Articles tagged with "natural gas"
I've been privileged to be an editor of TOD over the past several years, and am glad to have been invited to do a final post as the site moves to an archive status.
When I started writing about energy on the blogs in 2003/2004, I was writing mostly about Russia, gas pipelines and gas geopolitics. There were so many conspiracy theories abounding on topics like the Turkmenistan-Afghanistan-Pakistan pipeline or (a bit later) Russia vs Ukraine pipeline conflicts that I felt the need to put out a different version, given that I knew the inside story on many of these issues - and that got me invited to contribute these to TOD as well. In the meantime, my job (which was, and - full disclosure - remains, to finance energy projects) slowed moved from oil&gas work to power sector transactions and, increasingly, to renewable sector deals, and I started writing about the wind business, in my mind from the perspective of a banker wanting to make sure that these projects could be paid back over periods of 15 or 20 years.
While my work is now almost exclusively focused on offshore wind in Northern Europe, I still do not consider myself a 'wind shill'... but it does give me a different perspective on the debates currently going on about energy policy in various places, and on the changes to the power sector caused (among others, by renewables) that are underpinning such debates, and I thought it would be a useful complement, together with Big Gav's overview of the clean energy sector, to the other articles more traditionally focused on the oil&gas side of things.
I'll focus on Germany, where the transformation has been most advanced (and even has brought a new word to us: the Energiewende), and where the consequences of high renewable penetration are most visible.
On December 3 and 4 I attended Opal Financial's 2012 Clean and Green Investment Forum. I was invited to moderate a panel on "Market Outlook for Renewables vs Fossil Fuels". Forum participants included many investors and strategists with an interest in energy issues as well as a few entrepreneurs and others with a more academic interest. I had conversations with an interesting mix of people in both the oil and gas industry as well as alternative energy. This post consolidates my notes to give you a sense of some of the dominant themes in energy investing today.
Rather than give a blow-by-blow recap of the meeting, I'll organize the information into several topics that capture the mood of the forum:
- Government regulation and incentives
- Utility scale solar & wind
- Resiliency and distributed solar
- New technology
- The fracking revolution
The Oil Drum staff wishes a Happy New Year to all in our readership community. We are on a brief hiatus during this period, and will be back with our regular publications early in the new year. In the meantime, we present the top ten of best read Oil Drum posts in 2012. The ninth in this series is a post by Arthur Berman on the cost of shale gas production and its relation to the US natural gas price, originally published in February 2012.
U.S. Shale Plays
The advent of shale plays provided an important new source of gas. Yet this new supply is characterized by high decline rates which means that wells must be continuously drilled to maintain supply. In 2001, the U.S. natural gas decline rate was about 23% and the annual replacement requirement was 12 Bcf/d when total consumption was 54 Bcf/d. Today, the decline rate is estimated to be 32% and increased consumption of gas means that approximately 22 Bcf/d must be replaced each year (Exhibits 1 and 2).
The Oil Drum staff wishes Happy Holidays to all in our readership community. We are on a brief hiatus during this period, and will be back with our regular publications early in the new year. In the meantime, we present the top ten of best read Oil Drum posts in 2012. The seventh in this series is a post by JoulesBurn on the North Sea Elgin gas leak which took the news headlines in March 2012. The leak was successfully plugged May 15, 2012, and a permanent plug was put in place in September.
A crisis situation has developed at a gas and condensate production platform in the Elgin field in the North Sea. Gas is leaking out of a well near a offshore platform at a rate of approximately 2 kilograms per second (12 MMCF/day if gas), and a large sheen (assumed to be condensate) has been observed on the water. All workers on Total's Elgin PUQ (production-utilities-quarters) Platform plus those on the Rowan Viking drilling rig, which had been working next to it, have been evacuated. On Monday, workers on a platform and drilling rig at the Shell-operated Shearwater field (4 miles / 6.4 km away) were also evacuated. There is currently a two-mile vessel exclusion zone around the site and a no-fly zone. As current winds are light, the most immediate concern is the potential for explosion both at the PUQ and elsewhere. While it is possible that the leak rate will lessen over time, the Rowan Gorilla V jack-up drilling rig is being provisioned by Total for a possible relief well that could take months to drill.
The Oil Drum staff wishes Happy Holidays to all in our readership community. We are on a brief hiatus during this period, and will be back with our regular publications early in the new year. In the meantime, we present the top ten of best read Oil Drum posts in 2012. The sixth in this series is a post by Jonathan Callahan on the US gas market and its unsustainable price level.
