Tuesday, March 31, 2009

The House Energy/Climate bill

The first major energy/climate legislation has begun to take shape, and it is worth looking to see what the House seems to think is the way forward. Of the elements in the new bill (pdf), the ‘‘American Clean Energy and Security Act of 2009.” Given that it is 648 pages long, it is difficult to condense into a short post, but the key points can be summarized. The bill sets a target for the amount of renewable energy that is integrated into the national mix.

Percentage of electricity required to come from renewable sources, by date.

Federal renewable energy credits would be established at $50 apiece (each being equivalent to 1 MWh of electricity generated from a renewable source) and applicable utilities would be those that generate 1 million MWh or more per year. So for every MWh a utility fell below that annual target percentage it would have to pay $50, or 200% of the cost of the credit the year before the payment is required (whichever is the lesser). The program is also targeted to encourage distributed generation facilities cost competitive with other forms of renewable energy generation. The credits are tradeable between utilities.

The bill will set up a registry for identifying and permitting carbon dioxide sequestration sites around the country. Regulations will also be written to protect against any re-release of the CO2 one injected to ensure it does not escape. (This includes specifically EOR using CO2 injection. ) Regulations governing CO2 injection wells are to be promulgated a year after the bill goes into effect. The use of pipelines to carry the CO2 to the sequestration site will be examined to find out what the barriers are to that use. The bill calls for identification of market risks, and what the Administration will have to do to reduce that market risk in the use of pipelines to move the C02.

The Carbon Storage Research Corporation is posited as an affiliate of the Electric Power Research Institute and it is suggested that this will collect assessments from the industry over the next ten years, at a level of:

Assessment for CCS Research
This will be used to fund demonstration projects, at commercial scale, of CCS technology, and it is estimated that this should generate about $1 billion a year for the research.

EPA is called upon to provide regulations for funding in CCS commercial deployment applicable to plants larger than 250 MW., those that are more than 50% fed by coal or petroleum coke, or any entity that emits more than 250,000 tons of CO2 equivalent a year. Interesting funding will not be provided to entities that generate transportation fuels that contain more than 10 kg of fossil-based carbon per million Btu’s.

Standards are set for new coal-fired power plants (EGU – Electricity Generating Units) where units which get more than 30% power from coal and petroleum coke are covered. These EGU’s are not permitted to emit more than 1,100 pounds of CO2 per MWh. (falling to 800 lb after 2020), providing there are at least 2.5 GW of plant operating, either in the US or the world, that are collectively capturing 5million tons of carbon dioxide in the US, or 10 million tons world-wide.
Credits will be authorized for transportation fuels and used in encouraging the transition to electric powered vehicles (with the electricity generated from a source other than on the vehicle). Provisions are provided to establish electricity refueling stations for plug-in hybrids, and possibly integrating them into Smart Grids.

SEED (State Energy and Environment Development) funds are defined and these will be the conduit for money in the designated areas to flow from Washington to the States, primarily for “primarily for clean energy, energy efficiency, or climate change purposes”.

Money will also be directed toward the use of Smart Grids (for electricity generation). The first question to be answered being as to whether the installation makes sense. One of the objectives is to reduce peak demand for any load-serving entity that produces more than 250 MW. It is anticipated that these reductions will be through improved energy efficiency of generation and use. The Energy Star program will be used.

Target goals are set for improving the efficiency of building energy use, with 305 reduction being a quoted number and 50% after 2015. Building code standard changes in things like roof materials are included. Incentive funding will be provided to the States to encourage their adoption of the changes. And there is money to train those who will implement these new codes. A retrofitting program for old buildings is also established. This can include paying up to $500 for an energy audit of the building. Depending on the results of that audit between $1,000 and $2,000 might be provided to implement recommendations that reduce energy consumption by 10 or 20%.

It is interesting that the program also contains incentives ($600) for measures to reduce water demand by 35%. $20 more can be added per additional percentage point gained to a maximum grant of $1,200. And there is $2,000 for installation of new renewable energy items. Commercial programs are also described, with basically larger incentives.

The bill then goes into issues that address global warming, including targets for greenhouse gas emission reductions over the years. These caps are defined. Reports are called for on such items as who is polluting with what, how the global temperature is changing, and how the sea level is rising.

It establishes a registry of those that generate more than 25,000 tons of CO2 a year (including those that do it through a vehicular fleet). Emission allowances are then defined as relating to each individual ton of CO2 generated in a year. An offset credit can be used to compensate for a compliance obligation at the rate of 1.25 credits per ton of CO2 or emission allowance. The offset credit program is then established, with the opportunities of trading the credits.

I could not find a recommended price for these credits.

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Monday, March 30, 2009

P57. Pick Points

Over at The Oil Drum, Jon Friese has a guest post with an interesting plot of the relative drilling activity in the four major gas shale fields. It shows that while drilling in the Fayetteville and Woodford shale has remained relatively stable, there has been considerably more activity in the Haynesville shale, and a rapid drop-off in rig count in the Barnett. Overall the number of rigs drilling in gas shale has held remarkably constant over recent months at around 230 rigs, though this is down from the peak of 311 rigs last December. This is happening just as a new pipeline extension is connecting into the Barnett field. The Sherman extension to the Enterprise Texas Intrastate connector will carry up to 1 bcf out to markets as far apart as the North East and Florida. The Barnett had increased production in 2008 to nearly 1.4 tcf, and had 10,500 wells with 222 companies operating. But over the last few months the rig count had fallen 57% from 214 rigs to 91. With an average of 25 people per rig this is a loss of some 3,000 jobs. Meanwhile Exxon Mobil has leases on 19,400 acres in the Marcellus shale.

Oh, and in the great game of Azerbaijani natural gas, the Russians are now trying to get the gas that might go West to Turkey, to go instead North to Russia (who could then sell it into Europe). It is part of the ongoing struggle over supplies for the Nabucco pipeline. Gazprom is also trying to raise $500 million on the Eurobond market. Further East, the pipeline from Turkmenistan to China should have the Turkmen leg finished this year. Gas should reach peak flow (30 bcm per year) in 2011. And the Turkmen are still talking about possibly piping natural gas down to India and Pakistan. It is needed since even exports of goods from Pakistan are now being reduced due to shortages of natural gas. India, meanwhile is bringing new gas on stream and using natural gas increases from current fields to improve fertilizer production.

While Mt Redoubt is relatively quiet today, there are signs of new eruptions from a volcano in the Congo that last erupted in 2002, nearly destroying the nearby town of Goma.

Financing for wind power in the UK appears to be rapidly fading
Despite the fact that the UK has richer ambient energy resources than any other country in Europe, the government managed to beat its target for renewable power down to 15% of total energy supply, rather than the 20% adopted across the EU. Even so, this means that by 2020 35% of our electricity must be produced by wind, hydro, wave, tidal, solar or biomass generators. The technology that could be most widely deployed is wind power, but investment is melting away faster than an Andean glacier.

Shell has pulled out completely. Centrica, E.ON and BT are reviewing their plans. Sun Microsystems has suspended its projects. The Spanish company Iberdrola is cutting its investment in the UK by 40%. Scores of smaller firms are going bust.
On the other hand the British government has just offered increased financial support in order to get production closer to target.
The government is also planning to sign contracts with companies by the end of the year to develop up to 25 gigawatts of offshore wind power that will be awarded from its Round 3 development phase.

