Tuesday, November 30, 2010

Water Thoughts


Picture: The Hywind turbine (a 2.3 MW Siemens unit located on a 100 meter long spar being moved int position offshore of Norway in 700 meters of water. This type of turbine would be well suited for much of Lake Ontario, Lake Michigan and especially Lake Superior. Source = http://www.rechargenews.com and Statoil, the project sponsor and financer)
.

We all know that life without water does not cut it, that living on or with minimal water supplies can be expensive and is not conducive to growing things, or in many cases, making energy. Many civilizations have crashed and burned when the water supplies became inadequate, or else rendered the land unfit for growing things (like salting out agricultural land). Then there are things like cholera, which comes from fouling ones own water supply...

However, we don't have that problem on the North Coast of the U.S., and especially in the Buffalo area, as we have a very decent water supply (Great Lakes) and we are not a desert climate, nor likely to be one. However, converting raw water into drinkable water costs capital investments, labor and especially electricity to run pumps/make disinfectants, oxidants and flocculants. Similarly, treating used water (notably sewage) so it can go back to the lake or into the rivers where it came from/was going to go also costs in capital, labor and especially energy (again, usually electricity to push air to the microbes eating "bugfood"). It also costs energy (mostly electricity) and capital to pump potable or used water to its destinations.

In other words, water is a necessary cost of living. And in the last 30 years, our governments/society/region has been putting off many needed investments - the classic example being our regional CSO (Combined Sewer Overflows) problem - as the wealth creating portions of our economy have been decimated and/or exterminated, and often replaced with parasitic ones (a process called the financialization of our economy). In a region getting poorer due to lack of real wealth creation (manufacturing, and hopefully of useful items), spending money and resources on water seems to be last on the list to "honey do" items. And we are talking billions of dollars just needed for WNY.

But what about water as a money and especially wealth creating source which can eliminate the need for polluting energy and also be a major job creating force?

Some examples include:
a) Mandated use of renewable energy (= mostly wind turbines) to provide ALL electricity used in any water treatment and pumping activities for municipalities (making drinkable water, sewage treatment). This can be done via on-site or off-site means.
b) Run of river hydroelectricity - especially in the Niagara River (no dams needed, very fish friendly).
c) Offshore wind turbines - these utilize the stronger and more powerful winds over flat surfaces of the lakes to make electricity. Very capital and jobs intensive to make, and which will make a lot of homes for new fish spawning (assuming that is good). However, this is not as cheap an energy source as is onshore wind; best solution is to use both.
d) Onshore wind turbines near the lakes/on ridge-tops which are arguably using lake enhanced winds to make non-polluting electricity.
e) More pumped hydroelectricity facilities, which will enable our regional electricity supply to become 100% + (i.e. net exporter) renewable electricity based, and eliminate the threats (economic, environmental, depletion, etc) posed by nuke, Marcellus/Utica fracking sourced methane and coal sourced electricity.
f) Use of once through cooling/municipal cooling where applicable (results in less electricity usage, evaporation of lake sourced water), especially for biofuels facilities and manufacturing that requires cooling.
g) Possible use of lake water to help produce cellulose crops for heating, liquid fuels manufacturing.

The idea is to flip around the meme that water is mostly ONLY a cost (and getting potable water/delivering it/cleaning it will always cost something for capital, labor and electricity - it's a cost of living in a civilized society), and converting it into the regional electricity source and a major source of skilled manufacturing (= real wealth creating) employment. And part of the proceeds from this wealth creation (= some of the taxes paid by viable businesses/employed people) can be spent on the required and long deferred costs to deal with items like the CSO problems. Given the recent Republican triumphs (and essentially Democratic capitulations), the possibility of getting ANY monies for such investments from Federal or State (via Federal) are now effectively ZERO. These expenditures on money consuming (but quality of life enhancing) projects will have to be regionally or all NY State funded. In effect, "no money, no honey". And it would also be great to avoid Lake Erie coastline situated nukes (part of the NY State Energy Plan/NY Climate Action Plan for 2010-2050), and also avoid increasing ANY demand for natural gas (= Marcellus Ngas) via Ngas to electricity usage.

DB

Friday, November 26, 2010

Another Offshore Wind Report (and related)

Nysted 2 Wind Farm, Denmark (207 MW)

Shortly before the BP Macondo well exploded killing 11 workers and laying waste to a bunch of the northern part of the Gulf of Mexico (GOMEX), the Obama administration announced a green-lighting for more offshore hydrocarbon exploration in the Atlantic and GOMEX. This supposedly pleased the oil majors/oil and gas industry a lot, though they showed very little gratitude this November when these same industries and their friends became significant funders of the Republican Party. Don't the Obamanites realize that you just can't out "repub" the Republican Party, and that "compromise" only means "capitulation"? And when it comes to getting at more hydrocarbons in order to temporarily satiate the insatiable lust for primarily oil and secondarily methane in our country, environmental wreckage and ruination are considered an acceptable price to pay for the Repubs. And that's where a lot of Democrat's get a bit squeamish, though we still pony up to the gas pump to fill up our (sometimes) fuel efficient cars when the fuel gauge gets near empty....

