WastedEnergy

Topics on Energy, Resources, Waste and Culture

Archive for the ‘Energy Production’ Category

« Previous Entries
Next Entries »

Hot Potato

Posted by wastedenergy on January 10, 2011

Freedom isn’t free, at least not freedom from imported oil dependence.  Someone has to pay for the alternatives.  But whom?

The answer, if we base our decisions about which alternatives to pursue on incomplete information, without understanding their true costs and long-term impacts, is that all of us will pay the price.  And that’s exactly what the profiteers had in mind, which is why, even today, the members of America’s Natural Gas Alliance have done little to correct the media myths about what is really cheap and what is really expensive.  Quite to the contrary, producers continue to purchase ad space on the front page of the New York Times, repeating the story that “technological advances” have suddenly made ninety years of gas available, thereby allowing utilities, policymakers, and the public at large to indefinitely put off the more difficult work of finding resources that won’t run out and irreparably damage the planet’s life and ecosystems.  They know full well that energy transitions take time, and that it is impossible to respond immediately to volatility in the market by bringing new projects online – just look at the time it has taken to get the Cape Wind project off the ground.  If we choose to increase our dependence on natural gas today, we are stuck with that decision tomorrow, even if the costs rise dramatically – and we won’t have built out the capacity needed to manufacture replacements.  The conventional wisdom is that abundant gas is pricing the real alternative, renewable energy, out of the market.  “Energy in Depth,” indeed: if we get in so deep, where exactly does the “transition” part come into play?

What gets less attention than the (artificially) low price is that all that technology doesn’t come cheap.  The real winners in the horizontal drilling and fracking boom aren’t the gas producers like XTO, Chesapeake, and Range Resources, which helps to explain why these gas-leveraged companies keep selling off acres to companies with deeper pockets like Exxon, Chevron, and CNOOC.  The real winners are the oilfield services providers: companies like Halliburton and Schlumberger who hold the intellectual property rights, equipment and expertise required to coerce oil and gas from difficult-and-expensive-to-develop shales.  Counterintuitively, the larger base of reserves potentially available in shale and other low-grade resources, like bituminous sands and ultra-deepwater oil, doesn’t really help to alleviate scarcity because the higher costs of technology required to develop those resources must ultimately be passed on to the consumer at large.  As resource economist Peter Odell put it, you don’t run out of resources, you run into them.  Unfortunately, thanks to the PR blitz from the fossil fuels industry, it’s taken the mass media a while to make the connection between rising costs to producers and rising costs to consumers.  So we are stuck with the myth of cheap and abundant natural gas, the supposed “alternative to fossil fuels” that is, in fact, a fossil fuel itself.

Can you connect the dots?

If you follow the statements made by executives of major gas producing companies, you’ll notice that lately, the narrative has changed a bit.  No longer is anyone under the illusion that natural gas is a low-cost panacea; instead, they emphasize an ongoing transition to “liquids-rich plays,” like the Eagle Ford Shale in Texas and the Bakken Shale in North Dakota.  The idea here is that, even though heavily gas-leveraged companies know they cannot recover the costs of development at today’s prices, perhaps some of that cost can be offset by drilling for oil instead, given the higher price for the commodity.

So how has that transition from shale gas to shale oil been working out?  As it turns out, not so hot.  Producers are fast discovering what they should have already known: the price of oil is high for a reason, and producing it is not as simple as just poking holes in the ground.  The easy oil is gone, and you can’t offset the cost of producing expensive gas by simply shifting production to expensive oil instead.  So once the attempt to displace costs to another profit center, in the form of difficult and expensive oil, fails, to whom does the hot potato of high production costs get passed next?  The answer, as noted above, is quite clear at this point.  Sooner or later, we will all pay the price for our poor judgment.

It’s just a matter of time before all this blows up in our faces.

Posted in Energy Production, Water and Soil | Tagged: , , , , , | Leave a Comment »

The EV Fallacy

Posted by wastedenergy on December 14, 2010

Does a Nissan Leaf or a GM Volt really use considerably less energy than a comparable conventional compact or midsize sedan?  Could the same reasoning given for seductive ”100+ mpg” and “Zero Emissions” stickers be used for more insidious purposes? With the first shipment of 2011 model electric passenger vehicles ready to hit the streets and plug-in hype at an all-time high, it’s worth considering the implications of the EV methodology from the EPA (no, not the Electric Plug-in Association) and all its faults for another measure used to compare energy options: the energy return on investment (EROI) of primary fuels.  In fact, the same rationale used to justify head-scratching mileage ratings is used in a misleading context to make sources of renewable energy, such as the sun, appear less attractive in terms of energy return than conventional dirty coal and oil.

The biggest problem with 100+ mpg ratings for vehicles of the plug-in type is that primary fuels, or slightly refined derivatives thereof, are compared directly to units of electricity.   It should be noted that electricity does not simply come out of the ground as do coal or oil; it is a highly refined and nearly universal energy carrier whose versatility gives it far greater utility to society than raw fuel with its limited direct uses.  But according to the methodology of EPA, “a BTU is a BTU,” and units of electrical energy can be compared directly to the energy content of primary fuels such as gasoline and diesel fuel.  This is rather like comparing oranges to orange juice.  The high apparent efficiency of electric vehicles derives from the actual inefficiency in converting thermal energy to usable electric or motive energy (and in fact the conversion between these two forms is also close to 100% efficient).  If you want to know how many “gasoline gallon equivalents” any vehicle is actually using, simply multiply the given mileage using the EPA method by the conversion efficiency of the power plant used to generate its motive power.  In the case of a conventional vehicle, the power plant sits under the hood.  In the case of the typical U.S. grid mix, the power plant sits on somebody else’s backyard and is usually around 33% efficient.  So your 120 “mpg” EV actually gets, all told, around 40 miles per “gallon-equivalent” of its primary fuel, assuming you charge it from the grid.  Not too shabby, but 40 is not the same as 120.