But developers are anxious about financing the investments, which, at about GBP3 million a megawatt, are roughly double that of onshore wind.

The recent banking crisis has also made project finance difficult to come by and more expensive.

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Why we aren't buying a new car (yet)

I have mentioned earlier this year that we are thinking of buying a car. In fact we are planning on replacing an eleven-year old vehicle with a new hybrid. Last year we bought, for my use, a Camry Hybrid, with which I have been quite happy, both in around the town driving and in trips from Missouri to Maine. It introduced me to the joys of Hypermiling. Motivated by a post from Robert Rapier, this time we decided to look into the Ford Fusion for the Actress. It purportedly gets better mileage that the Camry (so that we could get to Maine in 2 tanks of gas, rather than 3), and promised many of the features that we like in the Camry. We aren’t however there yet, and this is perhaps a message to the Administration about what they are doing to the car buying public.

When we started the process we recognized that there is a difference in price between the pure gasoline model (starts at $19,270) and the Hybrid (starts at $27,270). Some, but not all, of that can be made up by the better mileage (from 34 to 47 mpg on the highway). But if we drive the car for 100,000 miles, even if gas gets up to $5 a gallon (on average over that life) we would only save around $4,000 on gas. (I actually believe that, with the likely impact of Peak Oil being felt within a couple of years the $5 price is optimistic, but I might be accused of padding the argument if I went much higher). There is, however an additional incentive. Because this is a new hybrid, there is a tax incentive or credit, if one buys the Fusion. At the moment it is $3,400. Which, given that there are some other benefits, brings the price of the two models to being sensibly the same. So we get on the phone and chat with a local dealer, or two. Ah, but here is the rub; that tax credit expires at the end of March. Yup! That’s right, tomorrow night! After that, the tax credit drops to $1,700, and in October it drops further, to $850.

So we re-call our closest Ford dealer, a very nice lady, and trying to be very helpful – but she hadn’t heard of the tax credit. (A little odd, but never mind). And so we asked about seeing one. She did some checking on the Internet and there is apparently one in Kansas City, and maybe another in Indiana, but those are the closest two, and one is sold. She will get back to us as soon as she has a model that we can test drive, but has no idea when this will be. So there goes $1,700 through the window – and I suspect that there are several folks in the MidWest, who, like us, never even got a look-in at that particular incentive.

But wait, in today’s New York Times, there is a report of President Obama’s ultimatum to the car makers, in which appears the following paragraph
Other salient features of the latest plan to pull Detroit out of its decades-long skid include a tax break, being started by the Internal Revenue Service at once, for auto purchases made between Feb. 16 and the end of 2009; incentives for people to turn in older, less fuel-efficient vehicles and buy more energy-efficient cars, and government-backed warrants to assure customers that they have nothing to fear by buying a car from G.M. or Chrysler.

The concept of encouraging people to buy more fuel-efficient cars, which has been tried with considerable success in Europe, will require the cooperation of Congress. Mr. Obama said he would work with lawmakers to identify portions of the recently enacted multibillion-dollar stimulus package that could be trimmed to finance the purchase-incentive idea — and make it effective at once.
I commented favorably when I first heard of this as a means of improving German car sales, that Chancellor Merkel had introduced. And noted that Russia had also adopted the idea. In Germany, in February, it spurred a 21% sales increase (y-o-y), while U.S. sales fell 41%. So it sounds as though it is a good idea.

The only thing is, as we sit here waiting, is that we don’t know what the new plan is going to be, and when it is going to be implemented. So, in the meanwhile, we won’t be buying that car after all. And I suspect, as word gets out, that we won’t be the only ones. So if the Administration and Congress want a hint, they might decide one way or another what is going to happen with this, since if it is at the level of the European deal (2,500 euros or $3,284) then it will be worth the wait. Particularly if we can also get the hybrid credit. But until they decide, we won’t.

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Sunday, March 29, 2009

P56. Pick Points

I see that Jerome is a little upset with the NYT story about coal and renewable energy costs. In the story the question is raised as to how much extra the average consumer is willing to pay to switch from coal to renewable fuels. There are several aspects to the story – the first is that the Administration can raise the relative cost of burning coal by imposing some additional cost for generating carbon dioxide (whether by tax directly or through cap and trade). The second is that, by regulation, it can make it so expensive to build a new coal powered station that the alternatives become more attractive. Or, by driving improved efficiency and conservation (especially in a time of recession) it can lower the need for additional power. However if costs are raised, then the utilities will pass these additional costs on to the consumer, and as I have noted before, running as the candidate who doubled electricity costs is not a sure election ticket. The article does, however, question the veracity of some of the estimates for coal-fired power
One big question is how much it currently costs companies to produce coal-fired energy, and the answers are often colored by ideology or self-interest. Companies that sell coal or rely on coal-fired electricity often pick a low number; environmentalists cite the indirect costs to society, like strip mining or spills of coal ash. And since the electricity industry became more competitive, the utilities, even municipal ones, have become more secretive about their costs.
Yet if the backup power to wind is natural gas (and most new power stations are planned to be fueled that way) and costs pick up around the end of they year, then the combined cost of new power generated that way will still argue for coal.

The debate between natural gas and coal continues in Mississippi where utilities with underutilized gas production are arguing against a new coal fired power station. At the same time there is a claim from Canada of a process that can burn any coal to generate electricity with a negative carbon dioxide balance. The Canadian Government is investing in ways to improve carbon capture

In the world of oil and gas pipelines there continues to be the sound of change, if not yet the certainty. The Nabucco pipeline (the one that will bring natural gas to Southern Europe without going through Russia) is getting some favorable publicity with the anticipation of an intergovernmental agreement in June to get the program running. However some of the gas is anticipated to come from Azerbaijan and the Shah Deniz field, and that production is being delayed. Stage 2 of the program is being delayed from 2013 to the 2014-15 time frame, though given the potential current glut in natural gas as more LNG tankers become available, this may be smart timing. It could also use another pipeline, the Turkey-Greece-Italy one, rather than Nabucco, since Azerbaijan is on the west side of the Caspian and thus does not have to go through Russia.

Nearer home there is a question as to whether the natural gas pipeline through the Mackenzie Valley might be built before the Alaskan natural gas version. ConocoPhilips thinks they are ahead. There is not, however, universal support for new pipelines north of the border. China, meanwhile has signed a deal, which gives it the natural gas production off-shore Burma, as well as a pipeline to deliver it.

It is a little hard to grow the feedstock for conventional corn ethanol in Alaska, but a more traditional fermentation near Governor Palin’s home has created “Permafrost” (which is a vodka). The Mt Redoubt volcano continues to rumble nearby, and snow was used to help Anchorage airport remove ash and get the place back running after the volcano had gone through a total of 18 eruptions (The snow helps hold the ash together, so that it can be moved by plow). There are some oil storage facilities in the area that might be threatened.

