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.

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

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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.

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.
_FT

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.

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.

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 ProcessAmong 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.

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

GCC
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.

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.

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?

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.

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. _American.com _ 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.

An Early Conception of a Biomass to Liquids Economy

Given a sufficiently large production scale, liquid fuels such as diesel produced from crop residue could be economically competitive with petroleum-derived fuels at current price levels, suggests a new study by a team from the Stevens Institute of Technology. Their analysis is published in the ACS journal Energy & Fuels. _GCC

GCC
A recently published study in ACS Energy & Fuels claims that a particular conception for biomass to liquid fuel (Fischer Tropsch diesel BTL) can compete with petroleum diesel today. The overall BTL system involves collection of baled biomass at a local pyrolysis plant, where the solid biomass is converted to a much more energy-dense liquid pyrolysis product. The pyrolysis product is more economical to ship to central biorefinery plants which transform the pyrolysis product into diesel using gasification and Fischer Tropsch catalytic synthesis.

James Manganaro and Adeniyi Lawal performed a preliminary analysis of an integrated “Biorefinery Collective” biomass-to-liquids process based on distributed fast pyrolysis and centralized autothermal reforming (ATR) followed by Fischer-Tropsch synthesis. Assessing plant sizes of 2,000, 10,000, and 35,000 dry tonnes per day of biomass at 8% return on capital, they found required sales prices (exclusive of tax) of $3.30, $2.40, and $2.06 per gallon, respectively. The process comprises:

harvesting surplus biomass such as crop residue;

locally pyrolyzing the biomass into pyrolysis oil (PO), char, and noncondensable gas (NCG);

transporting the produced PO to a remote central processing facility;

converting the PO at this facility by autothermal reforming (ATR) into synthesis gas (CO and H2), followed by, at the same facility,

Fischer−Tropsch (FT) synthesis of the syngas into diesel fuel. _GCC

This is not a novel concept. But this approach is still in the early stages of development, in terms of becoming economically competitive.

Low natural gas prices help to make the process more competitive in one sense -- as a cheap industrial heat source. But cheap natural gas is a natural competitor feedstock against biomass, for F-T synthesis of diesel. Inexpensive high quality heat from high temperature gas-cooled modular nuclear reactors makes more sense as an industrial heat source for both BTL and GTL, than natural gas which is better used as a feedstock.

In other bio-energy news, Proterro has bioengineered a promising strain of cyanobacteria which is capable of cheap, high-yield production of very pure sucrose from CO2 and light. The company claims to be able to produce 10 X more sucrose per acre using bioreactors than is achievable from sugar cane production of sucrose.

CO2 isn't cheap in pure reagent form, of course. For Proterro to deliver on its claim of pure sucrose at less than $0.10 per pound, it must guarantee a cheap and reliable source of pure CO2. Cheap sugars will change the economic calculus of fermentable biofuels, once they become available in large quantities.

As Many Views on Oil Prices as There Are Analysts

There is a wide range of opinion available from "expert analysts" regarding the determinants of oil prices on world oil markets -- almost all of which are contradictory.

Analyst Matt Badiali thinks that oil prices are due to crash soon, due to increasing oil inventories.

Economics professor Robert Pollin thinks that no matter how much oil is in hand, oil prices will continue to go up due to speculation.

Both analysts think that there is plenty of oil around. Batt Badiali thinks that "supply and demand" still controls market prices, whereas Robert Pollin thinks that oil speculation magnifies and distorts the real and imagined effects of supply and demand fluctuations so badly that practically all the rules of "supply and demand" have changed.

And despite the fact that world oil proved reserves continue to grow -- and are at the highest level ever -- there are also plenty of "peak oil" analysts who are predicting huge near-term price spikes up to $200 a barrel and much higher. These are the same analysts who helped to deplete pension funds, hedge funds, university endowments, and ordinary investor's savings during the 2008/2009 oil price debacle.

If the oil markets are as easily manipulated -- in spite of supply and demand -- as many economists believe, small investors need to be particularly careful when investing in oil, no matter how strongly they feel about supply gluts or constraints.

This caveat is especially applicable when so many of the world's large oil and chemical companies are investing many billions of dollars in the development of substitutes for conventional crude oil. It may take a decade or two for the economics of CTL, GTL, KTL, BTL, BitTL, etc. to accommodate large scale substitution for crude oil, but markets have been known to look ahead, once a trend seems inevitable, or even highly likely.

