Sunday, October 26, 2014

Acconia’s Brand New Big Turbine

Acconia’s factory in Iowa: from http://www.acciona.us/AccionaWindpower

These are strange days in the wind turbine industry. Due to events beyond its control (Republican power grabs), the industry has had to adapt to a “wave” business cycle - some years up and some down. For example, they did $25 billion worth of installs in 2012, but only $3 billion in 2013 in the US. In 2014-2015, they will probably do $30 billion (mostly in 2015); the weighting in 2015 is because of the delay in restarting the industry (it takes about 18 months to get permits/order turbines/get them installed, though that can vary depending on the backlog of orders).

Of course, no capital intensive manufacturing business really wants to operate this way. They would prefer a fairly steady set of orders which would allow for better planning, scheduling and a more logical, lower cost arrangement with respect to making and installing these systems. For example, just on the installation aspect, cranes capable of lifting turbines into place (which themselves cost a lot of money and also have ordering backlogs of well over a year) have to be leased and scheduled to place wind turbines into operation. Most new turbines now require cranes capable of lifting beggar weights to taller heights (70 to 100 tons to heights of 100 meters), which means a lot of the ones used a couple of years ago just won’t work anymore. 

Accountants and financial types hate the up and down, “boom or bust” business cycles. They like too promise fairly steady projections of growth and profits. Sales that go from 10% to 100% of rated capacity don’t lend themselves to stable projections of revenues. Fortunately, the US is now becoming an exporter of wind turbines and much less of an importer. Regional markets in Canada and Latin America can be supplied by American subsidiaries of European companies - especially by Vestas, Siemens, Gamesa and Acconia - as American products are seen as high quality. The reason China has not become a big player in South and Central America is mostly quality (they certainly have cheap (= psuedo-slave) labor for major components and final assembly, but quality is another matter - cheaper is useless if the turbines aren’t in operation enough of the time to make money due to “maintenance issues”).

The reason for the “wavy” business cycle is the on-again, off-again existence of the tax credits - Investment or Production Tax Credits (ITC or PTC) that get used along with the rapid depreciation (MACRS) tax avoidance based subsidies. These were in effect from 2009 to 2012, and then only reintroduced at the end of 2013 for one year once the industry had effectively shut down by December 31, 2012. The new extension in effect allows developers until the end of 2015 to complete projects that were at least 5% done by December 31, 2013. However, unless the tax credits are  revived in the near future by Congress, the industry will once again shut down starting in the early parts of 2015. And almost all wind industry factories and installations go to districts with a Republican Congressperons (rural midwest).

All energy generation and especially electricity generation business is subsidized in the US  to some extent, with nukes being the most subsidized of all, followed by solar PV, coal, natural gas and bringing up the rear, wind turbines. The nuke subsidies (Price-Anderson catastrophic insurance pass, am apparently infinite pass or ultra-toxic trash disposal (spent fuel rods) and the PTC are almost impossible to score, but at minimum are worth 20 c/kw-hr over a 40 year lifespan. The photovoltaic subsidies range from 10 to 18 c/kw-hr (over a 20 years), depending on how often the sun gets through the clouds period. Coal gets a variety of subsidies, but the pass on the costs of CO2 pollution are worth  8 c/kw-hr over the 40 to 80 year lifespan of a facility, and the health care related costs of coal based air particulate pollution are worth 2 c/kw-hr. Natural gas gets subsidies worth about half of those for coal for the CO2 pollution (using the Federal government’s “low ball estimate” of $64/ton of CO2) plus the added cost of methane pollution from leaking wells/pipelines - see http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf. Even government owned hydroelectric facilities have utilized subsidies, including low cost bond funding and a pass on their environmental ramifications, such as the near destruction of the salmon in the Pacific Northwest.

As for the subsides to the wind biz - over a 20 year period the MACRS and the less important PTC or ITC add up to roughly 2.8 c/kw-hr. Relative to what other competitors in the electricity generation biz are getting, the wind turbine subsidies are just small fries. Maybe they should get better lobbyists..

But since the Repubs are more or less totally owned by extractive businesses - in particular banking, mining as well as the oil and gas business - all the kissing of the vital parts of Republican congressionals (Senate and House) members by wind industry would be for naught - those parts are already claimed by the extractors. Besides, the oil and gas lobbyists have more money to spend, and a lifetime of long worked relationships - in effect, they own those congress critters souls, much like what happened to Faust (see http://en.wikipedia.org/wiki/Faust).

