Drumbeat: June 19, 2010
Posted by Leanan on June 19, 2010 - 10:29am
Prof. Smil is an expert on the history of technological innovation. He points out that the U.S. energy industry – which includes production, processing, transportation and distribution, coal and uranium mines, oil and gas fields, pipelines, refineries, fossil-fuel fired, nuclear, and hydroelectric power plants, tanker terminals, uranium enrichment facilities, and transmission and distribution lines – constitutes the world’s most massive, most indispensable, most expensive and most inertial infrastructure. Its principal features change on a time scale measured in decades, not years. That’s why “we’re going to be a fossil-fuel society for decades to come.”
A lot of us don’t want to hear that. Yet the facts don’t care whether we like them. Prof. Smil methodically sets out to show that the facts do not support either the romantics, who think we’ll be saved by wind turbines, or the techno-optimists, who think that electric cars are right around the corner. Along the way he demolishes peak oil theory, biomass for fuel, carbon sequestration, and various other energy myths. He believes that weaning ourselves away from fossil fuels would be a good thing. But we need to understand that the transition from fossil fuels will be complex, protracted and nonlinear, and will require enormous investments. “Wishful thinking,” he writes, “is no substitute for recognizing the extraordinary difficulty of the task.”
TOKYO (Agencies): Global oil output could slide by up to 900,000 barrels a day from projected levels for 2015 if oil producing countries follow the US lead and impose moratoriums on development of new offshore oil reserves, International Energy Agency executive director Nobuo Tanaka said Friday.
WHO would swap places with Resources Minister Martin Ferguson? There he is with the world's leading resource companies fuming over a mining tax, the spectre of BP's monstrous US oil spill on the nightly news, and he's just signed off new drilling leases in Australian waters that allows for wells twice as deep as the fatal rig that has ruined the Gulf of Mexico.
No wonder the Greens have popped up with a call to halt all oil drilling in Australian waters.
(Bloomberg) -- U.S. Representative Edward Markey will ask oil-company executives to revamp the spill-response plans lawmakers this week said were duplications and inadequate to deal with an environmental disaster.
The Deepwater Horizon tragedy in the Gulf of Mexico has sparked national attention to the manner in which oil and gas exploration and production operations on federal onshore and offshore leases are conducted.
The most important question (and one Tony CAN answer) was only hinted at by Rep. Scalise when he asked if the casing around the well was cracking. Hayward's response was a variant of "I don't know" because, he said, they can't see into the well. Scalise dropped the line of questioning without asking Hayward to offer his best explanation for the increasing flow rate of the well.
Why is the integrity of the casing or the ground around the well hole important? Because it says everything about whether the flow rate of this spill will increase, whether there are more disasters yet to come, and how long it could take to stop flow from this well with the relief wells. The question I'd like to ask Tony Hayward is this: To the best of your knowledge are we near the end of this spill? In the middle? Or perhaps, only at the very beginning?
Good days are relative for BP, the company responsible for stopping the largest offshore oil spill in the nation’s history. But the last two days brought moderate signs of progress in the company’s struggle to contain the catastrophe flowing from the floor of the Gulf of Mexico.
(Reuters) - BP Plc said its oil-capture systems at the gushing leak in the Gulf of Mexico shut down Friday night because of a problem and a restart was expected on Saturday after a lightning storm passes.
The latest suggestion comes from Nick Pozzi, a former pipeline engineering and operations manager for Saudi Aramco, is seek help from Saudi Arabia.
Pozzi says the oil-rich nation contained a similar oil leak in the Persian Gulf in 1993 using super tankers, after an accident spilled millions of litres of crude oil.
HOUSTON (Reuters) - A pair of relief wells snaking their way beneath the Gulf of Mexico are energy giant BP Plc.'s (BP.L: Quote) (BP.N: Quote) last and best hope for choking off its blown-out Macondo well in the near-term.
