The Oil Drum

69 comments on Urban Survival: The GOM Situation

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Stuart Staniford on October 1, 2005 - 3:29pm

The 1.5/18 calculation is not right - trade spreads the problem globally. So it's really 1.5/84 for oil. Even gasoline is likely to be somewhat more global since we dropped refining standards for the emergency. However, natural gas is probably a big deal.

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Glenn on October 1, 2005 - 4:01pm

Exactly, NG is a more continental market while oil is global. And the US has already peaked.

What about oil import capacity given destruction of port facilities? Then of course there is the refining capacity. I think we will see higher prices at the pump than if the oil problems had happened elsewhere.

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Fire Temple on October 1, 2005 - 5:24pm

The point is, in the post-peak or near-peak world the old supply-side models do not work. And we should be worried when we only hear these as "solutions" to the present energy problem.

What we need are aggressive government-sponsered programs in coal-gasification and Fischer-Tropsch synfuels (or similar "alternative" but demonstrated technologies). The "market forces" won't make this happen becuase they are afraid that LNG imports will make coal-gasification uncompetitive.

There is this myth in America that all great technologies were developed without government help. The reality is that the most successful technologies in the fuels and petrochemicals were developed during WWII with aggressive government help-- fluidized cat-cracking for high octane gasoline and synthetic rubber being just two examples.

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Engineer-Poet on October 1, 2005 - 7:07pm

F-T synthesis is lossy, and the fuel still has to be burned in the same old inefficient internal combustion engines. We would be much better off building our vehicles as plug-in hybrids and running as much as we can off electricity:

The mine-to-wheels efficiency is much higher with modern powerplants than with car engines, even without the F-T process losses.
IGCC powerplants are a lot cleaner than car engines.
We'd be able to power other loads on-peak while charging cars off-peak.
We could use any source of energy that generates electricity to run our cars; we would not be restricted to coal.

We've already paid a billion dollars for hybrids through the PNGV. It's a small step from hybrids to plug-in hybrids; we ought to insist that they be brought to market.

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CmdrPhil on October 1, 2005 - 8:29pm

I agree completely - plug-in hybrids are the best way to curtail transportation demand for gasoline and diesel in the medium term (5-10 yrs). Fuel cells for autos still seem to dominate the popular press and US auto makers as the likely solution, but the technical improvements necessary to make plug-in hybrids in real numbers are far less of a challenge. Plus beefing up the US electrical grid is a lot less daunting than thinking about building a hydrogen distribution system.

I also agree are better off using North American coal reserves to generate electricity (and thus displace natural gas consumption) than using the F-T process to generate diesel. I read in the papers a few days ago that GE and Bechtel agreed to begin engineering and design for a 600-megawatt coal-gasification plant in Ohio - finally! This is by far the largest plant to date. Coal gasification doesn't help much with our global warming problem but it greatly reduces particulate, sulfur dioxide and heavy metals emissions. I live in the Pacific NW and much of our air pollution and the mercury in our tuna come from coal fired electric generation plants in China. I wonder what the cost-benefit calculation would look like to pay the Chinese to replace their existing plants with coal gasification plants. GE would be all for it.

The President needs to take a step beyond conservation and put significant DOE money for plug-in hybrid development. His oil company constituency might not be thrilled, but it wins point on the fuel cost / national security fronts.

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Engineer-Poet on October 1, 2005 - 10:41pm

... beefing up the US electrical grid...

Is unnecessary unless you want to recharge during the day. The grid is sized for peak loads, and charging at night wouldn't get close to its limits. Average US power consumption is about 440 GW; my calculations are that actual power delivered to the wheels of US vehicles averages 183 GW given somewhat generous allowances for drivetrain efficiency. If we can power A/C loads at 4:30 PM, we can charge cars from 11 PM to 7 AM and the grid won't break a sweat. What we need is more fuel for the generators (or to shift some of that oil we're burning from 17%-efficient car engines to 55%-efficient combined-cycle turbines).

The President needs to take a step beyond conservation and put significant DOE money for plug-in hybrid development. His oil company constituency might not be thrilled....

There is a trivial amount of money in the new energy bill for plug-in hybrids, inserted at the last minute.

The plug-in hybrid was always the threat to the oil interests; it would have allowed anyone who cared to drive on energy from nuclear, natural gas, wind or even solar... on different days. I would not be at all suprised to learn that oil interests had a role in keeping CARB or anyone else from splitting the difference in the ZEV mandate, because once that cat was out of the bag it would have been really tough to keep the tech from spreading.

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Fire Temple on October 2, 2005 - 2:42pm

No matter which path you advocate, significant government support/leadership and subsidy will be necessary. The IGCC projects become uncompetitive if the 2-3 BCF/D LNG facilities planned for later this decade come on line and NG prices fall below $4/MCF -- which is why private enterprise hasn't been too enthusiastic about investing in coal gasification.

I am personally a bit hesitant advocating new technologies that require many years of R&D work and radical changes in transportation infrastructure (from engine manufacturing plants to power distribution) -- we just don't have that much time.

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CmdrPhil on October 2, 2005 - 7:33pm

Although we can currently bring LNG in from overseas and deliver it for around $3/MCF by the time we build enough LNG terminals to make up for the shortfall in domestic production the world market price will be substantially higher - natural gas demand in China and India is poised to increase dramatically, and diminishing gas production from the North Sea will make Europe a larger customer for LNG as well. As we progress towards the peak in oil production this trend will accelerate. I also don't think we will get as many LNG facilities built as soon as currently assumed - the public is even more scared of LNG terminals than of nuclear power. I'm worried that it will take massive shortages and federal action to get citing issues resolved in a timely fashion.

Coal is plentiful and domestic (no security risk), and coal gasification is almost as clean as electric generation from natural gas so the NIMBY factor is minimal. I think the recent deals between AEP, GE and Bechtel, and Cinergy and Vectren for new 600 MW IGCC facilities is the tip of the iceberg. There are substantial long term price risks on both the coal and natural gas sides because of peak oil; it's a good idea to hedge bets and invest in every reasonable path. And IGCC technology is looking more and more reasonable: in the last 3 years the price premium over a traditional coal fired electric plant has dropped from 50% to 20%.

Any path we choose to reduce our dependence on oil will require radical changes. If we don't have time to implement massive changes in our transportation infrastructure, well, hope you and I both survive the collapse. I'm hoping we still have another 10 years before things really get bad. I think we will see practical plug-in hybrids on the market within 3 years and they will make up a significant portion of the market within 10. In the meantime I don't see fuel cell cars becoming much more feasible and am doubtful biofuels can increase in EROEI and scale up.

What gives me more hope for the weak hybrid to plug in hybrid to electric car path is the tremendous improvement in battery technology driven by the consumer electronics industry. If we can replicate advances in cell phone and laptop batteries that we've seen in the last 10 years in auto batteries we should be able to shift the majority of transportation energy requirements from oil to the electric grid with a minimum of turmoil.

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ab3 on October 1, 2005 - 8:10pm

At least trade used to spread problems like this globally, but is oil still as fungible as it used to be? Venezuela, for example, is planning to sell oil preferentially to its Latin American neighbors, at reduced prices. And who knows what China's planning to do with all the oil assets it wants to buy.

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Sealth on October 1, 2005 - 11:27pm

Similarly, how long will Europe tolerate their surplus gasoline and diesel production being shipped to the U.S. at the cost of "demand destruction" on their own continent? If European trucking starts to fall apart because American demand is driving the cost of distillates too high, I suspect European politicians will start looking seriously at export bans or quotas.