Meanwhile, the industry keeps evolving as highly competitive industries do. In 2014 and 2015, almost all wind turbines installed will be the so-called low to moderate wind speed models, even in fast wind locations. This allows net energy yields from these units to rise to the 40% to 50% levels. When though these units are slightly more expensive than the fast wind models (tall towers and longer blades for a given generator size cost more), the net cost of the electricity produced can be lower with low wind speed units because of the high yield achieved. It’s just a math thing, since all the annual costs (mostly installed capital related) get divided by the MW-hrs/yr produced (often referred to as the Annual Energy Output, or AEO). As AEO gets bigger, the production cost gets smaller. In many cases, the cost to produce electricity is in the 5 to 7 c/kw-hr BEFORE subsidies are considered. And this fact has the coal AND nuke AND natural gas industry freaked out. It’s often cheaper to maker electricity with wind than to bother with natural gas - whose long term cost (5 to 10 years and beyond) is impossible to know, anyway.

Iowa now gets 27% of its electricity made from wind turbines. By the end of 2015, thanks mostly to Warren Buffet’s investments, over 35% of Iowa’s electricity will be wind sourced. Of course, this taps less than 2% of Iowa’s actual electricity generating capacity…. Kansas, home of the (apparently) Sith twins known as the Koch Brothers (http://en.wikipedia.org/wiki/Sith) may well switch senator and governor from Republican control because they really like their wind turbines on farms. Texas has quite the economic boomlet going due to a huge deployment of wind farms (plus 20,000 manufacturing jobs) - by 2015 there will be close to 18 GW of installed wind turbine capacity in that state. While that is bigger than most countries on the planet (except for China, the US and Germany), that will still be only a small fraction of their capacity to make wind based electricity.

Last month, both Acconia (http://www.windpowerengineering.com/design/acciona-windpower-extends-aw3000-platform-132-meter-rotor-low-wind-sites/) and Siemens announced new models with 132 and 130 meter rotor diameters, respectively, both for 3 MW rated turbines. This matches recent announcements by Vestas (126 meter) Senvion (122 meter), Nordex (130 meter). Alstom (122 meter) and GE (120 meter). Acconia already has 1800 MW of orders for their new 3 MW models, as well as concrete towers that will allow for 120 meter tall hub heights to be reached. These will soon become the industry norm, which is now in the 100 to 110 meter rotor diameter range. See also http://www.acciona-energia.com/media/315814/AW3000_brochure.pdf.

All that has to happen is that the price of natural gas has to go up by ~ $2/MBtu. Actually, methane has to rise from the present ~ $4/MBtu towards $6/MBtu so that most gas wells can be profitable (most are not though some are at present prices). Unless prices rise, production is likely to fall as fewer wells get drilled and declining production from existing wells is not compensated by new gas from new wells. For example, in the original tracking play (Barnett Shale), production is now down to 80% of its peak value (6.3 billion cfd in November 2011). Thanks to lower oil prices c/o Saudia Arabia ($80/bbl), lots of new oil wells (which ALSO make a lot of “associated gas”), are not going to get drilled as soon as would be the case with prices of $100/bbl.

“Associated gas” from fracking oil fields (Bakken, Eagle Ford, Niobrara, Permian, Utica) supply around 20 billion ccd of methane, or about 28% of present US usage. As fewer well get drilled for oil, less gas will get produced. And it only takes some arrangement of less supply couple to stable demand, or less gas produced for an increased demand to seriously bound gas prices. But higher gas prices won’t do much for drilling rates for oil - methane only supplies about 14% of the revenue from these fields. So anyone betting on cheaper supplies of methane that will make for cheaper electricity is putting their money down, long term, on a losing hand. They might squeeze out some luck in the short term, but that’s about all there is for opportunity in that domain. Meanwhile, as wind turbine production costs keep incrementally dropping, that will put even more of a squeeze on whatever profit can be extracted from the gas to electricity theme. Data from http://www.eia.gov/petroleum/drilling/#tabs-summary-2.

So, meet one version of the future. It’s only a question of how may year the Republican legislators can push off the day of reckoning for electricity producers, who will have to finally kick their vile and disgusting and polluting natural gas habit. But this future delayed means fewer jobs now, more CO2 pollution now, more unemployment now, and less of a viable future for those who intend (and who actually make it to the future). Thanks, Repubs… (yeah right). If only there was a way to repay them for those “favors” they keep on insisting on doing, all the while pocketing some hefty commissions….….