Similarly, when considering the EROI of primary energy sources used to generate electricity as a secondary carrier, one often encounters analyses that limit the study of coal, for instance, to the EROI at the mine-mouth.  But an EROI of 80:1 for simply getting rocks out of the ground does not give us much useful information to compare to potential alternatives.  Even if all electric power were generated directly at the mine-mouth (and we know that is not the case), we would still need to know the energy losses associated with conversion to electricity.  Converting thermal energy from a coal fire in turn to steam, to the mechanical energy of a rotating turbine, and finally to the energy carried by electrical currents induced in a power plant’s connection to the grid, introduces losses, mostly in the form of waste heat, at each step.  So if the EROI for the thermal energy content of mine-mouth coal is 80, then the EROI for mine-mouth-coal-generated electricity is roughly a third of that figure, or around 27:1, based on the conversion efficiency of typical power plants. 

Comparable figures to primary fuel EROI for most renewable energy sources makes little sense – the primary energy converted into electricity, e.g. sunlight or wind, is free, in both monetary and energy terms.  Instead, the ultimate EROI of wind- or PV-generated electricity is used as the basis for comparison, usually yielding relatively lower figures such as 8:1 for photovoltaics or 19:1 for wind power.  While we may also charge certain support infrastructure, such as long-distance transmission or energy storage, as additional energy costs unique to renewable energy in determining EROI, these considerations are no different from assessing the energy costs of networks of pipelines and railroads needed to support fossil fuel consumption, and such costs are (in the case of renewables) of far lower magnitude than the 60-70% losses of primary energy associated with thermal power plants.  And while 8:1 or 19:1 may still be lower than 27:1 (which should be an upper bound for the EROI of coal-fired electricity, given that any transportation beyond the mine-mouth will lower the ultimate EROI), these numbers are also a far cry from the 80:1 figures that make renewable technologies appear ridiculous by comparison.

Hopefully it is clear that my goal here is not to disparage the EV but to promote a clearer understanding of how to compare apples to apples.  And heck, the EV is better than nothing – we’ve known petroleum was unsustainable for about as long as we’ve been using it to carry around ourselves and our stuff, and what could be better evidence than the daily transfer of over $1 billion in wealth every day from Americans to petroleum exporting nations thanks to our gas-guzzling habits?  It is undoubtedly a good thing that automakers have had the foresight to put into production advanced models that can convert different forms of energy into propulsion power and conserve energy that would otherwise be wasted in transit.  But we cannot act as if the EV, should it prove a viable replacement for a major share of transportation, gives us a blank check to continue our happily motoring culture and all its trappings of luxury without considering the physical limitations of the biosphere and humanity’s existence within the larger ecosystems on which it depends.  

Case in point: what we call primary fuels are, in fact, secondary products of the bounty of sunlight harvested over eons by the Earth’s organisms.  Solar energy remains the only primary energy source directly driving the vast majority of life processes, and as a consequence the replenishment of fuels on which we depend is fixed at a certain rate given the biophysical conditions under which minable fossil fuels deposits can form.  Fossil fuels may have given us the temporary illusion of freedom from Earth’s primary productivity, but the overall energy balance equation hasn’t changed much over billions of years.  When one considers ancient photosynthetic and geologic conditions as input requirements, and the impossibility of recreating those conditions on timescales meaningful to humans, the long-term EROI of fossil fuels really doesn’t look so good.

“No it doesn’t!”

Posted in Energy Consumption, Energy Production | Tagged: , , , | Leave a Comment »

If It Ain’t Broke…

Posted by wastedenergy on November 10, 2010

It was suggested by a friend that I share this handy reference chart with the Internet at large.  Keep in mind the numbers here are simply rough estimates and should be adjusted for inflation, but hopefully it gets the point across.  There’s been a lot of chatter about the “clean coal” concept lately, and, predictably, the industry has been advertising that “it works.”  Unfortunately, now that the technology has cleared the lowest possible hurdle and moved up to the same level of credibility as plasma gasification and algal biodiesel, it’s the same old story again: no amount of money can buy it any more love.  Anyway, if old king coal can live up to its reputation for affordability, we might start thinking about adding it to the list of contenders.  Until this time, any additional promotional materials will be treated as such.

Posted in Climate Change, Energy Production | Tagged: , | Leave a Comment »

My Two Cents

Posted by wastedenergy on November 8, 2010

The race for energy in the twenty-first century has begun.  While the big stories to follow, those that define the timeframe of our present energy crisis, involve the great powers such as the United States, Russia, China and Saudi Arabia seeking to lock up control over dwindling oil reserves around the world, the race has already become much tighter than many analysts have predicted in the area that will come to define this century: harnessing the boundless energies of the Sun and Earth.

I do not mean to suggest that the battles over finite energy supplies and other materials critical to the survival of industrial civilizations will be fought lightly.  There will certainly be casualties, and the consequences of resource conflicts will most assuredly be made more dire if political trends continue promoting scientific denialism and private industry control of governments, once again killing off attempts to break the chains of fossil energy addiction.  But it is important to keep things in perspective.  While the period until 2030 or so will undoubtedly be fraught with bitter social divisions, struggling and even dying economies, and hordes of cold, hungry people as everyday material and energy needs become impossible to meet, what lies over this horizon is still uncertain.