But after drilling through more than 10,000 feet (3,050 metres) of rock layers a mile (1.6 km) beneath the ocean surface, BP engineers in coming weeks face the most challenging part of the drilling assignment: hitting a target that is the size of a large dinner plate with the drill bit.
ST PETERSBURG, Russia (Reuters) - LUKOIL, Russia's second-largest oil producer, said it was not interested in snapping up anything from the $10 billion asset sale with which BP hopes to help pay for its oil spill in the Gulf of Mexico. "We are not wolves, we do not eat the weak," LUKOIL head Vagit Alekperov told Reuters on Friday when asked whether Russia's largest non-state oil firm was interested in BP's assets.
Russia (Reuters) - The leaders of the global oil industry gathered as usual at Russia's top annual business forum this week but there was one ghost at the party.
BP chief executive Tony Hayward, normally a regular, was conspicuous by his absence this year and his company's woes were a constant topic of discussion among those who did come.
As a foreign company, BP may suffer harsher treatment at the hands of consumers and lawmakers.
The BP spill is a failure not just of technology but ideology. That oil flows into the ocean from the deregulatory tide of the last 30 years. President Obama is right to compare the fiasco to 9/11. If he can frame the message more memorably than he did in his Oval Office address, Obama may yet use the largest environmental disaster in U.S. history to speed the transition to a green economy, just as George W. Bush used terrorism to refashion foreign policy. To do so, “deregulation”—once a Reaganite call to arms—must be transformed into an epithet. If the president can’t put the antigovernment, Tea Party types in their place now, when will he? The legacy of the American progressive tradition is on the line.
"The Daily Show" news staff outdid itself Wednesday. While often specializing in skewering the news and the TV personalities who deliver it, Jon Stewart’s team showed what national news ought to be presenting.
On the day after President Barack Obama’s prime-time address pitching a renewed emphasis on developing alternative fuel sources to wean our country off its oil dependence, "The Daily Show" presented a well-researched documentary of sorts in a segment titled “America is an unstoppable oil-dependency breaking machine – unfortunately, the machine runs on oil” (Click here to watch).
In his 26 years in office, energy issues have defined Congressman Joe Barton's career. They've also defined his gaffes, as was evident Thursday when the Fort-Worth area Republican alienated even the members of his own caucus by apologizing to BP CEO Tony Hayward for what he initially called a White House $20 billion "shakedown," only to turn around later in the day and issue an apology for the impolitic apology. Here are eight of Barton's other not-so-finest moments in the limelight.
ST. PETERSBURG (Itar-Tass) -- Russia believes it necessary to reduce transit rates for oil transported through Ukraine by 30 percent.
Ukraine has rates the transit rate by 30 percent on the average since the beginning of the year, Deputy Energy Minister Sergei Kudryashov said on Saturday.
ST. PETERSBURG (Itar-Tass) -- Belarus’ government has provided no documents to prove Russia’s debts for gas transit via its territory, Viktor Zubkov, the Russian First Deputy Prime Minister and chairman of the board of directors of national gas utility Gazprom, told journalists on Saturday.
Alexei Miller also confirmed that if Gazprom fails to pay the debt for gas deliveries Gazprom will cut supplies to Belarus starting from Monday.
(Bloomberg) -- Eni SpA and Gazprom OAO agreed today in Saint Petersburg to sell a stake to Electricite de France SA, allowing the French company to enter the South Stream project, Eni said in an e-mailed statement.
BAGHDAD (AP) -- A protest over electricity shortages in Iraq's southern port city of Basra turned deadly on Saturday with troops fatally shooting one demonstrator, police officials said, underscoring rising tension over the country's lack of basic services.
BEIJING (Xinhua) -- China will endeavor to double the weighting of natural gas in its total energy consumption basket over the next five years to reduce its reliance on coal, a senior official with the National Energy Administration (NEA) said Saturday.
