Oil price volatility and possible consequences
Posted by Heading Out on October 9, 2006 - 11:05am
Topic: Supply/Production
Tags: german coal, oil prices, rig count, saudi arabia [list all tags]
So here we are, with the world beginning, yet again, major investments in alternate sources of energy, and the official was becoming nervous that we are about to see history repeat itself. The concern is sufficient that a significant state investment is being postponed a year to see how the events of the next few months play out. Are we again going to see companies lose large amounts of money chasing technologies that will no longer be needed ? While I argued against such a decision, the nervousness and resulting caution is not restricted to one state official. I commented earlier in the week about the concerns I have heard from those in the oil industry, about the possible drop in prices. They've been here before, and barely survived the last drop and so are much more cautious this time.
China, the most important coal-producing nation, uses coal to cover about 70 percent of its energy needs. About 26,000 of the 28,000 registered mines are small firms, which use mining techniques last seen in Europe during the 19th century. It's a deadly trade: According to official estimates, more than 6,000 Chinese miners lose their lives in work accidents every year; the actual figure is probably about twice as high.The move is toward the larger mechanized mines such as those that Germany can equip from their long experience in the business. And this is one of the European problems since many of the good seams have been mined many years ago, and current seams are deep, and not of as high a quality.
After all, this is no business for idiots," says Strakerjahn as he crawls along a mining face 1,100 meters (3,609 feet) below the ground. Along the mining face, coal chunks are being torn from the rockbed with a giant planing machine. (Ed. Note The machines are called plows, photo here).And this brings us back to the perceived reality of the current situation. The coal industry in Germany is heavily subsidized, but a global rise in demand, and price could be used to argue for sustained funding and development. There were plans for growthThe technology that the Chinese - but also the Russians, Iranians and Iraqis - are inspecting at Auguste Victoria/Blumenthal is the most up-to-date available. German mines are among the most modern in the world: Instead of hammers, the miners hold mini computers with barcode readers, using them to exchange information via the mine's own wireless LAN system. . . . . . . .(but) . . . . . the decline of German black-coal mining, however, isn't something he particularly enjoys talking about.
In 1860 there were 277 mines in the Ruhr region alone. Now only eight are left, of which at least two will be shut down in the coming years. Germany has become a dwarf among black-coal producing nations: It produces less than 25 million tons of black coal a year, out of a global total of 5,000 million tons.
One -and-a-half years ago, CEO Werner Müller announced that a new German mine could be opened for the first time in decades, on the eastern fringe of the Ruhr. But the record-price of coal soon turned out to be a short-term phenomenon: The price of coking coal dropped again, and no investors have been found for the mining project yet.There is thus some concern as to what will happen with the price and availability of oil. Historically this has been controlled to an extent by OPEC, and certainly the world's memory recalls the flooding of the market by KSA. So what are their current plans?
In Friday's discussion Cry Wolf asked about rig counts. And long-time readers of the site might remember that I find occasional interest in multiplying the number of rigs in KSA by the number of wells each can drill, and multiplying this by an estimated average production to determine potential production gains for the country. One of my sources for this has been the Annual Statistical Bulletin It was not so long ago but that the Kingdom was suggesting that it would be more open. But in the current bulletin they are not making the break between oil, gas dry and other wells that they made in 2003 (when the break was 214; 58; 11 and 46). The total number of wells drilled last year was 335, just 5 more than in 2003. If we assume that 220 of these were in oil, and one assumes that each produces an average of 4,000 bd (which one can argue may now be a little high), then the total oil increase (not counting NGL from the gas wells) would be 880,000 bd. Now you take a guess on what the depletion rate was and take that away, and you have the increase in overall production. Incidentally there were, on average, 44 rigs drilling in KSA in 2005. That means that each drilled, on average 335/44 = 7.6 wells. A quick glance at Baker Hughes rig count shows 50 oil rigs and 24 gas rigs working, which is a significant increase in number. Were this to be the average for the year then 74 x 7.6 = 562 wells, 2/3 of which would be 376 oil wells, and using the same 4,000 bd would provide a total oil increment of 1.5 mbd. But of course these numbers do make some assumptions.
source?
Coal is described of having a carbon content by mass of 50-95%.
Even clean-burning methane (CH4 + 2O2 → CO2 + 2H2O) generates more mass of carbon dioxide than the hydrocarbon itself weighs. It sucks the oxygen needed to do this out of the air.
*coal is described as
I wish there was an edit feature, if only for 15 minutes after posting.
Has anyone heard of any studies that show there is a decrease in the oxygen content in the atmosphere? Just curious.
monitoring Oxygen to Nitrogen ratios in
the atmosphere and oxygen is showing a
downward trend in relation to the
unchanging nitrogen.
Check out http://bluemoon.ucsd.edu/images/ALLo.pdf
Very interesting information. I wonder how much of a drop in oxygen it will take to start to affect combustion processes - As in internal combustion engines, gas furnaces, etc....?