But the actions of the Obamanites in the early part of 2010 promoting oil and gas discoveries in the U.S., before the GOMEX blowout/enviro-FUBAR, can be understood from the economic and national energy security point of view, sort of. The US economy runs on oil, and Ngas (methane) is also really important at the present time. No hydrocarbons, and/or even "not enough" hydrocarbons, and the economy is kaputz, and there will be a lot more cold, hungry, desperate and unemployed people around - something that will make today's economic disaster look like a walk in the park. And there is such big money to be made, as well as lots of bankers and investors to be made happy financing oil and gas exploration and production (E&P) and possibly some coinage to be extracted for re-election funds (oops....they all went to the party of the hard core right wingnuts...oh well).

But these efforts at more offshore oil drilling really got a lot of liberals, progressives and environmentalists quite angry. Instead of betting on and funding/significantly promoting a viable, renewable energy future in a significant manner, the Obamanites were spreading their bets around on everything, including loser items like nukes and offshore oil and gas. Granted, the Obama Administration is certainly less odious and vile than the Bu$h administration, but geez, there just seems to be essentially no making a stand here, let alone standing for sound environmental principals. Well, it's perhaps the equivalent of being "a little bit pregnant" - but you're either pregnant or you are not. Not a lot of gray area here.

And when the greed of BP belched out (saving a couple of million dollars on an oil field worth much more than $170 BILLION - talk about dumb amped up on steroids) in April of 2010, well, a lot of us enviro's had this "I told you so" thought cruising across our frontal lobes of our still thinking brains. As Molly Ivins used to say, "you got to dance with them that brung ya...", and that seems to be a dominant theme when hustling money from the oil and gas industry. There is simply no letting the oil and gas industry go unregulated, as the greediest and most stressed out will do ever more stupid things in order to meet those earnings expectations. And then there is the inevitable math of resource depletion for fossil fuels - the more oil extracted, the closer they are to obsolescence. The only growing part of that industry is generally the price charged for oil, a lot of which was found a long time ago, and is pretty inexpensive to get at. Similar quantity extracted, but with a higher price charged for it and yet at the same old production cost and it's just like being a recipient of a Niagara Falls like flow of money.

Anyway, Dr. Stephen T. Colbert puts this into perspective for us:
http://www.colbertnation.com/the-colbert-report-videos/308100/april-29-2010/wind-farm---oil-spill

As for those ticked off scientists, liberals and environmentalists, well, they've produced a report that shows that there is more energy and more jobs to be had with none of the risk of a BP Macondo epic disaster via offshore wind farms off of the US Atlantic coastline - notably from Georgia north through Maine. It can be found here:
http://na.oceana.org/sites/default/files/Offshore_Wind_Report_-_Final_1.pdf. The title of this report says it all:

"Untapped Wealth: Offshore wind can deliver cleaner, more affordable energy and more jobs than offshore oil"

Like it's really about job creation and national energy security and energy made without fossil fuel derived CO2 pollution...at least for Republicans, or at least for leaders of the Republican Party and their hydrocarbon and related industries friends. Besides, where will sub-urbanites get the gasoline to fill up their generally fuel -INefficient cars if nor via offshore sources? Especially since most of the onshore sources are pretty much tapped, at least in North America. The estimate Atlantic resource for oil and gas is about 6 billion barrels, or roughly 2 years of U.S. supply. But this will be scattered in many small fields, if it even exists, and right along a major hurricane alley...

Anyway, the report is an easy read, lots of nice pictures and graphs and as long as you ignore the flaw in the Oceana.org report (like it's really about jobs, when (at least, according to Republican leaders and their financial backers), it's really about profits). After all, GOP also (or mostly) stands for Grand Oil Party, as does a significant fraction of the supposed opposition to them, the Democrats.

BTW, another huge offshore wind farm in Europe just got financed, at the tune of 1 billion Euro's (about 80% of the total cost of the project, of 1.3 billion Euros). See
http://www.eurotrib.com/story/2010/11/25/112552/60 and http://www.offshorewind.biz/2010/11/25/c-power-financial-close-phase-2-3-belgium/ . The project (Thornton Bank, offshore of Belgium in the North Sea) will consist of 48 x 6 MW RE Power wind turbines in up to 30 meters of water, and about 30 km form shore. The probable average net output from this extremely windy piece of ocean is around 40 to 45% of capacity, or upwards of 125 MW.

The company announcement can be seen here: http://www.repower.de/index.php?id=151&backPID=25&tt_news=3096&L=1 and a description of their 6 MW system ("6M") can be seen here: http://www.repower.de/produkte/windenergieanlagen/6M/?L=1. There is also a link on that page to their product brochure.

Job creation: 1.3 billion Euro is about $US 1.7 billion, and at 15,600 job-years per billion of direct jobs, this project will generate about 26,000 job-years of direct employments, and probably 5 times that when all is said an done. I guess it is nice that someone (not necessarily in the U.S., but maybe that is asking for too much) is thinking "job creation". Who knows, maybe this dangerous contagion will spread across the Atlantic...

