TrivCap Energy Almanac

Ramping up to use natural gas as a motor fuel

2012-05-27T15:24:59Z

In the 1990s, natural gas was promoted as the motor fuel of the future. Utilities opened refueling stations and government agencies traded in their dirty diesel trucks for vehicles fueled with clean compressed natural gas (CNG).

The Lower Merion School District committed itself in a big way. It converted half its fleet of 113 buses to natural gas. The U.S. Department of Energy, which subsidized the conversion, called it “Pennsylvania’s primary success story for alternative fuels.” It recently took delivery of nine new CNG buses.

But some early adopters of natural-gas vehicles took an exit off the highway to the future.

The first purple Philly Phlash tourist buses were fueled by natural gas, but they were replaced by diesel vehicles modified to look like trolleys. The Upper Merion Police Department gave up on natural-gas cruisers because of their limited range — officers ran low on fuel in the middle of their shifts — and they had to drive too far to find an open fuel station.

“We gave it a try, but our needs weren’t met,” said Lt. Jim Early of the Upper Merion police.

Perhaps the biggest casualty was Philadelphia Gas Works, the city-owned utility that has a stake in selling natural gas. PGW acquired more than 100 natural gas vehicles and built three fuel stations. But by 2008, it had disposed of its aging fleet and closed the refueling sites.

“It wasn’t feasible for us to continue,” said Barry O’Sullivan, a PGW spokesman. He said that manufacturers were no longer selling suitable CNG vehicles and that the price of natural gas in 2008 was too high.

How quickly things have changed.

Now, with natural gas selling for half the cost of diesel because of new production from formations like Pennsylvania’s Marcellus Shale, government and industry are once again ramping up efforts to promote natural gas as a motor fuel.

President Obama and Gov. Corbett, citing the desire to reduce reliance on imported oil and promote domestic natural gas production, have endorsed plans to subsidize the build-out of a natural-gas fueling infrastructure.

On Thursday, the Pennsylvania Public Utilities Commission will hold a forum at Drexel University to explore policies to support investments in natural gas and electric vehicles.

Natural-gas advocates say they’re focusing their efforts on encouraging operators of big fleets of heavy vehicles and long-haul trucks to convert to natural gas. High-mileage consumers can more quickly recover the higher cost of natural gas vehicles with the savings from natural gas, which sells for about $2 for the equivalent of a gallon of gasoline.

Gas producers say that shale-gas supplies will remain robust and prices stable for years, which they hope assures fleet operators that their investments in CNG vehicles will pay off.

“The new generation of CNG vehicles have gotten better as the technology has improved,” said Richard R. Kolodziej, president of Natural Gas Vehicles for America.

Not everyone is enthusiastic. Some clean-air advocates, who had embraced natural gas vehicles because they emit less pollution than conventionally fueled vehicles, have grown uneasy with the vehicles because of the association with hydraulic fracturing, the vilified shale-gas production technique. They also say natural gas drilling emits large amounts of methane into the atmosphere, a more potent greenhouse gas than carbon dioxide produced from combustion.

“The president has proposed we switch trucks to natural gas, and I’m here to tell you today that every truck we switch to natural gas damages the atmosphere,” Fred Krupp, president of the Environmental Defense Fund, said at the IHS Cambridge Energy Research Associates annual conference in March.

Some green-energy advocates also regard natural-gas vehicles as rivals to electric ones in the passenger car market, though the electric vehicles are not competitive for hauling freight because of the limited range of battery technology.

“You’re not going to run an 18-wheeler with an electric vehicle,” said Kolodziej.

The Lower Merion School District has used CNG buses since 1995. The initial appeal was to reduce complaints from residents about the pollution from the diesel buses.

“There’s no longer a big plume of smoke when we start up the vehicles in the morning,” said Gerald Rineer, the district’s transportation supervisor.

The buses are also much quieter. “They hum,” he said.

But the lower fuel costs are offset by the higher up-front cost for the buses — a natural gas bus costs about $134,000 compared with $104,000 for a conventional diesel. Natural gas vehicles also have higher maintenance costs, said Bryan Bohn, the district’s lead mechanic.

Lower Merion’s school buses each only rack up about 15,000 miles a year. Higher-mileage vehicles would generate a bigger fuel savings.

“If you’re putting enormous miles on your vehicles, you have a payback of less than three years,” said Kolodziej.

Big fuel savings have induced such companies as United Parcel Service Inc. and AT&T Inc. to move into natural gas vehicles.

One of the biggest adopters is Waste Management Inc., the nation’s biggest trash hauler, which says that 80 percent of its new garbage trucks are fueled by natural gas. Waste Management opened a fueling station in Camden last year, where 80 of 100 trucks will use CNG by the end of June. The company plans to open a CNG station in Bristol later this year and one in Trenton in 2013.

“We’re going all in on CNG,” said George McGrath, a Waste Management spokesman.

The Waste Management stations are also open to the public, part of a growing network of stations to serve the market. Clean Energy Fuels Corp., associated with oilman T. Boone Pickens, operates 273 stations nationwide.

Demand for CNG is growing locally, said Cathy Engel Menendez, spokeswoman for Peco Energy Co.

Peco operates six refueling stations to serve the utility’s 15 CNG vehicles, and five of the stations are open to the public. Peco had had only four outside customers who consumed a meager 120 gallons in January 2011. That has grown to 30 customers this year — some own more than one vehicle — who bought an average of 500 gallons a month, she said.

Philly

Peak Oil: Oh, nein! Price at the pump puts Germany on road to Athens

2012-05-27T15:20:54Z

High petrol prices in Germany an ever increasing problem. 27 May 2012

India: diesel crisis, petrol outlets go dry

2012-05-27T15:12:40Z

It was a double whammy for residents of Chennai, as a large number of the 300 fuel outlets in the city that put up ‘no diesel’ on Friday also ran out of petrol. While there was no explanation from the oil companies till late evening, pump owners said petrol shortage was a spin-off of the diesel scarcity.

“On Thursday we placed an order for 12,000 litres of fuel – 8,000 litres of petrol and 4,000 litres of diesel – but we were asked to choose either of the two. We chose petrol because we have more petrol customers, but we completely ran out of stock by around 3.30pm today,” said B Gnanavelu who runs a fuel outlet near Kodambakkam flyover.

Pump owners said they ordering petrol more than normal to augment their loss of diesel sale. “When we asked senior sales officials they informed us that Mangalore Refinery and Petrochemicals Limited had suspended its operation for a few days in April, leading to a shortage. But we think the crisis is acute because of a few pumps choosing to buy diesel over petrol on Friday, and went dry on both,” said a Hindustan Petroleum bunk operator in Nandanam. Panic buying also added to the scarcity. Officials from oil companies were not available for comment.

By evening, motorists were calling up each other to find out where they could get petrol. “Because of the diesel shortage, I left behind my car and set out today on my bike. But, petrol outlets in CIT Nagar and Nandanam didn’t have stock,” said Vishnu Ram, an advertising professional who finally got to fill petrol at an outlet near the Thiru Vi Ka bridge.

For once, it was shortage overtaking price. “Yesterday we were cribbing about the petrol price rise,” said S Shankar, an autorickshaw driver at Nandanam. “Today, we are willing to pay anything for a litre of petrol.” Diesel shortage, meanwhile, continued for the fourth day on Saturday. A handful of pumps that managed to get the precious fuel on Friday evening had long queues of cars. “We finally got around 3,500 litres at around 5.30pm. By around 7.30pm, , the entire Indira Nagar second street was blocked by cars trying to drive in from every direction, and before midnight we ran dry again. We refused a few tempo trucks, but catered to many cabs,” said Nandan Krishnan, an employee at a fuel station on LB Road. Cabs and freight operators are believed to be the worst hit by the shortage.

If commuting to work on Monday is likely to be tough, work place experience may not be any better, as offices rely on diesel generators to function during power cut. “We don’t know how we will cope on Monday,” said Nasscom regional director K Purushothaman.

Times of India

Conditions and Treatments in North Ghawar

2012-05-27T14:01:48Z

Recent OGPSS talks have focused on the increased use of novel technology in Saudi Arabia, as a means of recovering stranded oil, left during the waterfloods that have successfully sustained production over the past few decades. That technology is being further expanded with the use of carbon dioxide injection as part of an Enhanced Oil Recovery program. The CO2 project has been in the works for some years with an initial estimate that some 40 million cubic feet of CO2 would be injected daily into flooded areas of the Ghawar field. The gas will come from the Uthmaniyah Injection Plant and will be initially injected into seven wells in the Uthmaniyah section of Ghawar. The initial flood will be monitored, since it is important to ensure that the CO2 finds the oil that it will help flow to production wells.

Aramco have also recently announced success with changing the make-up of the injection water being pumped into the fields to sustain pressure. By altering the ionic composition and salinity of this water it has been possible to significantly increase the amount of oil that is liberated and thus recovered from the reservoirs.

Ghawar is sufficiently large that it has been divided into different segments, and the conditions vary between them. Because of the differences between the various regions, the overall statement that Ghawar is producing some 5 mbd has to be read with a degree of caution, lest it be presumed that this has continued to be from the same regions of the overall field. (And while this article deals with oil production, it should be noted that Ghawar also produces around 2.5 billion cubic feet (bcf) of natural gas a day.)

Figure 1. Sectors of Ghawar with the date of discovery (Afifi)Ain Dar came on line in 1951, with an initial yield of 15.6 kbd of dry oil, and the field was given the overall name of Ghawar (from the Bedouin name of the overlying pasture) in 1952. The original well was still producing 2,100 bd of oil in 2008, having, by then produced a total of 152 million barrels. Down at the other end of the field the first Haradh well was put into production in 1964, and though mothballed for a while due to lack of demand, was still also producing in 2008, at a rate of 2,300 bd – for a total production of 24 million barrels. Shedgum 1 was brought onstream in 1954, and was sidetracked with a horizontal section in 2008, which brought production back to 3,700 bd. The first Hawiyah well went on stream in 1966, and by 2008 was still producing at 4,600 bd – having by that time produced some 51 million barrels of oil.

