognosticators, including Ken Deffeyes and the late Matt Simmons and King Hubbert, continue running up a long string of failed predictions for the global peak in oil production. It is almost as if they all suffered from severe conceptual deficits in their thought processes.....


...the peak oil theorists, if not wrong in the long term, seem to have been premature in warning that the summit for production was upon us. In 2009, for instance, one forecast for global oil production via The Oil Drum warned that output was set to fall by more than two million barrels a year. A decade ago, geologist Ken Deffeyes’ widely read book Hubbert’s Peak: The Impending World Oil Shortage opened by stating that “global oil production will probably reach a peak sometime during this decade.” The 2009 edition of the book makes the same forecast.

Deffeyes is hardly alone in warning that the end is near for raising global oil production, as a sampling of the many book titles in recent years on the peak oil subject remind: The Party’s Over, The End of Oil, and Profit from the Peak, for instance.

There is a peak out there somewhere, of course. Production for every commodity with a finite supply inevitably reaches a crest. The question, of course, is when? Estimating the date of the apex is problematic for several reasons. Technology, for instance, can change the analysis. If you can make cars more energy efficient, that’s the equivalent of finding more oil, all else equal. That leaves us with the troublesome task of predicting what technology will bring in terms of energy savings in the years ahead. _WallStreetPit


Meanwhile, China is ramping up shale exploration and technology development, in preparation for the coming boom in Chinese shale oil & gas, and GTL, along with combined GTL and CTL.

Argentina is likewise gearing up to take advantage of the unconventional hydrocarbon bonanza.

The massive global supplies of unconventional hydrocarbons are waiting only for improved technologies of catalytic conversion to high quality chemicals, fuels, polymers, etc. Perhaps the coming boom in space mining of platinum and other precious metals will have a secondary effect on the eventual boom in GTL, CTL, BTL, KTL, BitTL, GHTL, and other XTL technologies? Particularly with the development of gen IV high temperature gas cooled modular nuclear reactors, which will send the myth of EROEI to the dustbin of history.

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Monday, April 23, 2012

Shale Energy: We Have Barely Scraped the Surface

The energy world is changing in ways that were not predicted just a few short years ago. Peak oil and peak oilers were sitting on the top of the world just two years ago. Since then, the real world has been less and less kind to them.
More than 50 years ago energy experts began speaking of “peak oil” – the idea that the world was passing the point of maximum production and that supplies would decline. Today, shale calls that assumption into question. In the US new extraction techniques have transformed gas production, opening reserves that some estimate will last 100 years. Liquid-rich shales – ones that also contain oil – have enabled the US significantly to cut its dependence on crude imports.

Shale also has the potential to reshape domestic economies. In this year’s State of the Union address. President Barack Obama said experts predicted it would support 600,000 jobs, with more to follow as industries that rely on cheap energy were brought back onshore. Lord Browne, the former chief executive of BP and now a partner at Riverstone – backer of Cuadrilla Resources, a company exploring for shale gas in the UK – is convinced it is a prize worth pursuing.

“Ultimately, shale gas gives us options for the future. It puts our energy supply in our own hands, as well as providing obvious economic benefits. It is clear that shale will be one of the linchpins of global energy supply in the 21st century, alongside nuclear and renewables,” he says.

Shales are the most abundant form of sedimentary rock on earth, serving also as the source rocks for hydrocarbons that migrate into conventional reservoirs. Nigel Smith at the British Geological Survey, a research council, uses the analogy of looking for something to eat in a house. “All the food in the kitchen, the cupboards, the fridge and the freezer – that’s the hydrocarbon source rock kitchen. The conventional hydrocarbons that we have used so far have migrated to the dining room. We are going back into the kitchen to see what is still left in the source rocks or shales.”

The apparent abundance of riches in the “kitchen” is causing a stir around the world. Aside from Argentina, significant reserves have been identified in Australia, South Africa, northern Africa and eastern Europe as well as in the UK and France. After an assessment of the potential in 32 countries the Energy Information Administration, a US federal agency, has estimated shale could increase the world’s technically recoverable gas resources by more than 40 per cent. _FT_via_GWPF

With reserves as huge as those of many countries, not only will they use the resource themselves, they will certainly begin to export the resources to other nations. That phenomenon will shake world energy markets to their foundations. Just imagine: Russia's Gazprom will not only lose some of its best customers in Europe and Asia to their own shale gas resource. Gazprom will also be forced to compete with their former customers, as they turn into exporters themselves!

That is not what Mr. Putin wants to see, just as he is in the middle of plans to "re-build the USSR!"


Is This What Peak Oil Looks Like?

Peak oil theory holds a static view of the world, and its models ignore price effects: lots of oil discoveries and high production mean that prices and profits wane, and incentives for further exploration decline. But ensuing oil shortages then restore these incentives. When incentives exist, the industry will continue to produce and is likely to produce even more. Peak oil theorists also neglect the role of technological advances in oil production as a great multiplier. The history of the oil industry reflects an endless struggle between nature and our knowledge. Progress in technology allows both new discoveries and the increase in recovery rate needed to turn non-recoverable or hypothetical resources into recoverable reserves. _China Dialogue

In the real world, oil reserves are not static, but rather respond to changes in prices, technologies, alternative fuels and energies, and new discoveries. Peak oil has shown itself incapable of responding to real world conditions, which makes it more like a religion.
The market has now priced in declining oil prices at least through 2020. If "peak oil" dynamics are still at play, they are nowhere to be found on this futures curve. [see graph above] _Forexpro
Peak oil skunks show their true stripes in their hysterical reactions to the shale oil & gas boom. Instead of being happy that civilised nations are given a temporary respite from high energy costs, these little weasels are hoping that governments will shut down the new forms of energy -- they hope for political peak oil, and increased hardship.

Apocalyptic thinking has become all the rage in peak oil doom / carbon hysteria circles. Clearly the US Obama administration , along with several governments of Europe, have been tainted more than a little by this coliform pollution of the mind.

But no matter how many circles of doom may form around the perimeter, the main thrust of human nature has always been toward profit, growth, and life. These positive drives push technology and exploration forward, and open up new conceptual mindsets which are able to incorporate new forms of energy, fuels, and possibilities into a larger future vision.

Doom is fashionable among the effete elite in the media, politics, faux environmentalism, academia, and the many cults of the apocalypse. But the rest of us have work to do.