That we have already reached a peak in fossil energy production is undeniable at this point.  While those with ideological and professional blinders on may refuse to believe the evidence lying plainly before them or lose sight of the big picture in the daily twitches of the market, the truth is impossible to miss for those with their eyes open.  If you allow yourself to dismantle your inner capitalist contraptions and forget about dollars and cents for a moment, the trends become obvious.  It is everywhere the same story, whether we mean drilling multiple horizontal wells and fracking each well thirty-two times to produce tiny irregular pockets of oil and gas along with some of the multiple millions of gallons of water used in the process, boiling tar out of sand with steam and chemically enhancing the resulting goo to produce something resembling crude oil, or melting down the last of the forests and coal mines into synthetic alcohols and volatile oils to fuel fighter jets and excavating trucks the size of warships.  The real costs are to the health of ourselves and the other species inhabiting our present biosphere, and they are not just rising.  They are staggering.

With drilling equipment already poking around 20,000 and more feet underneath the deepest and darkest parts of the ocean, it is difficult to imagine digging a hole any deeper than we have already gotten ourselves into.  But the powers that be, eager to cash in on advertising revenue from the same dope pushers who have fought vigorously for the right to poison freely since the days of Rockefeller, continue to promote the idea that we have no choice but to push forward into ever deeper and uncharted waters in a vain quest to squeeze the last drops of flammable liquid from the crust.  Insisting that renewable energy can never possibly be competitive economically, they draw on examples such as solar power (which competes mainly with peak retail rates) and offshore wind (still a technological toddler from a commercialization standpoint) as “too expensive to matter,” never mind what actually happened to nuclear power.  A casual glance at the headline would suggest that, thanks to the Hundred Year Supply of gas just discovered a few months ago, etc., the fossil economy had just been given a new lease on life and that renewable energy could never be commercially viable.  But if you actually read the article in question, you might notice tidbits like this one:

“The ratepayers of Virginia must be protected from costs for renewable energy that are unreasonably high,” the regulators said. Wind power would have increased the monthly bill of a typical residential customer by 0.2 percent.

Those who would fight against the advance of renewable energy have a rather overplayed and quixotic way of referring to its advocates: they like to say that we are “tilting at windmills.”  It takes a fool to fail to recognize that they refer only to themselves.  With a monthly power bill on the order of $10 (not too hard in DC in November), I’d certainly like to see my two cents go toward something more productive.

All the way!

Posted in Climate Change, Energy Production | Tagged: , , | Leave a Comment »

Medium Rare

Posted by wastedenergy on October 20, 2010

Those who thought critical material shortages were a non-issue are about to get a little shock therapy.  The sleeping giant is awakening.

To be sure, a small but doggedly persistent group of ecologically-minded intellectuals has spent the past few years following and working to educate the public on the problems with promoting endless economic growth in a finite world with constrained supplies of essential materials.  But these discussions have largely focused on supplies of energy, while paying little attention to the creeping problems with supplies of matter.  So the debate over peak oil, for example, has become more or less played out, with familiar debates between doomers who insist that the majority of cheap oil has already been extracted and that society faces inevitable declines, even collapse, as a result of dwindling supplies, versus cornucopians who hold that the magic of free markets will always produce better technology and acceptable substitutes anytime a material such as oil is in scarce supply.  The opposing sides in this debate have become so locked in place and tunnel-visioned that almost everyone missed the impending supply crisis in rare earths, an obscure class of elements poorly understood but very much taken for granted by the vast majority of the populace.

All the technologies we take for granted as part of a twenty-first century economy are built on a foundation of stable supplies of rare earth elements, as well as other materials that could easily become unavailable in the quantities needed for manufacturing such as the platinum group metals.  The computer you are using to read this article wouldn’t exist without them: the light-emitting diodes in your flat-panel display require rare earth elements, and the magnet in your hard drive uses neodymium.  You could go and buy a replacement that doesn’t need these materials, I suppose, but first you’d have to get in your car to drive to the store – and your car uses platinum group metals for its catalytic converter and fuel refined using rare earth catalysts.  You could save fuel by driving a hybrid or electric vehicle, or take mass transit, but then you’d need more neodymium for the electric motors and quite possibly lanthanum for the batteries.  The military could secure you a supply of fuel by invading the Middle East, but they’d have a hard time doing so successfully without night vision goggles, drone aircraft, smart bombs, or radar systems – all of which use rare earth elements.  The prospect of critical shortages might even make you so anxious you want to call for help (or call your Congressional representative to take action), but your cell phone won’t do you much good: rare earths in there too.

The power of neodymium compels you!

The cornucopian theory of infinite substitutability now faces a key stress test.  Is the free market really capable of anticipating and heading off supply problems as its proponents claim, or were rare earth supplies a blind spot for business leaders as much as anyone else?  If this is the first you’ve ever heard of rare earth elements, you’re certainly far from alone.  So why are the media and political leaders paying so much attention now?  Rare earths, unlike what the name might suggest, are not even all that uncommon, so why have supply issues suddenly become so urgent?

As is often the case in critical materials, the real concern is not with the amount lying in the ground – rare earths are used only in relatively small quantities, and trace amounts can be found throughout the Earth’s crust.  The problem lies in the physical reality of the developed supply chain: China, which controls much of the world’s easily minable deposits, has taken the lead in producing these elements and today enjoys a virtual monopoly on production, which it has begun to leverage in trade conflicts with Japan and now the United States through export quotas and embargoes.  Even as Western nations developed a dependence on rare earths for technologies that have come to be essential for manufacturing, consumer goods, and defense applications, China was able to produce these elements at such low cost (in no small part thanks to its seemingly inexhaustible supply of cheap labor and willingness to look the other way as environmental standards are violated) that domestic producers were simply priced out of the market.  Virtually all non-Chinese rare earth mines have now been closed for some years, and even reopening mothballed production facilities will take several years, with new mines facing lead times of a decade or more.