Also, for what it is worth - a Danish pension fund announced that it had become an equity partner in an offshore wind farm (Nysted 2 in Denmark). Now, like traditional pension funds, this one is very conservative, and this means that it considers an offshore wind farm a very stable and SAFE investment. Nothing like putting money to productive use... See http://www.offshorewind.biz/2010/11/24/conditions-fulfilled-in-relation-to-pensiondanmark-becoming-equity-partner-in-nysted-offshore-wind-farm/

Finally, for those interested in Serious Thoughts about the effective bankruptcy of Greece and Ireland, often at the hands of unscrupulous bankers (bankster = gangster + banker) who privatized their profits, exported the profits and then socialized the losses, and what this means to us, comes this article: http://www.eurotrib.com/story/2010/11/26/53324/586. For example, on the current bankster crime spree in Ireland:
http://www.eurotrib.com/story/2010/11/24/5932/3695

Bankster is a term widely used in the U.S. in the 1929 to 1936 era, for good reason. An amazing man by the name of Ferdinand Pecora (see http://en.wikipedia.org/wiki/Ferdinand_Pecora) coined the term, as he was the person who exposed a lot of the crime (fraud, theft, conspiracy, collusion, for starts) of the financial wizard (banks, brokers, etc) that led to the 1929 and resulting Great Depression disaster.

DB

Thursday, November 18, 2010

Marcellus Gas Pipe Dreams or Wind Turbines?

Introduction
There has been a lot of talk about the latest get-rich-quick (GRQ) scheme(s) called Marcellus Tight Shale Gas (MTSG) which is based on a Devonian Shale (350 million years ago) resource. It turns out that this is about the methane and other hydrocarbons (ethane, propane, benzene, for example) trapped in essentially non-porous rock that have the consistency of a brick. The hydrocarbons will not flow out of this rock unless the rock is fractured in a special way ("fracking"). Quite often, the formation is between 1 to 2 miles underground, and there is often saturated saltwater laden layers on either side of the approximately 100 foot layer (a former swamp/shallow ocean bottom) of shale. The hydrocarbons are not uniformly dispersed at the same concentration in the Marcellus shale formation, so there are regions of hydrocarbon rich shale and other regions without any significant organics (as in hydrocarbon chemicals) content.

These are not easy hydrocarbon reserves to extract, and they also are financially expensive to bring to market compared to "easy gas". But, since most of the easy pickings of natural gas have been developed and are being or have been drained of gas in North America, our hydrocarbon addiction has resulted in a "seeds and stems" situation, where we are getting down to the dregs. If we want to keep using and living large (energy wise), it's time to use up the bottom of the barrel stuff - beggars can't be too choosy, after all.

Anyway, we could spend many large fortunes to extract some of the Marcellus gas (followed by Utica Shale gas as the next hydrocarbon adventure) and in the process make some people really rich as well as a significant number who might be able to cling to a middle class lifestyle for a while. However, keep in mind the fate of mining towns; once the mine has been played out, what remains is a ghost town and quite often a big mess (toxic mine tailings). Once the "sweet spots" in the Marcellus regions have been tapped, then we need to move on to energy resources based on something else, such as something that won't deplete and also cause all kinds of pollution problems. Some say that maybe we should just skip this temporary patch and get on to a viable future. But if we do that, what of the fortunes to be made by the wannabe or already are but not sufficiently so Methane tycoons? Won't they be robbed of their potential methane/hydrocarbon riches based on our collective resource? Or what about the path not chosen - renewable energy - won't those riches go to someone/somewhere else while we tubed our money on Marcellus Pipe Dreams?

Anyway, therein lies the rub. So let's "drill down" and see what is really at stake here. It could be that people will have to overcome their phobia of wind turbines and highly skilled manufacturing industries (and with attendant large employment requirements/low unemployment rate resulting society), which lead to more wealth generation and a more equitable distribution of wealth, assuming they wish to have access to "electricity on demand". Well, is that so bad? However, maybe they could have a society where electricity is scarce and undependable (i.e. no renewable energy to speak of/fossil fuel dependent), more "3rd worldish", at least for the vast majority who don't have a lot of money.

As is the motto with thermodynamics "there is no such thing as a free lunch", overall, at least. Somebodies freebie cost someone else. And there is also no such thing as perpetual motion, and energy is not like magic...too.

Discussion
America's society and economy runs on energy, among other things. Our rapid economic development, rise in our standard of living and rise in consumption of all sorts of things in the 19th and especially 20th century is based on plentiful quantities of cheap energy, notably coal, oil and natural gas. Our domestic oil production peaked in 1973 when the massive East Texas oil field (with 30 billion barrels extracted to date) had been sufficiently depleted, and for some time the difference between US consumption and US production has been made up by importing greater and greater quantities. We now pay over $1 billion/day to import about 12 million bbls/day (mbd) of crude and refined oil products, and this is a massive taxation on the American populace, for which no permanent improvement in our lives occurs. Oil is an especially compact and portable form of energy storage, and it is extremely useful for transporting goods and people in ways that coal and natural gas (Ngas) are not.