The 3 MW Acconia wind turbine schematic, from http://www.acciona-energia.com/media/315814/AW3000_brochure.pdf

Wednesday, October 8, 2014

A River of Air and So Much Talk, So Little Action


It’s new model season, and not for just cars. It seems they just had a big wind turbine Expo in Hamburg Germany, which is as intense as a hard-fought hockey game, and it’s a take no prisoners sales effort, Here is one of the new offerings, a 3 MW gearless wind turbines on a 149 meter tall concrete tower with more of a “Low Wind Speed Turbine” design (bigger blades, taller tower). This is the new fangled E-115 from Enercon, complete with “split blades” that are assembled into their full 56 meter (184 feet) length on site from two, much easier to transport parts, and now available in most places of the word EXCEPT for China and the US. From http://www.enercon.de/p/downloads/WB_03-2014_en_web.pdf

And just in time to tap the windy season, too. And isn’t stuff like that just what the 400,000 protestors at the NY City Climate March would find to be just fine and then some…

It’s now October and in the Northeast part of the US, this means we are now in the windy season. Average winds in the October to March period tend to average close to 40% more than windy than in the April to September period. And when you convert that to the power in the wind, that’s over 2.7 times as much power in the windy season that can be made as there is in warmer period of the year. The river of air that circulates around the globe at this latitude (called the geostrophic wind) tends to move from west to east, and it is especially prominent on the US Great Plains and in western Europe on the Atlantic coastline, places where there is minimal friction caused by surface obstacles like trees and mountains to impede the flow of the wind. It happens because air tends to flow from the “subtropical high” centered around 30 latitude towards the sub polar low (centered around the 60 degree latitudes). Of course, being climate and weather related with those associated second order differential equations and stuff, this gets complicated really fast….



But, as the saying goes, make hay while the sun shines, or electricity when the wind blows. Winter is also when its cold, and in a near future, assuming some modicum of civilization evolves out of the wretched combination of Peaking Oil supply rates and criminal “Neos” (neooliberals and neoconservatives, variants on the same sick song) fronts for the ever more rich “neofuedal overlords” stealing (sorry, doing asset appropriation otherwise known as asset stripping) we would take those winter winds and power up ground sourced heat pumps to keep what passes for winter at bay, and us warm. But that takes investments, and for those parts of NY State where that would be appropriate (around 5 million houses and a million small businesses), that could easily run $100 to $150 billion dollars over a decade to a generation, depending upon our degree of motivation.

So what’s the big deal? The world is just awash in money, so much so that interest rates in Europe are going negative, while in the US rates from the Fed to its “faves” are still approximately zero. And what about the $16 TRILLION that the Fed just created out of thin air (well, cyberspace, or its own imagination, a nifty magic trick if there ever was one) to bail us out of the disaster that a bunch of big time fraudsters (such as all the senior management and/or owners of big banks, big brokers and big hedge funds, for starts) (http://informthepundits.wordpress.com/2011/11/10/16-trillion-in-secret-bailouts/) got us into while at the same time extracting many huge fortunes in the form of "fees for services rendered? And then there is that great sleight of hand called “Quantitative Easing” (QE) where more money gets pumped into banks profits and inflates the values of assets (and guess which economic class has lots of assets?) - see http://www.nakedcapitalism.com/2013/11/ilargi-qe-the-people-and-the-damage-done.html. Where will that money get re-invested? Or does it just get snorted up in a major party only the arrogantly rich can attend.A grand bash if there ever was one? Can’t some spare coins from the biggest bail-out to the rich EVER eventually make its way out of the Wall Street Casino and into something that would make the world a better place by swapping depleting and polluting fossil fuels now used to keep us warm for renewables that don’t deplete, don’t pollute much and are affordable? And by the way, where did that $16 trillion go to, anyway? Wasn’t it supposed to not only plug some gaping holes in the balance sheets of major financial entities and rich people who were in reality less than broke at the time while simultaneously providing the hordes of little people with bobs and maybe reduced future energy addition? 