Meanwhile, as with other supply-constrained materials, political leaders ignored the warning signs of import dependence and associated security concerns and proposed half-baked solutions, if any at all.  In 1995, in fact, conservative Republicans who had just taken over the U.S. Congress even went so far in their zeal for shrinking government and outsourcing industries as to abolish the U.S. Bureau of Mines, the agency that had overseen research and development on rare earths and which could have proven instrumental in developing a secure supply chain.  As if the political right wing in the U.S. needed any more fractures, the need for provision of stable domestic supplies of rare earths for military uses would seem to put the defense hawks at odds with the free-market devotees, no?   I’ll continue to follow the rare earth saga as further developments unfold, but for now, it may suffice to say the way the whole issue is going these days, it’s looking more and more like we’ll be marking a point squarely in the doomers’ column, and a lot sooner than anyone might have guessed.

Well done, indeed.

Posted in Energy Production, Urban Planning | Tagged: , , , , | Leave a Comment »

ASPO-USA World Oil Conference: Day 1 Report

Posted by wastedenergy on October 8, 2010

Day 1 of ASPO-USA’s conference was an enlightening perspective from a good number of viewpoints on a variety of environmental and energy matters concerning us today and tomorrow.  It was a great privilege to attend a meeting of so many minds today, but I do have to say, I was a little disappointed in the turnout.  Very few public officials seemed to feel the matter of peak oil and energy and resource security matters deserved their attention on this first day of the conference, and only a handful of media were on hand to record today’s proceedings.

I felt a real diversity in the audience and speakers was lacking as well.  As I scanned over the audience and listened to today’s questions (didn’t manage to get myself called on today, but we’ll see if I can get the moderator’s attention at Arthur Berman’s session tomorrow) there was certainly a diversity of intellectual viewpoints expressed, but it was disappointing to look out onto a sea of mostly white, middle-aged faces.  It is our younger generation that holds the greatest stake in the critical resource and environmental challenges of tomorrow, and we must begin to speak out for ourselves and our own interests in these issues that will define our future and the fate of the world in the century and more to come.  Just as importantly, it is imperative that the voices of communities of color be heard, who have very often been and are still today disproportionately affected by many of the environmental and public health hazards created by our modern, industrial-energy-based society.  To consider a path forward on energy without paying heed to environmental justice matters is to ignore the very most pressing problems of environmental health, the toxic byproduct from communities handed the privilege of outsourcing their ecological footprint to someone else’s backyard.

While the conference provided a great deal of analysis on the availability of oil and other fossil fuels, another matter needing attention that was scarcely discussed was the impending and critical shortage of many other mineral resources, perhaps most importantly including rare earth minerals, and the urgent need to develop practical and environmentally sound ways of developing supply chains for not just energy, but all the minerals we take for granted that have become so important to such modern luxuries as radar systems, hard drives, cellular phones, hybrid car batteries, gearless wind turbines, and of course, oil refining catalysts.  A presentation providing an update on rare earth and other critical material issues would certainly be more than appropriate considering the subject matter dealt with at this event (Hint: ASPO, I’d be more than happy to fill this role for you or moderate such a session if needed at next year’s conference, and may or may not know one or two other people who could talk about it too, unless the shortage hits before October 2011 and spells The End Of The World As We Know It).

HIGHLIGHT: Catching a Cheseapeake Energy employee making an offhand remark to the woman sitting next to her about the climate change sessions being “balderdash.”  Very professional, and bonus points for using a word seldom heard since the 18th century.  Her comment went a long way toward showing just how much the natural gas companies really care about building climate-friendly bridges to the future, or whether they are really just interested in making a quick buck off those who might otherwise make an actual difference and in the process burn down some of those same bridges.

Some of the more memorable sessions I attended today:

Jeffrey Brown, independent petroleum geologist, spoke about the effect of net oil exports on the availability of the petroleum fuels we so take for granted in virtually everything in society that moves.  The supply of total world oil production and the amount that is actually exported from the countries producing it, from the standpoint of a country that imports the vast majority of its oil like, say, the United States of America, is actually a lot more important than the effects of the ”global peak” (which, incidentally, already occurred, back in late 2004).  The take-home point was that we all need to start thinking about the peak oil issue @ way sooner than right now, and going back to just yesterday won’t even help in the slightest.

Jonathan Callahan informed us that Gas Balancing Alerts were forced three times in the United Kingdom last year, and while he believes overall world production of natural gas will continue to increase, natural gas is of course a regional game, and it is in the very near future (actually, the present) that natural gas and other shortages will begin to rear their ugly heads in the UK and elsewhere.  Don’t hold your breath for an explosion in U.S. shale gas availability either, although given the amount of fracking going on over here, you might want to just hold your breath in general.

Oh, and of course, lest you forgot about China’s coal-truck-induced 20-day traffic jams, China is burning a lot of coal.  A lot lot lot.  India too.  Also, the United States and the rest of the world still burn a lot of coal – even more than before, in fact.  All told, pretty much more coal all around than anyone in their right mind can possibly imagine, and definitely way more than anyone would ever want to.  In fact, we burn so much coal that we may darn well be pretty tootin’ close to doing something a lot of people thought we could never ever do: run out of it.