Sunday, April 22, 2012

Carnival of Nucular Bloggers 101

The 101st Carnival of Nuclear Energy bloggers is being held at ANS Nuclear Cafe (h/t Dan Yurman). Here are some excerpts from the carnival:
The Turkish government recently signed a $20 billion project with Russia to build nuclear power facilities in Akkuyu, Turkey. Now the Turkish government has set its sights on constructing a nuclear plant in Sinop, Turkey.
The Financial Times recently reported that China is the primary contender for this contract due to its ability to secure financing without requiring guarantees from the Turkish government. Turkish Prime Minister Recep Tayyip Erdogan visited China last week, confirming reports of the deal when Energy Minister Tanir Yildiz held talks with Chinese authorities. At these meetings, Chinese Energy authority Liu Tienan pledged full financial guarantees for the $20 billion project.
This is a review of estimates for a nuclear energy century. It reports 1000 reactors for 2030 would be the high-2030 scenario from the World Nuclear Association (WNA) – Nuclear Century. The WNA lists nuclear generation targets by country.
Idaho Samizdat – Dan Yurman
Once again it is time to spit on your hands, rub them together, and raise the black flag of contention to respond to deliberate attempts at creating fear, uncertainty, and doubt.
It will take upwards of three decades to decommission Fukushima. There are many engineering challenges ahead. However, feat mongering is not useful as part of the dialog about the future nuclear energy in Japan or anywhere else.
In California Friends of the Earth is using Gundersen’s report to create fear of the SONGS plant by questioning the design basis of the steam generators. That’s propaganda. It isn’t engineering fact.
ANS Nuclear Cafe – Paul Bowersox
Suzy Hobbs Baker introduces the Nuclear Literacy Project, a new website and outreach initiative geared toward reaching young, non-technical audiences with information about nuclear energy. The new website is just the beginning… which you can check out at There are many ways to support Nuclear Literacy.
Dan Yurman covers the breaking story of a partnership between Westinghouse and Ameren Missouri to develop and build Small Modular Reactors at Ameren’s Callaway site — and other recent entrants in the race to win $452 million in cost-shared funding from the U.S. Department of Energy for SMR licensing and technical support.
Atomic Insights – Rod Adams
Electric utility executives, public utility commissions and energy industry pundits all seem to agree that the ability to extract useful quantities of gas from deep, tight shale gas reservoirs has opened up a 100 year supply of cheap natural gas. Many have publicly stated that abundant supplies of low-priced gas makes nuclear energy irrelevant and hopelessly uncompetitive.
ExxonMobil, one of the most widely respected multinational petroleum companies in the world is betting in the other direction. They are investing heavily in the capability to produce and distribute natural gas. They are not investing tens to hundreds of billions of dollars in natural gas related capital assets because they think gas will remain cheap.
ExxonMobil often places contrarian bets and rewards stockholders because they successfully buy cheap assets when no one else wants them and sells massive quantities of high margin products when everyone else is buying
Atomic Power Review – Will Davis
Will Davis at Atomic Power Review continues on his mission to give nuclear energy its history back by introducing an unusual (to the nuclear energy world) series of historical prose.
Previously announced at APR were four recurring, new historical features; the actual launch occurs now with the first installment covering Sylvania-Corning Nuclear Corporation’s Western Sales Office. Through many original documents both from Sylcor and from the late Jim Vadeboncoeur, Will Davis tells the inside story of the early days of commercial nuclear energy.
Thorium MSR – Rick Maltese
_ANSNuclear Cafe Nuke Carnie 101

Nuclear energy in the US is being unjustly held back by US NRC chairman Jaczko and a cabal of energy starvationist, anti-nuclear senators including Harry Reid and Barbara Boxer. Dan Yurman has more on the latest of the Jaczko follies

The US state of Missouri is joining Westinghouse in the competition for US DOE funding meant to promote the creation of small modular fission reactors.

US energy companies would be best off working together to defeat US President Obama's re-election bid in November, as well as working to eliminate other energy starvationist politicians who are ensconced within the fossil bureaucracies and divisions of the monstrously overgrown US government.


IBM and its New 800 Km Range Lithium-Air Battery

Electric vehicles are cursed by ludicrously expensive, short-range batteries, which sour new owners on the technology all too quickly. The EV and hybrid automobile industries cannot survive for long, if they cannot even attract old owners back for new designs and models.

But what if a company -- perhaps IBM -- were to invent and produce a reasonably priced battery that provided a 500 mile range per charge? How would that change the equation?
Most fully charged lithium ion car batteries today will take an electric vehicle only 160 kilometers before petering out. (Nissan says its all-electric Leaf has a range of about 175 kilometers.) Plug-in electric vehicles such as the Chevy Volt have an even more limited range of up to 80 kilometers before its gas-powered motor must kick in.

...Researchers predict a new type of lithium battery under development could give an electric car enough juice to travel a whopping 800 kilometers before it needs to be plugged in again—about 10 times the energy that today's lithium ion batteries supply. It is a tantalizing prospect—a lighter, longer-lasting, air-breathing power source for the next generation of vehicles—if only someone could build a working model. Several roadblocks stand between these lithium–air batteries and the open road, however, primarily in finding electrodes and electrolytes that are stable enough for rechargeable battery chemistry.

IBM plans to take lithium–air batteries out of neutral by building a working prototype by the end of next year. The company announced Friday it has stepped up development efforts by adding two Japanese technology firms—chemical manufacturer Asahi Kasei Corp. and electrolyte maker Central Glass—to the IBM Battery 500 Project, a coalition IBM established in 2009 to accelerate the switch from gas to electric-powered vehicles among carmakers and their customers.

...the lithium–air batteries might be ready for production by 2020 at the earliest, "if we don't find any show-stopping technology along the way." [Winfried Wilcke] adds: "The only thing I'm certain of is that it won't happen this decade." _SciAm
Well, it was a thought. But it is just as important to understand development timeframes when they are stretched out, as when they are compressed or accelerated.

EVs and hybrids are not magic carpets, sent from an alternate Persia to rescue us from hydrocarbon fueled vehicles. It takes time to overturn infrastructures based upon $trillions of investment, development, and production base.

Fortunately, there are many decades worth of oil remaining, and centuries worth of liquid fuels from CTL, GTL, BTL, KTL, and GHTL [gas hydrates to liquids]. If you throw in the cheap and abundant industrial process heat from new generations of safer, cleaner, scalable nuclear reactors, we are not likely to run out of liquid fuels for combustion engines for a very long time.

Peak oil religionists are good at sitting around in circles, droning their liturgical repeats, centered upon a dark and constricting future. The rest of us have work to do.


Friday, April 20, 2012

New Biofuel King? Bio-Butanol Replacing More Bio-Ethanol Plants

Back in 2010, the New York Times profiled 3 companies that were moving to retrofit bioethanol plants, converting them to produce a much superior biofuel -- bio-butanol. Now in 2012, the three firms -- Cobalt Technologies, Gevo, and Butamax (a joint venture of BP and DuPont) -- are pressing ahead with their plans to make bio-butanol the new king of the biofuels.
Cobalt Technologies recently announced a deal between the Naval Air Warfare Center Weapons Division (NAWCWD) and the company Albemarle to produce a jet fuel from biobutanol.

...Butanol does hold some advantages over other alternative fuels. It’s heavier than traditional ethanol and more similar to gasoline, making it over 30 percent more efficient than ethanol. California-based Cobalt Technologies has claimed that by producing the bio n-butanol with non-food feedstocks it is making some of the cheapest and most efficient biofuel on the market. 