In regards to atmospheric oxygen levels: we, and most other species, would die of carbon monoxide poisoning long before it affected the performance levels of ICEs, gas furnaces, etc. Sadly, lots of people already die this way from leaking furnaces, burning kerosene heaters inside their houses, or committing suicide by running their car inside a sealed garage. It is a moot point.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
our atm is around 21% O2. 19.5% is considered oxygen deficient. CO is formed from incomplete combustion. Internal combustion engines run at much lower O2 concentrations (torr not %. Besides CO breaks down naturally in the presence of O2. Our total atmospheric O2 will never drop to a low enough level barring nuclear war or asteroid impact for that to happen. There is not enough fossil or organic carbon out there to use up all the O2.
no danger of running out! I should have put my
post in persepective.
But it is interesting that the depletion of
oxygen in the atmosphere, mostly from combustion
process, is measureable.
C+ 02 => CO2 in combustion
would roughly increase mass by a net gain of twice (Oxygen being about the same atomic weight as carbon).
I want to get a better
http://www.eia.doe.gov/cneaf/coal/quarterly/co2_article/co2.html
The carbon dioxide emission factors in this article are expressed in terms of the energy content of coal as pounds of carbon dioxide per million Btu. Carbon dioxide (CO2) forms during coal combustion when one atom of carbon (C) unites with two atoms of oxygen (O) from the air. Because the atomic weight of carbon is 12 and that of oxygen is 16, the atomic weight of carbon dioxide is 44. Based on that ratio, and assuming complete combustion, 1 pound of carbon combines with 2.667 pounds of oxygen to produce 3.667 pounds of carbon dioxide. For example, coal with a carbon content of 78 percent and a heating value of 14,000 Btu per pound emits about 204.3 pounds of carbon dioxide per million Btu when completely burned.(5) Complete combustion of 1 short ton (2,000 pounds) of this coal will generate about 5,720 pounds (2.86 short tons) of carbon dioxide.
Let's assume anthracite with carbon content (elemental and volatiles) of 80%. The molecular weights of C and CO2 are 12 and 44. If I've read the chart right then net atmospheric carbon additions are 3.3 Gt pa. Fossil fuel emissions are 5.5 Gt (though I've seen higher figures) and I've arguably assumed these account for most of the net additions. I know Ronald Reagan said trees were to really to blame. This approach gives
1 X (44/12) @ 80% X (3.3/5.5) ≈ 1.8
So I'm covered by saying `up to two'. What this means is that when oil is gone coal must not take its place. In fact much of the coal industry will need to be mothballed but that's a separate topic.
We need to stop burning coal (without carbon sequestration) long before we pump the last barrel of oil (in practice, we'll never pump the last barrel of oil, so you have to define a moment when oil 'runs out' eg production has fallen 90% from its peak).
I'd have to check, but coal is roughly 1/3rd of all human CO2 emissions. On the basis that electric power is 40% of world energy consumption, and coal is about half of electric power generation and twice as dirty in CO2 terms as natural gas.
There are also significant CO2 releases from coal in domestic heating (China, North Korea, a few other places) and steel making.
It's entirely possible we've passed midnight on this, that nothing we do now can stop radical planetary climate change.
But the rule of prudence dictates that we do as much as we can, now, particularly in the rich countries, to try to slow the onset of this thing.
There is little evidence that we are going to do anything positive of global significance with the next ten years. I would love to be surprised and I would love to see a radical breakthrough, which would mainly be a radical political breakthrough. Within the United States, for example, neither political party is likely to do anything approaching the magnitude that is needed. Only painless approaches will be tried, a little ethanol here , a little promised magic of hydrogen there. We will do some research on coal sequstration, but will see little in the way of meaningful projects.
For starters, we need a world wide moratorium on coal fired plants and the expansion of existing plants. Most readers here can provide a laundy list of at least 20 others things we should do immediately. Very little of this will be done and we will be left with geoengineering, an approach fraught with uninintended and poorly understood consequences.
We will continue to waste billions on the military and other measures doing things like fighting in Iraq and fighting terrorism, a phenomenon that is not amenable to a military solution. We will continue to get our priorities wrong as a nation and as a people. The natural world is not a priority.
the world has yet to see anything radical from global warming.
Total temperature increase to date attributable to human greenhouse action is less than 1 degree centigrade, central estimate around 0.6 degrees.
The real consequences of Global Warming have yet to come.
What you are hearing is the first cracks in the dam, and we live in the village right below it.
More info please.
anything that's not in this article?
http://www.rockymountainnews.com/drmn/local/article/0,1299,DRMN_15_4310954,00.html
Many factors are involved -- the failure of the tree line to cover Trail Ridge is not proof of the absence of global warming. Only that local circumstances are different in different localities. An irrelevant tautology.
Of course, prior to the Pleistocene the earth was much warmer -- there may have been no glaciers in the mountains. And of course, there were no human coastal cities at that time.