Quick question I never got to ask Dave Summers, (Heading Out over on TheOilDrum), just to play devil’s advocate: According to Dave, the claim by some recently published research that we have already reached global peak coal production is false because unlike oil, we can directly measure how much coal remains by going underground and looking at the “thickness,” and we know a lot still remains.  While some coal reserves have been downgraded to mere resources, he asserts that as the global coal price rises, they will surely be upgraded to reserves again.  My question: if the price of coal rises, why the hell are we still mining coal?  I thought the only reason we mined it was because it was so cheap, at least until you start actually putting a price on its pollution?  And isn’t it a bit of an oversimplification to outright dismiss alternative energy technologies while reducing modern coal mining to “a pick and a shovel”?  One could just as easily say solar energy is as simple as planting trees, or that wind energy is as simple as putting up a sail (actually, come to think of it, they are).  Unlike a few professed photovoltaic “skeptics” (you can show someone something a billion times and they’ll still be convinced it doesn’t work), we know there are actual alternatives to burning coal to generate what people are actually looking for.  Sure, we’ll still have plenty of coal for the future – coal to hopefully make into graphene and activated carbon.  We just won’t have enough to burn for energy.

Finally, in what certainly seems to me to be an abuse of the ”net energy” concept and a little graphplay that hopefully wasn’t lost upon an audience that professes not to be innumerate, I’m sure the Dutch will be interested to know that you can’t actually get any energy from the wind (and I guess unlike oil and gas, better technogy doesn’t improve the outlook either).  What a shame.

Looking forward to Day 2, and I’ll do my best to be a real thorn in everyone’s side!

Posted in Agriculture and Food, Air, Climate Change, Energy Consumption, Energy Production, Solid Waste, Urban Planning, Water and Soil | Tagged: , , , , | Leave a Comment »

Playing With Fire Part II: After Burners

Posted by wastedenergy on September 17, 2010

It’s Energy for Tomorrow.  It’s a green machine, and it will keep the engines of the economy humming fresh and clean.  Clear blue skies, so clear it makes you want to go right up to a bus and suck down exhaust directly because it’s so much cleaner than the air around it.  And it will last forever.  Even if we do start to run short around these parts, we have so much of it here on the Gas Planet that the very idea that there ever wouldn’t be enough of it to do everything we need is…well, it’s out of this world.

And if you like that idea, you might also enjoy some of the other wonderful things we have to offer from Uranus.

The god of the sea says he might have some gas down there too.

So what’s really going on here?  And how can we make sense of the true nature of natural gas?  We can start by taking a look at some of the facts most economists and energy policymakers seem to have missed in their discussions about this highly leveraged commodity on which we seem to be quickly leveraging the future of our entire civilization.

The first thing to keep in mind about the natural gas market is that it is not anything like the oil market: there is no integrated global trading system, and it would be impossible for a single producer or cartel to dominate the global supply.  As a result, most natural gas used in North America does, in fact, come from North America.  This fact is often used as a selling point by proponents of natural gas like T. Boone Pickens, but in fact what it more reflects is the differing physical properties of the fuels and the fact that oil is by far the more convenient when it comes to transportation.  In other words, the resources are not fully substitutable for one another, and shortages of each are likely to cause their own different yet interconnected economic problems.

“Whaaat? I didn’t major in economics!”  It’s OK Boone, neither did I.

There really is no global natural gas supply; the only way to ship the stuff to other continents is in liquefied form (LNG) using enormous and expensive tankers and terminals, infrastructure projects with decade-plus lead times.  For a number of reasons, I believe that LNG will be largely irrelevant to global energy markets except in a few cases wherein the available supply for the foreseeable future is already spoken for by established importers.  The costs, risks, and public opposition to constructing new LNG terminals is substantial and may be insurmountable, particularly in relation to the quantity of overseas gas trade that would be needed to make up for regional shortages as large as those that could occur in a major gas consumer like the United States.  And of course, the process of liquefying and transporting the gas itself consumes significant quantities of energy and, together with leaks throughout the process, goes a long way toward erasing any possible benefit to using gas for the climate.  For these reasons, it is safe to almost completely ignore someone who talks about “global natural gas supply.”  To put it simply, there is no such thing.

So natural gas production is much more of a regional and continental game, and costs of production will therefore differ considerably from one location to another, even within the same continent.  For this reason, it makes little sense to talk about uniform, homogeneous pricing for gas as occurs on commodity exchanges, but there are a number of ways to do so, starting by calculating the breakeven price for production of marginal (new to come online) gas wells.  Breakeven price is really just a way of asking what the wellhead price of natural gas needs to be in order for an exploration and production (E&P) company to make back the money it spends in finding, drilling and constructing, and operating the well, and therefore to justify as marketable any new gas that becomes available.  The first method is to calculate the full amortized cost over time, the second method is to calculate only the operating costs while ignoring everything else, and the third is to ignore the share of the production cost that comes from shareholder investment. 

It should be noted that only the first method actually tells you anything about the sustainable cost of bringing gas to the wellhead and is the only measure that has any real meaning in looking at the overall resource available.  The second and third make no real sense for reasons that should be obvious if you are familiar with the basic principles of full cost accounting, in addition to the fact that every well is considerably different, even within the same gas field or “play” as the industry lingo goes.  Allowing the difference to be made up in equity while failing to report these costs in the wellhead price is the type of practice that allows a commodity bubble to form, although in this case the reported wellhead price is too low rather than too high as in most bubbles.  It remains a bubble nevertheless, with the reported wellhead price lower than the actual full cost and therefore the full costs not being reflected in pricing.  The price of natural gas today does not reflect the actual economic outlook primarily because E&P companies are so highly leveraged under private equity arrangements, especially virtually all shale gas producers.  If you want to get a real sense of the economic effects of one energy source versus another, you need all costs need to be included in the pricing to give an accurate representation of total E&P costs, which means adding in the equity provided by investors.  Once you perform this basic calculation, it becomes immediately obvious that the price of natural gas must considerably increase, at the very least by a factor of two to four, for shale and other unconventional gas sources to make up any kind of substantial share of the total gas market.