Stuart Staniford and Euan Mearns have, among others at The Oil Drum, provided extensive sets of information on Ghawar over the years. For those that are not familiar with the region, Stuart’s early description is a good place to start. In this brief overview I will not get into any of the details of those descriptions, though I will quote one or two of the most relevant highlights. The debate initially focused on the amount of the waterflood in different regions of the field, since it was possible, with extensive work, to extract information on the rate that the water was advancing, relative to the remaining volumes in the different regions. For example, in one of his earlier posts, Stuart showed the following sequence of profiles for the water progression across a section of the field at Uthmaniyah. This was followed by an additional response from Euan.

Figure 2. Sections of the Uthmaniyah region of Ghawar showing the water flood progression. (Original source: Figure 12 of Al-Mutairi et al, Water Production Management Strategies in North Uthmaniyah Area, Saudi Arabia, SPE 98847, June 2006.)Stuart then continued this analysis into evaluating the conditions in North Ghawar (i.e. Shedgum and Ain Dar) leading him, based on figures such as this:

Figure 3. Section through Ain Dar region, from Stuart Staniford,original source Alhuthali et al, Society of Petroleum Engineers Paper #93439, March 2005.This led him to accept a prediction from Fractional Flow, who had earlier noted that production in Northern Ghawar had fallen (in 2007) from the 2mbd oil and 1 mbd water of 2003 to 300 kbd oil and 2.7 mbd water in 2007, as follows:

*90% or so of ‘Ain Dar/Shedgum’s 2mbpd could water out over the course of a few years.

*We are likely somewhere in the midst of that process.

*That is likely the explanation for most of the Saudi production declines we have seen since June 2005 (including the failure of Haradh III and Qatif/Abu Safah to raise production).

The discussion at the time (which is still present in comments under the main papers) was fascinating, since it was based, inter alia, on information such as the speed at which the water front was advancing.

Figure 4. Speed of water front advance in North Ghawar (Fractional Flow).The use of horizontal wells and MRC came late in the development of North Ghawar, which is why the use of carbon dioxide injection for EOR, smartwater injection, induced fractures and long horizontal wells to capture otherwise stranded oil, will play a more important part in the production from the region.

What these new technologies bring with them is the ability to go back into the older regions of Ghawar and extract some of the oil that was left in place during the original water floods. Because a number of them will be dealing with regions of the reservoir that are already flooded, so that the oil will be coming from wells with a high water cut, it is in my opinion unlikely that these will allow increases in production from the region, but rather that it will allow a sustaining of existing production levels somewhat further into the future than we (the collective wisdom of the TOD writers) have predicted in the past.

But Ghawar is not just the original wells of the North, and I will have more to say about the field, and then about other fields in the country in future posts.

The Oil Drum

Tech Talk - Conditions and Treatments in North Ghawar

2012-05-27T10:14:10Z

Recent Tech Talks have focused on the increased use of novel technology in Saudi Arabia as a means of recovering oil stranded during the waterfloods that have successfully sustained production over the past few decades. That technology is further expanded with the use of carbon dioxide injection as part of an Enhanced Oil Recovery program. The CO2 project has been in the works for some years, with an initial estimate that some 40 million cubic feet of CO2 would be injected daily into flooded areas of the Ghawar field. The gas will come from the Uthmaniyah Injection Plant and will be initially injected into seven wells in the Uthmaniyah section of Ghawar. The initial flood will be monitored, since it is important to ensure that the CO2 finds the oil that it will help flow to production wells.

Aramco has also recently announced success with changing the make-up of the injection water being pumped into the fields to sustain pressure. By altering the ionic composition and salinity of this water, it has been possible to significantly increase the amount of oil that is liberated and thus recovered from the reservoirs.

Figure 1. Sectors of Ghawar with the date of discovery (Afifi)

Ain Dar came on line in 1951 with an initial yield of 15.6 kbd of dry oil, and the field was given the overall name of Ghawar, from the Bedouin name of the overlying pasture, in 1952. The original well was still producing 2,100 bd of oil in 2008, having by then produced a total of 152 million barrels. Down at the other end of the field, the first Haradh well was put into production in 1964, and though mothballed for a while due to lack of demand, was still also producing in 2008, at a rate of 2,300 bd – for a total production of 24 million barrels. Shedgum 1 was brought onstream in 1954, and was sidetracked with a horizontal section in 2008, which brought production back to 3,700 bd. The first Hawiyah well went onstream in 1966, and by 2008 was still producing at 4,600 bd – having by that time produced some 51 million barrels of oil.

Stuart Staniford and Euan Mearns have, among others at The Oil Drum, provided extensive sets of information on Ghawar over the years. For those who are not familiar with the region, Stuart’s early description is a good place to start. In this brief overview, I will not get into any of the details of those descriptions, though I will quote one or two of the most relevant highlights. The debate initially focused on the amount of the waterflood in different regions of the field, since it was possible, with extensive work, to extract information on the rate that the water was advancing, relative to the remaining volumes in the different regions. For example, in one of his earlier posts, Stuart showed the following sequence of profiles for the water progression across a section of the field at Uthmaniyah. This was followed by an additional response from Euan.

Stuart then continued this analysis into evaluating the conditions in North Ghawar (i.e. Shedgum and Ain Dar) leading him, based on figures such as this:

Figure 3. Section through Ain Dar region, from Stuart Staniford,original source Alhuthali et al, Society of Petroleum Engineers Paper #93439, March 2005.

This led him to accept a prediction from Fractional Flow, who had earlier noted that production in Northern Ghawar had fallen (in 2007) from the 2mbd oil and 1 mbd water of 2003 to 300 kbd oil and 2.7 mbd water in 2007, as follows:

*90% or so of 'Ain Dar/Shedgum's 2mbpd could water out over the course of a few years.

*We are likely somewhere in the midst of that process.

*That is likely the explanation for most of the Saudi production declines we have seen since June 2005 (including the failure of Haradh III and Qatif/Abu Safah to raise production).

Figure 4. Speed of water front advance in North Ghawar (Fractional Flow).

The use of horizontal wells and MRC came late in the development of North Ghawar, which is why the use of carbon dioxide injection for EOR, smartwater injection, induced fractures, and long horizontal wells to capture otherwise stranded oil, will play a more important part in the production from the region.

What these new technologies bring with them is the ability to go back into the older regions of Ghawar and extract some of the oil that was left in place during the original water floods. Because a number of them will be dealing with regions of the reservoir that are already flooded, so that the oil will be coming from wells with a high water cut, it is, in my opinion, unlikely that these will allow increases in production from the region, but rather it will sustain existing production levels somewhat further into the future than we (the collective wisdom of the TOD writers) have predicted in the past.

But Ghawar is not just the original wells of the North, and I will have more to say about the field, and then about other fields in the country, in future posts.

Cheaper gas spurs more travelers this Memorial Day

2012-05-26T19:39:10Z

More Americans will hit the road this holiday weekend than a year ago. And they’ll have a bit more money to spend thanks to lower gas prices.

Memorial Day kicks off the summer travel season, and since pump prices never reached $4 or $5 a gallon, as feared, economists says travelers are likely to dine out or shop more once they pull off the road.

About 30.7 million people will drive more than 50 miles for Memorial Day trips, according to auto club AAA. That’s 400,000 more than last year, a jump AAA attributes to improvement in the economy and consumer attitudes. The number of holiday travelers grows to 34.8 million when you include planes, trains and other means of transportation.

A drop in gas prices encouraged Americans to spend more at restaurants and bars in April. And that trend could continue over the holiday. Pump prices are down 27 cents since their peak in early April, to $3.67 a gallon, where they’re likely to stay this weekend, predicts Tom Kloza, the chief oil analyst at the Oil Price Information Service. That’s 12 cents cheaper than last year. Over the weekend, U.S. drivers will burn about 1.2 billion gallons of gasoline – and spend $144 million less on gas than last year.

Restaurants, movie theaters and retailers hope some of that savings goes to them. Just last month, AAA and IHS Global Insight, the firm that analyzed the AAA study, were expecting travelers to spend less on entertainment, dining and shopping on vacation and devote more time to family and friends. .

Now, travelers might take longer trips or spend more on other things “because there’s more money left in their pocket,” says John Larson, vice president for IHS.

Still, most people need to restrict their travel budgets. For many, incomes are growing slightly if at all. Household debt remains high. And although the increase in the stock market over the past year has helped some regain wealth lost in the recession, there is still a ways to go. A recent report from the Federal Reserve shows that American household wealth would have to rise by 13 percent to return to pre-recession levels.

While drivers may feel relief at the pump, gas still isn’t cheap. Besides last year, the only other time gas was more expensive on Memorial Day was 2008, when it eventually climbed to a record of $4.11 per gallon. This year, gas shot up by 66 cents from January through early April because of a spike in oil prices.

As a result, many people were skittish about planning long road trips. Half of those surveyed by AAA said they’ll travel less than 400 miles. They might be tempted to drive farther – a fill up costs about $4 to $5 less than in early April when gas peaked at an average of $3.94. But they’ll burn through that savings after about 30 to 40 miles.

Douglas Berkley, Jr., of Cranberry Township, Pa. drives his family 90 miles to a family house on Indian Lake in Shanksville, Pa. most summer weekends, including Memorial Day. He hasn’t noticed much of a drop in prices – it still costs him about $80 to fill his Chevy Tahoe. “Any little bit helps, though, obviously,” he says.

How far people travel might also depend on where they live. The difference in gas prices around the country is far wider than normal this year, Kloza says. In states like South Carolina, drivers could be paying as low as $3.10. Meanwhile, refinery problems on the West Coast – where prices usually exceed the national average anyway – have kept prices especially high there. West Coast drivers could be paying as much as $4.50 per gallon this weekend.