The US also had/still has major reserves of Ngas and coal, but depletion of these reserves have also resulted from decades of large scale consumption, and quite often, wasteful, profligate consumption. But since prices were cheap, who cared? However, starting in 2000 with the Enron crime wave and combination Ngas/electricity scams/frauds/grifting, Ngas prices have become more expensive, and even coal prices have been affected by these oil and/or Ngas instigated price spikes. At present, spot prices for oil on a thermal basis are 4 times that of Ngas, and about 10 times the price of coal (but that varies by region). Many of the prime U.S. Ngas fields have been drained, and so smaller fields that have less Ngas associated with them and thus higher extraction costs/required prices have to be used to maintain Ngas production. This is best seen in the number of wells being used (Ngas consumption has been relatively constant for the last decade). There are 137,000 new Ngas wells producing since 2000 - up by 40% in this time - (see http://www.eia.gov/dnav/ng/hist/na1170_nus_8a.htm), but Ngas production is still in the 22 trillion cubic feet /year (tcfy) range (see http://www.eia.gov/dnav/ng/hist/n9050us2A.htm) or up by 10% in a decade. Thus, 40% more wells to give 10% more Ngas... And the trend is even worse than that decade long summary of events - much higher investment and energy consumption (of diesel oil no less; those fracking and drilling operations use a lot of diesel oil) required to get out a given quantity of methane.

Ngas and oil production are also related - especially from the deep well in the Gulf of Mexico (GOMEX) - the Macondo (BP) well was 50 wt% methane/50 wt% "oil"/"natural gas liquids". About 6 tcfy (see http://www.eia.gov/dnav/ng/hist/n9012us2A.htm) of methane (Ngas) comes co-produced with oil and "condensates", or about 1/4 of marketed Ngas. Lately, there has been a glut of Ngas relative to what is used, partly due to GOMEX oil production, partly a result of the Exploration and Production (E&P) efforts undertaken when Ngas prices were very high (2004 to 2008), and partly due to the collapse in demand when so many factories bit the big one/were off-shored. As a result, Ngas storage capacity no longer exists (it's been maxed out) - see http://ir.eia.gov/ngs/ngs.html. As another result, Ngas prices are quite depressed - wellhead prices are averaging 50% of the values from two years ago (peak of recent prices) - see http://www.eia.gov/dnav/ng/hist/n9190us3M.htm. Ngas prices are especially sensitive to the supply demand balance - drastic price changes result from subtle shifts in this balance.

Nowadays, prices for both Ngas and oil have severely diverged from the average cost to produce these materials. Worldwide cost to produce oil is around $20/bbl or less, but the marginal production costs (the cost needed to make that last bit (say 1 mbd out of a worldwide production of about 83 mbd oil/condensates) of oil) are much higher. The price for oil (now around $85/bbl) is explained by the high demand and limited supply. In fact, current oil production rates may have peaked due to depletion of so many long used "mega-fields" (more than 100,000 bbls/day production rate - these supply about half of the oil produced worldwide), and to the great surprise of many, the International Energy Agency (IEA), which has long denied the possibility of Peak Oil for at least two decades from now, now says that Peak Oil has essentially already happened (and in 2006, no less). Ooops!!! See http://www.eurotrib.com/story/2010/11/9/8402/91314 and http://www.energybulletin.net/stories/2010-11-11/iea-acknowledges-peak-oil. So, if you find oil, and even little pockets of it (the Macondo field had 2 billion bbls of oil in it (plus Ngas), and that oil is presently worth around $170 billion!), in effect, you've won the Lotto, and a big one, too. And the Peak Oil prediction - as supply exceeds demand, prices will skyrocket until they crash the economy in repeated cycles, but the average oil price will rise at a much higher rate than inflation.

But as for Ngas in the US, the opposite is true. The marginal production price for Ngas is now near $10/MBtu (needs a price of around $10/MBtu) and the marginal production cost is above $7/MBtu, but the spot price is near $4/MBtu. Either production rates have to decrease and/or consumption rates have to increase before long term viable prices for Ngas (as viewed from the E&P perspective, not the consumer perspective) are the usual rule again. These graphs shows the trend for the smaller Ngas field/higher cost to find this Ngas:

The data for these cost and price estimates were provided by Credit Suisse, a major global banking concern, and a major banker/adviser to US oil an gas drilling companies. E&P activities are capital intensive, and don't happen like a charity; they have been high yielding investments, on average, and those projects that will be money losers will get cut off from investment bankers and fellow finance sources in a New York nanosecond (which is one billionth of a second, FYI). From the second graph, the estimated price needed to meet equity investor expectations would have been about $9.31/MBtu in 2010 (this year), and the break-even cost needed for the wellhead (not delivered, and not Henry Hub price) would be $7.11/MBtu. And this industry does not run on the "break-even cost" model..... Also note that a 10% ROI (return on investment) is really considered to be sub-par, and a sign of failure. ROI's of 15% to 20% are the ones really expected...

Over time, the Ngas glut will go away, but that point in time could be 5 years from now, and even longer if high oil prices spark off another Great Recession (GR2). All Ngas wells are depleting as long as gas is being extracted from them, so eventually the high productivity and high profit wells/fields will draw down. The other ways to deal with the glut is to either restrict production from existing wells (the "Standard Oil Business Model"), which may be illegal under anti-trust laws (assuming they are still enforced), or else to increase the consumption rate of this Ngas. Three ways to increase the Ngas consumption are to make more electricity from Ngas, use the Ngas directly in transportation (ships, trains, trucks, cars) or to convert the Ngas into liquid fuels. For a variety of reasons, direct use of Ngas in cars, trucks and trains is unlikely to become a major Ngas consumption venue, so Ngas to electricity and Ngas conversion into liquid fuels are the major options for increased consumption rates.