Thus, the idea on which we are supposed to be sold, that natural gas will be cheap and abundant for a long time (and therefore also the idea that it outcompetes renewable energy sources) is built on a myth that current, relatively low wellhead prices can be sustained. They cannot.  Most of the proponents of shale gas act as if it is some new resource that was just recently discovered.  It’s not; geologists and oil and gas engineers have known about the gas-bearing properties of certain shales for a long time.  In fact, it was only the gas price hikes of the early 2000′s that caused any interest in shale gas at all, and all gas companies know that the price still needs to increase considerably to make their investments in shale gas profitable.  At this point in time, they are not, and we all know what must eventually happen to a business that can’t generate profits.  What the gas companies are banking on is the idea that we will, believing the myth of cheap gas, fail to build viable alternative energy technology and infrastructure, and that we will end up being forced to pay the true, higher prices of gas once they inevitably rise. 

So it’s time we cut through the cloud here and started basing our projections on physical facts and real costs we already know for certain will come about, rather than on the babbling of people on Wall Street caught up in the day-to-day movement of markets and trained to avoid thinking about anything other than the next quarterly earnings report.

Gas bubbles are, of course, nothing new. 

Additionally, the cost of finding and producing gas is not the only cost involved; the delivered cost of gas to consumers of all types will, of course, be higher than the wellhead price, as it must include amortized pipeline construction and operation costs.  These costs are also more or less certain to increase considerably over the long term, as gas wells close to demand centers are gradually depleted and the average distance that gas must be carried through pipelines increases as more remote sources are exploited, just like with oil.  Bringing gas to hubs and then to various urban demand centers in the U.S. from distant wells in Alaska or Canada is inherently more expensive than piping it from nearby gas fields, while offshore gas pipelines are also more expensive to construct and operate and constitute an increasing share.  Transporting large quantities of gas over long distances also introduces all kinds of new safety, environmental, and national security risks.

So, natural gas might not be the future, and there are a lot of reasons to believe it shouldn’t even be the present anywhere near the extent to which it is.  Still, the idea that a long, comfortable transition to sustainable sources of energy will be made possible by ample supplies of clean, climate-friendly gas is being sold heavily by industry today, and many environmentalists seem to be taking the bait, although skepticism does seem to have increased of late.  But what will happen if the public actually does buy into this idea and agrees to bank the future on going from oil addicts to gas zombies based on “hundred year supply” claims?  What will the world look like, say, 28 years later?  Well, one thing you can count on is that a whole lot more of the Gas Planet will look something like this, times a few hundred, thousand, or million, depending on how each individual well plays out and just how much of the stuff we are capable of burning up before we simply kill ourselves off:

Careful, California: I hear the Texas Chicken Pox is contagious, and it’s spreading like wildfire these days.  Might even turn you into a zombie too.

And of course, don’t look now, but I don’t think Neptune is too thrilled anymore.

Meanwhile, from Siberia to Nigeria to down home in Lou’sana, the fires of industry and the midnight oil kept burning, never once stopping to allow for the possibility that one day soon all of it, every last bit, might come to an end…

Keep on burnin’…

Posted in Energy Production, Water and Soil | Tagged: , , , , , , , | Leave a Comment »

What’s in Store?

Posted by wastedenergy on September 3, 2010

Ask most energy experts what they see as the greatest obstacle to using renewable energy as the backbone of the electric grid, and you will usually get the same answer: “intermittency.”  The most readily scaleable renewable energy resources, wind, solar, and wave power, vary in their intensity and availability for commercial energy production according to daily and seasonal patterns in addition to random variation.  So while these technologies offer promise for reducing fossil fuel consumption today, they remain “unreliable” and even at high levels of market penetration must rely on fossil fuels for backup power.

Or so goes the popular conceit.

In fact, the reliability of electricity has little to do with how it was produced, and a whole lot more to do with what happens next.  What causes power to go out is usually a failure somewhere in the vast network that instantaneously carries that electricity to its destination; the circuits in your house don’t very well care if they are powered by wind or by exploding oil rigs, but they certainly care whether the power can get there in the first place.  And right now, the only way to get it there in most places is to constantly match the output of power plants running at any given time precisely against the amount of power consumed by all of the customers of an electrical grid.  This practice incurs not only enormous costs to keep the lights on through during spikes in demand, but also the risk of catastrophes like the August 2003 blackout of much of the eastern United States.  A major malfunction at a massive coal-fired, nuclear or hydroelectric power plant is far more likely to result in cascading power failures than a problem anywhere in a network powered by many small hydro installations, solar panels, wind turbines or combustors.  The smarter two-way grid required by such a network would be intrinsically far more reliable than today’s ancient one-way AC transmission systems, but there is still the problem of intermittency: electricity must be consumed instantaneously as it is produced; it cannot be stored for long periods of time before use, unlike most other commodities.  Right?