Thom Rasmussen of Battle Ground, Wash. would have driven 100 miles southwest to Lincoln City, Oregon and rented a hotel near the coast. Except that gas has risen to $4.33 per gallon where he lives. The retired truck maker now plans to “rent a bunch of movies” with his wife. He’ll consider making the trip this summer if gas falls below $4.

Some people who would normally stuff suitcases in overhead bins are packing them in car trunks. They’re balking at higher ticket prices, and AAA forecasts a 5.5 percent decline in air travel within the U.S. this Memorial Day. U.S. airlines spent 8 percent more on fuel in the first quarter, on top of a 26 percent increase last year, government data show. They’re passing that expense along to passengers.

The average airfare for North American flights: $291.04 per round trip, including taxes, according to travel site Kayark.com. That’s up 23 percent from last year.

Memorial Day travel is usually a good proxy for the summer. Alan Pisarski, independent consultant for the tourism industry, expects summer travel to be about flat compared with last year. Pisarski says concerns about the economy, primarily about jobs and housing, will keep many people at home. Others will likely travel less than they’d planned.

Douglas Frechtling, chair of the Department of Tourism and Hospitality Management at George Washington University, is more optimistic. He thinks the drop in unemployment, higher incomes and the drop in gas prices will encourage more people to travel. The increase will be just a “few” percent. But that’s important for travel destinations like Provincetown Mass. on the tip of Cape Cod, and Ocean City, Md., where motels and restaurants were forced to close during the economic downturn.

AAA doesn’t expect a significant pick up in travel until employment, incomes and consumer spending show greater gains and the housing market turns around. It sees signs of that happening next year. For now, travel remains well below the pre-recession peak of 2005, when 44 million people traveled for Memorial Day weekend.

At least that’s good news for people who hate overcrowded beaches.

Richard Heinberg: End Of Cheap Energy Era

2012-05-26T13:54:27Z

Richard Heinberg explaining why growth in the world economy is coming to an end. CCTVMay 2012

Drumbeat: May 26, 2012

2012-05-26T14:12:15Z

Q. and A.: Linking People’s Needs to Nature’s

It has been a generation since the rise of environmental economics. Yet even after years of groundbreaking research and support from governmental agencies and nonprofits, the work of such economists has tended to be tangential to the aims of most large conservation organizations. But in the last few years Peter Seligmann, the founder and chairman of Conservation International, has made a major strategic change in his $250 million organization.
After two decades of emphasizing the preservation of “hot spots,” or areas with a high level of biodiversity that are threatened with development, the group refocused on efforts to link environmental conservation to the economic self-interest of surrounding communities and countries. The move cost the 25-year-old organization some members, he acknowledges.

Oil Rises on U.S. Consumer Confidence, Iran Inspections

Oil rose on reports showing that U.S. consumer confidence gained and the United Nations’ atomic agency found evidence Iran boosted its output of enriched uranium that could be used for a nuclear weapon.
Futures increased for a second day as the Thomson Reuters/University of Michigan final index of consumer sentiment advanced to 79.3, the most since 2007. Iran almost doubled its supply of 20 percent-enriched uranium, to 145 kilograms (320 pounds) since February, the International Atomic Energy Agency said today in a restricted 11-page report seen by Bloomberg.

Cheaper gas spurs more travelers this Memorial Day

NEW YORK – More Americans will hit the road this holiday weekend than a year ago. And they'll have a bit more money to spend thanks to lower gas prices.
Memorial Day kicks off the summer travel season, and since pump prices never reached $4 or $5 a gallon, as feared, economists says travelers are likely to dine out or shop more once they pull off the road.

Mexico Oil Hedging Costs Rose 44 Percent Last Year

Mexico, the third-largest supplier of oil to the U.S., paid $1.17 billion last year to lock in prices for 2012 exports at $85 a barrel, a 44 percent increase compared to hedging costs paid the previous year.

Myanmar power protests put new reforms to the test

BANGKOK—Protests in Myanmar over persistent power shortages have provided a test of how the country's elected but military-backed government will respond to rising expectations sparked by the past year's democratic reforms. Small demonstrations over the last week in Myanmar's two largest cities and several towns could be seen as an indicator of the new openness under President Thein Sein, who has overseen the country's emergence from decades of authoritarian rule and diplomatic isolation.

China plans to exploit power-shortage protests in Burma

Burmese people have been suffering power shortage for more than two decades. Although the military-dominated regime gains a large sum of hard currency by exporting the natural gas to neighbouring countries, it neglects sharing the indispensable power supplies to its citizens for twenty years.

Gas prices this summer? Same as last, says expert

Why have prices been declining lately?
"Crude oil prices went too high," Oil Price Information Service Chief Oil Analyst Tom Kloza explained on "CBS This Morning: Saturday."
"Basically, gas prices were too high. We get sloppy drunk every year, the trading community, and this was no exception."

Fairbanks gasoline prices rise despite sharp drop in crude oil

FAIRBANKS — A couple of months ago the gasoline price in Fairbanks was about 40 cents per gallon above the U.S. average.
Today it is about 75 cents per gallon above the national average.
Since Tesoro refines 80 percent of the gasoline in Alaska at Kenai and has three refineries on the West Coast, the recent price spike in Alaska may be fallout from the situation in California and Washington, where gasoline prices have also increased.

Low natural gas prices continue to drive commodity chemicals industry

The U.S. commodity chemical industry that manufacture chemicals linked to natural gas are expected to have a strong 2012, according to a Moody’s report issued today.
The rapid growth of natural gas supply and low prices are driving the commodity chemicals boom domestically, even as economic slowdowns in Europe and China may well dampen the industry’s performance worldwide.

Obama gets boost as gas prices drop

“I think whenever you see gas prices decline, you will see these campaigns and parties switch to a different message, because that energy message doesn’t have the same bite it would have if energy costs were high,” said GOP strategist Tyler Harber, a partner with Harcom Strategies.
“I think you will see gas prices and energy start to disappear from the daily message attacks from Romney and the Republicans until the gas prices begin to spike again,” Harber said.

Nitish tells UPA come clean on oil price hike

Patna/New Delhi (ANI): Bihar Chief Minister Nitish Kumar on Saturday hit out at the Congress-led UPA over the petrol price hike, and said that the ruling government is putting the blame on oil companies to avoid the responsibility and come out clean.
"There has been an increase in the price of petrol. The Centre has taken this decision. Now, when there is revolt on this issue in the entire country, they are putting the blame on oil companies to avoid the responsibility and come out clean. It is for the first time in the history of this country that there has been so steep increase in the price of petrol," said Kumar.

From Canada Down To Argentina, The Oil Flows

As the wind whips across the scrub grass in southern Argentina, a crane unloads huge bags of artificial sand for oil workers preparing for the hydraulic fracturing, or fracking, of a well.
Water mixed with chemicals and tiny ceramic beads are then blasted underground at high pressure. This mixture helps create fissures, allowing oil and natural gas to flow.
Energy analysts believe there are billions of barrels of oil and gas buried in a desert-like patch in Patagonia.

Why Shell is betting billions to drill for oil in Alaska

This summer, the energy giant will begin exploring off the icy coast of Alaska -- after years of resistance by environmentalists. The payoff could be the largest U.S. offshore oil discovery in a generation.

Feds Invest In Deepwater Drilling Tech

The Department of Energy has selected 13 projects to enhance the environmental safety of deepwater drilling projects, particularly by improving the cement casing process that investigators cited as a cause of BP’s Deepwater Horizon spill in the Gulf of Mexico in 2010.

US Firmly Backing Nabucco Pipeline despite BP Criticism

The support of the USA for the European gas transit pipeline Nabucco is unwavering regardless of British Petroleum declaring the project unviable.

Gazprom eyes new partners for Shtokman gas project

(Reuters) - The chief executive of Russian gas giant Gazprom said on Friday it is seeking new partners for the Shtokman gas project, which has been repeatedly delayed on disagreements over investment volumes.
Alexei Miller also declined to directly address media reports that Shell may join the project.

Iran Doubles Enriched-Uranium Stockpile, Goes Beyond 20%

Iran increased its output of enriched uranium that world powers are concerned may eventually be used for a nuclear weapon, according to International Atomic Energy Agency inspectors.

Gas project to be sped up in South China Sea

CNOOC Ltd, the listed unit of China National Offshore Oil Corp, the country's biggest offshore oil producer, plans to accelerate the development of the Liwan gas project in the South China Sea with its partner Husky Energy Inc.

Icahn Buys Stake in Chesapeake, Seeks Board Replacements

Billionaire investor Carl Icahn bought a 7.56 percent stake in Chesapeake Energy Corp. and demanded new directors amid growing shareholder concern about management of the second-largest U.S. natural-gas producer.

Turkmen leader sacks fifth energy minister in five years

ASHGABAT: Turkmenistan President Gurbanguly Berdymukhamedov has sacked his oil and gas minister for incompetence, the fifth time in five years that he has dismissed the number one energy official, state media said Saturday.
Oil and Gas Minister Bayramgeldi Nedirov was fired "for serious shortcomings in his work", according to a decree published in government newspaper Neutral Turkmenistan.

Regulators: Oil leak in Alberta not all contained

Regulators in Canada are investigating a substantial leak of oil and water from a feeder pipeline in the western province of Alberta and say the leak is not yet completely contained.

Top Senate Democrat predicts no big energy changes this year

Bingaman has been unsuccessfully pushing for adoption of a nationwide clean energy standard that would force power utilities to generate an increasing share of their electricity from sources that emit low greenhouse gas emissions.
But Bingaman, the head of the Senate Energy and Natural Resources Committee, now concedes the political headwinds are too strong to push an ambitious clean energy standard bill through Congress this year.