Kansas is coming out of a record year for oil and gas production with production valued at $6.58 billion. This was up 10% over 2007, with most of the gain coming from oil. Unfortunately thefts of power (electricity and natural gas) are also up. The story is unlikely to be repeated this year, as the national rig count drops below numbers last seen in 2003. The question becomes when this decline will be seen in a production drop, given the short lives of most wells these days. The article suggests before the end of the year. In Colorado, where much production drilling has occurred, the rules are being tightened to include the Colorado Division of Wildlife in those deciding on new oil and gas location assessments. At the same time two new gas-powered plants are moving forward in the region.

Looking at alternate energy New Jersey is moving ahead with solar generation that will develop 42 MW of solar power by 2012. Meanwhile India appears to be opening up as a market for the technology. This goes beyond just building PV cells in country, a new plant will increase one companies production from 12 – 42 MW, The new Solar Cities Initiative will ultimately affect 60 cities, but will soon start with 2, including Nagpur.

Wind Energy, however, to return to Jerome’s topic, is becoming more recognized as the renewable to beat. The report by the Royal Society for the Protection of Birds (RSPB) this week stated
The RSPB believes wind energy has an important role to play in tackling climate change. Consequently we only oppose those windfarms that pose a significant threat to wildlife.
The title “Positive Planning for Onshore Wind,” also suggests the bent of the report – available as a pdf of 57 pages.

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T8. Carbon Dioxide and Atmospheric Radiation

One of the factors that is more and more being considered in deciding how the nations of the world will, in the future, provide energy for their inhabitants relates to the amount of carbon dioxide generated as each converts various forms of fuel into energy. The simplistic explanation often given for global warming is that the increase in carbon dioxide molecules in the atmosphere reflect more of the Earth’s energy back in the same way as a “greenhouse” works, but it is actually a little more complicated than that, and so the tech talk of the day is going to be about what actually happens. I’m going to base it somewhat on the book “Climate, Present, Past and Future,” by H.H. Lamb.

If I heat a piece of iron, as the temperature of the iron goes up, it will radiate energy and we would see this by a change in the color of the light it puts out. As the iron gets hotter the light changes from red to orange and then yellow. This is a change in the wavelength of the energy being radiated. Sensibly the hotter the object gets, then the shorter the wavelength of the maximum energy transmitted. This is true for all objects that are hotter than their surroundings, including the Sun and the Earth. (This is Wien’s Law.) The energy comes to the Earth from the Sun it is in a package of wavelengths that are very short (below 4,000 nanometers or 0.000000004 meters) and about half of the energy is contained in the band that is visible light (400 to 740 nm). However the Earth is a much cooler place than the sun and so the energy that it radiates back out is in a different range, generally between 3 and 100 microns (μm) (3,000 to 100,000 nm). The difference changes the way in which the energy interacts with the atmosphere through which it passes, either going in or coming out.

Change in the wavelengths of energy coming and going through the atmosphere

The atmosphere is, itself, made up of different gases, and particles. These both absorb and reflect some of this energy. Energy reflection generally comes from the particles, dust, such as that from the recent eruption of Mt Redoubt in Alaska. These can scatter and reflect both energy coming in and going out. When there are a large number of eruptions, or one or two individually very large ones, then the dust thrown high into the atmosphere will reflect the sun’s energy before it reaches the ground, and with less sun, the globe cools. It has even been suggested that particles could be artificially placed in the stratosphere to reflect sunlight and counterbalance warming. Most of the radiation that is reflected, however, is reflected back from the tops of clouds, or from reflective surfaces once the energy hits the Earth’s surface. Thus, of the energy coming in at the top of the atmosphere only some of it makes it through to the ground.

Solar Energy through the atmosphere as a function of frequency (Source Wikimedia Commons)

The smooth curve at the top of the atmosphere has been chewed up a little by the time it reaches the ground. This is because some of the gases in the atmosphere absorb the energy in certain wavelengths. Thus, for example, the ozone layer at the top of the atmosphere, although thin will absorb the entire energy spectrum below 290 nm, so none of that gets through. In a similar way the oxygen in the air and water vapor absorb all, or a large portion, of the energy in other wavelengths within the spectrum, as shown. Note that with relatively little of the energy being in the longer wavelengths, the role of carbon dioxide on incoming energy is very limited.

When the Earth re-radiates the energy it has received, it has changed the spectrum of distribution, and it is at these longer wavelengths that the carbon dioxide and other gases play their role. The amount of CO2 is not that great (Lamb quotes it as being equivalent to a layer at the surface 2.5 to 2.8 cm thick, or just over an inch), yet it is sufficient to absorb all the radiation between 4.0 and 4.8 μm. But this is the important quote
In the absence of water vapor, the carbon dioxide at present in the atmosphere would absorb 15-20% of the total energy emitted from the Earth. Water vapor is, however, a still more effective absorber of radiation on most of the same wavelengths as CO2, and linked together they appear to absorb ALL (my caps) the terrestrial radiation greater than 14 μm. So it seems that changes in the amount of carbon dioxide in the atmosphere can only affect wavelengths in the CO2 band about 4.3 μm, and between about 12-14 μm, for which the wave length absorption by water vapor is incomplete. In the stratosphere, where the quantity of water vapor is small, absorption by carbon dioxide just over a narrow band about its maximum at 14.7 μm exceeds that by water vapor.

Lamb goes on to note
Absorption curves reproduced by Shaw in 1930 and Plass in 1954 indicate that, in the absence of water vapor, the carbon dioxide in the atmosphere would absorb ALL (my caps) the radiation between 12.5 and 17.5 μm emitted by the Earth’s surface (taken as having a mean effective, or overall mean, temperature of 288 deg A), this main absorption band alone accounts for 14% of the Earth’s emission. In fact, however, the water vapor present absorbs in the lower atmosphere almost all the radiation between those wave lengths emitted by the surface wherever temperature is over 283 deg A, and its re-radiation returns much of this to the Earth; so the influence of CO2 must be limited to the colder, drier climates and seasons, and to higher levels of the atmosphere.

The point that should be noted is that, even at the lower concentrations of CO2 in the atmosphere when the book was written, the carbon dioxide was absorbing all the radiation that was available in the frequency ranges over which it is effective. Changing the concentration of the gas in the atmosphere does not increase the amount of radiation being captured, all that can be already is. This was pointed out to by one of my colleagues who is an authority in this field a couple of years ago. The only difference that increasing the concentration makes is that it allows the energy to be absorbed that much closer to the ground, but the difference is relatively trivial.
As William Happer noted in his recent testimony before the Senate Environment and Public Works Committee
There is little argument in the scientific community that a direct effect of doubling the CO2 concentration will be a small increase of the earth’s temperature -- on the order of one degree. Additional increments of CO2 will cause relatively less direct warming because we already have so much CO2 in the atmosphere that it has blocked most of the infrared radiation that it can. It is like putting an additional ski hat on your head when you already have a nice warm one below it, but you are only wearing a windbreaker.
I will tackle the role of methane, methane hydrates and permafrost and water vapor in future notes.

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Thursday, March 26, 2009

More thoughts while traveling - OPEC, the Tata Nano, and tides

In all fairness, since I was less than totally complementary to British transport services the other day, it is only balanced to note that, while I was hoping to be home in my own bed this evening, I am instead in a hotel in Newark. My flight was cancelled (I presume because of the weather) and despite a heroic effort by one of the Continental reps, because most of the remaining flights out were oversold, here I am. I also discovered that hotels could be oversold, since after being shuttled to this hotel we (the victims) were first told we would be sent on to other hotels. After about ¾ of an hour waiting for a non-appearing shuttle (apparently caught in traffic) the two of us assigned to this hotel were allowed to register.