Peak Oil: If It Weren't for Carbon Hysteria, We Wouldn't Be Having This Conversation

In 1920, the U.S. Geological Survey estimated that the world contained only 60 billion barrels of recoverable oil. But to date we have produced more than 1,000 billion barrels and currently have more than 1,500 billion barrels in reserve. World petroleum reserves are at an all-time high. _newsok

For over 150 years, "knowledgeable insiders" have been predicting the end of oil. Over that time period, oil has endured multiple cycles of boom and bust, with high and very high oil prices alternating with low and very low oil prices. High oil prices -- if they are sustained over several years without a "price bust" -- lead to increased exploration and improved technologies for production.

...technological advances have opened up resources beyond the limits of our ancestors' imaginations. We can drill offshore in water up to 8,000 feet deep. We have enhanced recovery techniques, horizontal drilling and four-dimensional seismic imaging. Oklahoma oilman Harold Hamm is turning North Dakota into Saudi Arabia by using hydraulic fracturing technology. U.S. oil production has reversed its 40-year decline. By the year 2020, it is anticipated that the U.S. will be the world's top oil producer.

...Nine years ago, I predicted that the age of petroleum has only just begun. I was right. The Peak Oil theorists, the malthusians and the environmentalists were all wrong. They've been proven wrong, over and over again, for decades. A tabulation of every failed prediction of resource exhaustion would fill a library.

Sustainability is a chimera. No energy source has been, or ever will be, sustainable. In the 11th century, Europeans anticipated the industrial revolution by transforming their society from dependence on human and animal power to water power. In the 18th century, water power was superseded by steam engines fired by burning wood. Coal replaced wood, and oil and gas have now largely supplanted coal. In the far distant future we'll probably use some type of nuclear power. But for at least the next hundred years, oil will remain our primary energy source because it's abundant, inexpensive and reliable.

...What's stopping us isn't geology. What's stopping us is ignorance and bad public policy. _New Age of Oil

But why are we even having this conversation about "peak oil" in the first place? The graphics pictured below should show anyone with intelligence that energy collapse will not be in the cards anytime soon.

Look at the tiny amount of liquid hydrocarbon that has been consumed by humans so far. Then look at the nearly infinite amount of liquid hydrocarbons and liquid substitute fuels which remain in the wings, waiting for sufficient need and ingenuity on the part of humans.

Discussion about EROEI -- energy returned on energy invested -- is just so much trash talk. When you consider the potential of high quality, abundant industrial process heat from advanced nuclear reactors, EROEI fears begin to sound like a joke. Whether it takes 10 or 20 years to develop and build gen IV high temperature gas cooled modular reactors, the die is cast, and peak oil doom is itself doomed, along with EROEI fears.

So what is this conversation truly about? Beneath all the smokescreens, it is about lefty-Luddite carbon hysteria, and the fear of of an advanced technological future for humans. If not for a trumped-up and irrational fear of carbon, a true hydrocarbon abundance suddenly opens up before us -- along with an abundance of electricity from advanced, safe, clean, nuclear reactors.

But if we listen to the lefty-Luddite green dieoff.orgiast fears coming from the highest levels of human governments and inter-governments, we face a new dark age of energy starvation. An age where unreliable intermittent-renewables -- ever prone to breakdown and failure -- replace reliable forms of power and energy.

The green world view is based upon several delusional beliefs, including carbon hysteria, energy scarcity, overpopulation, an environment doomed by global pollution. But these green lefty-Luddite fears are several decades old. Many of these same greens predicted that the great human dieoff was certain to occur in the 1970s, 1980s, and 1990s. They predicted doom from global cooling -- from CO2 and pollution, no less.

But when a temporary cooling trend was replaced by a temporary warming trend, these greens of doom quickly changed tack and jumped aboard a global warming train -- caused by the same things, supposedly, that were to have brought about global cooling! They are nothing if not versatile.

But the underlying cause of doom is always human industry, human science, human technology, human commerce. That is what they fear and what they attack -- the fruits of human ingenuity itself.