Coal plant operators find a convenient scapegoat in the EPA

When in doubt, blame the EPA.
That’s becoming the mantra of some Texas coal plant operators, who have found the federal Environmental Protection Agency the legal and financial equivalent of a rented mule – an unpopular bureaucracy they can berate as the cause of all their problems.

Cuban, U.S. scientists breaking through some political barriers

Cuban and American scientists have joined forces to protect wildlife and to study Caribbean weather patterns that fuel hurricanes, and in the process, they're chipping away at a half-century of government feuding, helping to bring the nations together for talks on vital matters such as what to do in case of an oil spill.

Author Jeff Rubin on The End of Growth and titlesake Richard Heinberg

High-energy Toronto author and blogger Jeff Rubin admitted that California-based author Richard Heinberg was “somewhat surprised” to hear from Rubin directly that both men had books at various stages of development called The End of Growth.
“He was somewhat surprised, admittedly,” the former CIBC chief economist told the Georgia Straight in a sit-down interview on May 24. “I guess I would be if I was in that situation, too. But I just thought, it would just be too weird if I didn’t tell him.”

Wheat Fields Parched By Drought From U.S. To Russia

(Bloomberg News) Droughts withering wheat crops from the U.S. to Russia to Australia will probably spur the biggest reduction in global supply estimates since 2003 and drive prices to the highest in almost a year.
Kansas, the top U.S. grower of winter wheat, is poised for its driest May on record, the state's climatologist estimates. Ukraine and Russia, accounting for 11 percent of world output, have endured drought conditions for three months, University College London data show. The U.S. Department of Agriculture may cut its global crop estimate by 1.2 percent next month, the biggest drop in a June report since 2003, according to the average of 18 analyst estimates compiled by Bloomberg.

Beef, chicken, pork prices still climbing

DENVER — The money you’re saving on gasoline may go toward buying steaks, ribs and chicken for the barbecue.
Meat prices are expected to rise faster than overall food costs in 2012. Prices rose in the spring and may increase an additional 1 percent to 3 percent this summer. Grill masters will find bargains harder to come by as retailers attempt to recoup some of their higher costs.

Brazil: President Vetoes Major Parts of Bill to Open Up Forests

President Dilma Rousseff on Friday vetoed portions of Brazil’s new Forest Code, a bill drafted to open big areas of protected forests to large-scale agriculture. The decision by Ms. Rousseff, which removes 12 articles from the bill, alters legislation sought by powerful agricultural groups.

Area's sea-level rise has fastest rate on the East Coast

ONLEY — An inaugural interactive workshop discussing historic and future sea level trends and their implications for Virginia’s Eastern Shore is planned for June.
“We’ve got the highest rate of sea level rise on the East Coast,” said Skip Stiles, executive director, Wetlands Watch, who will be making a presentation on the historic, current and future sea level changes and potential impact on the Eastern Shore.

Time To Prepare: Rising Sea Levels Threaten Connecticut Coast

Tropical Storm Irene hammered the houses in the low-lying Cosey Beach area of East Haven last August. Now, according to town officials, most of those homes are being rebuilt.
This is understandable. But is it wise?

Poll: Majority of N.J. residents call climate change a 'real concern,' want government to take larger role

After a year of erratic weather, a large majority of New Jersey residents consider climate change and global warming a real concern — and they also expect government to start taking a bigger role in protecting the environment, according to a Kean University/NJ Speaks poll released today.

Book review: Michael Mann’s ‘The Hockey Stick and the Climate Wars’

When it comes to key warriors in America’s battle over the causes of climate change, few rival Pennsylvania State University professor Michael E. Mann. Mann, who directs the Penn State Earth System Science Center, led a 1998 reconstruction of temperature records going back thousands of years and showing that global averages had shot up in recent decades.
Featured in a 2001 report by the U.N. Intergovernmental Panel on Climate Change, the chart resembled a hockey stick, with the ancient temperatures running along the handle and the latest figures rising sharply at the base. It sparked intense debate over the human contribution to global warming and transformed Mann from a geeky geophysicist into a public fighter in a bruising political and legal war over how to conduct science and public policy.

Key question at climate talks: Is China poor?

BONN, Germany -- Another round of U.N. climate talks closed Friday without resolving how to share the burden of curbing man-made global warming, mainly because countries don't agree on who is rich and who is poor.
China wants to maintain a decades-old division between developed and developing countries, bearing in mind that, historically, the West has released most of the heat-trapping gases that scientists say could cause catastrophic changes in climate.
But the U.S. and Europe insisted during the two-week talks in Bonn that the system doesn't reflect current economic realities and must change as work begins on a new global climate pact set to be completed in 2015.

U.S. cut its carbon emissions in 2011 — but China erased the gains

Yes, it’s true: Americans are slowly starting to tackle global warming. U.S. carbon emissions dropped 1.7 percent last year, according to the International Energy Agency. But that only went so far. Thanks to China’s fast growth, the world’s greenhouse-gas emissions hit record highs in 2011.

Limits We are Reaching – Oil, Debt, and Others

2012-05-25T11:36:34Z

The world is clearly reaching many limits. What limits are the human and natural systems reaching now?

Apocalypse Soon: Has Civilization Passed The Environmental Point Of No Return?

2012-05-26T06:08:56Z

Remember how Wile E. Coyote, in his obsessive pursuit of the Road Runner, would fall off a cliff? The hapless predator ran straight out off the edge, stopped in midair as only an animated character could, looked beneath him in an eye-popping moment of truth, and plummeted straight down into a puff of dust. Splat! Four decades ago, a Massachusetts Institute of Technology computer model called World3 warned of such a possible course for human civilization in the 21st century. In Limits to Growth, a bitterly disputed 1972 book that explicated these findings, researchers argued that the global industrial system has so much inertia that it cannot readily correct course in response to signals of planetary stress. But unless economic growth skidded to a halt before reaching the edge, they warned, society was headed for overshoot—and a splat that could kill billions.

Don’t look now but we are running in midair, a new book asserts. In 2052: A Global Forecast for the Next Forty Years (Chelsea Green Publishing), Jorgen Randers of the BI Norwegian Business School in Oslo, and one of the original World3 modelers, argues that the second half of the 21st century will bring us near apocalypse in the form of severe global warming. Dennis Meadows, professor emeritus of systems policy at the University of New Hampshire who headed the original M.I.T. team and revisited World3 in 1994 and 2004, has an even darker view. The 1970s program had yielded a variety of scenarios, in some of which humanity manages to control production and population to live within planetary limits (described as Limits to Growth). Meadows contends that the model’s sustainable pathways are no longer within reach because humanity has failed to act accordingly.

Instead, the latest global data are tracking one of the most alarming scenarios, in which these variables increase steadily to reach a peak and then suddenly drop in a process called collapse. In fact, “I see collapse happening already,” he says. “Food per capita is going down, energy is becoming more scarce, groundwater is being depleted.” Most worrisome, Randers notes, greenhouse gases are being emitted twice as fast as oceans and forests can absorb them. Whereas in 1972 humans were using 85 percent of the regenerative capacity of the biosphere to support economic activities such as growing food, producing goods and assimilating pollutants, the figure is now at 150 percent—and growing.

Randers’s ideas most closely resemble a World3 scenario in which energy efficiency and renewable energy stave off the worst effects of climate change until after 2050. For the coming few decades, Randers predicts, life on Earth will carry on more or less as before. Wealthy economies will continue to grow, albeit more slowly as investment will need to be diverted to deal with resource constraints and environmental problems, which thereby will leave less capital for creating goods for consumption. Food production will improve: increased carbon dioxide in the atmosphere will cause plants to grow faster, and warming will open up new areas such as Siberia to cultivation. Population will increase, albeit slowly, to a maximum of about eight billion near 2040. Eventually, however, floods and desertification will start reducing farmland and therefore the availability of grain. Despite humanity’s efforts to ameliorate climate change, Randers predicts that its effects will become devastating sometime after mid-century, when global warming will reinforce itself by, for instance, igniting fires that turn forests into net emitters rather than absorbers of carbon. “Very likely, we will have war long before we get there,” Randers adds grimly. He expects that mass migration from lands rendered unlivable will lead to localized armed conflicts.

Graham Turner of Australia’s Commonwealth Scientific and Industrial Research Organization fears that collapse could come even earlier, but due to peak oil rather than climate change. After comparing the various scenarios generated by World3 against recent data on population, industrial output and other variables, Turner and, separately, the PBL Netherlands Environmental Assessment Agency, conclude that the global system is closely following a business-as-usual output curve. In this model run the economy continues to grow as expected until about 2015, but then falters because nonrenewable resources such as oil become ever more expensive to extract. “Not that we’re running out of any of these resources,” Turner explains. “It’s that as you try to get to unconventional sources such as under deep oceans, it takes a lot more energy to extract each unit of energy.” To keep up oil supply, the model predicts that society will divert investment from agriculture, causing a drop in food production. In this scenario, population peaks around 2030 at between seven and eight billion and then decreases sharply, evening out at about four billion in 2100.

Figure courtesy of PBL Netherlands Environmental Assessment Agency

Meadows holds that collapse is now all but inevitable, but that its actual form will be too complex for any model to predict. “Collapse will not be driven by a single, identifiable cause simultaneously acting in all countries,” he observes. “It will come through a self-reinforcing complex of issues”—including climate change, resource constraints and socioeconomic inequality. When economies slow down, Meadows explains, fewer products are created relative to demand, and “when the rich can’t get more by producing real wealth they start to use their power to take from lower segments.” As scarcities mount and inequality increases, revolutions and socioeconomic movements like the Arab Spring or Occupy Wall Street will become more widespread—as will their repression.