So with the promise of another early morning (I was at the tube station before the ticket sellers appeared this morning) this will again focus on just a few stories out of the press, rather than the usual. Firstly there was something that I wanted to post from the TWIP that I forgot, and that was this table:

OPEC anticipated production at the beginning of 2009 (Source EIA)

These are the sorts of tables I like to squirrel away for future comparison, since this is the prediction of how close we are to more interesting times. I have always (while blogging) discounted 1 mbd from the Saudi Arabian total, since they count Manifa (at 1 mbd) in these numbers and that field won’t come on stream until they (Aramco) install their own refineries for it. That day is still slipping and how heading beyond 2013. And if you take that number out you might note how close to capacity OPEC was last September before demand, and then supply, was reduced by the recession. If demand picks up this summer, and I need to stare some more at those graphs that I talked about yesterday to see how they develop into the summer, then we may be back under OPEC’s thumb faster than you may realize.

The second thing worthy of note was the story of the Tata, which was in the Daily Telegraph today. It is the promise, for Indian drivers, of an automotive future. With a cost of around 1,300 English pounds ($1,900). The Tata Nano was launched earlier this week, and given a positive test drive result in today’s paper. It is small, barely holds four, without luggage, yet gets 70 mpg, and is within range of a lot of Indian families.
At the test track inside the Tata compound earlier, I struggled to believe it could be possible to get four people inside, with the front passengers able to stretch their legs comfortably. I counted three normal steps as I paced from front wheel to back, and one large Monty Python-style stretch from left wheel to right at the front.

It resembles a bumper car, and its tiny circle means it can turn in a space comparable with a taxi cab in London.

For a skeptic expecting a tinny, bone-shaking ride, it was surprisingly ordinary, an observation which delighted the engineers who created it. Their goal was to create a "proper car", affordable to India's millions of two-wheeler riders, and in that they've succeeded.
The only thing, of course, is that good mileage or not, it will likely provide the avenue into car ownership for a large number of Indians. And with that will come the demand for fuel that must be provided. (The two upper level models will also be air conditioned).

Over on TOD Europe Luis has noted the problems that are arising with the generation of tidal energy from the sea. The first three machines, launched with some fanfare have been out of the water now for some time, and the experiment is losing momentum. Plans for similar units are being made for Morecambe Bay in the UK. A Group of industrial and academic folk has been founded . When three others are added then the total contribution can be as much as 5% of the nation’s electricity demand. But there are some years yet and demanding investments before we see a significant contribution.

Well I am defeated by travel again, so will see you on the morrow.

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Wednesday, March 25, 2009

Of gasoline demand and automobile fuel production.

It being a Wednesday, there is a new TWIP report out, and so we try and interpret what they had said and what it suggests for the future. At the same time the Federal Highway Administration have released the January driving figures, and what optimism was left about the economy is reduced a little.

So what am I talking about? Let’s begin with the weekly graphical plot for gasoline demand (from This Week in Petroleum where along with the current numbers it is possible to do some analysis.

Source EIA .

Now we’re squinting at the line to ensure that the red continues to increase, and with our remaining optimism, the end of the curve does seem to be tending back upward still. If it will only continue. But when we plot, for the past five years motor miles driven per month at this time, The conclusions are not pretty. Looking first at the January figures for the amount of miles driven, one can see the drop in the past year, against the rise in all but the year precious.

Monthly mileage driven in the US for periods of 6-months for the last 5 years (source DOT). The current line is obviously still heading down, and though leveling off, is not quite an optimistic projection as I had expected at the time.

What is then interesting is to look at the total accumulative miles driven over the period and suddenly you see the trend is still down even if slightly less so.

When we do a monthly plot with a rolling 12 month average, then we get another curve, and this suggests that while we might have dug our way out of this a little we have a long way to go.

Source FHWA Mileage driven by month since 1984 (Source FHWA).

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Tuesday, March 24, 2009

P55. Pick Points

Given the size of a couple of the stories a little less than half-a-dozen stories of interest today:

Redoubt, the volcano in Alaska that was being monitored when I flew over here has now erupted, and though it threw a plume of ash some 60,000 ft into the air, the wind was such that Anchorage, 110 miles away, was not covered. And the heavy snow falls turned into enough water that much of the ash that landed was washed away to a distance of up to 22 miles. By 4:30 am Monday there had been five eruptions, back in 1989 when it last erupted the eruptions lasted for four months. It has since erupted again, and appears now to be building a lava dome.

Source Alaska Volcano Observatory/U.S. Geological Survey

More recently the air had cleared enough to allow planes to be unwrapped and to take off again and resume service.

Source Alaska Volcano Observatory/U.S. Geological Survey

It has been postulated, by Lamb among others, that the fine dust high in the atmosphere can cause a reduction in the Earth temperature, though the effect of one volcano really depends on the size and volume of the ash generated and I suspect this is not producing enough yet to be significant.

Last year, shortly after he was inaugurated President Medvedev travelled to Kazakhstan, Turkmenistan and Uzbekistan with the President of Gazprom to lock up control of the natural gas supplies for those countries. Now the agreement may turn out to be an expensive one for Gazprom. The company has seen its own production drop 25% and so relies on the agreement, but that was at a $409/tcm, and now the price is falling to $260 per tcm.
Gazprom currently buys about 50 billion cubic meters (bcm) of Turkmen gas, 15 bcm of Kazakh gas, and 7 bcm of Uzbek gas, amounting to about 14 percent of the company’s total production in 2008, according to the Nezavisimaya Gazeta report. Rising transit costs and falling consumer demand in Europe and Russia mean that the company’s operating costs in Central Asia are becoming a big burden. The company has already scaled back development plans for the region.

Gazprom officially acknowledged in early March that gas production in 2009 may decrease by 7 percent this year. But analysts say the cut in output could likely to be much higher.
Poland meanwhile, which had an agreement with the “middleman” between Gazprom and the Ukraine (RosUkrEnergo), an entity which has supposedly been kicked out of the deal, is now negotiating directly with Gazprom. The hope is to get the agreement in place so that the Poles can fill their storage tanks before winter comes, when supply becomes more of an issue. Meanwhile Ukraine is reducing the amount of gas that it plans on buying from Gazprom by 17.5%.. However part of this is that Ukraine needs someone to invest in their infrastructure and update it, and the hope is that this will come from Europe which is not sitting too well with the Russians.

And speaking of natural gas, CERA has announced a new analysis which sensibly says:
North American natural gas is entering a new era in which supply is no longer constrained, according to a new Cambridge Energy Research Associates (CERA: undefined, undefined, undefined%) multiclient study, Rising to the Challenge: A Study of North American Gas Supply to 2018. A revolution in technology has unlocked "unconventional" gas resources, dramatically changing the prospects for the market. Demand, rather than supply, will be the challenge for the market going forward, accentuated currently by the economic crisis.
Not wishing to be argumentative, but one wonders if CERA has been monitoring the rates at which drilling rigs are being shut down?