The end result of human ingenuity is a cleaner and more sustainable -- but more abundant -- human future. That is what greens fear. They fear that we will move beyond the more primitive stages of human technology into cleaner, sustainable -- but very abundant -- forms of technology. This possibility is a distinct threat to the leftist green vision of the future, and must be opposed by greens in every way possible, using every green tool and green trick in the book.

That is what carbon hysteria is, of course. It is a tool to be used until it is of no more use, then it will be discarded for whatever else might serve. Just like "energy depletion and scarcity," carbon hysteria is a useful tool of ideology, without which the "peak oil myth" could never survive long.

The fear is not that there is not enough oil, not enough hydrocarbon fuel. The fear is that there will always be more than enough. As a tool to stoke that fear, carbon hysteria cannot be improved upon. Peak oil: without carbon hysteria, we wouldn't be having that conversation.

Green Energy Crashes and Burns from US to EU to China

Everyone is familiar with the multi $billion losses from US President Obama's green company bankruptcies, with about a dozen of Obama's darling fake energy companies in economic trouble. But not as many are as aware of the looming problems of green energy companies in Europe, and the coming bursting of China's wind and solar industry.

If you want a country to fail, just get them to invest in intermittent green energy schemes. Nothing is more like a dead albatross around the neck than intermittent green energy. That is why US President Obama's concern that China may be moving ahead of the US in green energy is so amusing.

Obama's favourite green energy stimulus payoffs to his political backers are failing right and left, while the forms of energy that Mr. Obama is trying to kill -- natural gas, oil, coal, oil sands, nuclear, etc. -- are what is keeping the US' industry and economy treading water. If Mr. Obama's agenda were actually carried to completion, the US would be drowning, with a doubtful prognosis.

Here are a few of the news stories dealing with the collapse of the global green fake energy industry:

Germany's solar industry in trouble

Europe Rethinks Solar Subsidies

China's wind industry bubble to deflate

China Abandons Solar for Nuclear h/t WUWT

Cheap Natural Gas Kills Green Energy

Another Obama Green Bust

Obama Backer Receives Whitehouse Backing, then Declares Bankruptcy

Electricity Costs: The Folly of Wind Power (PDF)

Are Oil Company Profits Excessive, Even In an Oil Price Bubble?

When global oil prices rise, so do oil company profits. And yet, oil companies do not control global oil prices. Market prices depend upon supply, demand, the value of the dollar, political policies and actions, and the market's machinations in response to investors' actions.

EnergyTribune

The global price of crude oil – the critical factor that many things collude to affect – translates directly into higher gasoline prices at the pump. We all know this. But, contrary to popular belief, the major oil companies have little control over the price, high or low. Nobody complains about low prices and low profits, the economic knock-on effect of high oil profits. But high oil profits, which mean new exploration, cheaper domestic shale production, not to mention the economic ripple effect (often forgotten) of high profits on pensions, stocks etc, almost always means the proverbial hits the media fan every time there’s even a whiff of large oil profits in the air. But honing in with venom on Big Oil or Big Gas, a much-beloved pastime of politicians, simply helps skew Joe Public’s opinion as to how the economics and the markets work.

...energy industry profit margins are cyclical. According to Robert Bradley Jr., CEO for the Institute for Energy Research, between 2006 and 2010, the largest oil companies averaged a profit margin of around 6.5 percent. As Bradley states, “This pales in comparison to profit margins in just about every other industry” the “pharmaceutical industry, for example, routinely averages a profit margin of about 16 percent. The soft drinks market is even more lucrative.” In short, oil companies in the States make around 7 cents per gallon, while the U.S. Government “extracts more than 48 cents, on average, per gallon...nearly seven times more out of the drivers’ wallets via taxation than Big Oil”...

...When it comes to understanding how the energy markets work, focusing on times of larger profits may light a fire under the anti-capitalist left and green activists. But that should not sway Joe Public to go to war against their imaginary pantomime villain. The sheer fact of the matter is that the real Mr Big behind the oil profiteering racket is Big Government, not Big Oil. But it’s just not in the interest of the anti-capitalist Big Green to target high-taxing, good-cause, Big Government oil profiteers; that’s the goose able to lay their leftist social engineering ‘eggs’. _EnergyTribune

US President Obama will say anything to get re-elected. He has a great deal more to do, before he is finished with the US economy and US industry.