 And because biobutanol doesn’t mix well with water—something ethanol does do—the product can be interchanged very easily with traditional oil products in pipelines and refineries, Jack Huttner, executive vice president for corporate development of Gevo, another biobutanol company, told ClimateWire in January 2010.

...Cobalt has decided to forego food crops in production and instead uses cellulosic feedstock from wood waste. _TGDaily
Gevo continues retrofitting corn ethanol plants to biobutanol plants. But Gevo is aiming first for the lucrative chemicals market, with its butanol product. By generating early profits in this way, Gevo is hoping to improve and scale its technology so as to compete head to head with petro-fuels in just a few years.

Butamax -- the joint venture of BP and DuPont -- may be ready to break out of the pack soon. The venture has entered into a collaboration with Fagen -- a heavyweight biofuels engineering firm -- to move rapidly into the ethanol to butanol retrofit game.
Butamax Advanced Biofuels, LLC, a joint venture between BP and DuPont, has entered into collaboration with Fagen, Inc. for the introduction of commercial biobutanol production using Butamax technology.

Fagen is an experienced biofuels engineering, procurement and construction contractor, having built more ethanol capacity than any other company. It has built more than 85 ethanol plants totaling approximately 6 billion gallons of annual production.

...The company announced last December the formation of the Early Adopters Group (EAG), a consortium of biofuel production companies interested in becoming early adopters of Butamax biobutanol technology. In addition, piloting work continues at the Butamax Technology Demonstration facility as the company prepares for market entry with commercial production in 2014. _GCC
It is likely that Butamax will enter the chemicals market prior to the fuels market, for economic reasons, and due to its connection to DuPont. Bio-butanol is also likely to be used as a fuel additive for both diesel and gasoline, before it is forced to compete as a drop-in replacement for gasoline.


Peak Oil Persistently Punched and Pummeled

Inflated oil prices continue to drive investment in new exploration and production technologies. Large new oil finds in Africa are causing political repercussions from China to Europe -- where inflated oil prices combined with carbon hysteria and nuclear phobia are hurting several economies.
The really bad news for the ‘peak oil faithful’ is that commodity prices might not become more expensive in future. High benchmark prices today, continue to drive investment into technological innovation for cheaper extraction tomorrow. Little surprise that future oil prices are dipping under spot market dynamics: East Africa has merely added an attractive prospect for bullish supply side expectations. Peak is dead.

...Not only have global unconventional finds flattened Hubbard’s ‘peak’, more and more conventional plays are cropping up. ‘Running out’? We have more than enough of the black stuff to incinerate ourselves several times over. Such supply side bounty has been well documented in the Americas – not just in the US and Canada, but across Latin America, offering a second pass at resource riches. Head all the way over to Australia, and you’ll see a dazzling display of unconventional technologies rapidly increasing kangaroo LNG production. The North Sea can squeeze out a few more drops; Europe can finally get it’s ‘energy sovereignty’ back from shale plays, all while the Arctic offers Russia untold oil riches. Anywhere you look, the narrative is the same. But just when we thought the global hydrocarbon map was complete, another serious player has cropped up, and it comes in the form of East Africa. This is the new African oil rush, and the race to secure regional riches between East and West is on. Nobody wants to lose: Peak oil is dead, the Great Game is back. _Forbes
Much more at the link.

Peak oil doomers tend to give too much credence to trend charts of production and discovery, without examining the underlying reasons for the data that goes into the charts. This lack of insight into conceptual underpinnings dooms them to be disappointed and disillusioned by a resilient energy sector that keeps on going.

There is one type of peak oil that is very real, however. Political peak oil. Temporary and manipulated oil shortages caused by political caprice, instability, and incompetence. That kind of peak oil is often mistaken for the real thing by shallow analysts. Try not to make that mistake yourselves.

Thursday, April 19, 2012

Cheap Shale Gas Revolutionising US Industry

The shale gas boom is injecting new life into US manufacturing. Several parts of the US are beginning to enjoy renewed economic activity, thanks to the fracking shale gas boom. Despite the improvement to the US economy, US President Obama is not altogether pleased at these developments, and has already taken steps to clamp down on the shale gas industry, once it is politically safe for him to do so. A good example of new production brought about by cheaper natural gas prices, is Dow Chemical's planned US expansion in ethane cracking to ethylene, and in new propylene supplies.
Dow plans to supply the required ethane and propane for these projects through a variety of supply arrangements, including: a possible joint venture fractionator in Texas, supply from existing fractionators, supply from future new fractionators to be built within the industry, and potential supply deals from various shale gas opportunities such as the Eagle Ford and Marcellus shale regions. Dow has signed ethane and propane supply contracts based on the Eagle Ford shale gas and is pursuing several more agreements from this area. In addition, Dow has signed a Memorandum of Understanding (MOU) with a wholly-owned subsidiary of Range Resources Corporation (NYSE: RRC), stating plans to enter into a long-term supply agreement for the delivery of ethane from the Marcellus Region in southwest Pennsylvania to Dow’s existing operations in Louisiana. “As the largest consumer of propylene in North America, Dow has a unique opportunity to invest aggressively for on-purpose propylene production from propane. Additionally, Dow is the largest producer of ethylene in North America, which provides capabilities to increase our use of ethane in existing ethylene production units – and to grow,” Fitterling said. “All of these investments, combined with Dow’s planned agreement with Range Resources, will dramatically increase our capability to consume ethane, while maintaining our industry-leading feedstock flexibility.” _Businesswire
More from O&G Journal

More available for WSJ subscribers
Illinois is beginning to enjoy some of the economic benefits of the fracking boom
H/T Carpe Diem
If US voters can eject their current energy starvationist government -- in the persons of Barack Obama, Ken Salazar, Lisa Jackson, John Holdren, etc etc -- they will be in a much better position to regrow a prosperous economy.

That is the only way the US will be able to dig its way out from under the mountain of debt its government has created -- by growing entire new industries and sectors of commerce.

