The Oil Drum

The ABC's "7:30 Report" last night had a look at the large amount of optimism that many people have regarding Australia's natural gas reserves - "As world oil prices skyrocket, experts warn Australia must find an alternative source of fuel. Some argue a cheaper, greener solution is right under the nation's nose: natural gas."

Both the APPEA and new Energy Minister Martin Ferguson have been arguing this for some time - though its far from clear how long we can continue to expand LNG exports, expand gas fired power generation (as part of the APPEA's "transition to lower carbon emissions" strategy), contemplate building GTL plants and use CNG for most or all of our transport as suggested in this report (not to mention supplying the usual industrial and domestic uses of gas) especially when one major potential source of supply (from PNG via the now abandoned pipeline project) has been removed from the equation.

This past week, courtesy of Leanan and Gail it seems that there have been more than the usual number of stories on natural gas developments and the potentials of formations such as the Utica shale, the Haynesville shale, and the Marcellus shale. These are all relatively tight deposits that have only become economic because of increasing gas prices and advances in technology. So I thought it might of interest to explain just a little of that technology, and why it costs so much more for the horizontal well. So the post is largely going to be on horizontal wells, vertical natural fractures and slick artificial ones. To “thank” Gail I am also going to try and describe a slide on ethanol use that I saw at a talk I went to this week on Global Warming by Richard Stegemeier, a member of the NAE, and lest it has been missed I will end with a reference to the Worlds Worst Wind Farm.

I had thought that the short thread that has run through my last few posts – relating to the imminence of a fuels crisis, and the lack of political perception of the problem, had run out. And then I read the piece from Salon that threadbot had as the top story on Drumbeat on Sunday. Taken with a conversation that I had with the Nurse (who lives in Ottawa) today, it led me to this additional comment. And to put that in context, for those who live further South, while Ottawa might get about 100 inches (250 cm) of snow in a normal winter, this year it has had more than 166 inches (421 cm) and the snows are not over. Part of the reason that I bring this up, in context of the Salon article, was the line in that article that said (and I recognize that I am taking it a little out of context)

And for that only one alternative fuel is even remotely plausible -- carbon-free electricity.

And my tiny mind asks, where, with a 20-inch (50 cm) snowstorm does one find this source to supply a city of 1,148,800 inhabitants in the short term.

[Comments fixed.]

The Engineer-Poet recently had a post on The Cogeneration Stopgap at the Oil Drum, which looked at how the combination of cogeneration (generating combined heat and power - CHP - using natural gas) and heat pumps could be used to heat North American homes much more efficiently and extend the life of North America's dwindling natural gas reserves for a period of time while houses are retrofitted to make them more energy efficient and natural gas use is replaced with electricity. The only example of cogeneration technology touched on in the article was from Climate Energy, whose CHP unit is made by Honda.

An Australian company working in this area called Ceramic Fuel Cells was in the news recently after landing a $240 million deal with Dutch energy company Nuon to supply 50,000 CHP units by 2014. The company still needs to meet a number of commercial requirements set by Nuon - in particular improving the durability of the cells from two years to four.

The company is hoping that production will begin by June 2009 in a new €12.4 million factory in Heinsberg, Germany, which aims to produce 10,000 2 kW units per year. The cells are expected to emit 60% less carbon dioxide than traditional combustion generators. The company is also partnering with Britain's Powergen, Germany's EWE and Gaz de France.

Sometimes lost in headline discussions of oil production and prices is the sister story for natural gas. As might be expected, natural gas prices have mirrored the price change in oil, (though in the UK, they are currently approaching $15per mcf-a much higher increase than in North America). We have just been through (and still are in, from where I type this) one of the coldest winters in recent memory-consequently we have had dropped considerably from beginning storage levels. This morning the EIA announced a 36 bcf withdrawal of natural gas for the week ended Mar 21, in line with expectations, but capping a winter of 2nd largest withdrawals since 1995. Below the fold are a few graphical snapshots of the natural gas situation. TOD readers feel free to post any relevant natural gas links below.

I have recently been writing about Botswana, and their sudden discovery of vulnerability when they found that their supply of electricity was no longer to be available. There is a passage in Cape Wind, the book by Wendy Williams and Robert Whitcomb, that shows the increasing vulnerability of places such as New England as the balance that exists between available supply and demand narrows. The event occurred in mid January 2004 when there was a sudden cold spell that lasted over a week, and the story is told from the point of view of the Independent System Operator (ISO) that manages the supply for some 14 million folk, and is located in Holyoke, MA.