A Few Definitions of "Peak Oil"

A hypothetical date referring to the world's peak crude oil production, whereby following this day, production rates will begin to diminish. _Investopaedia

This definition is almost meaningless, in that it allows for a potentially infinite number of "peak oils," over an extended time period of fluctuating production (for whatever reason).

Consensus definition: The theory of “peak oil” is the point where practical oil extraction has reached its maximum level and is entering a state of permanent decline. _Energy101

This is a more useful definition, in that it includes the term "permanent decline." But since such a "permanent decline" in oil extraction can only be seen in retrospect, and can be due to a wide range of reasons -- including the lack of economic need for crude oil -- it is far from perfect.

...“peak oil” – the point at which the world’s oil supplies go into irreversible decline – is a long-running argument... _FT

This definition looks at world oil supplies going into "irreversible decline." By using the vague term "world oil supplies," it is less useful than the previous definitions.

Peak oil is the point in time when the maximum rate of petroleum extraction is reached, after which the rate of production enters terminal decline. _Wikipedia

This definition is more precise, referring to a "terminal decline" in the "maximum rate of petroleum extraction." The Wikipedia author uses the idea of the lifecycle of an individual oil well as analogous to the lifecycle of global oil production. It is a simple idea, but also more than just a little simplistic. That may explain its wide appeal.

Peak oil theory is that oil production will not just peter out, it will fall catastrophically starting right now, and that no alternative energy source will arise to take its place. The result will be inevitable disaster... _Facts+Logic

This is the popular view of peak oil -- the catastrophic conception which has such a wide and quasi-religious following. In this view, peak oil is not just about declining production of conventional crude. It is about the abrupt and catastrophic collapse of civilisation that accompanies the peak oil aftermath.

Point when production of crude oil word wide reaches capacity and is evidenced by an increase in oil prices. _BusinessDictionary

This is a more practical definition, which allows one to use the proxy of "oil prices" to decide if crude oil production has reached capacity or not. But oil production can "reach capacity" with increases in oil prices an infinite number of times. Are they saying peak oils can occur in unlimited numbers.

Here is an increasingly popular -- and exceedingly weaselly definition of peak oil:

The peak in oil production does not signify 'running out of oil', but it does mean the end of cheap oil, as we switch from a buyers' to a sellers' market. For economies leveraged on ever increasing quantities of cheap oil, the consequences may be dire. Without significant successful cultural reform, severe economic and social consequences seem inevitable. _Energy Bulletin

In this definition, "peak oil" has been baited and switched from an issue of depletion to an issue of pricing. We increasingly hear the phrase "the end of cheap oil," as if consumers have ever considered oil to be too cheap. In fact, oil prices have always gone through periods of boom and bust, up and down, and continue to do so.

The recent rapid boom-bust of 2007/2008 through 2009 illustrates the point. Unfortunately, since that turbulent cycle, governments such as Russia and Saudi Arabia have become institutionally addicted to higher levels of oil prices than the global economies can easily endure. This sets up a conflict of interest between producers nations and consumer nations which can only end badly. Mixed producer/consumer nations such as Canada, the US, Brazil, and soon-to-be China, will have to deal with the conflict both internally and externally.

Why is the Energy Bulletin definition "weaselly?" Because in current times, oil prices have gone up largely due to an unforeseen skyrocketing of demand from the formerly impoverished China and India combined with multiple political factors which act as drags on oil production around the world. None of that has anything to do with "Hubbert's Peak." Demand for crude in the developed world -- the world that Hubbert and his cohorts were thinking of -- is declining.[Added 6 April 2012]

A lot of things influence oil prices besides simple supply and demand equilibria, including wars, rebellions, political constraints, and much more. Oil prices have peaked several times over the last one and a half centuries, leading many disciples of the oil apocalypse to declare "peak oil" prematurely. Had they invested their life savings in their belief system, they would be paupers.

There are more definitions of peak oil out there, of course. It is said that there are as many conceptions of "god" as there are believers. The same could be said of peak oil, if one includes the many deep, individual emotional connotations of the term.

Not all peak oil believers are also doomers. Many energy professionals who believe in imminent peak oil also think that civilisation will find a way to mitigate most of the catastrophic fallout from energy shortages.