Of course that is not the case: as we all know, we already use stored electrical energy from batteries in all manner of applications large and small, including relatively large-scale energy storage systems used by hospitals and other critical sectors in need of uninterruptible power supplies.  And of course, many utilities already make use of pumped-storage capabilities of hydroelectric dams.  But proposals to store enough electricity in batteries to feed the grid in times of need run up against all manner of obstacles: they may take up too much space, requiring large purchases of additional land, or material supply constraints and costs may be too burdensome considering the scale of deployment necessary, as with lithium or nickel-metal hydride battery models using lanthanum, a rare-earth metal in limited supply.  But grid energy storage is probably necessary for integration of variable-supply renewable energy sources at scales large enough to replace traditional power plants.  And it has an added benefit as well:  in combination with two-way transmission capabilities and excess production capacity, energy storage results in a sort of “cloud grid” wherein no single energy production unit is ever essential to the functioning of the system, and the network would become resilient to even large numbers of intermittent sources failing to provide or numerous failures along the transmission and distribution system.  In essence, the ”smart grid” needs to function more or less like the Internet: less like a series of tubes, which can get clogged easily, and more like a big truck, wherein excess energy can be easily dumped into storage at low cost and then retrieved as needed, whether for cheaper power during peak loads near where it was produced, or to provide support when other nodes in the network fail elsewhere.

For battery storage or any other energy storage system, the most important numbers are the amount of power that can be discharged at a given moment, measured in megawatts for utility-scale systems, and its total storage capacity, measured in MWh or simply hours if the voltage remains more or less uniform over the course of the discharge phase.  One advantage of battery systems in many applications is the simplicity offered by their relatively uniform discharge profile; the power density of compressed air, for instance, declines sharply as the storage container gradually depressurizes over the course of a discharge phase.  The advantages of NaS in particular for grid storage are many.  Their energy density is high, offering a small footprint compared to many other storage options and the possibility of siting large numbers of storage facilities at many points along the grid.  They are efficient, relatively durable, and can survive many cycles of large fluxes of energy, making them well-suited to the rigors of utility-scale energy production.  And perhaps most importantly, they scale up easily, as larger cells are more economical to construct, and the materials required are far cheaper and more abundant than those used in any other battery design.  The most common NaS batteries available today are of the 1 MW, 8-hour class, while larger cells and more cost-effective, efficient, and reliable designs are in the development and testing stages and offer promise in addressing the remaining obstacles to widespread implementation.

So why have NaS batteries just begun to arrive on the scene?  For one thing, the technology is fairly new.  First developed in the 1960′s, the first batteries of utility size were created by a consortium of the Tokyo Electric Power Corporation (TEPCO) and NGK Insulators, which produces the insulating material needed to keep the battery within its operating temperature range, during the 1980′s.  This consortium remains the sole commercial manufacturer of NaS batteries for grid energy storage.  A prototype battery for mobile applications was released in 1991 for the EcoStar electric vehicle, but ultimately proved less appropriate for vehicles than the lithium-ion and nickel-metal hydride batteries in use today, and the concept was abandoned.  The first U.S. field trials of the technology took place in Ohio from 2001 to 2002.  In 2006, the New York Power Authority installed a battery to store off-peak electricity for powering compressors used by the Metropolitan Transit Authority’s Long Island compressed natural gas (CNG) bus fleet. In 2008, the world’s largest array of the batteries was installed at a wind farm in Japan, consisting of seventeen 2-MW units used to provide storage of off-peak wind generation and smoothing of plant output.  That same year, Xcel Energy, the leading U.S. utility in wind power market penetration, began testing a 1-MW unit at a wind farm in Minnesota, and the first results of the tests were released earlier this year.  In 2010, the town of Presidio, Texas, connected to the U.S. power grid only by a single transmission line built in 1948, began trials of a 4-MW, 8-hour module for use in case of supply disruptions and to bring down the cost of power, the largest single battery of this type built to date. 

While the tests conducted so far show great promise, the NaS battery remains a relatively young technology, with most battery chemistries in use today dating back to the nineteenth or early twentieth centuries, and large-scale grid energy storage is still a fairly new idea.  And other technologies could compete to fill the niche of modular, low-cost energy storage systems as well; compressed air looks to be another dark horse candidate as higher efficiencies are achieved and costs decline.  But with NaS batteries now reaching the necessary levels of reliability and commercial production, is large-scale battery storage ready for prime time as well?  Could these devices be the answer the conundrum of large-scale grid energy storage?  It certainly makes a short list of serious contenders, and considering the urgent and widespread need to upgrade the aging U.S. electric grid and build synergy with the ever-growing renewable power sector, what better way could there be to put Americans back to work?

Posted in Energy Consumption, Energy Production, Urban Planning | Tagged: , , , , , | Leave a Comment »

Go With The Flow…

Posted by wastedenergy on September 1, 2010

Here are a couple of simple diagrams I whipped up to illustrate the difference between two kinds of networked systems.  What is the obvious difference between these two types of networks?

Now, envision enlarged versions of these networks, extended by adding more flows, additional consumption hubs, and either more (in the case of the second network) or larger (in the case of the first) production hubs.  Think about what happens when the flow along one of these networks is disrupted.  Which system is more resilient (i.e., able to continue operating) when the flow is interrupted at any point in the network?

In other words, which type of system is more reliable?

How do you suppose this diagram might illustrate the challenge of meeting the world’s energy needs for the twenty-first century, what types of energy sources are beneficial, even necessary, to add, and which are a waste of time, or even counterproductive?

Posted in Energy Consumption, Energy Production | Tagged: , , , , | Leave a Comment »

False Alarm

Posted by wastedenergy on August 29, 2010

I’ve been thinking a fair bit about communicative strategies recently.  If you have read many of my other writings here at WastedEnergy, you know that I believe we face an imminent, even ongoing crisis due to the rising costs of obtaining energy and resources.