Methane is a far worse greenhouse gas than CO2.
but not all of that is atmospheric release. You also get ash, some of which goes up the chimney (black particles are actually a very serious contributor to solar absorption and hence global warming) and some of which is carted away as a solid.
A lot depends on what you use the coal for. In a power plant you are aiming for maximum combustion so I would assume you get maximum CO2 release.
Haven't found a number yet for amount of CO2 released per tonne of coal burned.
But the above tells you how 1 tonne of coal can produce at a limit over 2.5 times as much CO2.
Anthracite coal (most carbon is 'fixed', non volatile carbon) tends to have the highest percentage carbon if the ash content is low, next comes bituminous (various ranks), ssub-bituminous, and finally the lignites. Burning lignite is a little like burning dirt.
Under typical combustion you get a few hundred ppm of CO at the low excess air conditions used to maximize boiler efficiency. And you do get some carbon loss in the ash. A typical PC boiler will give you a LOI (loss on ignition) of 2-10%. For a coal that is 10% ash, that's 2-10% LOI of 10% ash. Very, very small losses in total.
And thus, it remained probably the least popular subject among students, who promptly forgot 90% of it.
1 mole of C = 12g
1 mole of O = 16g
1 mole of CO2 = 44g
It would then be easier for everyone to start off with a mega mole of C = 12 tonnes and to quote all energy transformations in SI units - Joules I believe.
I mention this from the angle that I seem to spend half my days converting one set of units to another and looking for , ensuring I have got correct conversion factors.
By way of example, going from meters cubed (M3) to barrels. I Googled that and got 8.5219 bbls / M3. Used that quite happily for a day and was mystified about disagreement between numbers so produced and those in BP stat review - and then I learned that BP use 6.2898 bbls / M3 - quite a difference.
This emission stuff makes my head hurt! ;-).
On the barrels to oil, my thought is the density of oil might be a factor?
source...
Education may be?
Carbon is atomic weight 12
Oxygen is atomic weight 16
12 grams of carbon + 2 x 16 grams of oxygen = 44 grams of CO2
Thus, actually 1 ton of coal = 3.6 tons of CO2, neglecting of course the "interesting" pollutants sulfur and heavy metals.
post about the two tons of CO2.
The biosphere (forests, soils etc.)and
the oceans soak up about half of fossil
fuel combustion CO2 emitted as shown by CO2
stable isotope studies.
http://www.realclimate.org/index.php/archives/2006/10/attribution-of-20th-century-climate-change-to- cosub2sub/
The problem is that there are many sources and sinks of atmospheric carbon, and you can't necessarily blame the excess on any one of them. You can do things, for example, like adding up all of the "natural" (non-human-caused) CO2 sources and compare with the buildup of CO2, and find that the natural sources completely account for the buildup (apparently Crichton does this in his presentations). But this ignores the fact that with multiple sources and sinks, counting just sources gives you a mistaken impression.
It's a good article and made me realize that the headline numbers about how much warming is due to human activity are really rather meaningless.
Education may be?
Does insulting other people make you feel smart? Numerous people pointed out the atomic weights 5 hours before you did.
That being said I misread his statement. Didn't see the "up to". I was more concerned with studies that calculate how much of our CO2 emissions the planet can absorb.
That being said I'd still like to see some CO2 conversion studies as others have noted a reasonable amount of carbon is locked away as ash.
About a year or 18 months ago the former KSA oil minister (head of Aramco?) named Husseini was interviewed on the subject of oil production capacity of the Saudi peninsula and offshore areas. He said that KSA was close to maximum production for current facilities & infrastructure, but was willing to spend large sums to increase production. The interviewer asked how much production could be increased and Husseini responded that 12 or 12.5 million barrels per day could be reached if enough investment was made over a several year period. The interviewer then asked if 15 million barrels per day could be obtained, and Husseini replied "unlikely". So according to the former head of KSA's oil ministry the world may never see more than 12 MBPD from the Saudi fields. Note that the US's Energy Information Agency (DOE arm) has counted on KSA eventually producing 18 MBPD.
So, where is the truth in increased production? Will the tens or hundreds of billions of $$$ spent for KSA to reach 12 MBPD give a sufficient return if oil goes to $40 per barrel in four or five years? I don't trust the powers in charge in US or KSA. Brace for $100 per barrel not $40.
They need to increase the number of rigs that they have if they are to make the stated targets. One of the things to watch is as to whether they can succeed in getting those rigs. While I believe the latest target is 120 rigs, I also seem to recall that they are having some trouble finding that many available.
For those interested in doing the arithmetic, the OPEC Statistic is that KSA produced 9,353,300 bd in 2005, over 8,897,000 in 2004. Those numbers suggest that each well produces around 5,200 bd. Given that the production from some of the more recent fields has been reported as less than this (hence my choice of the 4,000 bd) nevertheless it does suggest that some of the older fields remain very productive.