Russia Faces Crucial Threat from Shale Gas

This article is cross-posted from Al Fin blog
Now and again Russian President Putin has warned Russian gas-giant Gazprom that it must face the growing threat of abundant shale gas. Shale gas is a massive and newly accessible energy resource ranging from North America to China to South America to Europe. But it is the shale gas resources in Europe and China that Putin is most worried about, for those resources represent a huge and devastating threat to Russia's ability to finance its government. Putin's ambitious plans to make Russia into a world superpower, like the collapsed USSR, are at stake.
Could the boom in shale gas challenge the leadership of Russia in gas? Until now, Moscow and Gazprom have seemingly been nonchalant about the threat. But as the impact of the boom in US natural gas production becomes clear, depressing prices to levels not seen in 10 years and increasing the prospect of the country becoming an exporter, the Kremlin is beginning to pay attention. The change in attitude is led by Vladimir Putin, Russia’s president-elect. He told the Duma last week that the boom in shale gas can “seriously” reshape the global energy market. “National energy companies, obviously, must respond to these challenges,” he said, in a clear reference to Gazprom. ...The biggest risk for Russia is not the US shale gas but the potential of the development of similar reserves in neighbouring Bulgaria, Romania, Poland and Ukraine. Eastern European countries are racing to tap shale deposits using the same technology – hydraulic fracturing, known as fracking, and horizontal drilling – used in the US gas industry. Gazprom supplies Europe with about 20 per cent of its gas needs, so the development of shale deposits in its backyard is a serious long-term threat. Until now, European companies have found it difficult to renegotiate their expensive contracts with Gazprom because the lack of alternative suppliers. Over the next decade, the development of the European shale industry could give the Continent’s natural gas consumers a bit more leverage. _FP_via_GWPF
China is another Gazprom customer which will soon be in a good position to re-negotiate its contracts, based upon the development of its own native shale gas resource. All of these re-negotiations will be extremely painful for a corrupt energy oligarchy such as Russia, which depends upon high energy exports to finance its very existence -- an existence already threatened by an ongoing demographic collapse, a worsening public health disaster, an industrial infrastructure that cannot keep up with the west, and a military that is increasingly seen as a "paper tiger" by its ambitious neighbor to the southeast. Putin has green activists well in hand, in his battle to keep Russia's energy customers helpless and dependent upon their Russian energy suppliers. But governments are being pushed to the wall by energy prices and ongoing budget deficits. Most of Russia's customers are not overly fond of the aggressive bear, and do not care to pay for Russia to re-develop its nuclear and conventional threat.
...Gazprom’s European customers, tired of being ripped off by Gazprom, are avidly exploring the possibilities of undertaking fracking to develop their own sources of the “blue gold,” and nowhere is interest higher than in the Russian Federation’s neighbors Ukraine, Poland, Romania, Bulgaria and China. ...the rapid growth in U.S. shale gas production has already led Gazprom to postpone the launch of its massive Shtokman gas condensate field development in the Barents Sea, which contains an estimated 3.9 trillion cubic meters (tcm) of natural gas. In 2009 the U.S. overtook Russia as the world’s biggest producer of natural gas as expanded fracking activity to extract fuel trapped in shale rocks. Even worse, by 2016 the U.S. plans to become a net exporter of liquefied natural gas, with initial sales of 31.1 million cubic meters (mcm) a day doubling within three years. Gazprom’s exports to Europe are already falling because of increased competition. Moscow’s National Research University Higher School of Economics Center for evaluation of commodity assets director Valery Kryukov noted that while Gazprom previously supplied 37 percent of Europe’s natural gas needs, that had slipped to 25 percent and concluded, “Russia risks losing its main source of income - the export of natural gas.” Perhaps the weirdest aspect of Russia’s views on shale gas is that it has criticized recent interest in Rumania, Bulgaria and Poland in shale gas development as environmentally irresponsible, a somewhat surreal complaint given the USSR’s ecocide inflicted by more than seven decades of headlong industrialization. _GWPF
China's situation is even more threatening to Russia than the prospect of losing its European customers. Because China is a clear and developing threat to Russia's very possession of its vast East Siberian resources -- from timber to minerals to oil & gas to uranium. If China becomes self-sufficient in gas production, not only will Russia lose a lucrative customer, it will also be faced with a more dangerous competitor -- on many levels.

Wednesday, April 18, 2012

Can Markets Deal with the Government Sponsored Green Energy Blight?

Global investment in clean energy dropped to its lowest since the depths of the financial crisis three years ago as the U.S. and European nations cut support for wind and solar projects, Bloomberg New Energy Finance said.

...Spain suspended subsidies to new renewable-energy projects in January, while Germany and Britain have curtailed support to solar power. In the U.S., a Treasury grant program offering as much as 30 percent of development and construction costs for renewable-energy plants expired on Dec. 31, while the Production Tax Credit, which grants an incentive worth 2.2 cents a kilowatt-hour of wind power, is due to end this December. _Bloomberg
The green preference for intermittent unreliables such as big wind and big solar, cannot hide the inability of these wasteful enterprises to compete on a level playing field. In the end, market forces will tell.
Solar manufacturers have been hurt by the global recession, an influx of Chinese panels and declining subsidy programs in Europe. Germany, the world's largest market for solar power, announced in February that it would cut solar subsidies by 30 percent.

"It is clear the European market has deteriorated to the extent that our operations there are no longer economically sustainable, and maintaining those operations is not in the best long-term interest of our stakeholders," First Solar Chairman and CEO Mike Ahearn said in a statement. _AP
First Solar was another of the Obama favourites. Over a dozen Obama green energy picks are struggling for survival, after their politically connected backers picked their bones for personal profits, before passing the massive losses on to the taxpayer.
The production tax credit for wind power, for example, was created in 1992, and is now set to expire at the end of this year.

...Recent attempts in Congress to renew the wind power tax credit have been defeated. Government support for renewable energy has become increasingly contentious in the US as a result of growing opposition in the Republican party.

The collapse of Solyndra, the solar panel manufacturer that went into bankruptcy last year after borrowing $527m from the government, has been seized on by Republicans as an emblematic example of the mistakes made by Mr Obama’s administration.

Pressure on public spending created by the size of the budget deficit is also constraining the funds available for subsidies.
Big green energy schemes cannot survive without massive and ruinously expensive government subsidies. Big wind and big solar are intermittent unreliable sources of energy, which are favoured by greens, but represent disaster to power grid management and quality of service for power utilities.
It's a grim prospect for any solar company based in North America or Europe that is battling fierce competition from China, even when such companies are doing much of their production overseas. Yesterday, SunPower announced it was closing one of its two plants in the Philippines. That leaves the company, headquartered in San Jose, with two plants, one in the Philippines and one in Malaysia. The plant it’s shuttering is the oldest of the three, and the decision to close it is connected with SunPower's effort to focus on production of higher-efficiency solar cells.

Four years ago, when the industry was abuzz with talk of a "photovoltaic Moore's law," SunPower and First Solar, based in Tempe, Ariz., were considered the star performers among U.S. PV manufacturers. _IEEEGreenblog
Opportunistic parasites are flocking to green government subsidies in the US and Europe before they expire. The inevitable bankruptcies and vast rusting fields of idle giant wind turbines and solar farms will provide long term testimonies to the folly of opposing underlying market forces in the name of a lefty-Luddite dieoff.orgiast green faux environmentalism.