I am quite aware of the many commentators who accuse those advancing ecological principles of “alarmism” or of promoting a particular political agenda.  But what if a careful examination of the facts reveals that some alarms should be sounded, lest a window of opportunity pass us by?  On the other hand, is the very idea of sustainable development truly a contradiction in terms as some observers have suggested, and would we be better off preparing to revert to a pre- or proto-industrial society and abandoning the ideas of mass production and technological progress wholesale, rather than attempting, presumably in vain, some transformation of the existing economy based on new, sustainable industries?  The role of technology and degree of faith in technological progress to deliver solutions appear to be central to determining one’s approach to this question.  As a result, discussions of sustainability tend to degenerate into Luddites arguing against hedonists, ultimately irreconcilable viewpoints leaving little room for nuance.  I think both ways of framing the issue are incorrect, and each obscures the path forward in its own way.

There is a more complicated view that says renewable energy and other clean industry, as components of sustainable living systems, are not really about maintaining business-as-usual at all, and it would be far too late for that already if they were.  What this matter is really about is building a necessary component of resilience networks, creating a safety net in the likely event that fossil fuel depletion continues apace and creates otherwise unmanageable problems in tearing apart the fabric of society as we have built it.  In other words, if you would like to get around your city and possibly even visit other cities at some point, it might be a good idea to build some trains, and some batteries to store the energy needed to make them move around, rather than assuming we can or should keep the fantasy of endless compulsive personalized motoring alive forever.  In the absence of this level of planning, what is most likely to emerge in the wake of an energy crisis is not a resilient society, but fragmented and insular communities distrustful of outsiders and unable to manage new problems that emerge in ways that require movement of people and goods.  The rhetoric in political discussions on this issue, when they do take place, does not often reflect the urgency of the matter, instead framing the debate over fossil fuels as being about saving polar bears versus keeping the economy humming.  This rhetorical approach accepts and repeats the conceit of cheap fossil fuels versus expensive alternatives, as if that were really the choice we face.

The reasoning behind this approach is not difficult to understand: our political institutions give no quarter to those who point to resource constraints as practical limitations on growth.  It is as if the notion damaged the central thesis of modernity, that advances in technology and our understanding of the world will make it possible to achieve ever more complex and advanced structures both physical and social, and to make the benefits of progress, expressed through higher material living standards, available an ever-growing share of the world’s population (which is itself ever-growing).  Such a view has long been enshrined in classical economic models and deeply ingrained in the minds of those living in developed countries, exemplified by the idea of the American Dream.  Increasingly, however, the sciences of the earth and its ecosystems have revealed such abstracted thinking about progress and faith in technology to be at odds with the physical reality of the human body and the space it occupies. 

So in choosing which points to emphasize and which alarms to sound, it becomes clear that one need not and should not make an all-or-nothing choice between supporting business-as-usual and returning to pre-industrial modes of living.  One need not dispense with the idea of progress in its entirety to deal with the matter of limits; it requires, rather, that we take a sober and realistic look at the options available.  It does not strain the ideal of progress to accept that some ventures are simply too costly or unrealistic to maintain. Part of the idea of progress is to shed the superfluous trappings of the material world that bring us needless burdens and suffering, like our nation’s present crises of debt and obesity driven by overconsumption as expected and continually reinforced by popular myths in our culture and media.  It is possible to agree that we are capable of making great strides in perceiving and understanding the world around us while still accepting that our perception and understanding are imperfect, and that we are capable of making great strides backwards as well.

We are likely on the verge of such a backslide if we fail to take appropriate corrective measures quickly.  The point to emphasize in discussions of energy and resource consumption is that altruism and “green” conscience hardly even enter into the picture.  What is really at stake, and hardly a foregone conclusion at this point, is our own survival and well-being.  Energy transitions take generations to accomplish and require generations of planning in advance.  Our great technological progress has instilled in us a certain way of thinking about problems, so that we expect the market to provide solutions quickly and avert any possible crisis just in time.  This approach will not work with a crisis in energy systems, which underlie such progress in all other areas and make possible the style of just-in-time delivery of new technologies to which we have become accustomed in communications, health care, and information technology.  We cannot afford to sputter between complacency and panic modes on energy as we have become accustomed to doing.  If we wait to act until the gas pumps begin to run dry, it will be far too late already.  Most Americans in particular have a strange and largely unwarranted faith in this deus ex technologica approach to energy, even though, as the late Matt Simmons was fond of saying, America has no Plan B.  We have done less than almost anyone else to prepare for the end of cheap energy, even though we are never more than a few days away from a total society-wide breakdown at all times given the possibility of a sudden disruption in our networked systems of infrastructure.

In any case, two central themes seem to have emerged from my reading of the existing communication strategies on energy, natural resources, and other questions ecological.  First, extreme proclamations from either Cassandra or Pangloss are unlikely to get us very far when the truth is far more complicated than either position allows; second, some positions associated heretofore with ideological extremism, like the “limits to growth” hypothesis, may turn out not to be so extreme after all, and we would do well to adapt our language on such matters so our voices are not so easily dismissed or drowned out.  The only way meaningful ideas about sustainability are likely to achieve any traction is if ecological insights become mainstream thinking and associated with self-interested rather than merely altruistic motivation to action.  All signs point to vast and rapid changes in the terrain ahead of us.  Will we continue to rely on a system that keeps these matters out of sight, out of mind, and off the table, all the while promising us that nothing could possibly go wrong?  Will we give up hope for modernity altogether and refuse to build bridges to the future on the grounds that such bridges are manifestations of the technological demon that brought about crisis in the first place?  Or will we choose locally-based, adaptable, organic and democratic approaches to changing economic cultures, to prioritize the advancement of technologies needed to avert a total collapse and to make the resources we consume real to us again?

The way we read the signs makes all the difference in how we choose to respond.

“Full speed ahead!”

Posted in Energy Consumption, Energy Production | Tagged: , , , , , | Leave a Comment »

« Previous Entries
Next Entries »
 
Follow

Get every new post delivered to your Inbox.