Ngas usage rates to make electricity can be increased readily with no need to spend anymore money on new plants, as there is already a tremendous glut of Ngas based generating capacity available in this country. Most of it is rarely used, or used for "peaking". The capacity usage of Ngas plants in this country is near 50% or less. However, any new electricity made by the Ngas using facility would have to displace ultra-low priced electricity from fully depreciated coal burning or nuke facilities, and even at $4/MBtu (or about $6/MBtu as delivered to the facilities (see http://www.eia.gov/dnav/ng/hist/n3045us3m.htm)), Ngas users would need electricity prices higher than 5 c/kw-hr to justify Ngas usage. Unless either the coal burners or nukes (the low cost electricity producers) are shut down to use the higher priced electricity source fuel, increasing Ngas usage for electricity is unlikely to occur to the extent needed to cause Ngas prices to double. In fact, a trend of slightly increased Ngas usage is evident (see http://www.eia.gov/dnav/ng/hist/n3045us2A.htm), but nothing significant. And additionally, wind power is often directly competing with Ngas based electricity production; as more wind is installed, less Ngas will be used to make electricity. Adding more wind into pricing systems such as those that exist in NY State also LOWERS generated electricity prices (no matter what the cost to make that wind derived electricity happens to be - remember, electricity production cost and price for that electricity are not necessarily related in the NYISO marginal based pricing system), further depressing any trend to make more electricity from Ngas and putting price pressure on Ngas.

So, since the electricity route will only provide a slight demand increase, what about the use of CH4 (methane) for make molecules such as polymers of -CH2- (gasoline, diesel, kerosene, waxes). Mobil Oil installed a facility at Motuni rated at ~ 15,000 bbls/day in New Zealand (MTG process) over 20 years ago (New Zealand has natural gas but essentially no oil associated with that gas). Another version is Shell Oil's Bintalu facility in Malaysia (see http://www.theoildrum.com/node/7118), and the "world scale" Pearl GTL (Gas To Liquids) facility in Qatar, rated at 140,000 bbls/day (see http://www.shell.com/home/content/aboutshell/our_strategy/major_projects_2/pearl/overview/). About 1.4 billion cubic feet/day (bcfd) of methane will be used, equal to about 2.3% of present U.S. production; this facility cost about $19 billion in Qatar, and easily over $25 billion in the US. It takes about 10 MBtu of Ngas to make a barrel of oil products (refined, not crude), so roughly $50 of raw material would be made into $125 of products.

In the U.S., a GTL facility could get made, providing companies were willing to fork over a $25 billion investment to make ~ 140,000 bbls/day (the US imports 12 mbd to make about 10.5 mbd of products). However, at least a $250 billion investment would be needed just to make about 10% of US gasoline, diesel and oil. The limiting factor may well be just the available investment money... And a 20 year supply per facility would need 10 TRILLION standard cubic feet just to keep it supplied with raw material. Furthermore, if that money was invested in renewable electricity (that could be made with wind turbines) and in electric transportation as well as more efficient liquid fuels consuming cars, the need for a GTL unit would more or less vanish. Looks like more oops. Bankers and other investors would ONLY make such investments if they had guaranteed customers for the products of these GTL facilities.... and at guaranteed prices for the GTL products as well as the Ngas raw material....

Conclusion
While people tend to be focused on Marcellus shale gas/fracking (see http://www.energybulletin.net/stories/2010-11-17/sixty-lame-minutes for a great article on that), it is puzzling that:

1. Ngas prices are now too low to justify shale gas E&P and are likely to be that way for some time, too.
2. Ngas usage is likely to remain quite dormant for some time - no new markets to speak of.
3. If Ngas prices were high enough to justify Marcellus Shale gas fracking, it would be less expensive or similar in cost to make onshore wind turbine derived electricity instead of Ngas derived electricity. So why bother with fracking to make unmarketable Ngas?
4. Increased fuel efficiency could drastically lower oil demand in the US, which would trash any need for a GTL facility. For example, doubling average gasoline mileage at constant miles driven would mean that only half of the gasoline usage rate would result. Dropping the vehicle-miles traveled per year by liquid fuel consuming vehicles by half would also drop fuel usage by half. Combining these results in transportation fuel usage of only 25% of today's levels. Given the huge demand for capital, and also potential competition from even MORE expensive to build coal based sin-fuel facilities (which at least used to have stable prices for the raw material - coal, pet coke), and also the potential for drops in the demand for fuel to move people and stuff around.. maybe GTL sin-fuel facilities are too risky to build.

So why the rush to do this? Maybe, as is suggested in this article - http://www.energybulletin.net/stories/2010-11-17/shale-gas-shell-game - the Nags drilling is really an ASSET PLAY. That is, small and medium sized E&P companies stake out territory, drill some wells in order to get bought up by extremely cash bloated major oil companies. The goal is not to produce a lot of Ngas (but the more pricey "condensates" are another matter, and very much sought after), or to provide energy security to the U.S., or even to slow down the rate of CO2 pollution by substituting Ngas for coal in electricity production. The oil majors need to obtain hydrocarbon reserves in order to boost their stock prices (all that cash does not do this), and these E&P units are losing money at prodigious rates (a high "burn rate", as in burning through capital), so this is a match made in financial heaven. Recent examples include the purchase of XTO by Exxon-Mobil for $30 billion in cash, and Atlas by Chevron for a mere $3.1 billion, cash. So the idea that this will provide a "gas boom" of employment and business/economic development seems to have no basis. Of course, before the minor E&P's can sell themselves off, they have to find and deliver SOME gas, which means some fracking and related activity. Including air and water pollution, done by companies operating in a cut-throat, precarious environment, and a race against time to avoid bankruptcy. They need to get bought out before they go bankrupt, and that means cutting corners (safety and pollution rules be damned...), and hey, "ya gotta do what ya gotta do...."