Or, as Emily Litella (http://en.wikipedia.org/wiki/Emily_Litella) used to say, “Never mind…”. That lines about the $16 trillion probably goes up on the big board of tall Tales like “Violins of TV” or “conserving natural racehorses”… Anyway, looks like the vast majority of this country (alias “the little people”) are tapped out, and the likelihood of them signing up for another session of abuse due to debt servitude is somewhere between slim and none, or maybe even less than none. So may all that money conjured up because the super rich were in super trouble will just go poof, though there will no doubt be a lot of lovely Lamborghinis to show for it for example, going “topless” could run a cool $5.3 million for a Veneo sports car with more male appendage substitution power than you can possibly imagine… (http://www.gizmag.com/most-expensive-lamborghini-veneno/29464/):


Anyway, with “Never Mind” soothing us past that big example of the US Memory Hole, there are those naysayers still wondering where our electricity comes from if the winds stop blowing (at some given spot - and the answer is from another spot, or from something like the big water battery (pumped hydro electrical energy storage). Or what about in the summer, when its not so windy? Of course, you tend not to need heat in the summer - instead, air conditioning, and more of it as Global Warming closes in for the kill. And that’s a nifty thing about ground sourced heat pumps, because they can provide the same quantity of cooling for 25% of the electricity as an air to air heat exchanger. The reason is similar to the way the wind flows - from high pressure to low pressure. heat flows from high temperature to lower temperatures, and in NY State the first 15 feet of ground (a volumes of only 131 cubic miles or so) works as a great heat sink. It’s average temperature tends to be around 50 F, and if you are trying to dump heat from an enclosed space that is 75 F, why, heat rolls downhill really easy. But if it is 85 F outside and you try to push that heat from a 75 F place, that will cost you lots of electricity.

So summers, which until recently were the big peak demand for electricity in NY don’t have to be that way. But they will be as long as we keep the heating and cooling in its present really primitive state of affairs (as in fossil fuels for the most part). So in the meantime, cue the siren song of crackers who want to peddle some methane while the stuff is still affordable but if more people keep using it to make electricity that should be made via the breezes, well, maybe it might even be profitable, too. It seems most fracked wells that only make methane also make lots of never ending debt (the kind that won’t be paid off from sale of the product) and fraud opportunities, and only a few of those methane wells are ever profitable. After all, gas sure is easy to turn into electricity, and while it have have all kinds of pollution and Global; Warming grief associated withy it, it sure can convey the image of “clean”. Ditto for what it can do to addicted customers when price spikes start happening again, as in “clean out the bank accounts…

But electricity and where to get it without pollution and at a reasonable price is a problem easily solved in NY State, though money creation on SOMEBODY’s behalf is certainly required to do that, since rich people and their investment funds have shown no inclination to do so at the scale required for both a sane climate and a decent bout of job creation/wealth creation, the kind that lots of people could share in. What about something tough, like fuel for the supremely fuel inefficient though supremely aerodynamic car? After all, no fuel, no driving, and not a lot of action will be forthcoming from the $5.3 million investment unless it gets some fuel.

Well, that electricity scene is a walk in the park on a nice pleasant day compared to NY’s liquid fuels problems. In effect we are the Blanch DuBois of states when it comes to powering up out planes, trains, trucks and especially cars, and those strangers are we depend upon for their kindness are looking stranger and stranger by the day… After all, the organized crime units called ISIS or ISIL would be of no concern in most parts of the world, but that part of the world has most of the world’s remaining low cost and high quality oil reserves. It takes about 42 Bakken fracker oil wells to pump out what one decent Middle East oil well will bound out over its 50 year lifetime (most tracked wells are pumping dregs after 5 years). Or only 60 Iraqi oils can pound out 1 million bbls/day for decades. Those Dakota wells need a price of $100/bbl to justify their existence and those investments…



As that other saying goes, "The Shale Revolution is not all it’s fracked up to be”. Sure, it allows us to put off for a couple years what we have to do anyway, but that gasoline consumption graph says it all. Most Americans have seen their real incomes drop by a few percent since 2000, while other expenses have not gone down but still marched upwards. Despite prices that have been essentially stable since 2010, US liquid fuels consumption is ALSO stagnant. What happens when the price goes up, as it must, to tap tight oil that is of even less quantity and quality than what passes for an oil sweet spot today? After all, gasoline prices are at the point where they are so high and frozen or declining wages are so constraining that even in a slightly expanding economy, gasoline consumption is stagnant to declining. So who needs a KXL pipeline, anyway? Certainly not the US of A....

Oh, but that car is such a sweet thing, and no doubt, it can get the attention of other “sweet things” for the owner of that epitome of consumption. Won’t somebody feed it some fuel - heck, even booze will do (actually, it would work better because ethanol can handle a 25:1 compression ratio, versus around 9 for gasoline)? Because if you can afford the car, fuel at any price is probably not much of an issue. It’s also a car that says “who cares about anyone else” better than just about anything else, and it does it with such style…. As such, it really is a sign of the times. No doubt, coming to a rich person enclave really soon, where keeping up with the other asset extractors is always a never ending task….