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Peak Oil vs. Oil Plenty

There are clearly different ways the oil market may evolve over the next five to ten years. A continuation of high prices in the face of production disappointments and strong Asian growth is plausible. So is a kind of re-run of the 1980s, with new supplies, growing efficiency and intra-OPEC competition driving down prices. What is not on the horizon is a resource-limited peak in production, nor an associated economic collapse. _Robin Mills via GWPF
Can global oil producers ramp up oil production in the face of widespread claims of "peak oil?" Renowned oil economist Robin Mills considers the question in a recent essay. Here are some excerpts:
Despite Total chief Christophe de Margerie's stating in 2010 that global production would be unlikely to exceed 100 million barrels per day (bpd), and that 90 million would be "optimistic", in November 2011 supply actually reached 90 million bpd for the first time ever. This is on a broad definition - including unconventional oil, natural gas liquids and biofuels - but to the consumer, the source of the fuel that goes into the tank is irrelevant.

...After a long period of post-invasion decline and stagnation, the new investment is beginning to deliver: Iraq’s exports in March were the highest since 1989. It will probably exceed its 1979 record production this year or next, in the process overtaking Iran as OPEC's second-largest player.

In response to the Libyan and Iran crises, Kuwait and Saudi Arabia have also increased production to record highs, not matched in Saudi's case since 1980; in Kuwait's since 1973. Saudi Arabia's production capacity is tight but that is due to its post-recession decision to delay new field developments, now being reversed. This casts doubt on the famous prediction made by the renowned investment banker Matthew Simmons in 2005 that "we could be on the verge of seeing a collapse of thirty or forty percent of [Saudi] production in the imminent future, and imminent means sometime in the next three to five years - but it could even be tomorrow."

The implication that OPEC (led by Saudi Arabia) sought to maintain a fairly constant market share from 1994-2011 suggests four scenarios for the future:

Non-OPEC production remains weak, leading to a continuation of OPEC's matching policy, and high prices to ration demand. Note though, that with an actual peak and decline in non-OPEC supplies, it becomes optimal for OPEC to increase market share

Robust non-OPEC output growth resumes, forcing OPEC to match it to maintain market share, or as in the early 1980s, to cut output to defend an ultimately unfeasible price target
OPEC changes its policy and begins increasing market share because it is worried about demand destruction or non-oil technologies

Other OPEC members seek to expand capacity, most likely Iraq but possibly also Libya and a post-Chavez Venezuela, forcing Saudi Arabia and its Gulf allies to respond with increases of their own

These scenarios present a far more nuanced view of global oil production trajectories than the simplistic "peak oil" view of a resource-limited production curve. [...]

...Yet these dramatic developments and advances in our understanding appear to have been ignored by many observers, who remain trapped in a paradigm where physical availability of resources is the only significant factor.

Former UK Chief Scientific Adviser, David King, with oceanographer James Murray, published an essay in Nature 10 in January arguing that there has been a peak in 'easy access' oil (whatever that means) since 2005. Remarkably, this study mentions neither OPEC policy (including its 2008 production cuts in response to the economic crisis); Iraq, with its enormous volumes of 'easily-extracted' oil; nor shale oil.

Intellectually, the peak oil movement appears to have moved on to preparation for collapse (or at least an end to growth). Peak oil has become conflated with other real or potential crises: the recession, climate change and overpopulation.

This is very reminiscent of the 1970s, and indeed features of OPEC strategy, rising costs, new resource types and technologies are also familiar. There are clearly different ways the oil market may evolve over the next five to ten years. A continuation of high prices in the face of production disappointments and strong Asian growth is plausible. So is a kind of re-run of the 1980s, with new supplies, growing efficiency and intra-OPEC competition driving down prices. What is not on the horizon is a resource-limited peak in production, nor an associated economic collapse. _Robin Mills _ via GWPF
More at GWPF, and the full essay at Europe Energy Review with free registration.
Peak oil acolytes should take warning from the many failures of prediction by Simmons, et al. Mentally unstable persons are often drawn to conspiracy doom theories such as peak oil. For those of sounder mind, they would do well to learn to adopt a more nuanced view, which allows for a wide range of future developments in new technologies, discoveries, and an eventual breakdown of the many corrupt political obstacles to a more abundant human future.


Tuesday, April 17, 2012

Unconventional Liquid Fuels Set to Double in 5 Years

Worldwide, natural gas reserves far exceed oil reserves. Indeed, at current consumption rates, the earth has about a 45-year supply of oil, compared with a nearly 1,000-year supply of natural gas. In many locales, though, natural gas is “stranded” and thus suppliers have limited markets. A key objective of gas suppliers is the development of processing and conversion technologies, such as gas to liquids, that would enable entry to the multitrillion-dollar market for chemicals and liquid fuels.

The gas-to-liquids (GTL) business is involved in the chemical conversion of stranded natural gas feedstocks to liquid products such as transportation fuels and chemicals. Insofar as beneficial processing of the world’s huge resource base of stranded natural gas is concerned, GTL processing is a relatively recent research and development (R&D) focus of the petrochemical industry. Development of commercial-scale GTL plants, utilizing stranded natural gas, is a relatively recent development, too. _ReportsnReports
Oxford Catalysts GTL Process
Among those small companies moving into competition with the giant energy enterprises for that $multi-trillion global marketplace, include Oxford Catalysts, Carbon Sciences, GasTechno, and a growing number of startups.
A significant amount of the world’s natural gas resources are stranded, far from existing markets. In the U.S. market, the recent substantial increase in natural gas reserves creates a technical and market opportunity for lower cost conversion to liquid fuels and chemicals. GTL technologies can economically convert these resources into high-quality, ultra-low sulfur diesel (ULSD) fuels that can be transported to consumers or used in remote locations.
Fischer-Tropsch (FT) processing of synthesis gas (synthesis gas) has undergone significant improvements in reactor design and product recovery and is no longer limited to large-scale commercial demonstrations. The process creates liquid fuel from synthesis gas, either gasified from hydrocarbon sources or natural gas, but not crude oil. FT processing has allowed South Africa, for instance, to reduce its dependency on foreign crude after World War II.

Technically, GTL fuel production is in a relatively advanced stage of development, with commercial production well demonstrated in, for example, Qatar, Malaysia, and South Africa. Although synthetic fuels can be produced from a range of feedstocks—biomass, coal, and natural gas—the GTL process is at the most advanced stage of commercial development. In addition, GTL utilizes gas resources that are either flared or currently unmarketable. Synfuel production via GTL processing of stranded gas is approximately 100 mbbl/d (thousand barrels per day), and it is estimated that as many as 10 large-scale GTL plants will be in operation over the next decade, producing as much as 300 mbbl/d of GTL products.

Many major oil companies have announced plans to investigate producing synthetic diesel fuel via a GTL process. However, a handful of companies, such as established GTL companies Sasol, Shell, Syntroleum and Rentech, are the dominant producers. As discussed in this report, though, there are numerous “second-tier” companies that have sizable GTL support operations in engineering, design, plant construction, ancillaries, and related activities. Generally, R&D is improving the efficiency and economics of GTL production as well as quantifying the costs and benefits of production and use of GTL fuel in vehicles. _ReportsnReports
The full report is available for $4850

The unconventional fuels industry is beginning to garner a lot more attention from investors, venture capital, and the energy and chemicals industries. When the full range of unconventionals is considered -- from CTL to BTL to GTL to KTL etc. -- the potential volume of fuels falls into the 10 trillion barrel oil equivalent range and up.