But it can not escape notice that most modern energy shortages are due to political reasons and policies. Just as wars cause virtually all modern famines, political decisions and policies cause virtually all energy shortages.

So when will true energy and resource scarcity and depletion -- aside from arbitrary and capricious political machinations -- set in? That depends upon how smart or how dumb humans come to be. It should be clear that the underlying practical question is not actually about "peak oil" at all, but about "peak energy" and "peak resources."

But peak energy and peak resources are relative terms, and depend upon what humans are capable of doing, technologically, scientifically, economically, and psychologically. Humans could be much smarter on average, or they could be much stupider. Evolution supplied humans with a wide range of intellectual complements.

As for why humans are not sailing to other stars on fusion powered spacecraft -- that reflects on the particular skew of the range of intellectual complements which evolution supplied us with. Human ingenuity is the key. There is no shortage of energy or resources, there is only a shortage of conceived ways in which to utilise what is there in a clean and affordable manner. That is a mental limitation, which hobbles most of the world populations. Most of the rest of the world's populations are hobbled by political limitations.

Any other definitions of "peak oil" would be welcome.

Gas to Liquids News

Shell is considering building a huge gas to liquids (GTL) plant in Louisiana, comparable to the size of its Pearl Qatar GTL plant. The new plant would reportedly cost in excess of $10 billion.

European oil giant Royal Dutch Shell Plc. (RDS-A, RDSA.L, RDSB.L, RDS-B) is exploring the possibility of building a plant in Louisiana that will convert natural gas into diesel fuel, the Wall Street Journal reported Wednesday, citing people familiar with the matter.

The plant, which would cost more than $10 billion, would reportedly be similar in size to Shell's Pearl gas-to-liquids or GTL facility in the Qatar. The Pearl facility turns natural gas into enough diesel to fill more than 160,000 cars per day.

According to the WSJ report, Shell initially considered locating the facility in Texas and Louisiana, but opted for the latter as the state offered better incentives. Shell may, however, take up to two years to develop construction and engineering plans to see if the project is economically viable.

The boom in natural gas production from shale formations in North America has resulted in lower natural gas prices even as oil prices are rising. This has prompted energy companies to look at turning natural gas into liquid fuels that is seen as financially appealing. _NASDAQ (WSJ)

SASOL also wants to build a large GTL plant in Louisiana, to take advantage of the region's vast gas reserves.

Carbon Sciences -- designer of scalable GTL plants -- announced a significant advance in its project to use CO2 as a feedstock in its "dry reforming GTL process."

Carbon Sciences Inc. CABN -3.45% , the developer of a breakthrough technology to make transportation fuels and other valuable products from natural gas, today announced the successful test of a new version of its natural gas dry reforming catalyst that can process high CO2 content natural gas at high efficiency, resulting in significant economic and environmental benefits. The company's management believes that this breakthrough catalyst may help accelerate the growth of the emerging natural gas to liquid fuels industry.

While all natural gas fields contain CO2, production is economically viable only when the CO2 is less than 10% of the total volume. At that level, the CO2 is removed and typically released into the atmosphere. Where the CO2 content is higher, the removal process is prohibitively expensive, making those fields economically stranded.

Byron Elton, Carbon Sciences CEO, commented, "According to the U. S. Geological Survey, there are many gas fields with CO2 concentrations ranging from 10% to 99% within the continental U.S., particular in Texas, the Rocky Mountains, and the Gulf Coast. We believe our catalyst will make these high CO2 gas fields economically viable, and encourage the pooling of multiple gas fields into much larger natural gas steams with high CO2 content. Additionally, CO2 captured from sources such as power plants can be added to low CO2 content natural gas and used to cost-effectively produce large quantities of clean and green liquid transportation fuels and industrial chemicals." _Marketwatch

We will want to watch Carbon Science's progress in developing better catalysts for its "dry reforming GTL" process. It isn't easy or cheap to reduce CO2 in order to build medium to long-chain hydrocarbons. But there would certainly be a demand for the process if it could be made affordable and capable of high volume production.

Carbon Science's small scale GTL systems should be suitable for use in the offshore environment and at stranded gas wells. Several other companies are competing for that niche as well, so expect to hear more about scalable GTL soon.

Australia's Linc Energy refers to its "syngas to diesel" process as "GTL." Linc plans to expand its operation to take advantage of opportunities in North America.