Many observers protest that such apocalyptic scenarios discount human ingenuity. Technology and markets will solve problems as they show up, they argue. But for that to happen, contends economist Partha Dasgupta of the University of Cambridge in the U.K., policymakers must guide technology with the right incentives. As long as natural resources are underpriced compared with their true environmental and social cost—as long as, for instance, automobile consumers do not pay for lives lost from extreme climatic conditions caused by warming from their vehicles’ carbon emissions—technology will continue to produce resource-intensive goods and worsen the burden on the ecosystem, Dasgupta argues. “You can’t expect markets to solve the problem,” he says. Randers goes further, asserting that the short-term focus of capitalism and of extant democratic systems makes it impossible not only for markets but also for most governments to deal effectively with long-term problems such as climate change.

“We’re in for a period of sustained chaos whose magnitude we are unable to foresee,” Meadows warns. He no longer spends time trying to persuade humanity of the limits to growth. Instead, he says, “I’m trying to understand how communities and cities can buffer themselves” against the inevitable hard landing.

Scientific American

U.S. Hard Line in Failed Iran Talks Driven by Israel

2012-05-26T06:06:47Z

Negotiations between Iran and the United States and other members of the P5+1 group in Baghdad ended in fundamental disagreement Thursday over the position of the P5+1 offering no relief from sanctions against Iran.

The two sides agreed to meet again in Moscow Jun. 18 and 19, but only after Iran had threatened not to schedule another meeting, because the P5+1 had originally failed to respond properly to its five-point plan.

The prospects for agreement are not likely to improve before that meeting, however, mainly because of an inflexible U.S. diplomatic posture that reflects President Barack Obama’s need to bow to the demands of Israel and the U.S. Congress on Iran policy.

The U.S. hard line in the Baghdad talks and the failure to set the stage for an early agreement with Iran means that Iran will not only increase but accelerate its accumulation of 20-percent enriched uranium, which has been the ostensible reason for wanting to get Iran to the negotiating table quickly.

Iran’s enrichment to 20 percent, which Tehran has justified over the past two years as needed by its Tehran Research Reactor to produce medical isotopes, can be turned into high enriched uranium more quickly than the 3.5 percent enriched uranium for Iran’s nuclear power programme.

But although Iran has let it be known that it is open to making a deal to end its 20 percent enrichment and even to let go of its stockpile if offered the right incentive, the Obama administration has opted not to go for such a deal by refusing to offer any corresponding reduction in sanctions.

The U.S. demand for the closure of the Fordow facility, which is now under surveillance by the International Atomic Energy Agency (IAEA), was a direct response to pressure from Israel. Prime Minister Benjamen Netanyahu declared that demand one of his “benchmarks” for the talks on Mar. 2.

In discussions with the U.S. in late March, Defence Minister Ehud Barak insisted on the closure of Fordow as one of the Israeli demands, as he revealed Apr. 4. That was a quid pro quo for Israeli acceptance of a focus in the first stage on halting Iran’s uranium enrichment to 20 percent rather than demanding an end to all uranium enrichment, as Reuters reported Apr. 4.

That agreement clearly implied that the Obama administration would do nothing to dismantle any sanctions against Iran unless Iran ended all uranium enrichment.

The administration’s refusal to entertain any removal of sanctions as part of its diplomatic strategy with Iran also recognised the fact that it would have to pay a steep political price merely to request any change in sanctions legislation and would be unlikely to prevail over the deeply entrenched interests of Israel in both houses.

After being lobbied by 12,000 activists attending the conference of the American Israel Public Affairs Committee (AIPAC) in March, the House of Representatives passed a resolution demanding a policy of preventing Iran from having a “nuclear weapons capability” by a vote of 401-11.

The U.S. understandings with Israel were sharply at odds with a deal with Iran based on a “step by step” approach which had been proposed by Russian Foreign Minister Sergei Lavrov. Under that approach, each move by Iran to satisfy Western concerns about its nuclear programme should be rewarded by a relaxation of sanctions.

As Michael Adler revealed in The Daily Beast Mar. 7, however, the Obama administration was unwilling to reduce sanctions gradually as the Russians wanted. Adler’s account implied that it could only come at the end of the process in response to a complete suspension of all uranium enrichment by Iran as a “confidence building measure”.

For Iran, 20 percent enrichment has been largely an exercise in increasing its bargaining leverage with the United States by creating a level of enrichment that the U.S has said is threatening.

Iran has made a series of policy statements since it began that enrichment suggesting that the objective has been to trade those bargaining chips for negotiating concessions that would benefit Iran – mainly moves to reduce sanctions and the recognition of its right to enrich.

The demand that the 20 percent enrichment be ended and that Fordow facility be closed without any easing of economic sanctions would represent a double diplomatic defeat which Iran has strenuously rejected.

“Giving up 20 percent enrichment levels in return for plane spare parts is a joke,” Iranian analyst Hasan Abadini was quoted as saying.

There was some discussion before the Baghdad meeting, initiated by Europeans, of at least offering to suspend a European ban on insuring oil tankers, which threatens some of Iran’s oil trade with Asian countries, in conjunction with a deal, according to the New York Times May 18. But that was evidently rejected by Washington.

The U.S. rejection of the “step by step” approach in favour of a stance that leans heavily toward Israeli preferences leads to apparent contradictions in U.S. policy.

That stance is sharply at odds with the official U.S. stance suggesting ending Iran’s 20 percent enrichment is an urgent requirement. A senior U.S. official was quoted by Associated Press Thursday as saying, “We are urgent about this, because every day we don’t figure this out, they keep going forward with a nuclear program.”

The contradiction was further highlighted by reports that Iran is further increasing its capability for 20 percent enrichment at the Fordow facility. A Reuters story from Vienna Thursday said that Iran may have already put 350 more centrifuges into Fordow since February, on top of the almost 700 already operating there.

Associated Press reported a senior U.S. official in Baghdad explaining that sanctions were likely to increase the pressure on Iran to agree to U.S. terms in the next round of talks. “Maximum pressure is not yet being felt by Iran,” the official was quoted as saying.

But few diplomatic observers believe that Iran’s Supreme Leader, who makes the crucial decisions, could afford to bow to the U.S. demands as presented in Baghdad.

Meanwhile, the U.S. strategy of drawing out the talks to wait for the impact of sanctions to work on the Iranians allows Iran to continue adding “facts on the ground”.

Ironically, U.S. strategists have argued publicly in the past that Iran was using negotiations to “play for time” while it increased its nuclear capabilities.

In another seeming contradiction between U.S. diplomatic posture and its declared interest in ensuring that Iran prove the non-military character of its nuclear programme, U.S. officials dismissed as irrelevant the news that Iran and IAEA Director General Yukia Amano are close to an agreement on the terms of Iranian cooperation in clarifying allegations of past nuclear weapons work.

A “senior U.S. official” said the United States welcomed the signs of progress, but then carefully differentiated the purpose of the P5+1 negotiations and those of the IAEA, according to Al-monitor May 22.

“The IAEA is about accounting for the past and for naming what is,” the official explained. “It is not about what is the nature of Iran’s nuclear program and what will Iran’s nuclear program look like going forward, and will it be peaceful.”

That statement abruptly reversed previous U.S. insistence that Iran’s cooperation with the IAEA represented a central element in a diplomatic settlement of the conflict over Iran’s nuclear programme.

The idea that U.S. negotiations with Iran would not be affected by whatever it did to prove allegations of past nuclear weapons work wrong implies that Washington is firmly committed to its present diplomatic course mainly in order to placate Israel and the U.S. Congress.

*Gareth Porter is an investigative historian and journalist specialising in U.S. national security policy. The paperback edition of his latest book, “Perils of Dominance: Imbalance of Power and the Road to War in Vietnam”, was published in 2006.

IPS

Is Natural Gas a Deflation Catalyst?

2012-05-26T06:05:47Z

We have a ton of it sitting in the ground waiting to be consumed, the price is right (super cheap) and even T Boone Pickens loves it; so why aren’t we using more natural gas?

Over the last 2 years or so I have been examining alternative energy scenarios that would help solve our thirst for crude oil and gasoline, which not only drives both of those prices higher, but makes the U.S. dependent on foreign countries, who in turn capitalize and grow stronger on our weakness. Many of these oil producing nations do have our best interests in mind.

70% of our crude oil consumption is driven (pun intended) by our transportation needs, ground transport accounts for a large part of that.

What’s interesting to me is that even though diesel is “less refined” than traditional gasoline, it is more expensive. What’s worse is that the average tractor trailer gets about 5 MPG (That’s 1/3rd the MPG of a 12 cylinder Lamborghini).

Our interstates and the trucks that travel along its twists and turns are the primary circulatory system for getting goods and services to North Americans. But since the average tractor trailer gets 5MPG and with diesel averaging over $4.15 per gallon, much of that cost is added into many of our consumables; everything from food and drink to clothing and even trash.

According to the Wall Street Journal, Waste Management (WM) passed $170 million in fuel costs back to the customer in 2011 alone. To keep costs down, 80% of the vehicles they purchase over the next 5 years will be powered by natural gas.

The biggest issue with natural gas is not the engines or conversions, it’s the infrastructure. When was the last time you saw a “natural gas station” while driving up and down America’s highways

But if large transport companies were to use their advanced logistical prowess to setup key refueling stations where needed and plot out truck routes so that minimal infrastructure was needed, we could be there sooner than later and perhaps see more stable, if not cheaper goods at our stores. (This is already underway to an extent)

Waste management says that Nat gas vehicles may cost $30k more, but will save at least $27k per year. My thinking is that if a truck has a 10 year life span, the company would save a minimum of $270,000.00 per truck. Waste management currently operates 1,400 CNG (compressed natural gas) trucks in N America, which equates to a savings of $378 million over 10 years on those trucks alone. There are thousands of trucks in the total fleet.

Scott Perry, a V.P. at Ryder noted that “The economics favoring natural gas are overwhelming” and Frito-Lay is also moving to Nat gas transport.

While a conversion to Nat gas has been difficult in the past, we may have the perfect storm of price, technology and politics to propel this initiative to wide adoption.