The key obstacle to greater participation in XTLs is the very high upfront capital costs for facilities. The Shell Pearl Qatar GTL plant, for example, cost $20 billion in development costs -- although it is expected to provide at least $6 billion per year in profits at full capacity production, so long as the price of oil does not crash and stay low. No wonder Shell and Sasol are considering building large plants in Louisiana to take advantage of the shale gas boom in that region of North America.

China is looking at a wide range of GTL and CTL approaches, to take advantage of its own shale gas wealth and coal resource. Once China's unconventional liquid fuels processes kick into production, Chinese demand for overseas oil imports is likely to diminish. Particularly if China is able to combine its ambitious nuclear reactor development program with unconventional hydrocarbons production. Persian Gulf states are likewise looking at expanding current GTL capacity to increase the value of the massive natural gas resource there.

Finally, Russia is likely to be forced to enter the GTL marketplace, as it sees the value of its natural gas resource slipping away, as more and more of its customers develop their own native shale gas reserves.


Monday, April 16, 2012

Obama Bureaucracies Poised to Pull Plug on Shale Boom

One of the few bright spots in the dismal Obama economy has been the shale oil & gas boom. Several US states have benefited from the rapid growth in energy drilling, and consequent boom in local manufacturing, housing, and service investment that has taken place.

Unfortunately, the unconventional energy boom has proved inconvenient to many of President Obama's key supporters, potential allies, and constituencies, including the foreign government of Russian President Vladimir Putin. But given the enormous beneficial economic effect of the shale boom on large parts of the US economy, Mr. Obama cannot openly move against the industry. He must first provide himself with as much bureaucratic and faux environmental cover as possible.

Update: Obama a threat to low cost natural gas

While Mr. Obama has the Department of Interior (Ken Salazar) and the EPA (Lisa Jackson) well in hand, the Department of Energy has been a bit too eager to help the energy industry to expand and develop, for Mr. Obama's taste. When one has devoted so much of his time to taming the private sector economy in order to establish the uncontested dominance of the public sector, one cannot easily allow any industry to "break out" of the pack -- particularly an industry as politically incorrect as the oil & gas industry.
The US Departments of Energy (DOE) and of the Interior (DOI), and the Environmental Protection Agency (EPA) announced a formal partnership to coordinate and align all research associated with development of the US’ unconventional natural gas and oil resources such as shale gas and oil. The partnership exemplifies the cross-government coordination required under President Obama’s executive order released earlier today, which mandated a new Interagency Working Group to Support Safe and Responsible Development of Unconventional Domestic Natural Gas Resources. (Earlier post.)

The new partnership will help coordinate current and future research and scientific studies undertaken by the three federal agencies. A primary goal of this effort will be to identify research topics where collaboration among the three agencies can be most effectively and efficiently conducted to provide results and technologies that support sound policy decisions by the agencies responsible for ensuring the prudent development of energy sources while promoting safe practices and human health. A broader set of activities will be coordinated under the newly ordered Interagency Working Group. _GCC
More at GCC, with links to public documents and announcements.

One must read between the lines in order to interpret the underlying intent of bureaucratic coordination of this type. While the announcement is worded to suggest that the Obama administration is promoting new energy sources such as unconventional oil & gas, the sad reality is that Mr. Obama is using two ideologically subjugated bureaucracies to subdue a third, which has failed to submit itself totally to getting its ideological mind right.

In an election year, the president cannot be too careful in covering his donkey. Particularly when his planned policies are likely to hurt the US economy by attacking crucially important energy supplies and economic activity.

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Friday, April 13, 2012

Innovative Approaches to Nuclear Power Offer Great Hope

Transatomic Power Team Presentation

In a recent posting at Idaho Samizdat Nuke Notes, Dan Yurman highlights two of the most promising new approaches to nuclear power, for the intermediate term future:
In Massachusetts, Transatomic Power, run by two Ph.D. candidates at MIT, Leslie Dewan and Mark Massie, the effort is focused on using uranium-based spent nuclear fuel to provide the energy to run the reactor. Their business model is to license a design to a major reactor vendor or a state-owned reactor development agency.

...Asked why they chose this specific technology, they point to three specific factors - safety, waste, and economics. Massie says the team chose the molten salt design concept because they feel it will provide more bang for the buck, and it will be faster and cheaper for someone licensing their technology to bring it to market.

The most significant reason is that when compared to a new design for a fast reactor, there is no need for fuel design, qualification, and fabrication, a process that could add years to the development timeline.

Financial backing for the firm is coming from private investors as seed funding. Dewan says the hunt is on for early stage funding to establish a stronger financial base.

The real challenge in the next two years is to build a team to complete the design. The firm has gone back to some of the experts who worked on the molten salt reactor at Oak Ridge National Laboratory, but what it really needs is a new generation of engineers to work on the design.

"What we offer to a new PhD. or engineering graduate is the excitement and opportunity to develop new aspects of nuclear energy. There is a misconception that there is not a lot of room for innovation," Dewan said. _IdahoSamizdat: Nuke Notes
China may be interested in their approach, but the Transatomic Power team is uncertain whether China would steal control over their innovations and intellectual property.

The other promising innovative approach to nuclear fission is Flibe Energy, Kirk Sorensen's liquid fluoride thorium reactor (LFTR):
Liquid-fluoride reactors operate at high temperature but not at high pressure because they use a chemically stable medium as the fuel and the coolant, making them much safer to operate than conventional reactors.

He says that "Thorium is the only abundant nuclear fuel that can be efficiently utilized in a thermal-spectrum reactor and is uniquely chemically suited for use in a fluoride reactor."

Introduction to Flibe Energy

The market for the design is based on an assessment that there are many remote sites where electrical power is generated by diesel fuel that is transported over great distances and over challenging or hostile terrain. A small modular power source has the potential to reduce the costs, hazards and vulnerability of power supply-lines, saving money and even lives in term of providing power to military bases. _Dan Yurman
Much more at Dan Yurman's Idaho Samizdat Nuke Notes, linked above.

Both approaches are capable of much higher energy efficiencies from a given nuclear fuel -- either uranium or thorium. The thorium approach may offer marginally better fuel costs, once the infrastructure for thorium production is developed and scaled up. But with plans for energy extraction from fuel above 98%, the cost and availability of fuel should be the least of concerns for either company.

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Thursday, April 12, 2012

The Jobs and Economic Future of the US Are Tied Up In the Energy Boom

The US economy has been kept afloat -- despite the best efforts of the Obama administration to sink it -- by the oil & gas boom. Obama's EPA continues to try to find ways to shut down the shale energy boom -- just as it has shut down coal plants, offshore drilling, and stonewalled clean new advanced nuclear reactor designs.