Saturday, September 20, 2014

(Natural) Gas Warfare - Another Great Diversion


In honor of the efforts of those in the big Climate March this weekend (http://peoplesclimate.org/march/) and the almost sure to follow disappointment, betrayal, co-optation as well as the derision and depression that is surely to come afterwards to those brave participants, how about a nice picture of something that can remake the future, one turbine at a time? And we wish you the best of luck in your efforts - we hope you at least make it onto the evening news on Sunday. Picture from http://www.vestas.com/en/media/images.aspx#!turbines of a German array when winter was still possible…

As for that wind turbine, it is the one thing that really puts fear and anger into those pushing natural gas as the temporary answer to so many of our energy problems (as in, the perceived lack thereof of Ngas). They really don’t care much about PV’s - in their minds, money spent on PVs is just less money for wind turbines - even though they may not be happy about them. After all, for every million dollars expended in the US for PVs, on average only 292 MW-hr of electricity will get made in a year (at $4.5 million per MW of PV capacity, 15% average efficiency - see https://openpv.nrel.gov). That will (on average) displace the combustion of about 2.375 million standard cubic feet of natural gas (methane) in a year (42% average thermal efficiency), with a bulk value of about $9144/yr at the present gas price of $3.85/kcf. In NY State those PV’s will only make 214 MW-hr/yr - not as much sun gets through the clouds around here, so a megabucks worth of installed PVs only displaces $6706/yr worth of methane at present prices in NY State.

That same $1 million would produce 1753 MW-hr/yr (40% efficiency, $2 million per MW of capacity installed) - though the minimum size that makes sense is now around 1.7 MW capacity these days. So that commercial turbine will displace 6 times as much natural gas for the same $1 million in much of the country, or 8.2 times as much Ngas in NY State (almost $55.000/yr worth of methane). Now, if you are in the business of trying to sell as much methane as you can as fast as you can either because it could soon get really pricey (and then wind sourced electricity becomes cheaper than gas sourced electricity) or it might be forced by bad economics or (unlikely) good climate policy to stay put in the ground, you might not oppose PV so much, because you will certainly sell a lot more Ngas (at least for electricity production) if people choose to install PV’s instead of wind turbines. So if you had a trace of strategic planning capability and were of the conniving sort, you would not really oppose PV installations too much, but instead you would put all your efforts into blocking wind turbines, because you could sell more Ngas in North America that way in the next decade while supplies still exist which can be extracted at prices that undercut wind turbines. In other words, PVs are pretty good for the gas biz, because money spent on them means money NOT spent on commercial scale wind turbines in today’s zero sum arrangement.

But aside from causing Global Warming and a big mess when fracking is employed to get it out of the ground, methane can also lead to all kinds of financial fraud and actual warfare over the huge piles of money to be raked in from selling mass quantities of it. And for a lot of people in places where actual winters exist, at present, methane extracted from underground deposits is what both keeps people warm and keeps the electricity grid functional, supplying considerable amounts of the electricity of many countries, such as the US, Canada and Great Britain.

There are four present big conflicts in the world where one of the central causes or major factors of these wars is natural gas, and in particular, how to get the methane from the gas field to paying customers. These are in Libya, Syria, Afghanistan and the Ukraine, though that potential also exists in Algeria, Eurasian former Soviet Republics (FSU), Iraq, Iran, offshore of the eastern Mediterranean Sea (Gaza, Israel, Palestine, Syria) due to the Leviathan field discovery in some deep waters, and a burgeoning spat between China and Japan over disputed oceanic reserves. And it turns out that ONE cure for these social and mental diseases (wars, psuedo-wars, spats) is commercial scale wind turbines, so there also is the war ON wind turbines which has Global Warming as its “minor” consequence. And that is sort of a war on anyone or any living critter on the planet. But since they don’t vote and don’t have money (a bird or a bacteria just has no use for the finer things in life….), they have no say in these issues. And since lots of money is involved, we get to involve the taproot of evil, a combination of money, greed, money lust, nationalism, historical gripes of epoch proportions, power over others, dominance, submission, gambling, epic corruption, religion, fear of starvation, fear of thirst, and fear of not having they money that can buy everything from good health to awesome sex to really bad sex, not to mention promulgating genetic code that are of dubious quality from a mental health standpoint. Quite a batch of gumbo  here…, but since the Golden Rule is “those who have the gold make the rules”, well, you know it’s going to get ugly. And then there are those minor conflicts such as in Nigeria, East Timor, Angola, Equatorial Guinea…..