Of course, eventually the oil majors will need to produce this Ngas, but that won't be for a while - not until prices are high enough for a long enough time to justify the rapidly increasing cost to do this Ngas development. And then that will run into the wind turbine wall; its less expensive and price/cost-wise, much more dependable to make electricity via wind than to rely on roller coaster pricing for Ngas, coupled with roller coaster electricity pricing. Who knows, proper environmental enforcement and proper waste water disposal (for all the spent fracking fluids, and hydrocarbon-contaminated produced water brines, alias "produced water") might be enforced.

Thus, a business model for Marcellus and Utica shale gas exploitation would include the removal/minimization/obliteration of the only viable competition for electricity production in the northeast part of the US (wind turbines, pumped hydroelectric energy storage, biomass and biogas) - those need to be "taken off the table". Taken out, prevented and thwarted by hook or by crook. So the use of astroturf "environmental organizations", lobbying, public relations, purchased/rented media, and the denial of media access to pro-renewable energy advocates is essential. After all, rural NY is pretty much all Republican, and the oil industry pretty much OWNS the GOP (Grand Oil Party). In this endeavor, truth is an immediate casualty, and time gets to be on the side with billions in cash (oil companies, and related bankster/investment entities organizations) just sitting by idly, looking for a use.


This is a big way that wind turbines enter the fray with respect to the fracking controversy. Wind turbines directly compete with Ngas to provide electricity, and they also tend to depress the price for electricity via the Merit Order Effect, thus destroying the profitability of Ngas to electricity schemes, and the extra-ordinanry profitability of old coal and old nuke operations. You can choose no electricity (and thus a peasant farming based society, hurtling towards third world and then fourth world status), renewable wind, renewable biomass (and wind plus biomass plus pumped hydro is also a nifty combination), polluting coal, polluting nukes or air and water polluting fracked methane. But, it is a choice, one way or another. The one that creates the most jobs for a given investment with essentially no pollution is the renewable one. But for some, using the most money to create the least jobs is just fine as long as it results in a situation where the rich get significantly enriched, and all others get the wrong end of the process.

DB

Monday, November 8, 2010

Gut-Check Time

This week, still another warning similar to this - http://climateprogress.org/2010/11/07/dont-believe-in-global-warming-thats-not-very-conservative/ - will be delivered to people in Western NY, and by extension (and also since we presumably are also a part of NY, the U.S.A., this world), all of us humans who speak and read English. Bill McKibben will be in town (Buffalo, Nov 13, 2010), more or less preaching to the converted, speaking Truth to Power. Odds are, Power will just ignore him, and especially what he says, and even more especially the meaning behind the words he says. So what if he speaks the Truth, and what does it matter if few, if any hear this Truth, or can even comprehend this as Truth, given how most appear to have been programmed to ignore/discount this? George Orwell's warnings in "1984" have met the era of Corporate Media, and guess what - Big Brother is an amateur compared to this modern hybrid of commercials, advertising, Republicans, corporate media, message framing and fear of unemployment (which is really scary these days given that there is so much of it).

Bottom line, we have to quit dumping the waste by-product of a lot of our energy usage - CO2 - into the atmosphere, and if we are to do things like make electricity, move people and goods around, stay warm, stay cool, keep food cold till used, and manufacture things, it has to be done with a small fraction of the CO2 pollution than what is presently the case. Otherwise, that CO2 pollution will make the surface of the Earth much warmer, melt most of the ice on the surface, and as a result, a lot of the places where people live/grow things will be much hotter and/or too dry to grow things. It's that simple.

The good news - we already have ALL of the technology needed to convert from unsustainable to sustainable energy production in this country. The bad news is we have such ignorance of the fact, and insufficient motivation to accomplish it. It is as if Pearl Harbor (Dec 7, 1941) happens, and the U.S. promptly surrenders to the Japanese Imperial War Machine. And in the U.S., we have so much under-used and unused capacity to make and install these changes, it should be a "piece of cake", so to speak. And it would certainly drop that horribly high unemployment rate to lower levels, despite the apparent wishes of a powerful few to keep unemployment rates high, and with that, most people fretfully worried. Of course, improvements in technology (and especially dropping the cost to produce and use this energy) could be helpful, but no new improvements above what presently exists are needed to move us from unsustainable to sustainable. And as for those future price drops...for most technologies, those won't be that dramatic unless we use slave or psuedo-slave labor in the manufacturing and installation of them - and unfortunately, there are a lot of people advocating that approach (= made in China). There is little or no need to make CO2 pollution via burning of fossil fuels to make electricity, and ways to move things and people around without burning oil and natural gas also exist. These renewable energy approaches aren't necessarily cheap, but they do exist. Sure, we also could quit being so wasteful with energy, but nevertheless, with 310 million people in the U.S., it's still going to take a lot of energy to keep us functioning. Without energy, that 310 million number will have to drop DRASTICALLY, and even when that lower number (whatever it is) is arrived at, the standard of living for most will also be greatly lessened. Hence the need for energy to keep us warm, keep the water we drink free of pathogenic varmits like cholera, clean up sewage, keep us warm, move food from where it is grown to where it is used, keep us entertained and informed.... it's a long list.