"Natural gas accounts for only 4 percent of energy in China now. The country will raise that to 8 percent during the 12th Five-Year Period (2011-2015)," Wu Yin, deputy head of the NEA, said at an energy forum in Beijing.
A PLAN to start extracting and refining Uganda’s oil has hit a snag due to tax disagreements between an exploration company and the Government.
Heritage Oil and Gas Company Ltd has to sell its interests to a richer company that has the resources to extract and refine the oil, but does not want to pay taxes on the sale.
(Bloomberg) -- Brazilian Energy Ministry official Marco Antonio Almeida said it is “indispensable” that Petroleo Brasileiro SA offers new shares at the same time as the government swaps oil for the state-controlled company’s stock.
“Things will have to match somehow, this marriage looks indispensable to me,” Almeida, the ministry’s secretary for Oil, Gas and Renewable Fuels, said yesterday in an interview in Brasilia. “Either the capital increase happens a bit later or we succeed in accelerating the oil pricing process,” he said.
Beginning in 1975, the first step in transition from the consumer/industrial economy to a knowledge/service economy was taken. It was innocent enough—the oil embargo made the manufacture of cheap goods questionable. Seeking a way to return to maximize profits that were being hit by rising oil prices, outsourcing to third-world countries with low-wage employment enabled U.S. corporations to compensate for rising oil prices and continue to rake in large profits. It’s taken 35 years, but the US is clearly no longer an industrial producer. Where once companies like GM, US Steel and Motorola electronics manufacturing and other production businesses dominated the business sector, today they’ve been replaced by finance/banking, insurance, and medical care as the largest, most successful businesses. We make nothing and those countries that do, India, China and Indonesia are already beginning to see the reality that they too will no longer be able to fuel their economy on cheap goods production. The ‘learning curve’ for them will be very short. We produced for 150 years…they for perhaps 50.
First, the science that I’ve read suggests there is a layer of oil located deep below the surface that covers a huge area of the globe. If it can be recovered, then this oil could keep the world going for many years — contrary to the central claim of “peak oil” theorists, who believe we’re already seeing the effects of the world “running out” of available oil.
And that oil is under tremendous pressure. So, this seems to be an area where humanity never has been before and that we really don’t understand that well. You could even describe it as a place where we may not belong.
"We threw away things people kill each other for now." That's how Eli (recent Tony winner Denzel Washington) describes the world before it was flattened by "the flash" in the Christian fable The Book of Eli, new to DVD and Blu-ray this week. Since the world ended, or very nearly did, everything is at a premium. The thirsty must barter for a full canteen; even an iPod charge costs a pocketful of trinkets.
CARBON SHIFT: How Peak Oil and the Climate Crisis Will Change Canada Edited by Thomas Homer-Dixon, Vintage Canada, 230 pages, $22
Homer-Dixon, a leading member of Canada’s small band of public intellectuals, has assembled a collection of six essays by the influential likes of former CIBC world markets chief economist Jeff Rubin and Globe and Mail columnist Jeffrey Simpson to address the challenge of shifting to a clean, low-carbon energy. Especially timely as the oil continues to gush in the Gulf of Mexico.
Global warming, we’re often told, is an issue we must address for the sake of our grandchildren. We need to cut carbon because of our moral obligation to future generations.
But according to Bill McKibben, that’s a 1980s view. As McKibben writes in his new book Eaarth: Making Life on a Tough New Planet, the increasingly open secret is that global warming happened already. We’ve passed the threshold, and the planet isn’t at all the same. It’s less climatically stable. Its weather is haywire. It has less ice, more drought, higher seas, heavier storms. It even appears different from space.
And that’s just the beginning of the earth-shattering changes in store—a small sampling of what it’s like to trade a familiar planet (Earth) for one that’s new and strange (Eaarth). We’ll survive on this sci-fi world, this terra incognita—but we may not like it very much. And we may have to change some fundamental habits along the way.