Zacks.com

A Guided Tour of Catastrophe

2012-05-26T06:04:43Z

The pop environmentalist polemic follows a rigid formula. From its best-selling beginnings, with angry screeds like Rachel Carson’s “Silent Spring” (1962) and Paul Ehrlich’s “The Population Bomb” (1968), the genre has mobilized generations of activists by inducing nightmares of planetary destruction. The Earth’s future is “in the balance,” we are but a few generations from environmental collapse, and nature, as writer Bill McKibben declared, has effectively ended. For reasons only psychoanalysts properly understand, Malthusianism sells. Lay readers face the unenviable task of disentangling political activism from the complicated scientific record that most haven’t the interest, time or academic training to assess.

So Andrew Blackwell, a journalist and self-described “sensitive, eco-friendly liberal,” deserves praise for producing an environmentalist book that avoids the usual hyperventilation, upending stubborn myths with prosaic facts. In “Visit Sunny Chernobyl: And Other Adventures in the World’s Most Polluted Places,” Mr. Blackwell avoids the trendy tropes of “ecotourism” in favor of the infinitely more interesting world of eco-disaster tourism.

The author has traveled to seven of the world’s most blighted and benighted places. Besides the titular ghost town of Chernobyl, site of the infamous 1986 nuclear accident, Mr. Blackwell journeys to Amazon rain forests and floats down sacred and sewage-infested Indian rivers. He searches for a massive floating island of plastic refuse in the Pacific, assists a cigarette-smoking 8-year-old Chinese boy in disassembling junked computers, and explores both the American and Canadian ends of what was to be the Keystone XL Pipeline, which the Obama administration has stymied under intense pressure from activist groups.

This isn’t an overly heterodox book; Mr. Blackwell doesn’t underplay the ecological problems facing his most forsaken vacation spots, nor does he question the existence or dangers of man-made global warming. But his tone is balanced and skeptical. Unlike heavy-breathing accounts of environmental issues written by authors whose main goal is to spur readers to action, Mr. Blackwell’s book provides a nuanced understanding of environmental degradation and its affects on those living in contaminated areas.

His Geiger counter convulses on a visit to the abandoned areas around Chernobyl, but Mr. Blackwell reacts soberly. While the initial disaster provoked a justifiable public panic, it also inspired scare-mongering from groups like Greenpeace, which claimed that the fallout would cause 270,000 cancer cases. He points to a study commissioned by the United Nations concluding that, after an initial spike in thyroid cancer, “no measurable increase has yet been demonstrated in the region’s cancer rates.” The author is also sure to irritate certain readers with the claim that “paradoxically, perversely, the accident may have actually been good” for the local environment, since the evacuation created an accidentally verdant nature reserve.

At the controversial Alberta tar sand pits, Mr. Blackwell offers a diligently evenhanded perspective, skeptical of both those who suggest that Canadian crude will greatly mitigate America’s dependence on oil from the Middle East and activists who declare the project an unmitigated environmental catastrophe. In Port Arthur, Texas, where the Keystone XL Pipeline would have deposited Albertan oil for refining, he listens sympathetically as locals regale him with stories of cancer they believe is caused by refinery incinerators, while conceding that “it is excruciatingly difficult to make definitive statements” about the long-term health effects of the city’s oil industry on local inhabitants.

Mr. Blackwell also avoids the sentimentality that so often colors environmental writing. When investigating the soy industry’s actions in the Brazilian rain forest, he ruminates on a nagging thought—that it is not just those mustache-twisting multinational corporations that rely on rain forests for profit but local farmers and landowners as well. Indeed, “Visit Sunny Chernobyl” highlights the significant improvements in forest preservation made by both the Brazilian government and logging companies: “How was I supposed to make a pithy observation about the end of the world if everything was going so well?”

Then again, according to Mr. Blackwell, all isn’t going that well in the heavily polluted city of Linfen, China, where the world’s retired computers are stripped for parts. Enveloped in an enormous cloud of smog, Linfen frequently tops the tables as China’s most polluted city. Again, he shares a few extenuating observations but quickly insists that he hasn’t gone to the dark side: “Don’t worry. I’m not debunking anything. We’re still ruining the world and Linfen is still polluted as hell.”

There are moments when the reader will wish that Mr. Blackwell was a touch more forthright about his views. On a trip to the North Pacific Gyre—a swath of ocean known as “Garbage Island” for the enormous amounts of refuse bobbing in the water—he observes periodic knots of trash but not the floating garbage dump the “size of Texas” described by campaigners. What he witnesses is “vast and problematic,” but how big a problem is it, really? Should governments dedicate resources to cleaning up the garbage that is there? Mr. Blackwell returns to dry land with a string of questions that will likely be similar to those of his readers. But we want answers from him.

Still, Mr. Blackwell is a smart and often funny writer, who has produced a complex portrait in a genre that typically avoids complexity in favor of outrage. Without the usual predictions of imminent environmental collapse, though, will anyone listen?

WSJ

Drumbeat: May 25, 2012

2012-05-25T13:41:27Z

Jeff Rubin: Whatever happened to $200 oil?

Four years ago, when I was still chief economist at CIBC World Markets, I forecast that global economic growth was on pace to send oil prices CL-FT to $200 (U.S.) a barrel by 2012. In short, the argument was based on a supply-driven analysis that weighed the sources of future oil supply against the prices that would be needed to make the extraction and processing of that oil economically viable.
Since that call (which clearly hasn’t come to pass) received some attention at the time, it feels fitting to spend a few words discussing what happened to derail the projection.

Rising oil prices threat to life we know

Toronto economist Jeff Rubin's point of view in this thorough and articulate polemic is blunt and, at first glance, unsettling.
The rising costs of oil, he forecasts, will continue to force material changes in the way Canadians live. Our children and grandchildren will not know the lifestyle to which so many of us have become accustomed.

Will oil become the 'Canadian disease'?

There's an odd symmetry to Jeff Rubin's take on the energy world these days: His logic about the effect of high oil prices might just be seen as being on the unconventional side - just as increasing amounts of oil and natural gas are coming from unconventional sources.
Rubin's latest book, The End of Growth, addresses the impact high oil prices will have on the global economy. Simply put, economic growth, as we know it will slow down.

High oil prices stifling global economic growth

The recent slide in world oil prices is being viewed as a sign of just how fragile the economic recovery following the most recent recession is.
Crude prices are hovering around a 7 month low, as goverment's the world over start to rein in economic growth projections.

Oil Rises on Euro-Bond Speculation to Trim Weekly Drop

Oil rose for a second day in New York, paring its fourth weekly decline, as support among European Union leaders for joint euro-area bonds fueled speculation that the bloc can resolve its debt crisis.

Motorists' summer outlook: Relief at gas pump

Except for the supply-tight West Coast, motorists can expect more relief at the pump heading into peak summer driving season.

Falling oil revenues strain Russia's budget

Russian financial markets have hit an eight-month low as the prices of oil, the country's largest export, continued to plunge, lowering revenue from the lucrative sector.

Trade Deal Spurs Record Flow of North Sea Oil to South Korea

An unprecedented 24 million barrels of North Sea crude were exported to South Korea since December after a free trade agreement with the European Union opened the 16,500-mile (26,500-kilometer) arbitrage trade.

Despite early storm, Canadian forecasters expect average hurricane season

HALIFAX - The early arrival of a tropical storm off the U.S. east coast does not mean Eastern Canada should brace for a particularly active hurricane season, Canadian forecasters said Thursday.
Bob Robichaud of the Canadian Hurricane Centre is predicting an average number of hurricanes this year, despite the formation of tropical storm Alberto off South Carolina last weekend.

Clive Capital Hedge Fund Rebounds on Energy Price Bet

Chris Levett’s Clive Capital LLP gained as much as $230 million in May after betting oil, power and coal prices would fall as oil tumbled as much as 12 percent, two people with knowledge of the fund said.

EU challenges Argentina trade restrictions at WTO

The EU, the world's largest trading bloc, said Friday that Argentina's recent move to seize control of a division of Spanish energy company Repsol was indicative of the worsening business climate in the country but was not instrumental in seeking international protection for its trade and investment.

EU must be careful not to alienate gas suppliers: ex-IEA chief

European gas demand is more likely to increase rather than fall by 2050, so it is important that the EU sends positive signals to suppliers about its future needs for imports, according to Claude Mandil, a former head of Gaz de France and the International Energy Agency and now the deputy chair of the advisory group on the EC-sponsored Energy Roadmap 2050.
"The perspectives for 2050 show that gas use will be less, according to the European Commission. But what if time proves this to be wrong?" he said at the 10th Gas Infrastructure Europe conference in Krakow on Thursday.

Iran, big powers agree to hold more nuclear talks in June

(Reuters) - Iran and world powers agreed to meet again next month to try to ease the long standoff over its nuclear work despite achieving scant progress at talks in Baghdad towards resolving the main sticking points of their dispute.
At its heart is Iran's insistence on right to enrich uranium and that economic sanctions should be lifted before it shelves activities that could lead to its achieving the capability to develop nuclear weapons.

Iran nuclear talks not enough to halt EU oil ban

The EU foreign service has said an oil embargo on Iran will start as planned on 1 July despite ongoing talks on Teheran's nuclear programme.

Iran's oil minister plays down looming EU oil embargo on Tehran

Tehran (Platts) - Iranian Oil Minister Rostam Ghasemi Friday played down the impact of the European Union's oil ban on the Islamic Republic, due to come into effect on July 1, but warned that the sanctions had negative implications for the world economy, local news agencies reported.

Iranian crude flowing to China

China's imports of Iranian crude rebounded nearly 50 per cent last month, as Beijing refused to bow to western pressure for sanctions designed to choke off Tehran's main source of revenue.
The rise came after differences between the two parties over payments were resolved, and some say it is probable that China has been successful in its attempts to pay a lower price for Iranian oil.