On January 14th the ISO had assurances that up to 10,000 megawatts would be available from gas-fired power plants as they anticipated demand rising to around 23,000 to 25,000 megawatts, as the temperature was anticipated to drop to minus ten degrees. But by 8:30 am on the first morning of the crisis, this began to change:

A trickle of phone calls began coming in to the Holyoke headquarters, all with pretty much the same bad news. Plant operators who relied on natural gas as their fuel reported that although their plants were in working order, there was no gas available for them to buy. It had all been taken by the companies responsible for providing gas for home heating.

By afternoon the trickle of “no gas” calls became a flood. . . . .During this all-time winter peak, when electricity was essential for the very survival of many New Englanders, roughly 7,200 megawatts of gas-fired generation was now unavailable. . . . .because they couldn’t find enough natural gas to buy.”

In the end crisis was averted by some load shedding, including closing the schools, but it illustrates the coming vulnerabilities that we face as our historic assumption that there will be enough power when we need it, suddenly starts to be significantly challenged. However, in this case, action was taken, and things no longer look as grim.

This is a guest post by TOD reader Jon Friese. Jon is a software engineer living in Minneapolis and a volunteer with the Twin Cities Energy Transition working group, seeking a path to a low carbon future. Under his own initiative Jon tracked down literature on EROI methodology, contacted the Canadian Government and an energy consulting company for data, and came up with the following analysis on declining energy return on Canadian Gas. This draft analysis is provocative (backing into an EROI estimate using $/GJ suggesting possible energy break even for natural gas within a decade). However, in addition to the new info, I was inspired that a smart, engaged citizen chose to volunteer his time on the pressing issue of fossil fuel decline, and then shared it with others in the TOD forum for feedback. Thanks for your initiative here Jon.) (Editors Note: Jon is working on an update to this analysis incorporating feedback from the TOD community -please treat the information in this post as a work in progress.)

Figure 1 Canadian Natural Gas Energy Return on Investment, actual + trend line (Click to enlarge)

Someone e-mailed a few days ago and asked about the present economics of corn ethanol. I did a few calculations, and thought the results were interesting enough to share. This exercise should make it clear which factors have the biggest impact on corn ethanol profitability – and why corn ethanol producers are presently struggling.

Consider this a supplement to Stuart Staniford’s comprehensive essay Fermenting the Food Supply. Stuart’s essay goes into great detail on the factors underlying the economics. In my essay, I take a snapshot of a corn ethanol plant based on current prices for corn, natural gas, and by-products. (Note that because this is a snapshot, the numbers will change over time. But you should be able to use the methodology here to roughly calculate the economics at any point in time.)

Some of the great things that make human live much easier are dependent on rare non-renewable resources. Helium is one of these, a noble gas with remarkable qualities due to its inert state. It is used for example to cool metals needed to create superconductivity. This process is applied in the medical industry to make Magnetic-Resonating-Image( MRI) scans, a technique to produce images of body tissue, making accurate diagnosis of health problems without surgery possible. But Helium is also applied in nuclear magnetic resonance spectroscopty (NMR), for the arc welding of various metals amongst which are titanium, magnesium and aluminium, to reduce high-pressure risk in deep-sea breathing systems, to purge and pressurize liquid-hydrogen rocket propulsion systems, to find leaks in pipelines, as a coolant in certain nuclear reactor types, possibly for superfluid gyroscopes and last and for me definetly the least, to let balloons float.

Can Helium be substituted? The answer is no for applications which need cooling below a temperature of minus 210 degrees centigrade since that is the temperature at which the next best thing, liquid nitrogen, freezes. Helium on the other hand only liquifies at minus 272 degrees centigrade and stays in that state even down to absolute zero. Making it the most precious element for cooling at very low temperatures. For MRI scanning this means the available substitutes can only offer much higher temperatures at which the scanner can operate, implying less conductivity and therefore a less effective scanner.

The availability of Helium is thus quite important as long as no substitutes for these processes have been developed. So how long will this resource last?

There has been the occasional story popping up in Drumbeat over this past week or so about the severe winter and gas shortages in Iran, and their resulting cut in supplies to Turkey. The Iranian domestic shortage was supposed to be made up from Turkmenistan. Unfortunately the shortfall from Iran to Turkey was supposed to be made up by increased supplies from Russia, but those also are falling short. About a year ago we saw some of the same discussion about supplies from Turkmenistan, through Russia, to Europe, with shortfalls and price increases – particularly relating to the gas supplies to Ukraine, through which the pipelines flow. At the end of that discussion the Turkmen got an increase in the price of their gas. It is therefore not surprising to see that Turkmenistan is seeking to double the price it gets from Iran.