The current boom in drilling for ‘unconventional’ gas has helped raise US production to levels not seen since the early 1970′s. This has been an incredible boon to consumers and has kept spot prices contained below $5 per million BTU for the past year, recently dropping below $3/mmbtu. Unfortunately, this price is below the cost of production for many of these new wells. When the flood of investment currently pouring into natural gas drilling operations dries up, the inevitable bust will be as scary as the boom was exciting.
Posted by Heading Out on December 9, 2012 - 6:15am
Tags: asean, china, egypt, india, iran oil exports, iran sanctions, natural gas, russia, south korea, syria, turkey [list all tags]
There is a lot going on in the Middle East at the moment. The revolution in Syria seems to be entering some form of end game, and there are the riots in Egypt. There are some signs that these events might move into countries such as Jordan. Increasing levels of turmoil in the Middle East do not help stabilize the future flow of oil and natural gas around the world, and there are underlying tensions, brought about in part by the need to sustain sanctions against Iran.
Turkey, for example, is caught up in dealing with Syrian refugees and the adjacent civil war and is also largely dependent on Iranian fuel to get it through the winter. In October, Turkey is reported to have imported 75 kbd of Iranian oil with larger portions of the total 417 kbd import coming from Iraq (105 kbd) and Russia (103 kbd). The volumes that continue to flow are now becoming a source of friction, since US law demands that countries continue to lower their imports every six months. While Turkey continues to work to lower their need for Iranian oil (and may increase imports from Russia), in the interim the U.S. Government is not increasing pressure but instead, is apparently moving to extend the waiver of sanctions not only to Turkey, but also to a total of 21 countries, a list that includes China, India, and South Korea.
Two officials said an announcement of the six-month extensions was expected from the State Department on Friday. The officials spoke on condition of anonymity because they were not authorized to publicly preview the step.
In addition to China, India, and South Korea, the waivers will apply to Malaysia, Singapore, South Africa, Sri Lanka, Turkey and Taiwan. All nine were originally granted six-month renewable exemptions from the sanctions in June.
The exemption means that banks and other financial institutions based in those places will not be hit with penalties under U.S. law enacted as a way of pressuring Iran to come clean about its nuclear program.
A total of 20 countries and Taiwan have been granted the waivers. The others—Belgium, Britain, the Czech Republic, France, Germany, Greece, Italy, the Netherlands, Poland, Spain and Japan—will come up for review in March.
Posted by Heading Out on December 3, 2012 - 2:47pm
Topic: Alternative energy
Tags: arpa-e, batteries, co2 science, light splitting, natural gas, prussian blue, solar power, sugar beets, wave energy, wind energy [list all tags]
The Department of Energy has just announced the projects selected for funding in the next round of the ARPA-E program. This is the Advanced Research Projects Agency-Energy, first funded in 2009, to, inter alia, "focus on creative “out-of-the-box” transformational energy research that industry by itself cannot or will not support due to its high risk but where success would provide dramatic benefits for the nation". There are some 66 projects on the list, which is broken down into eleven different focus areas. These are the technologies that the ARPA-E program is betting some $130 million on as sources of future energy supply or savings. It is worth taking a quick glance through the topics to see what is considered important and likely of success.
The two largest areas of funding are Advanced Fuels and Grid Modernization, both of which get around $24 million or 18% of the pie. This is split among 13 fuel projects, and 9 grid-related projects. With the growing supply of natural gas that is coming from the developing shale gas reserves in the country, it is perhaps no surprise to see that methane conversion to liquid fuel captures the largest part of the fuel funding this year, being the theme of nine of the awards.
The largest of the fuel awards goes to Allylix, a company that specializes in terpenes, and who is tasked with turning these into a viable aviation fuel. Specific genes needed for terpene production are extracted from a biosource, and then optimized for use in a yeast host. The optimization is an engineered change that can increase product yield several hundred fold (according to their website). From that point there is a fermentation process, and then a recovery and purification of the liquid fuel, which is stated to be already commercially viable.
There is only one algae award this year, to Cornell for $910k, and they will look at using light fibers in a small reactor as a means of improving economics. After having looked into this process I am prone to disagree that smaller is better (if you are going to generate hundreds of thousands of barrels a day you need large systems, and anything on a smaller scale is hardly worthwhile). Further there are issues with engineered light paths, but they will no doubt find those out as they carry on with their work.