But given the central role of the shale oil & gas boom in preventing an all out US economic recession, it is inconceivable that Obama would publicly try to shut it down -- at least, not until after the November elections.
... the oil and gas boom could make America a major player again in the world energy market and help spur the entire U.S. economy. Already, both Texas and Louisiana have unemployment rates significantly below the national average, and according to the Bureau of Labor Statistics, the West South Central region -- which includes Arkansas, Louisiana, Oklahoma, and Texas -- has the second-lowest overall unemployment rate in the country, at 7.1%. The lowest? West North Central, which includes North Dakota (with a 3% unemployment rate), where gas producers in the supergiant Bakken formation can't find enough workers to fill their shifts...

...On the East Coast, abundant natural gas flowing from the Marcellus Shale formation, which runs through New York, Pennsylvania, and Ohio, is enriching farmers who lease their lands to production companies and is estimated to have created 60,000 jobs in the region, with another 200,000 possible by 2015.

Cheap domestic energy is also good news for the manufacturing sector. "The discovery and development of North America's shale resources has the potential to be the most remarkable source of economic growth and prosperity that any of us are likely to encounter in our lifetimes," U.S. Steel CEO John Surma told the Congressional Steel Caucus in a late March hearing. It's a virtuous cycle: More drilling requires more steel, and lower energy costs give U.S. steel producers a cost edge. This at a time when the Department of Energy reports that the energy intensity of U.S. steel companies is now among the lowest in the world.

In St. James Parish near Baton Rouge, ground was broken last year for a $3.4 billion steel plant being built by Nucor Steel (NUE), the first major facility built in the U.S. in decades. U.S. Steel is investing in a new facility in Lorain, Ohio, and V&M Star Steel (the North American subsidiary of the French pipemaker Vallourec) plans to spend $650 million on a small-diameter rolling mill in Youngstown, Ohio.

It's not just Big Steel that will benefit. Feedstock made from cheap natural gas is a boon for the petrochemical industry. Citing "the improved outlook for U.S. natural-gas supply from shale," Dow Chemical (DOW) says it will build an ethylene plant in Louisiana for startup in 2017. (Ethylene is used to make things like plastic bottles and toys.) Dow will also restart its ethylene plant near Hahnville, La. Shell, which is building a new petrochemical refinery in Pennsylvania, is also considering a $10 billion Louisiana plant to convert natural gas to diesel. "Low-cost natural gas is the elixir, the sweetness, the juice, the Viagra," says Don Logan, president of the Louisiana Oil and Gas Association. "What it's doing is changing the U.S. back into the industrial power of the day."

...Companies that built import terminals to bring in LNG in the early 2000s are now spending billions to remake them into export facilities. Cheniere Energy plans to break ground on the first new LNG processing unit at its Sabine Pass Terminal on the Louisiana coast this year and be exporting natural gas by 2015. Cheniere has signed contracts with four overseas customers including Spanish utility Gas Natural Fenosa. Besides Sabine Pass, at least three other LNG terminals, built as intake ports, have applied for export licenses. Essentially the infrastructure of the Gulf Coast oil and gas industry is being spun around to serve the new realities of the great petro-revival. _Fortune.cnn
Something Barack Obama and Vladimir Putin have in common: They are both afraid of the success of North American shale gas & oil. Perhaps now President Putin could slip green dieoff.orgy activists a bit more funding under the table?

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Wednesday, April 11, 2012

Biofuels Technology Improves Rapidly, Despite NatGas Glut

Given the huge glut of natural gas in North America, you might think that biofuels developers and startups would throw up their hands and give up. Cheap, abundant natural gas produces electricity more economically than biomass, and can be used to make polymers, fuels, lubricants, and chemicals in a more straightforward manner than when using biomass or microbial approaches.

So why are biofuels and biomass companies persisting, swimming against the tide, as it were? Quite simply, it is because no matter how much natural gas exists in reserves, there are always limits. Natural gas prices are bound to increase as more and more uses are found for the valuable resource -- particularly gas to liquids (GTL) and the production of chemicals and polymers.

And when natural gas prices increase, biomass to liquids (BTL) and microbial fuels producers want to be ready to supply a high quality product -- using a feedstock that will never run out.
Two of the most promising projects in this area are UOP and Ensyn’s integrated biorefinery (IBR) pilot-scale project in Hawaii, and the IH2 project, led by the Gas Technology Institute (GTI),i with catalysts provided by CRI Catalyst.

Despite being pilot projects, both technologies are not far from commercialisation. Jim Rekoske, vice-president and general manager for Honeywell UOP’s Renewable Energy and Chemicals business, says UOP aims to be able to offer its system to customers for commercial sale in 3Q12, while the IH2 project is scheduled for commercial operation in 2014.

Vann Bush, managing director, energy conversion, GTI, told GTForum that based on an analysis from the National Renewable Energy Laboratory (NREL), the anticipated cost on a product basis for fuel produced using the IH2 technology is around US$1.60/gallon for woody biomass, dropping to around US$1.36/gallon if a refiner has sufficient spare hydrogen capacity and opts to forego installing the reforming unit. This compares to the US Department of Energy’s goal of US$3/gallon.

...woody biomass tends to produce more gasoline than diesel via the IH2 process, while algael fuels tend to produce more diesel. Overall yields are also affected by feedstock. “The yields vary between say 70 gallons per ton to 157 gallons per ton. The worst yields we’ve had are with fairly high ash agricultural residues and the highest are with algae.”
Rekoske is particularly pleased with the yields UOP has seen so far – in the order of 300 gallons of renewable fuel per tonne of triglyceride feedstock, obtained from oil seed crops, algae and fats and greases. Given that overall yields are highly dependent on feedstock, direct comparisons between different biomass to oil product technologies cannot be made unless they both use the same feedstock.

“We’re achieving yields from the conversion facility and from our testing and laboratories that are much, much, higher than what we had anticipated, approaching the theoretical limits. We just did not expect to achieve yields that were that high,” he says

With both technologies, the final product slate is largely independent of the host-refinery’s complexity. This might make such systems more attractive to low-complexity refiners in regions with high biomass potential.

...In the future, there are two main options for refiners looking to use the IH2 technology. One involves the installation of both the main unit along with the components for conventional steam reforming/pressure swing absorption system, and the latter can be committed by a refinery with sufficient spare hydrogen capacity looking to reduce capital costs.

...Bush expects the IH2 technology to be built on a variety of scales. He expects that while many projects “would be at a scale that would be able to be fabricated in a shop and shipped to a site”, some “will be very large processing facilities and be built on site”. Bush says the scale would range between a few hundred tons per day to 2,000tpd “for most of the feed materials”. _Global Technology Forum
Here is another fascinating technological development in the quest for biomass energy. The biomass potential is immense, on this biological planet, and it is unlikely that entrepreneurs would overlook it for long.