I would normally not take up this much space in a Pick Points, but the report goes on to say
Given the increased productivity of unconventional wells, the study concludes that it is not necessary to increase drilling activity to maintain - or increase - production. After years of developing unconventional gas with its long-lived production, in the aggregate, the average decline rate will fall. This means, the study says, that a smaller quantity of new production is required to offset natural production declines. CERA does expect production to increase, with dry gas productive capacity growing from an average of 53.5 Bcf/d in 2009 to 60.6 Bcf/d in 2018 in the lower 48 United States, and from 15.8 Bcf/d in 2009 to 19.6 Bcf/d in 2018 in Canada.
Sometimes I wonder what reports they are reading, the average life of an unconventional (read gas shale) well is less than 3 years. The average well is depleting 60% in the first year. I have posted on this before and these are not my numbers. Well, as they say, the next eighteen months will see which of us is correct. And LNG imports may change the picture a little, Wood Mackenzie are expecting them to rise. On the other hand the steps by the Indiana Governor to allow synthetic natural gas from coal won’t likely make much of a difference.

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Monday, March 23, 2009

More Traveling Thoughts

The visit to Dalry today was fairly short, but I was thinking of stopping at Blackcraig Wind Farm Site to take a photo, yet though I drove past it twice, I saw no signs of activity, save only that the nearest house (with a big “Ban the Big Wind Turbines” sign) has been sold. Nothing at all to show where it was, though I was driving along the bottom border, and so maybe next time I’ll try the top. There were only some belted Galloways grazed uncaring to my curious glance. If the site had been up (it will hold 23 turbines at 3.0 MW apiece) today then the power meters would have been spinning. While it was beautiful looking out, when you stepped out the wind was, in local parlance “brisk.” (Though it may well be back to snow by the end of the week). And, for those nerds among us, I did stop by James Clerk Maxwell’s grave, which is in Parton, just south of New Galloway on the bottom of the map.

Maxwell's grave at Parton.

Reading the European press gives a little different viewpoint, than that picked up from the Midwest; I had been impressed by the idea of Chancellor Merkel in Germany to subsidize the purchase of new cars. Basically the government will give an incentive to those trading in cars more than nine years old, both incentivizing the economy and reducing carbon dioxide emissions. But now the Aotomotive Distribution Federation in the UK has come out against the idea. It seems that because most cars in the UK are imported, the policy (which is being viewed favorably by the government) won’t help British manufacturers, but will rather hurt the distributors, that are currently kept employed repairing the old clunkers. Except that, talking to one of my dealer friends, folks aren’t doing more than the absolute minimum to keep their cars on the road at the moment. And so far the idea has not caught on in the States. Even though, in Germany, it seems to be a great success already with sales up 21%. The incentive is a 2,500 euro payment. There are also some in the States that would be strongly opposed.

Oh, I see that there is another claim to do cold fusion, I think I’ll stop there, for tonight.

We should be back on schedule by the weekend.

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Sunday, March 22, 2009

British Public Transport is so easy, and convenient

Hmm! Well this was going to be a post on American driving habits, but instead it is going to be on the downside of relying on British public transport. (With the odd redeeming feature). After posting last night (following the delayed dinner for which I got the free wine since it took so long) I was looking forward to a gentle journey through the English countryside by train, with a single change at Carlisle, and getting into Dumfries in time for a pleasant relaxed dinner. Instead of which I had, as I told Elaine, a fellow passenger, what should be thought of as an adventure (lest we despair).

Having been brought up in the UK, and remembering the reliability of the trains under British Rail, I meandered over to the London station at Euston*, expecting that I would have to wait at most an hour, for a train North. Wrong! There were repairs to the line going on up past Lancaster, and so we would have to bus around the problem section and, as a result, I should take the 2:25 pm train and not the one just after noon, getting on the bus at Oxenholme. That was when the good luck went away.

So I grabbed a paper and waited the couple of hours and then hopped on the train. One of the nice things that the railway folks in the UK do is to allow you to upgrade to first class on the weekend for about $20, so I did (the train was full) and thus got free coffee and cookies as the train rumbled north. Until we got to Preston. This is South of Lancaster, and so I was wondering why we were staying at the station.

Then I heard the announcer with the news that a freight train had broken down between Lancaster and Preston, and there was no passage further North. We should all proceed from the train, over the bridge, and out of the station, where a bus would soon come by to pick us up and take us on our way. This is a fully loaded 11-carriage train folks! So we all got off and dutifully moved across the bridge into the cool of a British Spring afternoon (did I mention I had left my heavy coat, gloves and scarf back in the London hotel for my return). We left the train at about 4:45 pm. I passed the time outside doing a Sunday Telegraph Sudoku. No buses, I did the other Telegraph Sudoku (these ain’t easy folks so this took some time). Still no buses. (They had been waiting for us at Lancaster, and so had to drive down to Preston first). And finally they came. So did they get parked along the concourse so that they could all load at once? Er, no we queue, and load them one at a time from the front. (I got on bus four). And so we left for Lancaster.

The orderly wait for 8 buses at Preston
It was 6:10 pm when we left, and getting dark as the bus drew in to Lancaster.

7:00 pm Arrival at Lancaster

Here the train-load was split into different destinations, and fortuitously, instead of having to go up to Oxenholme, they split the group so those of us going to Carlisle could go directly there. The bus was somewhat more comfortable (I could just read my Kindle) and off we went.

7:15 pm the bus leaves Lancaster

And so North to Carlisle, where we were to change to another bus, since they were apparently repairing the line to Dumfries. So we get to Carlisle, and look for a bus to transfer to.

8:20 pm Arrival at Carlisle

However we are now back on a schedule, and the bus to Dumfries leaves at 9:12 pm. I trust you will understand if, at this point, I beat a retreat to the bar in the local hotel and had a beer! (and a sandwich – just so that I didn’t feel guilty using the loo for free, you understand). Then back out for the bus to Dumfries. . . . .bus for Dumfries . . . . bus for Dumfries. The organizer was looking harassed (they tend to make public announcements in a whisper to their closest neighbor), but eventually we gathered that the bus had arrived 3 hours earlier and gone to park in the local Car Park. . . . . . (I could have had another beer).

9:40 pm No bus, nor taxi yet at Carlisle

The company instead ordered 3 taxis, to take the 11 of us up to Dumfries. There is a long pause, Elaine reminds us that they made a movie about a trip like this, with Steve Martin. Did I mention I did not have my gloves and scarf! A while later the taxis arrived. And so I shared a taxi with 6 others (including an opera singer from Kirkcudbright) and off we set into Scotland.

9:50 pm leaving Carlisle

We arrived at Dumfries at 10:30 pm, and the restaurant was closed, etc etc
What an adventure ! Can’t wait until tomorrow!

But the rail company did provide the taxis, and the buses, and though we rarely knew what was happening until it did, they did get me here – and I probably didn’t need that dinner any way.

Even before we left London there was much complaining of the cost of the tickets in the carriage I was in, and yet, as I said, the train was full. (The fare was sensibly one hundred English pounds (about $145).

* Having been given Neil Gaiman's Neverwhere for Christmas by the Advocate and the Bishop, I couldn’t resist this link.