Biomass, coal, natural gas, and more can be used as starting points for F-T synthesis of diesel from syngas. But expect alternative approaches to GTL, CTL, BTL etc. as better catalysts, materials, and processes are developed.

I Will Gladly Pay You in 2018 Prices for My Oil Shipment Today

The 2018 futures price for Brent crude is $30 less than the 2012 front month contract. This has triggered some conversation in regard to the concept of whether near to intermediate term oil shortages -- peak oil -- is still being taken seriously by markets.

WSJ

"Peak oil is over for sure," said Olivier Jakob, managing director at Swiss Consultancy, Petromatrix. "In 2008, everything was 'peak oil' all over the place, but now it's not really a theme any more."

Analysts say that while prices for oil well into the future don't always predict where they will actually end up, in part because economic conditions can change, this wide disparity between current and futures prices is unusual and gives an indication of current market thinking. The price for a May contract of Brent crude is now $30.63 a barrel above that of a contract for delivery in December 2018.

To be sure, the gap could narrow if oil prices pull back or if the consensus shifts to expect a faster increase in demand for oil that would compensate for some of the additional supply. Still, the marked diversion in prices marks a flip in the relation between the two contracts from just two years ago.

"So much has been done in terms of shale development that everyone recognizes it's going to be a bit longer before we get to the peak-oil dilemma," Mr. Jakob said.

In the U.S., oil production is likely to increase by a fifth over the next 10 years, largely because of the development of shale oil fields and offshore drilling in the Gulf of Mexico, according to estimates from the U.S. Energy Information Agency, an arm of the U.S. government. _WSJ

One has to assume that the 2018 prices are adjusted to 2012 dollars. Otherwise, the accelerating debasement of the US dollar will make that 2018 price much lower than it appears.

The take-home message would seem to be that markets anticipate a global economic slowdown and demand destruction between now and 2018.

Interestingly, the Russian government is predicting much nearer term drops in the price of oil:

The price for Urals oil set a record at $122.6 per barrel in March showing growth of 14.3% comparing to the same period in 2011. But they expected to drop to $102 by the end of the year as producers such as Saudi Arabia boost supply.

“There’s also a possibility that Iraq resumes supplies or shelf oil would enter the market, it would limit oil price growth,” according to Nabiullina.

Meanwhile the authorities confirmed its forecast for oil prices in 2013 and 2012 at $97 and $101 per barrel respectively. _RT

Of course much depends upon whether Russia continues to ramp up international tensions in Iran and elsewhere in MENA. Russian oil production will also affect global markets, as will Russian market plays on commodities exchanges.

Regardless, it is clear that both Canada and the US are ramping up oil production as well as gas production. Gas production is significant in this regard, as multiple ways of substituting cheaper gas for more expensive oil are being perfected. The same will eventually be true for coal, as soon as the energy starvationists and carbon hysterics can be ejected from control of the governments of western coal producers.

Top 10 US States in Oil Reserves and Unemployment

There is a relationship between energy abundance, industrial viability, and productive employment. Energy abundance is necessary but not sufficient for the other two. The list from ibtimes below, allows you to compare oil reserves and employment. US unemployment is roughly 9%.

A better comparison would be between oil production and employment, rather than oil reserves and employment. Proved reserves are estimates that are always subject to rapid upward revision and interpretation. Oil production, on the other hand, is relatively accessible data.