There is always the problem of transporting large volumes of biomass from the field to the refinery. In the case of algae, you can always locate your growing facility close to the refinery, or vice versa. With bulkier biomass crops, you may have to use pyrolysis as a pre-treatment, as discussed in earlier postings here.

There is also the problem of hydrogen supply. The IH2 process is designed not to need outside hydrogen, although many other BTL processes will need outside sources of hydrogen to produce drop-in hydrocarbon fuels from biomass. As long as methane remains cheap, it is likely to be used as a hydrogen source for some BTL processes, as well as for CTL processes -- perhaps first in China, then spreading from there.
The potential global yield of advanced BTL is quite large, and should continue to grow as technologies improve and allow for larger yields on smaller areas of land or ocean. And since desert lands can be used for algae, drought-tolerant crops, and halophyte production, there will be no shortage of arable land for food production.

As you can see in the image above, it will take quite some time before humans exhaust the hydrocarbon resource -- particularly if they use high temperature gas-cooled modular nuclear reactors for industrial process heat in the conversion processes. But it is not likely that we will wait until finite resources are exhausted before we begin to utilise the essentially infinite resource of advanced BTL and microbial fuels.

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Tuesday, April 10, 2012

Shale Oil & Gas Boom Moves into Kansas, Ohio, and Beyond . . . .

The huge boom in shale oil & gas discovery and production continues to roll across the US, despite the best efforts of the US Obama administration.
Kansas is on the verge of joining the nouveau rich petroleum states
Ohio is beginning to profit from its new oil & gas industry, and is forced to face the political fallout of newfound wealth.
Natural gas producers in the US are struggling with the economic implications of the huge shale gas glut
More companies are looking at gas-to-liquids (GTL) as a way to boost profits in the face of very low natural gas prices in North America
Besides GTL, other companies are planning to export LNG to Asia to take advantage of high demand there.

So as GTL and LNG exports begin to pick up, one should expect natural gas prices in North America to rise, making new unconventional gas exploration and production profitable once again.

Oil & gas production in North America has boomed to produce an energy glut, which must find a way to be exported into a hungry global marketplace, in order for North American producers to profit fully.


Contrasting Approaches to Energy Access: Obama vs China

China's approach to energy access is rather simple: China aims to build its energy reserves as quickly and as large as economically viable. The aim is to boost industrial and commercial growth, thus boosting the overall economy and national strength.
China is adding 764,000 barrels per day of new crude refining capacity in 2012, bringing total refining capacity to 11.6 million barrels per day. In contrast, the United States is removing refining capacity due to new layers of onerous regulations, lower demand for liquid fuels, and lower refinery margins, thus making it difficult for refineries to earn a profit.[iii]

In December 2008, China began test operation of its first coal-to-liquids plant, which is already making a profit, and plans to reach 1 million tons of annual capacity. Coal-to-liquids technology is not allowed for military use in the United States due to the Energy Independence and Security Act that does not permit the military to use any fuel that releases more carbon dioxide than traditional petroleum.[iv] China already consumes more than three times as much coal as the United States and that is expected to grow rapidly.

Since 2010, Chinese companies invested more than $17 billion into oil and gas deals in the United States and Canada. In 2009, China National Petroleum Corp. bought 60 percent stakes in two oil-sands projects for about $1.9 billion. The following year, Sinopec committed $4.65 billion for a 9 percent stake in Alberta’s Syncrude oil-sands project. Last year, Cnooc agreed to pay $2.1 billion for OPTI Canada Inc.[v] In contrast, environmentalists want to ban the use of oil sands in the United States because of its higher emissions even though those emissions are only slightly higher and will not stop its production and consumption elsewhere.

PetroChina, owned 86 percent by the Chinese government, produced 2.4 million barrels of oil a day last year, surpassing Exxon by 100,000 barrels of oil produced a day. PetroChina’s output increased 3.3 percent in 2011 while Exxon’s fell 5 percent. PetroChina outspent Western companies, acquiring petroleum reserves in Iraq, Australia, Africa, Qatar and Canada. Since 2010, its acquisitions have totaled $7 billion, about twice as much as Exxon. According to the IEA, total acquisitions by Chinese energy firms increased from less than $2 billion between 2002 and 2003 to nearly $48 billion in 2009 and 2010.[vi]

China is purported to have offered to pay for construction of a pipeline to bring Canadian oil sands to Canada’s Pacific Coast, an opportunity that became available when President Obama rejected a decision on the construction of the Keystone XL pipeline between Alberta’s oil fields and the Gulf Coast of the United States until after the election.[vii] _IER
Contrast China's "all-in" approach to Obama's policies of promoting unreliable intermittent-renewables, such as big wind and big solar projects which are backed by crony political backers of his presidential campaigns.

At the same time that Obama is wasting many $billions on a futile quest for intermittent-renewable unreliables, his administration is going all-out to quash energy from oil sands, coal, shale gas & oil, offshore and arctic oil & gas, and safe, clean, new forms of nuclear power.

The new US energy bonanza from shale oil & gas began long before Obama came into office, and is bravely battling against all of the Obama administration's attempts to shut it down, using faux environmental justification for new, stifling regulations.

The US House of Representatives has gotten so fed up with the Obama policies of energy starvation, that they are attempting to promote policies that will lead to new energy supplies that will allow for economic growth in the private sector economy -- a part of the US that Obama seems to have been trying to destroy.
... if anyone is stuck in the past, it’s President Obama, as he has refused to acknowledge the great potential of America’s energy resources thanks to new technologies that help us unlock them.

New discoveries and production of resources like shale oil and gas are dramatically altering our energy supply outlook and the entire global geopolitical landscape. And the pace of change—particularly in the past few years—continues to accelerate.

When it comes to energy supply, efficiency, and environmental safety, our prospects are better than they have been in a long time. And the outlook will only improve if the government unleashes the private sector and stops getting in the way.

North Dakota’s story is illustrative. As recently as 2006, the state ranked ninth in the country in oil production. By 2013, the state could move to the number three spot, behind only Texas and Alaska, according to The Institute for Energy Research. In fact, North Dakota's January oil output eclipsed the current third place holder, California. Production may more than double again within five years.

Private sector breakthroughs created this new energy boom; the federal government is not involved.

It’s a mistake to declare war on any source of supply because, if we have learned anything about energy, it is that future technology will not be what is now predicted.

By fully harnessing the power of our own previously inaccessible energy resources—and by forging strong partnerships with neighboring nations—America is on the cusp of being able to chart a course toward North American energy independence. It is an exciting time for American energy, but only if American energy policy spurs these innovations rather than stifling them. _ Fred Upton, Chairman US House of Representatives Committee on Energy and Commerce
The US government was based upon the idea of "separation of powers" and "checks and balances." If the US ever needed to call upon rational minds within one branch of government to combat irrational ideologues in another branch, now might well be such a time.

Of course, the ideal course would be to eject the green ideologue energy starvationists from the government, so that the private sector could be freed to innovate and grow.


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