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Saturday, March 21, 2009

P54. Pick Points

So here it is the weekend, and I would usually be putting up Saturday Pick Points, and the Saturday post, with Sunday’s Tech Talk in the wings. However, since I am still wandering around Europe (tonight I am in London, but leave early in the morning for Dumfries and Burns Country) I am, instead going to take a quick peak around and do sort of an abbreviated Pick Points, looking at some half-a-dozen or so stories that are worth a quick look.

Getting around as I do involves a fair bit of travel by plane, and I’ve noticed that the planes seem to be getting smaller, and thus fuller, as the economy spins away. Of course the increased traffic might be because some travelers, can’t have a new jet of their own, though I doubt it. China is now providing its suppliers with increasing quantities of jet fuel, perhaps suggesting that while the rest of the world is cutting back , they continue to grow. Cutting back is almost the universal cry, and certainly the restaurant business has to be hurting. And I have eaten in a number of places recently where I was one of only few customers. Of course sometimes it is because, when I go to places like the Fem Sma Hus in Stockholm I show up at American dinner times not European (most of my meal I was alone in the cellar, but just before I left it became crowded). This lack of demand hurts chef employment, in NYC the restaurant trade lost more than 10,000 employees in the three months over the end of the year, nationally the drop has been more than 100,000. And with reduced waitstaff, in more popular places this can catch management out when there is an evening surge in demand. Which may “earn” you a free glass of wine as it did for me tonight in London. Sadly, however, sales of alcohol often pick up in troubled times, as they are now in Russia, while the harsher economic environment means that the smaller firms are pushed out of the trade.

Robert Rapier has noted that this is a good time to pick up alcohol – though he is talking of the ethanol variety in his most recent column at R-Squared Energy Blog: Valero Now in the Ethanol Business. As he notes VeraSun, the nations second largest ethanol manufacturer, filed for Chapter 11 at the end of October. The corporate assets are now on the block, and Valero Energy stand to pick up the seven ethanol refineries, at a quarter of the construction costs. Other ethanol companies have already filed for bankruptcy protection, and it appears Aventine may soon be in similar straits. Yet even as these sales start, the scale of the volume that ethanol will contribute, relative to the coming need is small, and while it provides, as Robert notes, an easy way to pick up a fuel that is being mandated as part of future supply, for small change to the oil companies, it is not going to be more than a contributory part to the answer. Yet, at the moment, despite that mandate, farmers are planting a greater fraction of the crop in soy beans this year, anticipating a bust in corn prices (which prophecy might be self-defeating). On the other hand if the import tariffs are reduced, as some in the Senate suggest, we may be able to import all we need. (But wasn’t there this slogan about freeing ourselves from imported fuel dependency?) Even the Wall Street Journal has weighed in against ethanol, though that also gives me the chance to make a small technical note. Unless I am doing something stupidly wrong (not unlikely) American Kindles can’t yet pick up magazines and papers in Europe (neither Sweden nor the UK). So much for my plan to save weight in my carry-on baggage by just loading the papers to it – Rabbits! Though I guess they may have other bigger troubles.

Solar panel advocates can no doubt breathe a sigh (though they said it was rather a shout) as the final Space Station panels were successfully installed. The station now has enough power to allow double the crew. Down on Earth the Administration is making its first Federal loan guarantee for alternative energy. The guarantee is for $535 million and will help construct a PV facility that can generate panels to produce up to 500 MW per year. The panels are designed for use on rooftops. The world’s solar PV installations are stated to have reached a combined total of almost 6 GW by the end of last year with Europe getting 82% of the business to date. (The ranking by country is Spain, Germany, USA, Korea, Italy and Japan). Sales are thus on a positive upward trend, with DuPont estimating a trebling of sales by 2012. First Solar have also just announced that they have now produced 1 GW of their solar modules, so with manufacture gearing up, all we need now is the market growth.

The other major renewable, wind power, is also gaining market, with a new effort to put turbines into South Africa. The country, as you may remember, has had problems with suppling power, not only for its own needs, but that of its neighbors. The first 30 MW farm is not scheduled until 2011, which won’t help the intervening shortages. It will, however, quadruple capacity. Eskom – the main SA power provider needs a rate increase, but is having trouble getting its act together, and having a power failure at a rally to improve their public posture sure doesn’t help. It is frustrating enough to Botswana, who got most of their power from SA, that they have started seeing pink elephants. (Would I lie to you ?). Of course it’s not just the South Africans that can run into infighting over turf relative to wind power, though the new Interior Secretary promises to get it stopped.

And finally (as the clock kicks over here in London) it is 4 years ago that Kyle Saunders and I first posted our collaborative effort that was, and is, The Oil Drum. I have posted a short history of the site, over there, and repeat the very best wishes that I have for the site. It has filled a valuable need, and that will not diminish in the months and years ahead, and so my wish that the site “Live long, and Prosper.”

More stories can be found at The Energy Bulletin and Drumbeat at The Oil Drum.

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Thursday, March 19, 2009

My excuses and a natural gas thought

Hmm! Tomorrow I get to go and give the report that brought me all the way over the Atlantic, and so this perforce must be brief, since even us ageing Academics must look over the material at least once. Also The Oil Drum is coming up on a fourth Birthday, and I am trying to do a quick history before it all fades into the past.

Thus, with your indulgence, just another grim look at the price of natural gas, where the seasonal drop is not yet helped, by the reduction in rigs, and new wells. The Natural Gas Weekly Update shows the same steady decline in gas prices that we have seen for the last six months.

Source EIA

And yet when one looks at the stocks of some of the producers, the story is a wee bit different. Chesapeake stock price has started to rise again, a little, as has Devon Energy so maybe we are coming through the end of the bottom of the market in energy – well a little early to tell, so keep watching.

Must dash! But back soon! No more below

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Wednesday, March 18, 2009

TWIP, gasoline and NGL's

For the last few weeks I have been following the amount of gasoline that EIA tabulates in their “This Week in Petroleum” (TWIP) reports. It won’t be until next week, when I anticipate that the January driving results come out, that I can see how the two integrate. What I have been looking at is the seasonal uptick in demand as driving usually picks up from now through the summer. At the end of last month it had appeared that demand was getting ahead of last year’s numbers, and while that continues to be the case, with today’s TWIP, the gap is getting smaller and trying to find the seasonal uptick, which was obvious, in now becoming more of an exercise in optimism.

Source EIA
So the question is, when we get to April, will we be below last year or above it?

Looking at stocks, which had been falling, an increase in both domestic production and imports (presumably anticipating the traditional spring driving surge) with the stabilization of demand has led to a stability in stock volumes at a time when they would usually be declining.

Source EIA

Domestic crude is up around 300 kbd over last year, and imports have dropped a similar amount, so that refinery inputs are holding relatively steady, while this time last year they were dropping. We’ll just have to wait to see next week how this correlates with driving.