Following the horridly regressive election results of November, 2010, some things have become become starkly apparent. One of them is that subsidies for renewables that lower the price of renewable energy production down to the present price levels of polluting energy (for electricity, think coal and/or natural gas) will NOT be increased, and may not even be maintained, no matter how sensible they may be. And you can muster all kinds of great arguments, logic, economic models, and facts, but that is irrelevant when faced with the essentially religious views that there is no Global Warming, there is no limit of the amount of CO2 pollution, no upper rate of CO2 pollution that we can't dump into our atmosphere. And that coal, oil, natural gas and nukes are next to Godliness, and that to oppose then is not only just plain sinful, but also a form of theft from those who would stand to immensely profit from this, not to mention the few millions of people who will stay employed (for a while) in the polluting energy biz. Welcome to the thought processes of Conservative Man and Fossil Fuel (or Fool) Man.....

So let's say that you are (or are sympathetic to) one of those liberal, environmentalists, scientists who can't find fault with Jim Hansen or Bill McKibben, or just someone who wants a viable planet left for themselves/friends and relatives. Or someone who wants a way to make a living that does not involve being a mercenary paid to conduct operations in Oil War 3, or Oil War 4. What would be a course of action to take to "right the ship of state" and/or change the course of this "Ship of Fools"? After all, there should be more to life than doom and gloom...

Well, there may be many choices, but here is one that is climate sanity oriented and which avoids the "epic die-off" option. It's pretty obvious that no significant renewable electricity production is going to occur if that is a money losing enterprise. And if renewable energy production is not sufficiently profitable and/or economically viable, no one will install renewable energy production systems, and thus order them from manufacturers. And without orders for renewable energy products, renewable energy manufacturing will more or less cease and desist, and along with that, so will possible employment to make those things, and also to support those who make those things (the so-called "spin-off jobs").

How to make renewable energy sufficiently profitable now becomes the central question, the "crux of the biscuit", so to speak. And here's another fact that is ...complicated. In electricity systems like the one that exists in NY State, when you add more renewable energy priced less than 20 c/kw-hr, it actually DROPS the average price for electricity paid by customers via the Merit Order Effect (MOE) - though obviously electricity made at 10 c/kw-hr has a greater MOE impact than doe the 20 c/kw-hr electricity - even though this renewable electricity is more expensive than the grid price (NYISO price for NY State). Finally, let's add another factor - future price certainty exists for renewables, and guaranteed future fossil fuel price uncertainty is the rule for non-renewables (though eventually, guaranteed higher prices - but when and how high at what time? - due to Demand Destruction) due to Peak Oil (world wide), Peak Cheap Natural Gas (North America) and Peak Coal (China).

So if you want to deal with Global Warming, you need to figure out how to provide a stable, sustainable and equitable (to both investors AND consumers) price for renewable energy that does not depend on government subsidies (tax breaks, tax avoidance, direct grants, "cap and dividend", etc) or the imposition of those "external" costs onto polluting energy sources. Those avoided external costs (coal derived particulate air pollution, "Swiss Cheesing" of rural NY for Marcellus/Utica tight shale gas with attendant high costs, rapid depletion, air and water pollution, nuke problems like trash disposal, atomic weaponry proliferation, that next "Chernobyl" event) really are subsidies, but since environmentalists have between really, really small to essentially no media control, access and presence, that debate is already lost. Odds are, import duties on imported oil and natural gas/natural gas derived commodities like ammonia and methanol are also out of the question these days, for similar reasons.

So far, only two options fit the bill - Feed-In Laws, and either Power Purchase Agreements by Federal, state or municipal owned utilities or laws mandating those on private monopolies. Combinations of these are also possible solutions. And unfortunately, most environmentalists in the U.S. have never heard of Feed-In Laws, and so the expression "ignorance reigns supreme" seems to have widespread applicability these days. But, if you really care about the environment, and about having an economy capable of employing people/not exporting all your money to pay for imported energy, you would find out about Feed-In Laws. Here is a good place to start:
http://www.allianceforrenewableenergy.org/why-reps.html

Otherwise, when ignorance and apathy are combined into such a heady brew, you can expect endless repetitions of the 2010 election debacle/FUBAR, until it just doesn't matter any more. And we can do better than that.

BTW, when sane pricing policies are pursued, here is what you can get:
http://www.eurotrib.com/story/2010/10/17/8520/7847

Or, picture wise, this (a 5 megawatt prototype installed in 2008 in Germany, ~ 500 meters offshore in a very busy harbor):


from http://www.renewableenergyworld.com/rea/news/article/2008/11/5-mw-bard-near-shore-wind-turbine-erected-in-germany-54098. In this case, the manufacturer (Bard) is currently producing turbines and foundations for it's initial commercial development, a 400 MW offshore wind farm in Germany's part of the North Sea (Bard Offshore 1 - see http://www.bard-offshore.de/en/projects/offshore/bard-offshore-1) - still under construction - that required about a $2 billion investment, which they obtained. That translates into about 32,000 job-years of employment. It is scheduled to be completed at the end of 2010.