Some particulars on these wars and “conflicts”:
1) Afghanistan has been in play since the 2000 to 9-11-2001 time period, when the Enron Corporation needed a huge flow of gas to go to a 2.2 GW gas to electric plant that they had built in India. Negotiations between the repressive Taliban and US companies such as Unocal and other international entities were being conducted to transmit FSU gas via Afghanistan to both Pakistan and India, especially to the Enron power plant. And the plans still remain, even though the opportunity went up in smoke on 9-11-2001…

2) Libya has gas pipelines that connect its former colonizer, Italy, with gas often derived as a by-product of oil, as well as a a large number of new fields have been located offshore of Libya with BP as the primary player in these (gee what could go wrong…). Before former dictator Qadaffi was removed via a concerted set of activities, Libya was exporting 2 mbd of oil and a 1 bcfd of gas - but with the dictator gone, chaos and jihaists of all sorts (paid by Qatar and others) now reign and jockey for position. Libya still has about 60 billion barrels of high quality oil buried in the ground, and a lot of gas, so a lot of southern Europe’s financial prospects rest on order being restored in that region. And if Italy can’t get that gas from Libya, well, it has to pay more for stuff obtained elsewhere…

3) The Ukraine has gone from being an exporter of gas to the Soviet Union to a “transit country” (the gas fields onshore are mostly tapped out by now). There are several major gas lines that connect Russia’s vast gas supply with central Europe and thus central Europe’s money. In the last 20 years, most of the Ukraine’s income and wealth generation has been in either fees for gas transit (along with a cut of the gas transmitted), agriculture, gas based chemicals and weaponry for Russia. Most of the massive “transit fees” have been stolen by the “oligarchs” in the Ukraine, and now there is little to show for it. The US-European originated coup this spring has degenerated into both a military conflict and a way to massively impoverish EVEN MORE of most of the Ukraine’s people. The vast gas supplies in the Black Sea near Crimea are now forfeited to Russia, and as winter approaches, no money and no gas are going to be a very cruel combination - perhaps crueler than the Ukranian Nazi’s who are consolidating power from the oligarchs who think they can control them. Should things go even worse, a large segment of Europe will have their gas held hostage by the Nazis/oligarchs coalition which hates Russia and is hated by Russia (the Russians just don’t like Nazis after WW2). However, while it is normally money that smooths over things/does the talking, things are now up in the air, and money might not calm these profound disputes. Several million people could starve or freeze this year if some compromise by the oligarchs with Russia and the Europeans is not arrived at soon….

4) Syria’s conflict began shortly after a plan to export gas from Qatar via Saudia Arabia via Syria through Turkey and to Europe was rejected in favor of the Iran-Iraq-Syria plan by Syria’s Baathist Party leadership. The present chaos of ISIS is a “Made in Qatar/Saudia Arabia/USA” mess (check out this most awesome article on ISIS - http://www.huffingtonpost.com/alastair-crooke/isis-wahhabism-saudi-arabia_b_5717157.html), with all sorts of Sunni extremists waging a mercenary war that may get out of control. It may also turn into a Sunni-Shia bloodbath, where the ancient conflict is settled for once and for all. But it is the ability to transmit massive quantities of methane to Europe that is at the root of this; the religion and other turf wars are just the icing on the cake. Also of interest is the Leviathan gas field that parallels the eastern Mediterranean coast (but is in deep waters) - see http://en.wikipedia.org/wiki/Leviathan_gas_field. While only a mere 25 trillion cubic feet of gas, this IS 2 billion cubic feet per day for over 34 years. And there is enough oil to keep Israel supplied for some time…. and Israel in the intrigue of this battle in Syria. 