The front article in this weeks report deals with Non Gas Liquids (NGLs), and I have to confess that, back when I first read “Twilight in the Desert”, this was one of the questions that made me nervous about making absolute statements relative to when peak production would occur. Back when we started TOD there was considerable optimism about the volumes that would be generated from this source. For those not that familiar, as the EIA explains, as it folds NGL’s in with other non-crude oil liquids:
Non-crude oil liquids are those liquid hydrocarbons that are part of the overall oil supply, but are not crude oil, including such things as condensates, natural gas liquids (NGLs), and biofuels. These other liquids have traditionally been classified as “oil supply” because they are closely linked with the oil sector. Our March STEO re-evaluation of OPEC non-crude liquids production focused on NGLs, which are generally extracted from natural gas at processing plants and constitute the largest portion of OPEC non-crude liquids production. Our re-evaluation specifically focused on the relationship between OPEC NGL and crude oil production. Because much of the natural gas produced in OPEC countries is associated with crude oil, we had already assumed some link between OPEC crude and non-crude production. However, the magnitude of the fall in OPEC crude oil production over the last two quarters, along with the larger relative importance of non-crude liquids in the market today, prompted us to take another look at the nature of this relationship.
There was a time that the gas that came out of an oilwell was separated and flared off as a nuisance. And in some parts of the US that is still the case, where the volume is small. (I remember driving from St. Louis to Vincennes and passing – and smelling – small flaring wells).

Saudi Arabia realized the value of this resource to them back in 1982 they were collecting the equivalent of 750 kbd of oil as natural gas, and starting to use it for domestic consumption. Along the way they took the NGLs that were also produced, and reached an export level, at that time, of 360 kbd. JoulesBurn has written on the difference between oil and gas wells in that country, and where the wells are going. More recently this Master Gas Plan (MGP) has released the equivalent of over 1 mbd from domestic fuel consumption (through NG replacement) to be available for export. With the cut-back in production as world demand has fallen, the exact status of these new sources of production is less clear. Hawiyah was supposed to be producing 310 kbd by 3rd quarter 2008, for example. But given that domestic consumption of natural gas is anticipated to continue growing at 5% a year the associated NGL will no doubt also climb - although not in quite the same ratio. (Which suggests a theme of “wet” gas and how it dries, for a future Tech Talk).

I dwell a little on this more independent side of the non-crude liquid production, since I am not sure that we can tie the volumes to crude production, quite as closely as the EIA project.

However, with that caveat, it is worth noting their comment that OPEC non-crude liquids are going to outperform any gain in oil production from non-OPEC countries. But it should be noted that the vertical scale on the graph they show is not very comforting:

And what is worrisome is the little caveat at the end of the piece.
Within the context of the overall global oil market, these changes would usually be minor. However, when viewed with our expectation of almost zero growth in non-OPEC supply over the next two years, the effect of this change is magnified. Less overall liquids flowing into the market will tighten the overall oil supply. In addition, lower natural gas production in some OPEC countries could lead to substitution of oil for natural gas in the electric power and industrial sectors, increasing domestic oil demand. Until the superstar returns from the disabled list, the overall condition of the oil market will continue to depend upon these marginal contributors.

I think that depends on which of the two superstars they are referring to, and the nature of the injury that they perceive.

P.S. If this is what we can expect with Gobal Warming, we.e.e.ll I’m not sure I’m a fan (h/t to Dan at Bleakonomy).

And the real reason for the snow around the Palace, was the Royal Palace Sprint.

Courtesy of my lunch break

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Tuesday, March 17, 2009

P53. Pick Points

Half-a-dozen or so stories that might be of interest:

There does appear to be a little recognition out there now that oil prices have hit a floor, and may perhaps be bounding up a little. I suppose if I was that kind of blogger I would point to the post where I said so, but let’s be a little cautious a week or so longer. Ecuador thinks that the price should really be $80 (per barrel) but would be happy with $60. Although Shell admitting they weren’t replacing their withdrawals from reserves, might also have helped. With some of the excess oil that has been held in tankers now coming onto the market perhaps others are seeing the sort of signal that says we may now see a crawl back up in price. It was only a month ago that something like 80 million barrels was being held in these vessels, given that a VLCC (Very Large Crude Carrier) can hold up to 2 million barrels, and with 45 tankers having been used that way, there was a lot to ease back into the market. Shell sold their first two tanker loads (some 1.2 mb) back at the end of January and it seems that others are now also finding a sale.

The lower supply price for natural gas is now reaching the point (as winter demand dies) that supply companies are starting to pass on their savings to the customer. For example up in Canada, Enbridge Gas Distribution has just go permission to drop their price from 30.4 cents per cu.m to 23.5 cents. For a household using 3,000 cu m per year, this will save some $230. (That price converts to a drop from $8.60 to $6.65 per kcf). Similar things are happening in New Hampshire with the utility there, Unitil Corp, is getting a new rate of 69 cents per therm, (or $6.90 per kcf), which is down 26% on recent prices, and 56% from last summer’s peak ($15.50 per kcf). There are some out there, however, that have picked up the message I have mentioned here earlier, that as rigs drop off, so availability will again become tight, and thus prices could double again by next year. Next January’s futures are up 49% on April. However, while I was looking at a 20% shortfall some time into early next year, with the current fall in production, some are seeing 5% drops by the fourth Quarter. And looking back in history (which I favor)
The last time drillers stopped rigs at this pace was seven years ago, when futures advanced 86 percent. The world's biggest hedge funds have already started to close bets on a drop in prices, government data show. Natural gas tumbled 30 percent this year, the worst start since 2006, as sales weakened with the recession.

I usually only just look at the weekly EIA numbers for crude, gasoline and natural gas, (and those comments may be a few hours delayed since I am working in Sweden) but it is worth having a quick peak at the coal forecasts, which come out on Monday’s. For reference here are the current spot prices for coal:

Source EIA

In case you were wondering why most utilities are buying Powder River Coal from Wyoming. The amount of coal being produced and used is remaining fairly stable.

Source EIA

The blue line for last year shows record production levels, that are, at this time, not anticipated to occur this year because of the economy. However, when one looks at the international market, where last year saw record prices of up to $300 a tonne, (sometime I will start correcting for the difference between short tons (US) and metric tonnes (most others)), the market is currently looking at prices of around $115. Of course that view came from New Zealand, where a new coal offering was fully subscribed. Australia is hoping to settle, for the moment, at around $70. But those who think that the global slowdown will seriously reduce consumption, might want to consider that China’s imports were at the highest level in 22 months in February, at 4.88 mill tons, and with prices being bruited of $62.10 per ton in Newcastle, Australia, they may not be the only ones that come calling. (But part of the demand relates to internal Chinese politics over the price utilities will have to pay the mines for coal). It might also be worth noting that in order to sustain their economies both China and India are pouring money into infrastructure, and that means steel, and steel means iron, and iron means coal. India is going into elections this year, in case you had forgotten. However the number of ships lined up to take coal at Newcastle has dropped from 70, eighteen months ago, to 15.

Well having just skimmed around the big three tonight, I thought I’d leave room for a couple of pictures. Back when we went to Cork for the ASPO Conference , Colin Campbell laid on a piper to lead us in to dinner. Well I was led to where I was ended up deciding to eat tonight by pipers* in the Stockholm Gamla Stan.

Pipers in Stockholm

And then when I wandered back to the hotel, I found that the Royal Palace had been surrounded by a belt of snow about a street wide, and some 20 cm (8 inches or more) thick of artificial snow. Maybe they thought I missed it, or was expecting it (it was snowing when I arrived). Anyway, not a good picture in the light, but just to show, these are normally the steps up to the Royal Palace.