Eaarth, argues McKibben, is our greatest failure.
THE planet is far from running out of water, but many countries are beginning to exhaust the local supplies they need to maintain agricultural productivity and ecosystem health.
Welcome to the age of “peak water”.
Fifteen hundred miles — that’s what the average American meal has traveled to reach your plate, according to a Natural Resources Defense Council study. It’s the equivalent of your lunch road-tripping from Las Vegas to Columbia. That doesn’t even account for the ingredients from five foreign countries in the standard meal.
“The entire industrial food system essentially ensures that your food is marinated in crude oil before you eat it,” said author Bill McKibben in the foreword to "Diet for a Hot Planet" by Anna Lappè.
The U.S. Department of Energy is leading a sea change in the way industry, investors and consumers are approaching the energy crisis: turning away from the hype surrounding solar, wind and other renewable generation technology, to focus more on energy efficiency.
Greening the backyard BBQ: Less meat could mean more water and fuel
It's summertime and the grilling is easy. But before stocking up on steaks, burgers and other traditional carnivorous fare, consider trying meat-free alternatives.
Exploring a vegetarian diet isn’t just about making healthier lifestyle choices. A UN report released earlier this month called for a global shift toward a vegan diet, citing the disproportionate amount of resources required to produce meat.
Power generated by burning wood, plants and other organic material, which makes up 50 percent of all renewable energy produced in the United States, according to federal statistics, is facing increased scrutiny and opposition.
That, critics say, is because it is not as climate-friendly as once thought, and the pollution it causes in the short run may outweigh its long-term benefits.
The opposition to biomass power threatens its viability as a renewable energy source when the country is looking to diversify its energy portfolio, urged on by President Obama in an address to the nation Tuesday. It also underscores the difficult and complex choices state and local governments face in pursuing clean-energy goals.
The American Petroleum Institute said Friday that gasoline deliveries fell 0.4 percent in May to 9.05 million barrels per day, the lowest May level in seven years. That compared with year-over-year increases in March and April.
API Chief Economist John Felmy said the decline shows that demand is more sensitive to higher prices and the pace of the economic recovery than other oil products, like diesel, heating oil and jet fuel.
HOUSTON — The number of rigs actively exploring for oil and natural gas in the U.S. increased by 12 this week to 1,539.
Baker Hughes Inc. said Friday that 953 rigs were exploring for natural gas and 574 for oil. Twelve were listed as miscellaneous. A year ago this week, the rig count stood at 899.
(Bloomberg) -- Asia-Pacific countries will study safeguards used by International Energy Agency members to protect against energy supply disruptions and oil price swings.
Asia-Pacific Economic Cooperation energy ministers meeting in central Japan agreed to participate in a one-week session organized by the IEA this fall, Mitsuo Matsumoto, a director for natural resources at Japan’s trade ministry, told reporters today in Fukui city.
ST PETERSBURG, Russia (Reuters) - Russia could produce less gas than expected this year if European demand falls, energy officials said on Friday, but maintained that the spot market and shale gas do not pose long-term threats.
Russia's biggest short-term concern is falling demand in Europe, its biggest export market, due to the economic downturn. While demand grew steadily in the first four months of the year, it fell sharply in May, especially in south-west Europe.
(Bloomberg) -- A U.K. court has found Total SA and Chevron Corp. guilty of failing to prevent the Buncefield fire in a fuel depot in north London in 2005, according to the Health and Safety Executive.
“When the largest fire in peacetime Europe tore through the Buncefield site on that Sunday morning in December 2005, these companies had failed to protect workers, members of the public and the environment,” the HSE said today in an e-mailed statement.
SALT LAKE CITY – Salt Lake City attorneys expect Chevron Corp. will quickly agree to a financial settlement related to last weekend's pipeline spill that dumped 33,000 gallons of crude oil into city waterways, a spokeswoman for Mayor Ralph Becker said Friday.