In many cases, oil is also involved, as oil and methane often come from the same hydrocarbon deposits. In some cases, the country in question doesn’t even have the gas, but they have a location between where the gas is and where the use that also has money is. This is because methane is somewhat special, as it generally needs pipelines to get it to customers; otherwise very expensive cryogenic liquid methane transportation SYSTEMS need to get purchased and installed. These systems include the liquefaction facility ($5 billion minimum), LNG tankers and LNG storage/gasification units (also $5 billion minimum), and the ability to finance these facilities, too. And then there is the safety aspect - you can’t put LNG facilities in places where really ticked off people are going to use weaponry or other nefariousness to blow these up, or to even threaten to blow them up - explosions that would be like a small nuke going off (but at least no radiation fallout). Pipeline systems (the installed pipe and gas compressors) are cheaper, but there is the issue of trolling. Lots of money is at stake, and lots of people want a cut of the action when all that is needed is the right of transit and not much else. And did corruption get mentioned? Sometimes it’s a fine line between just compensation and shakedown, and isn’t Switzerland a nice place to keep the proceeds? Then there is the issue of banking and how to move all that cash from customer to pipeline troll and supplier… as well as how to finance these deals.

It used to be that the methane that was found when searching for crude oil, or that came along with crude oil, was a real pain - and probably the leading cause of oil wells blowing up. And it still happens - the Macondo well that BP might get dinged for an additional $18 billion blew up because the pressure of the crude (which was about 50 wt% methane). But methane in the form of “natural gas” soon displaced “City Gas” (a mix of hydrogen, carbon monoxide and a some methane) that was made in “Gas Works” by reacting red hot coal with water/steam, and “natural gas” is definitely an improvement on City Gas…. After all, in winter it gets cold in a lot of places in the Northern Hemisphere, and methane can mean the difference between freezing to death and staying warm… Methane can also power up a big part of a manufacturing society, and while cheap energy is cheap, lots of wealth (fairly or unfairly distributed) can be generated. Half of the ammonia (which means a major portion of the protein content in food) used in the world comes from hydrogen made using methane - it’s so much easier to use than coal. For North America and Europe, no ammonia means no food for much of the present population….

By now, most of Europe and North America get most of their residential heating from natural gas, which tends to be anything but clean, but if you have the money for it and have access to it, you can stay warm in the winter. Otherwise, you can use propane or fuel oil, but those tend to be more expensive. And for those in rural regions, wood is often an alternative or a supplement to fossil fuels. One of the more expensive other approaches is electric resistance heating. For those paying 18 c/kw-hr for their delivered electricity (as in a state like NY), this is $53/MBtu (hey, at least it is 100% efficient….). Fuel oil at $4/gal delivered is still around $26/MBtu, and correcting for an 85% efficient furnace, you get $31.40/MBtu. Propane is a bit cheaper, but not that much… Meanwhile, delivered natural gas is around $10/MBtu delivered these days, which translates into $11.76/MBtu once furnace inefficiencies are taken into account. Price data approximately from http://www.nyserda.ny.gov/Energy-Data-and-Prices-Planning-and-Policy.aspx

North America is essentially a separate world with respect to natural gas from Asia-Africa-Europe, and is still temporarily in a “gas glut” which is slowly fading away as the big drilling boom of 2006-2009 gets “digested”. Most of the wells recently drilled were based on fracking, most have rapid depletion rates, and since less than 25% of the number of wells drilled per year  for gas is the present drilling rate (versus 2008), this indigestion will soon pass. Most wells now drilled in the US are for fracking based oil, which also makes a lot of methane, but those too will rapidly deplete. However, the price of oil makes such drilling possible, and the by-product methane can add to profits. But in this temporary glut where most gas wells drilled are money losers or certainly not epoch money makers like they are SUPPOSED to be and where huge losses are still getting racked up (see http://srsroccoreport.com/condition-red-fracking-is-destroying-oil-gas-companies-balance-sheets/condition-red-fracking-is-destroying-oil-gas-companies-balance-sheets/), there is no longer much tolerance for lack of profits. Most gas only wells or prospects for wells are no longer “bankable”. The bottom lines are: 

1. Nothing has changed in America….. there’s always another sucker born every minute.
2. Spot price of methane on 9-11-14 was $3.85 per thousand standard cubic feet (kcf = MBtu)

So gas is still pretty cheap, at least in major pipelines. Residential rates… not so much…