Snow covering the stairs into the Royal Palace

(it’s artificial, and 20 cm plus deep)
* I actually dined on moose, and cloudberries, just around the corner.

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Monday, March 16, 2009

Of hybrids and algae

As I had mentioned in an earlier post, we are thinking of getting a second hybrid in the family, with thoughts turning toward the Ford Fusion. At the time of the decision, there still seemed to be an aura around the concept of hydrids that continued to make them seem a more desirable product. With the drop in gas prices, and their higher initial price over conventional gas models, that is no longer the case.
"When gas prices came down, the priority of buying a hybrid fell off quite quickly," said Wes Brown, a partner at Los Angeles-based market research firm Iceology. "Yet even as consumer interest declined, the manufacturers have continued to pump them out."

Last month, only 15,144 hybrids sold nationwide, down almost two-thirds from April, when the segment's sales peaked and gas averaged $3.57 a gallon. That's far larger than the drop in industry sales for the period and scarcely a better showing than January, when hybrid sales were at their lowest since early 2005
I hadn’t realized that we were planning on joining such an exclusive group. And perhaps we can see why Ford have not been more aggressive in selling (they aren’t).
executives at other automakers (than Toyota) concede they lose money on every hybrid sold. "If we were making money on the Civic hybrid, we weren't making a lot," Honda spokesman Chris Martin said.

That may help to explain why fewer than two of every 100 Chevy Malibus sold last month had the hybrid powertrain and why Ford priced its new hybrid Fusion, which dealers expect to start receiving this month, $8,000 above the gasoline-only version.

Ford expects to produce about 20,000 Fusion and Milan hybrids this year, or about 1% of its total production. . . . . . . Three weeks ago, Jerome Haig, a lawyer in Torrance, put down a $500 deposit on a Fusion hybrid, even though he hasn't even test driven one because they have yet to hit lots. "I do like the idea of getting a hybrid," Haig said.

But he admits that he may not have considered the car if not for a $3,400 tax credit on Ford hybrids and a deduction on new car sales tax. The latter was part of the $787-billion federal stimulus package. "The tax advantages are a pretty big incentive."
However sales of the Honda Insight seem to be doing better than expected, but this is because the new model is cheaper than a Prius. if the price can hold under $20,000 then that sales growth is expected to continue.

Shell appear content to continue funding of their algae program. Back in 2007 the reviews were mixed:
algae always seemed promising as a biofuel feedstock. They devour CO2, multiply like rabbits, are oily, and don’t need much land. The U.S. Department of Energy spent almost twenty years studying more than 3,000 varieties of algae to see what would work. Nothing did; Clinton pulled the plug in 1996.

That is because algae-to-oil is a balancing act: Only the hardiest strains thrive with temperature variations, and they have fewer lipids. Really greasy algae aren’t outdoors types. So a lot of small algae biofuel companies prefer “photobioreactors,” or grow closets for algae. Others go back to the farm, but keep algae under wraps.

Shell says its pilot project will determine which strains of algae are commercially viable and which will best be able to suck up CO2 emissions from power plants. In the meantime, its Hawaiian project will be using bottled CO2.
The Hawaiian pilot plant on Kona is run by a joint venture called Cellana and uses non-modified species in a surface “racetrack” set of ponds. The first step in the process was to find the right local species. This involved putting test tubes of different strains out to find which ones grow the best.

In the next step in the development last June the partners were talking of having the first commercial plant available within three years. A site has been found in Maui near a power plant, that would provide a source for the CO2, and with high interest from officials, the date for the plant to be started moved up to 2011. The technical breakthough has been to limit the amount of time that the algae spend in the open ponds, the crop is harvested, and a new stock is injected, with new nutrient, at an already high concentration, so that the residence time is short, and competition from other species is limited before the algae have consumed the nutrient, multiplied, and are ready for harvesting. By doing it this way, it is claimed that costs are reduced. To bring the feed stock up to the required volume needed for injection, the algae are first bred in plastic tubes. In regard to the volumes of carbon dioxide that are consumed
A very rough calculation would be a minimum of 250,000 tons of CO2 per year captured by 1,000 hectares (roughly 2,500 acres) of algae, for a coal-fired or diesel-fired power plant. So a very large commercial facility, say 20,000 hectares (roughly 50,000 acres), could perhaps capture 5 million tons of CO2 per year. This calculation will be further refined during the joint venture demonstration phase.
The nutrient added to the seawater will largely be nitrates and phosphates, as it depletes in the water, the concentration of oil in the algae increases.

Cellana meanwhile is moving ahead with algae selection at the the facility on Kona. They have screened some 5,000 possible candidates down to 75 who were evaluated for high throughput, cutting the number down to 12, of which 8 were considered viable for outside cultivation. These will be studied and screened down as the Kona pilot plant develops in 2010. That facility will be a 2.5 ha size, and will be used to help plan the full commercial facility that has now been targeted for 2014. They have now down-selected to 7 species and hope to have their first harvest this quarter, with the first oil produced in volume by the end of the year. One of the team partners, Bodo University in Norway, is evaluating the de-oiled biomass as an animal feed. The production plant has the following objectives
The project will use 10 percent of the Maui Electric plant’s CO2 emissions as feedstock. The CO2 will be delivered by pipe from the Maalaea pipe, and the plant will produce up to 3 Mgy of algae oil based on a projected 750-acre algae farm producing 5,000 acres per gallon.

The company said that it expected that it would take up to three years to obtain permits for the operation, which would be profitable in the first year of production according to HR Petroleum execs.
There are some doubts about the longer term and larger scale production that will be needed if algal biodiesel is to make a significant contribution to fuel supplies. But even with those doubts the potential for removing carbon dioxide remains attractive, and the Alberta Research Council has joined with Innoventures Canada to look at this .
The ARC says the preliminary target for its Carbon Algae Recycling System project is a 30 per cent reduction of the greenhouse gases produced by an average 300 megawatt coal-fired power plant. CARS proposes to feed flue gas (CO2, nitrogen oxides and other emissions) directly from industry into ponds to feed algal growth.

"We are in the early stage of looking at carbon dioxide bio-fixation to micro-algae," says Quinn Goretzky, project manager for strategic initiatives at the council. "Our vision is to transform carbon into a value-added good."

To date they have focused on green algae. Of 21 samples under examination, nine failed to thrive.

"Five were taken to characterization, and that relates to biomass and rate of growth," Goretzky says. "Algae is made up of fatty acids and lipids, which is the most important since they go to fuel. The carbohydrates go to ethanol and the proteins to animal feed and fertilizer."

He admits the process as it stands right now is energy-intensive. The ARC consortium favours a large greenhouse-covered pond system. "This maintains temperature, delays evaporation and reduces contamination."
The Canadian system has a target set of data (ppt)
•Total algae pond system area : 400 ha
•Algae yield : 30 – 120 g/m2/day
•CO2 captured : 77 500 – 310 500 tonnes/Year
•Algae oil = 3.5 barrels/tonne algae
•Carbon credit : 15 $/tonne CO2
It has an anticipated 7 year return on investment if it can sell the biodiesel for over $3.46 a gallon (which is currently isn’t).

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