1. Texas

Proved reserves of Crude Oil: 5,006-M bbls

Oil refineries: 23

Unemployment rate, Jan. 2012: 7.3%

Share of jobs supported by Oil and Gas: 14.3%

2. Alaska

Proved reserves of crude oil: 3,566-M bbls

Oil refineries: 6

Unemployment rate, January 2012: 7.2%

Share of jobs supported by Oil and Gas: 10.3%

3. California

Proved reserves of Crude Oil: 2,835-M bbls

Oil refineries: 19

Unemployment rate, January 2012: 10.9%

Share of jobs supported by Oil and Gas: 4.6%

4. North Dakota

Proved reserves of Crude Oil: 1,046-M bbls

Oil refineries: 1

Unemployment rate, January 2012: 3.2%

Share of jobs supported by Oil and Gas: 7.5%

5. New Mexico

Proved reserves of crude oil: 700-M bbls

Oil refineries: 3

Unemployment rate, January 2012: 7.0%

Share of jobs supported by Oil and Gas: 7.5%

6. Oklahoma

Proved reserves of Crude Oil: 622-M bbls

Oil refineries: 6

Unemployment rate, January 2012: 6.1%

Share of jobs supported by Oil and Gas: 14.1%

7. Wyoming

Proved reserves of Crude Oil: 583-M bbls

Oil refineries: 6

Unemployment rate, January 2012: 5.5%

Share of jobs supported by Oil and Gas: 15.8%

8. Utah

Proved reserves of Crude Oil: 398-M bbls

Oil refineries: 5

Unemployment rate, January 2012: 5.7%

Share of jobs supported by Oil and Gas: 4.9%

9. Louisiana

Proved reserves of Crude Oil: 370- bbls

Oil refineries: 17

Unemployment rate, January 2012: 6.9%

Share of jobs supported by Oil and Gas: 15.1%

10. Montana

Proved reserves of Crude Oil: 343-M bbls

Oil refineries: 4

Unemployment rate, January 2012: 6.5%

Share of jobs supported by Oil and Gas: 6.4%

www.livetradingnews.com

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

_ibtimes

Breakthrough in Battery Electrodes and Fuel Cell Catalysts?

For catalysts in fuel cells and electrodes in batteries, engineers would like to manufacture metal films that are porous, to make more surface area available for chemical reactions, and highly conductive, to carry off the electricity. The latter has been a frustrating challenge.

But Cornell chemists have now developed a way to make porous metal films with up to 1,000 times the electrical conductivity offered by previous methods. Their technique also opens the door to creating a wide variety of metal nanostructures for engineering and biomedical applications, the researchers said.

The results of several years of experimentation are described March 18 online edition of the journal Nature Materials.

"We have reached unprecedented levels of control on composition, nanostructure and functionality -- for example, conductivity -- of the resulting materials, all with a simple 'one-pot' mix-and-heat approach," said senior author Ulrich Wiesner, the Spencer T. Olin Professor of Engineering.

...The researchers report a wide range of experiments showing that their process can be used to make "a library of materials with a high degree of control over composition and structure." They have built structures of almost every metal in the periodic table, and with additional chemistry can "tune" the dimensions of the pores in a range from 10 to 500 nanometers. They have also made metal-filled silica nanoparticles small enough to be ingested and secreted by humans, with possible biomedical applications. _RDMag

This is another example of the "dull revolutions" taking place in research labs around the world every day. It is the breakthroughs in materials, catalysts, electrodes, solvents, and basic processes, which will build the bridges to a more prosperous, clean, and abundant future.

The biggest threat to such a transition to a cleaner, more abundant future, is the threat from well intentioned political and faux environmental movements, which have pure feelings but feeble minds.

Wind Turbines a Fire Danger to Wildlands, Forests

A recent wind turbine fire in Germany exposes the risk of constructing wind farms in drylands and wild lands subject to wildfire. The image below of a turbine explosion and fire in Scotland, illustrates the danger.

And now we learn that such fires are not considered uncommon by insurers:

“You do get fires occasionally and it comes with the territory,” McLachlan said by phone. The turbine may take at least a year to replace, he said.

...With many potential causes, “we can’t start any investigation until we have a chance to look at the turbine and in order to do that we have to get to the nacelle,” Andrew Hilton, a spokesman for the company, said of the casing on the tower that houses the turbine’s power-generating components.

The company will survey the damage more intensely tomorrow, Hilton said by phone from Aarhus. The site is in the countryside, not in a residential area, he said.

A fire at such a machine could lead to a potential loss of 300,000 euros to 400,000 euros ($400,000 to $533,000) per year, according to Fraser McLachlan, chief executive officer of GCube Underwriting Ltd., an insurer of renewable energy projects. _Bloomberg

As more people discover the cluster-foque nature of wind farms -- from the outlandish costs of service and maintenance, to the inherent unreliability and risk to the power grid, to the human illness caused by proximity to the turbines, etc. etc. etc. -- public support for these monstrous monuments to the green dieoff religion should subside.

As public opposition to these counter-productive boondoggles grows, a bit of energy reality should eventually be enforced -- even in lands such as Germany, where sun and wind faeries are worshiped in all government buildings.