Becker has vowed to make Chevron pay for the cleanup, and the company has repeatedly pledged to cover the city's expenses, as well as damage or reimbursement claims from others.
From the Oval Office the other night, President Obama called the oil leak in the Gulf of Mexico “the worst environmental disaster America has ever faced.” Senior people in the government have echoed that language.
The motive seems clear. The words signal sympathy for the people of the Gulf Coast, an acknowledgment of the magnitude of their struggle. And if this is really the worst environmental disaster, the wording seems to suggest, maybe people need to cut the government some slack for failing to get it under control right away.
But is the description accurate?
(Bloomberg) -- Anadarko Petroleum Corp. and Mitsui & Co. should pay into a multibillion dollar fund for claims tied to the leaking Gulf of Mexico oil well the companies co-own with BP Plc, U.S. Representative Edward Markey said.
“They cannot escape responsibility,” Markey, a Massachusetts Democrat, said yesterday on Bloomberg Television’s “Political Capital With Al Hunt,” being broadcast this weekend. Both companies should be “contributing to any fund that is constructed for any part of the reconstruction.”
(Bloomberg) -- Anadarko Petroleum Corp., the Texas oil company that owns 25 percent of the damaged well pouring crude into the Gulf of Mexico, said BP Plc, the project’s operator, should pay the costs from the spill because it acted recklessly and unsafely at the drilling site.
BP didn’t monitor or react to warning signs as the Macondo well was drilled, Chief Executive Officer Jim Hackett said yesterday in a statement. BP is responsible for damages under such conditions, Anadarko said.
(Bloomberg) -- Five years ago, investors including Goldman Sachs Group Inc. and Carlyle Group put up $500 million in seed money to hunt for oil in the deep waters of the Gulf of Mexico and elsewhere.
After the BP Plc oil spill, smaller Gulf operators such as the Goldman startup, Cobalt International Energy Inc., may be swept up in a wave of consolidation as the regulatory landscape tilts in favor of larger firms, said William Herbert, an analyst at Houston-based Simmons & Co.
(Reuters) - As early word of BP's Deepwater Horizon blowout began spreading, investors panicked. After closing above $60 before the April 20 disaster, the energy giant's shares plunged almost 20 percent in New York, to below $50, in just two weeks.
It is not hard to understand why. Even then, the out-of-control oil spill in the midst of rich fishing grounds and nearby resort beaches raised the specter of horrific damages and untold potential liabilities.
Yet, nearly to a person, the dozens of securities analysts who followed the British oil giant were unfazed. As BP shares continued to drop, most were screaming the same message: buy, baby, buy.
HOUSTON — The green-and-yellow logo that BP employees normally wear with pride is meant to evoke an environmentally friendly sunflower. These days, it feels more like a bull's-eye.
(Bloomberg) -- BP Plc has appointed an internal team to review BP’s U.S. portfolio and select $20 billion in assets that will be used to guarantee a fund it will set up to pay oil spill claims, Robert Dudley, BP managing director, said in an interview at BP’s Washington office.
Mississippi (Reuters) - A $20 billion fund set up by energy giant BP Plc to compensate financial losses due to a big oil spill in the Gulf of Mexico will pay legitimate claims fast, the fund's independent administrator said on Friday.
(Reuters) - BP Plc , battling to plug a gushing oil well under the Gulf of Mexico, is seeking loans of $1 billion (676 million pounds) from each of seven banks to raise up to $7 billion, banking sources told Thomson Reuters LPC on Friday.
(Bloomberg) -- BP Plc’s $20 billion oil spill fund, established at the request of U.S. President Barack Obama, may not stop more than 230 lawsuits filed by people and businesses harmed by the worst environmental disaster in U.S. history, a judge said.
When Barack Obama looked into a television camera this week and said the United States urgently needed to break its addiction to oil, he was sitting at the same desk in the same office where Jimmy Carter said the same thing 31 years ago. For conservatives who think Jimmy Carter was a terrible president, the parallel was ominous.