But in Europe, where 500 million relatively affluent people live in places that still have actual winters, methane prices are north of $11/MBtu in major pipelines. And while there are some decent methane fields (Netherlands, North Sea) in Europe, most methane used gets imported. That comes by pipeline (Algeria, Libya, Russia) and by Liquid Natural Gas (LNG) tanker (Qatar, especially), and while most European countries try real hard to build up big underground stashes (except Great Britain), the stash only goes so far. And then there is India, China and Japan, where methane prices are quite high (Japanese prices are near $17/MBtu), where most imported material arrives via LNG tanker. India and Iran make a natural connection, as do the FSU countries to the north of Afghanistan, but that requires a solution to the potential Iranian nukes issue, a cessation of the Pakistan-India spat and a cessation of Pakistan’s efforts to add Afghanistan to THEIR empire building efforts (via the Taliban-Pakistan security (their CIA-FBI equivalent)). Pipelines require that adjacent countries and customer-suppliers at least be civil to each other and overlook various differences in return for the money made by supplying product or right of way. And while the power of lots of money over long time periods can be great, it can’t do miracles and overcome many severe hatreds (such as the Shia-Sunni or the Muslim-Hindu eternal wars).

The essence of the “methane trade” is to connect customers with money (such as Europeans, Japanese) and natural gas suppliers via pipelines. The supplier and customer are then connected at the hip, so to speak, and it is both of their interests not to rain on the other’s parade. Pipelines are a long term commitment, and the pipelines, compressors and gas/oil fields are a big investment which need to be repaid - such as via steady supplies and reasonably stable prices. LNG systems (tankers, liquefaction, storage/gasification facilities) are an even more massive investment. Much to the dismay of financial speculators, a lot of the gas is sold via long term contracts, especially from Russia. The one area that is NOT connected to either the money stashes in northern Europe or India, China and Japan to any great extent is the Persian Gulf, and the world’s biggest stash of methane is in the southern part of the Persian Gulf. This field is shared by Qatar and Iran (North Dome/South Pars) and it holds close to 1800 trillion standard cubic feet of methane, as well as lots of valuable ethane, propane and butane (see http://en.wikipedia.org/wiki/South_Pars_/_North_Dome_Gas-Condensate_field). Production in Iran is now around 18 billion scfd, and in Qatar production is over 23 billion scfd. This filed is amazingly productive, wells are unlikely to go dry for decades, production costs are really cheap, and the combined production (41 bscfd) is similar to that of the entire U.S. (~70 bscfd from 540,000 wells). This field is a license to print money….

But so much of the cost is tied up in compressing an liquifying the methane… if only there were pipelines to connect the monied customers with that methane. And pipelines could easily go to India, Pakistan and China, too…

While the North Dome/South Pars is the world’s biggest gas field, there are a lot of massive fields in Iran, Iraq, and especially Russia, as well as some ex-USSR countries (the “‘Stans”) and Algeria (see http://en.wikipedia.org/wiki/List_of_natural_gas_fields). But this gas is useless unless it has paying customers, or else it gets converted into either ammonia or methanol, for which shipping by tanker is easy. In some cases, it can get converted to petroleum (Qatar's Pearl facility) but those are fabulously expensive….. In the meantime, in North America most of the prime gas fields are already tapped out, many of the smaller offshore fields in the Gulf of Mexico are getting tapped out, and so fracking has come to fill the void. But fracking wells don’t last decades (they are generally 90% or more used up in less than 5 years. Having to frack for gas means that you will soon be importing LNG and will be one of many customers competing for the fabulous Persian Gulf supplies of methane.

So those who control the flow of gas to dependent (whether to power industry, make electricity or provide the citizenry with heat) countries have a lot of power…. unless there is competition to the Ngas biz. And so far, a combination of getting more efficient and wind turbines ARE the competition to natural gas, with biomass and solar thermal heating being nice supplements to the wind turbines. Nothing else comes close to filling the void that will be left when the gas supplies start to diminish in terms of rate of supply. At least in places like the US, Canada, Australia, New Zealand and almost all of Europe.

So the race is on - will the easy to get at methane get used up in North America before Climate Sanity becomes a dominant thing? Will this country start tapping its awesome and really low cost to produce wind based electricity, or will that opportunity get royally tubed? Will the same nut jobs who brought us the Iraq War disaster (many are still employed in the US State Department - they are often called “neo-cons”) get us into wars in the Middle East or Ukraine or other “Gas states” such as Kazakistan over methane, or will it be done the old fashioned way - over oil? Time will tell, but gettingg active - no matter how futile it all seems - is what has to be done, no matter how distasteful it seems. Otherwise, no pretty winter pictures of wind turbines, because there won’t be winters with snow to them any more… And while that may sound enticing, it isn’t - think Frankenstorm Sandy, but amped up with a rising ocean level that turns a lot of NY State’s money machine - NY City - into a none too valuable fish farm…

ShareThis

 
Web Analytics