Hey Buffalo, sound like a plan?

DB

Friday, November 5, 2010

Reply to "350.org" eARTh Email

The 350.org group is a collection of people who are trying to make the world a better place. It is sort of led by Bill McKibben, a professor at Middlebury College in Vermont who has worked very hard and with some success (though perhaps not enough, though not for lack of trying) to try and educate people in our country/the world about the disaster and then some that is CO2 pollution (defined as where more CO2 goes into the atmosphere than gets absorbed by the oceans). Or, if you don't recognize the term "CO2 Pollution", maybe "Global Warming" will ring a bell. The evidence of CO2 pollution can be seen via measurements at the Mauna Loa NOAA observatory, where the CO2 concentration of the atmosphere (and other trace gasses like methane, sulfur hexafluoride, nitrous oxide, etc) have been monitored via techniques like infared absorbance for roughly the last 50 years. See http://www.esrl.noaa.gov/gmd/ccgg/trends/ for the FACTS; read it and weep is one very sad conclusion...

In the attached graph, you can see the trends in terms of the rate of CO2 increase per year (ppm/year), and the total concentration. And also strictly a math projection of those results using an 8th order polynomial regression (higher order (could have gone to 45th order..) didn't alter the results, so why bother...). The math-only version predicts that the rate of CO2 increase per year (ppm/yr) will ACCELERATE until about 2040, in which case our goose (or those who are offspring and other descendants of those now of a decision making (voting age) capability) is really cooked - the CO2 concentration in our atmosphere would be near 460 ppm, NOT 350 ppm. And this is the optimistic version if we continue down the path that we are evidently on (see http://www.youtube.com/watch?v=3hNjxJCXfis - and it is a tune that really needs to be played at a decently loud volume - as to what that path really is).




So, I got an email from them yesterday - sort of "well, the 2010 elections are a heavy bummer, man, but all hope is not yet lost, and besides, Prop 23 in California got rejected... And we have this great idea for eARTh..." Here is a summary:

"After the tough results from election night, it's time for us all to be re-inspired. Get involved with “350 EARTH”, the first-ever global art exhibit large enough to be seen from space:
http://earth.350.org"

Anyway, here is my reply:

Dear Numericals,

Artwork is not going to cut it. If you want to to lessen the disaster that was the Congressional elections of 2010, here is a much more worthy task for those who profess to want a better world in the coming years:

MAKE RENEWABLE ENERGY ECONOMICALLY VIABLE !!!!

This gives you a few options, since in general, renewable energy is often MORE expensive (unsubsidized basis) than polluting energy (especially in the current highly subsidized arrangements):

1. Make polluting energy MORE expensive, and raise it's price so that at least some renewable energy sources are economically viable (i.e. it does not lose money, as is the case right now).

2. Allow renewable energy to be sold preferentially on the grid (if you make it it will be sold), at a price equal to the cost of production PLUS some reasonable, socially arrived at return on the investment.

3, Subsidize with taxes (oil import duties, income taxes, taxes on CO2 pollution, taxes on radioactive trash production, or a sales tax on food, for example) the production of renewable energy so that it can be sold at the present and possibly future depressed prices.

4. Subsidize with tax avoidance (i.e. bribe some of the rich) the price of renewable energy. In direct terms, this only will financially benefit those who pay large amounts of taxes, and those taxes will need to be made up for by increasing the tax burden of those who pay lower tax rates (the poor and middle class). However, the effects of this form of class warfare are softened by (and perhaps balanced by) the many benefits that come from making and/or installing renewable energy, as well as the benefits that come from using renewable energy instead of pollution derived energy.

Based on the election results, Options 1 and 3, no matter how attractive to socially responsible human beings with a conscience, are non-starters. In all probability, polluting energy will be FURTHER SUBSIDIZED. Elections have consequences, and those results do not necessarily have to be beneficial to life on this planet, or beneficial to the vast majority of people in our country.

Obviously Option 2 would be preferable, but Option 4 is better than nothing. Unfortunately, "better than nothing" does not make the world a better place at the required pace.

As for "350 eARTh", what a pathetic waste, and a diversion of people's time, attention, talent and resources, unless it highlights an educational purpose, and especially if it is just another diversion. The 2010 election results have shown that ignorance now reigns supreme, whether in the Republican-corporate-teabagger (RepubliCorp) alliance, or in the clueless Obama administration. People need jobs, and there are potentially millions of jobs to be made converting our polluting energy based society to a non-polluting based energy supply. But there will be no jobs unless the business of making renewable energy systems is economically viable - it can't do much good if it exists as a charity. It becomes a cruel hoax to imply that if we all just wish upon a star, our dreams of a sane climate policy will come true. There is a higher probability that those dreams will cause the star to go "super-nova".

So, you people are supposedly smart - no doubt, a lot of you got great grades in your college courses, and in many cases worked your tail end off getting advanced degrees. Perhaps you could put those "smarts" on display.

DB

What are your thoughts...? And if you can bring them to the Environmental Congress on Nov 13, please do so. See http://www.growwny.org/whats-new/301-join-us-wny-environmental-congress-2010

BTW, I suggest not riding the proverbial train (see above audio clip) to it's conclusion... Sorry to get Old Testament about it, but seriously folks, wake up and smell the damn coffee...

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