"It's the second term of Jimmy Carter! Same speech!" bellowed the inexplicably popular radio host Rush Limbaugh. "Everything he said, Obama repeated last night!"
This time last week I wasn’t convinced that we face “an irrecoverable fall in global oil supply by 2015 at the latest”, which is the view of the UK’s Industry Taskforce on Peak Oil and Energy Security. So have I changed my mind?
Well, not on that precise point. But, at the risk of stating the obvious, peak oil is not the issue. The real danger is the “oil crunch” that could well happen even if the world’s oil supplies plateau in the next few years rather than fall off dramatically.
I have added the purple rectangle for the great depression, and red rectangle for WWII. As you can see, whether the technology adoption was slowed or partially reversed very much depends on the individual technology. Automobiles and telephones took a big hit - actually going backward for a number of years. However, the progress of electricity is only moderately affected, and the progress of radio barely deviates at all from its rapid increase. Refrigerators started only in the late 1920s and spread very rapidly all through the depression.
I think the point is that for industrial societies, even when under a great deal of stress, they have some resources and some choices. Thus, those things that they see as the highest priorities may continue to move forward.
Among those who understand Peak Oil and the fragility of global supply chains, it is widely assumed cities will quickly become hellholes of squalor and extreme violence once liquid fuels are no longer cheap and abundant. Perhaps, but history suggests cities are highly resilient adaptations.
What never ceases to amaze me is how few people who expect cities to implode have any grasp of the size and scale of cities which thrived for hundreds of years without any fossil fuels.
"For a moment, put aside thoughts of the British Petroleum oil leak that's clogging the Gulf of Mexico. The greater crisis is peak oil, those attending the Colorado Renewable Energy Expo's pre-conference were told Friday.
"Peak oil" refers to the point in time when demand for the fossil fuel will exceed the supply of what is left in the ground, factoring in who wants the oil, and how easy and cost-effective it is to obtain. Global political realities (called geo-politics in energy circles) also affect oil supply.
HONG KONG — A company here that is partly owned by the Chinese government has quietly purchased a 5.1 percent stake in the only American-owned provider of enriched uranium for use in civilian nuclear reactors.
If you believe that much of our response to peak oil will be last-minute and on a budget, you may have little trouble imagining growing numbers of people buying increasingly cheap and functional navigation devices or software for their smart phones in order to save gas by avoiding traffic and wrong turns. As I argued in "The Methadone Economy," my vision of a likely peak oil future, the less prepared we are for peak oil, the more prevalent such bottom-up, quick to implement solutions will become.
ince it came out, the Fortwo Smart “microcar” has made a bit of a splash in a world of peak oil and increasing environmental concerns. This tiny vehicle, which holds only two occupants (hence its name), traces its origins back to the 1980s, but the first ones did not roll off the assembly line until 1998. For several years, the car was available only in Europe (where motorists have long paid 3-4 times as much for motor fuel as Americans), and was not legally available in the U.S. until 2008.
Today, the Smart Fortwo has gained a reputation as being the most fuel-efficient vehicle on the road. But is it, really? And what about the trade-off in terms of storage capacity and safety?
(Bloomberg) -- Asia-Pacific nations will establish as many as 20 low-carbon model cities to test new technology including smart grids and renewable-power generation as part of efforts to reduce pollution and dependence on crude oil.
Tianjin, northeastern China, may be the first city picked for the project, Japan’s trade minister, Masayuki Naoshima, said today after a meeting of Asia-Pacific Economic Cooperation energy ministers in the western Japanese town of Fukui. The cities will be chosen within three years, he said.
Governments moved closer Friday to curbing the use of chemicals commonly used as coolants in refrigerators, air conditioners, hair spray and other household items in what some say would be among their biggest climate decisions ever.