Riddle of the sands

Oil and the Middle East are by all accounts Siamese twins. It is tough to mention one without the other. Even other words and characteristics that are also commonly associated with the Middle East are invariably perceived as having links to oil: cartels, boycotts, sanctions, terrorism, military expenditures, corruption, dictatorship, conflicts, wars, revolutions, foreign meddling, oil prices, oil shock, and yes, Islam.
How did these countries become so associated with oil? How did these perceptions and associations come about? What is fact and what is fiction? How has oil affected these societies - their human, political and economic development? What does it all mean for the future?

New and Frozen Frontier Awaits Offshore Oil Drilling

Barring a successful last-minute legal challenge by environmental groups, Shell will begin drilling test wells off the coast of northern Alaska in July, opening a new frontier in domestic oil exploration and accelerating a global rush to tap the untold resources beneath the frozen ocean.
It is a moment of major promise and considerable danger.

BP agrees to $8 million fine in connection with refinery violations

BP agreed to pay an $8 million penalty and invest more than $400 million in state-of-the-art pollution controls in response to alleged violations of the Clean Air Act at its Whiting, Indiana refinery.

Canadians split over NDP views on energy

OTTAWA—A new poll suggests Canadians are roughly split over NDP Leader Tom Mulcair’s contention that the Alberta oilsands have given the country a case of Dutch Disease as he prepares to visit the province next week.

Western energy vs. eastern industry: a manufactured debate

Contrary to widespread opinion, the oil sands are not a significant share of the Canadian economy, and are not crowding out other sectors. Total energy and mining production as a share of Canadian GDP is actually smaller today that it was in recent decades – 4.6 per cent of GDP today, versus 5.1 per cent in 1990 and 5.9 per cent in 1980. Business services – which encompass everything from fast-food to investment banking – are by far the dominant sector in our economy, now representing 54 per cent of GDP.

Mixed Signals Emerge From Bakken Shale

NEW YORK (Trefis) -- Hit by rising labor and other costs, Occidental Petroleum is moving some of its rigs out of the Bakken Shale Play in North Dakota.

Energy Income For A Peak 'Energy Return On Energy Invested' World

EROEI is the energy one must expend in order to obtain more energy. This ratio represents the physical constraint on global energy production capacity. Even if oil is discovered, if the EROEI to obtain that oil is less than 1 it will not be added to production. Essentially, the more EROEI falls the less production is added, and with new discoveries dependent on deep water drilling or arctic exploration this ratio is falling fast for new sources. This does not bode well for replacing and expanding oil production.

IMF Warning on Oil Prices Shows Urgent Need for Alternative Fuel Sources, Fuel Freedom Foundation Says

The Fuel Freedom Foundation is a nonpartisan, nonprofit organization based in Irvine, California, which is dedicated to breaking the U.S. economy’s oil addiction by removing barriers to competition to promote the development of cheaper, cleaner, American-made fuels. Fuel Freedom means that gasoline, diesel, methanol, natural gas, ethanol and electricity compete on equal footing both at the dealership and at the pump. Achieving Fuel Freedom will lower fuel prices, create jobs, spur economic growth, reduce pollution, and improve national and global security.

Geologist Is Nominated to Lead Nuclear Agency

WASHINGTON — President Obama on Thursday nominated Allison M. Macfarlane, a professor of environmental science at George Mason University, to serve as chairwoman of the Nuclear Regulatory Commission.

China rules US clean energy support improper

BEIJING — China’s Commerce Ministry issued a ruling Thursday that U.S. government support for six renewable energy projects violated free-trade rules, the latest volley in a widening conflict over clean power.
The United States and China, the world’s two biggest energy users, have pledged to work together to develop renewable sources. But they accuse each other of improperly subsidizing or protecting their manufacturers.

China to spend $27bn on energy efficiency and renewables

China plans to spend $27 bn (£17bn) this year to promote energy conservation, emission reductions and renewable energy.
The country's finance ministry said it wants to promote energy-saving products, solar and wind power and accelerate the development of renewable energy and hybrid cars.

Off-the-Grid Living in Brooklyn

AS the standards for environmentally friendly construction rise, a Brooklyn developer has a new goal: renovate an apartment building so it generates as much energy as it uses.

Africa: 'The Real Enemy Is Humanity Itself'

Forty years on and those predictions of doom have not been borne out. The average life expectancy of a human has increased by 10 years, and the number of infants dying before their fifth birthday has fallen from 134 per thousand to 58. Thus, the human population has nearly doubled, and global GDP has risen threefold. There are more of us, we are healthier, wealthier and better fed. There is vast disparity between what the advocates of political environmentalism have claimed and reality. So why are world leaders set to meet next month in Rio at the United Nations Conference on Sustainable Development?

German Power Set For Record Slide Without Carbon Fix

The European Union’s failure to decide whether to curb supplies of emission permits is sending prices for electricity in Germany, Europe’s largest market, toward their biggest losing streak since at least 2006.
Power for 2013 delivery has fallen as much as 8.8 percent this year to a record low today, according to broker data compiled by Bloomberg. It may decline a further 7.1 percent by November, according to UBS AG. Adapto Advisors AB, a hedge-fund manager, forecasts an additional 5 percent slide this year.

Africa: Livestock - Cure or Curse?

Lambasted for their voluminous greenhouse gas emissions, implicated in massive land degradation, and denounced for driving deforestation, livestock are supposedly the bad kids on the block - the black sheep of sustainable agriculture.
In short, the sacred cow has long left the building; to misquote Orwell, it's definitely now a case of "four-legs-bad".
But the polarisation of the livestock debate has brought about one of the greatest public image travesties of our time. It has seen small-scale livestock keepers, who raise a handful of animals for milk or meat in low-tech systems with a negligible environmental footprint, tarred with the same brush as large-scale industrial producers.

China hits back at claims it is blocking climate talks

China hit back Thursday at claims it was holding up global climate talks in Germany, saying the United States, Europe and other rich states were the ones applying the brakes.
Developed nations are trying to wriggle out of legal targets to curb global warming, Chinese chief negotiator Su Wei told AFP.

The UN climate talks grapple with rich-poor divide

There is a growing gap between rich and poor countries at the UN climate talks which risks undermining the global effort to control harmful carbon emissions, the Associated Press.
Negotiations at the Bonn, Germany talks have been plagued by technical disputes but the core of the problem is the divide between developed and developing nations.
"There is a total stalemate," Artur Runge-Metzger, the chief negotiator for the European Union told the AP.

To Tap Arctic Oil, Russia Partners With Exxon Mobil

2012-05-25T12:27:11Z

Russia is still the world’s largest producer of oil and gas, but growth has stalled and to get to new supplies requires going to a very difficult place — the Arctic.

“If you want to be in this business in 2020, 2025, you must think about the Arctic,” says Konstantin Simonov, head of the National Energy Security Fund in Moscow.

In the past month, Moscow has signed several deals with foreign oil companies designed to maintain Russia’s position as the top producer. The most important deal, and the most lucrative, is a partnership between Exxon Mobil and Russian oil giant Rosneft.

Exxon Mobil could eventually spend half a trillion dollars to look for and extract oil and gas in the Russian Arctic. The investment is enormous, but so are the potential rewards.

Getting To The Arctic’s Reserves

“The reserves in the Russian Arctic are vast,” says Roland Nash, chief investment strategist for Verno Investment in Moscow. “Nobody quite knows how vast, but the numbers are enormous.”

Some estimates put the oil and gas reserves in Russia’s Arctic waters at 100 billion tons. According to Simonov, the deal with Exxon Mobil is a sign that Russia knows it needs international investment and technology to get to those reserves.

“Without foreign partners, for us it will be impossible to develop this area,” Simonov says. “It’s out of [the] question.”

The deal was signed on April 18 with Russian President Vladimir Putin looking on. It gives Exxon Mobil access to oil fields in the Black Sea and provides Russia some access to Exxon Mobil’s oil deposits in Texas, Canada and the Gulf of Mexico.

At the signing, Putin said Exxon Mobil also had the option to work in Russia’s north and south, as well as in other regions. Meanwhile, the Russians will soon start work with Exxon Mobil in the U.S. and Canada.

In addition to the Exxon Mobil deal, Russia’s Rosneft recently signed smaller deals with Italian oil company Eni to go after oil in North Africa, and with Norway’s Statoil elsewhere in the Arctic.

But it hasn’t been easy for foreign oil companies to do business in Russia. BP had a similar deal with Rosneft that fell apart last year. According to Roland Nash, everyone knows about Russia’s troubled past with international oil companies.

“Signing the deal is Step 1,” Nash says. “Implementing the deal is a bigger step in some ways.”

So Russia has changed the game in favor of the oil giants. The government has eased the tax burden on Exxon Mobil and others looking for oil in the Arctic, making it a more attractive proposition.

And, according to Simonov, letting Rosneft in on energy deposits elsewhere in the world turns the Russian oil giant into an international player, helping it spread its risks. There are also potential political benefits.

“It’s like, you know, the logic of capitalism,” Simonov says. “If you are the shareholder of serious assets in Europe and the United States, maybe there will be more reason to have political dialogue also.”

Making Things Happen

The financial markets have reacted cautiously to the deal, given Russia’s checkered relations with international oil companies in the past. But Nash believes it’s a very good move by Exxon Mobil and by Russia.

“The real reason why Exxon Mobil should believe in this is because Russia really needs this investment. They recognize that without that investment, you’re not going to be able to maintain Russia as the world’s largest oil producer. You’re not going to be able to get this oil out of the ground in the Arctic,” he says. “When things are necessary in Russia, they tend to actually happen.”

But it won’t happen fast. Russia has a long-term deal with Exxon Mobil, and it’s unlikely that there will be any serious production from Russia’s soon-to-be explored Arctic waters until after 2020.

NPR

The rise of re-use

2012-05-25T12:07:01Z

Last week I read that the glitzy world of virtual reality created instant multi-millionaires and several billionaires when Facebook went public selling shares.