The “different” program in this effort is for $1.8 million that is being given to Plant Sensory Systems to develop a high-output, low-input beet plant for sugar production.
Posted by patzek on November 19, 2012 - 1:26pm
Tags: condensate, crude oil, demand, destruction, efficiency, energy, gain, independence, lpg, natural gas, petroleum, product, refineries, russia, saudi arabia, security, self-delusions [list all tags]
[Editor's comment: This article is by Dr. Tad Patzek, chairman of the Department of Petroleum & Geosystems Engineering at The University of Texas at Austin. Dr. Patzek's research involves mathematical modeling of earth systems with emphasis on multiphase fluid flow physics and rock mechanics. He is also working on smart, process-based control of very large waterfloods in unconventional, low-permeability formations, and on the mechanics of hydrate-bearing sediments. In a broader context, Patzek works on the thermodynamics and ecology of human survival and energy supply schemes for humanity. He has participated in the global debate on energy supply schemes by giving hundreds of press interviews and appearing on the BBC, PBS, CBS, CNBC, ABC, NPR, etc., and giving invited lectures around the world. This article first appeared on Tad's blog Life Itself.]
Before I discuss the logic behind negating a peak of production of anything, let me sum up where we are in the U.S. in terms of crude oil production. According to the Energy Information Administration (EIA):
The United States consumed 18.8 million barrels per day (MMbd) of petroleum products during 2011, making us the world's largest petroleum consumer. The United States was third in crude oil production at 5.7 MMbd. But crude oil alone does not constitute all U.S. petroleum supplies. Significant gains occur, because crude oil expands in the refining process, liquid fuel is captured in the processing of natural gas, and we have other sources of liquid fuel, including biofuels. These additional supplies totaled 4.6 MMbd in 2011.
Let me parse this quote.
Mark J. Perry caused a minor sensation on October 22, 2012 when he posted a blog about record-breaking fossil fuel production in the United States. Perry is an economics professor at the University of Michigan at Flint and a visiting scholar at the American Enterprise Institute. His blog is titled as an economics and finance website but a great deal of content is about energy.
In "U.S. fossil fuel production will reach all-time high this year; America’s energy self-sufficiency will be highest since 1990" (http://www.aei-ideas.org/channel/carpe-diem/page/2/), Perry shows a stunning graph of U.S. fossil fuel production (coal, natural gas and crude oil) from 1975 to 2012 (Exhibit 1).
Posted by Heading Out on October 15, 2012 - 12:30pm
Tags: alaska pipeline, armenia, azerbaijan, china, iran, lng, natural gas, npra, russia, south pars, turkey, turkmenistan [list all tags]
There has been much talk in the current presidential debates about possible changes in US energy policy, with Governor Romney suggesting that more federal land be opened for prospecting for oil. Historically, one of the regions included in such lists is the National Petroleum Reserve in Alaska. And, perhaps anticipating the debate, the current administration has already recently moved toward opening those territories up for development.** However, those fields have been determined to contain more natural gas than oil, and so hopes for finding more oil reserves has shifted into moves offshore, where Shell has continued optimism as it begins to sink new wells in the Chukchi sea – although well completions have now moved into next year. However, suggestions in the past should be noted that more of the hydrocarbons under the Arctic are gas deposits than oil, and this argument has been strengthened by the recent discovery in the Barents Sea of more gas, when oil had been anticipated.
The large volumes of natural gas that are currently being developed and marketed, whether in the United States or from Turkmenistan, are making considerable change in the economies of many countries. Russia, who lost the sales battle to supply natural gas to China, can no longer justify the expense of opening the Shtockman field because alternate supplies are coming to the market at lower costs. This in turn, will cascade on to prices in Europe, where the advent of more gas in the UK is making it difficult to justify a switch into a greater reliance on renewable sources such as wind and solar.
This scenario means that it is not a good time to have a huge reserve of natural gas, or to go to the market with this resource to generate income. This is particularly true if the country in question is Iran.
Iranian Oil Minister Rostam Qasemi has announced that Iran’s exploitation of the South Pars gas field will equal Qatar’s exploitation of the gas field by the end of Iranian calendar year 1392 (ends March 20, 2014) if $54 billion is invested in gas projects.
Iran and Qatar share the largest natural gas field in the world, a reserve that is known as South Pars in Iran and as the North Field in Qatar.