Last week I also noted the important real world problem of some 250 million tons of solid waste a year in our country alone.

Guess which “world” gets the most investment, status, fame, klieg lights, and attention of the skilled classes and the power structure?

Guess which world is more important for our wellbeing and that of the planet?

You’ve heard of CEO Mark Zuckerberg and Facebook’s 900 users exchanging gossip and other personal pleasantries or worries through a medium that inflates narcissism.

The three Rs

You’ve probably not heard of Ben Rose of the New York City Materials Exchange Development Program (NYC MEDP) or the equivalent organizations in your communities providing services to thousands of charitable non-profit groups which promote the donating and reusing of materials to avoid incineration, landfilling and recycling.

To grasp the enormity of modern society’s waste products, Ann Leonard created a sparkling website, visited by millions of people (www.storyofstuff.org). She also published a recent popular book titled The Story of Stuff that details every aspect of your environment and physical being. Air, water, food, soil and even your genes absorb the byproducts of processing mountains of stuff. The results are not pretty.

While recycling efforts in cities like San Francisco, Vancouver and Los Angeles rise above 50 percent, New York City has been slipping behind its own 2002 level and is still struggling to reach 20 percent. New York City has been a leader in improving air quality and reducing greenhouse gas emissions, but it still has dreaded incinerators producing toxic air and toxic residues.

In the early 90s, pragmatic environmental scientist, Professor Barry Commoner demonstrated in two operational pilot projects that the city could reach a residential recycling level of nearly 100 percent. Unfortunately, New York City missed a chance to become a world leader in recycling when its leaders, beginning with Mayor Rudolph Giuliani, declined to establish a city-wide recycling program based on Professor Commoner’s model.

The New York City recycling challenge still hasn’t recovered from that devastatingly wrongheaded decision. Politicians and corporations cannot stop an even superior environmental cycle, presently driven by charitable associations, in Mr. Rose’s words, “nimbly accepting, exchanging and distributing thousands of tons of reusable material each year,” as they have done for generations, “all the while contributing to the social, economic and environmental fabric of New York City.” Over the decades, the recipients have been communities in need, such as homeless shelters and poor populations.

The NYC Materials Exchange Development Program now sees a great potential to “organize, grow and advocate for the practice of donating and reusing materials for the benefit of all New Yorkers,” creating local jobs and adding productivity without any tax dollars. They are rediscovering the past of a thrifty culture and expanding it mightily to contribute to the neighborhood and economic landscape.

Donating materials instead of trashing or recycling them enlarges the gifting culture and the beneficial human interactions that follow. As Ben Rose notes: “In contrast to recycling, where used materials are broken down into their raw elements to make new items, reuse takes useful products and exchanges them without reprocessing, thus saving time, money, energy and valuable resources.”

Battling manufactured obsolescence

The obstacles are obvious. First a throwaway economy of waste is profitable for sellers who want you to keep throwing away and buying. They plan product obsolescence and lure consumers with the convenience of disposable products. So we have to change habits: become more cunning about what manufacturers and vendors are up to and expand second hand, reuse and material exchange programs.

What are reusable materials? Just about everything you purchase that doesn’t spoil or perish. Clothing, furniture, books, bicycles, containers, computers, tools, surplus construction materials and things you buy or grow that you do not use. Reuse outlets include Goodwill or Thrift stores, charitable book and clothing drives, ecology centers and creative arts programs.

Nothing less than a “New Age” for a burgeoning sub-economy of reusable products and materials is being envisioned by the collaborative likes of the New York City Sanitation Department and the City College of New York’s Department of Civil Engineering. Collecting data which shows how much energy is saved, how many jobs can be created, how much better pricing systems can be, and how much solid waste can be prevented will elevate this subject and its social status within the “zero waste” movement. We should aspire to using resources, in the worlds of Paul Hawken, “10 to 100 times more productively.”

Other countries are advancing in the reuse sector in ways we can learn from immediately. Holland is starting numerous “Repair Cafes,” that are attracting increasing interest in “fixing” rather than dumping. These used to be called “Fix-It Shops” in the U.S. before the advent of our throw-away corporate culture.

For more information visit (www.nycmedp.org).

– Ralph Nader, the Nader Page.

Operators Admit Fukushima Radiation Levels Exceed 2 1/2 Times Announced

2012-05-25T12:03:37Z

Fukushima plant operators are now admitting that the Fukushima radiation levels emitted from the disaster exceeds almost two and a half times the initial ‘estimate’ produced by Japanese safety regulators. The announcement comes after independent researchers exposed the true amount of radiation leaked from the plant back in October of 2011. The study revealed that significantly more radioactive caesium was released into the atmosphere as a result of the Fukushima explosion than many nuclear experts previously told the public.

Fukushima Radiation Levels: A Cause for Concern

The researchers from this study went against the official explanations (now confirmed as bogus by the operators themselves), and stated that the amount of radioactive isotope caesium-137 released at the height of the crisis was equivalent to 42% of that from Chernobyl. And that’s just the amount released at the height of the event. Many experts have actually labeled the Fukushima event to be even more catastrophic than the Chernobyl incident. Scientists who challenged the official report published their findings online in the journal Atmospheric Chemistry and Physics, and authors state that Fukushima radiation levels truly began flooding the environment between being struck by the magnitude-9 earthquake on March 11th and being hit with a tsunami 45 minutes later.

Maxim Shingarkin, an expert in nuclear and radiation security, commented on the situation in Fukushima:

“In fact, this statement came with a big delay. The operating company deliberately concealed this information. The explanation is simple – the company is afraid that any checking by competent experts would reveal its inability to save the situation. Only recently, foreign experts founded a consultative body for the clean-up of the accident’s consequences. Moreover, the company is concealing the information about the amount of pollution of the environment.”

The plant now states that the meltdowns which took place at three reactors at the Fukushima Daiichi plant released about 900,000 terabecquerels of radioactive substances into the air. But what happened to the majority of the radioactive contamination? According to the earlier report, 20% of the caesium-137 fell on Japanese land, and about 2% ended up on land outside the country. The remainder came down in the Pacific Ocean. Is it any wonder that ‘hidden’ deaths are now being reported by scientific research?

Health and radiation experts are now admitting that radiation stemming from the Fukushima disaster is leading to an unknown number of deaths as a result of increasing cancer rates around the globe. They are also stating that these deaths will be ‘hidden’ from the public eye due to a lack of accurate identification when it comes to targeting Fukushima-related cancer deaths.

It seems that Japanese government officials and plant higher-ups are now being forced to reveal certain details of the Fukushima disaster. From concealing integral information from the public to ignoring the real threat to public health, there is sincere lack of honesty and communication between many worldwide health officials and the citizens of the world. As information continues to surface, more and more truths will be expelled from the mainstream media and ‘health’ officials alike regarding the troubling event.

InfoWars

Drill, Baby, Drill! More drilling doesn’t necessarily mean more oil

2012-05-25T11:59:08Z

The United States has a problem. An oil problem. No matter how many wells are drilled oil companies just can’t seem to raise production to anywhere near the figures required to reach the holy grail of energy independence.

Looking at the oil production data, active rigs in use and footage drilled over the last forty years it is clear that no matter how much investment is made are there just isn’t the size and quality of oil producing fields left in the U.S. any more.

Figure 1: U.S. Crude oil production (including lease condensate) and active rig count, January 1973 to January 2012.

Various news items and opinion pieces have announced that the United States is entering an exciting new era of energy independence. Figure 1 shows that the truth is a bit more sobering. We can see that over the last 40 years the overall trend for crude oil production has been steadily decreasing. There are a few anomalies however. In the late 70’s and early 80’s the rig count climbed dramatically as a response to high global oil prices. This however only produced a very slight increase in oil production over the boom period. Once the bubble burst in 1985 crude oil production continued on its downward trajectory. Rig counts fluctuated wildly until the Asian recession in 1998, recover and then dip again after the Dot-com crash of 2000-2001 and recover again until the beginning of the global financial crisis (GFC) in 2008. This is where things get interesting. As the economy begins to recover after the GFC and rig counts begin rising, U.S. oil production begins rising for the first time in over 20 years. This is due largely to rigs coming online that employed hydraulic fracturing or fracking, the process that enabled oil companies to extract oil from previously marginal areas.

This increase in oil production is what pundits have been hailing as a new era for U.S. energy independence. There are a number of reasons why this is overly optimistic and these will be explored below.

Figure 2: U.S. crude oil production (including lease condensate) and U.S. footage drilled for crude oil, natural gas, and dry exploratory and developmental wells (thousand feet), January 1973 to February 2012.

Figure 2 shows footage drilled had been steadily increasing from the early 2000s but fell off during the 2008 financial crisis. Once the global economy began to recover drilling increased sharply to the highest numbers seen since the mid 1980s. The remarkable thing is this: even though drilling is at a 25 year high production has not followed suit. Since July 2009 the drilled footage has increased a whopping 105.5 percent but production has failed to follow increasing by only 7.6 percent. Clearly all is not well in the land of oil and gas.

Figure 3: Ratio of U.S. crude oil production (thousands of barrels per day) to active rig count, January 1973 to January 2012.

Figure 3 shows that for every active rig in the U.S. today roughly 2700 barrels of oil are produced. This is a far cry from the 5900 daily barrels per active rig at the beginning of 1973.

Figure 4: Ratio of U.S. footage drilled for crude oil, natural gas and dry exploratory and developmental wells (thousand feet) to active rigs, January 1973 to January 2012.

Figure 4 shows that the ratio of footage drilled of all types to active rigs has steadily increased since 1998. This is a combination of both drilling deeper and less exploratory wells being converted into active rigs. It can costs hundreds of dollars per foot to drill so we can see that the U.S. is coming up against increasing inefficiencies with drilling to active rig conversion.

Figures 3 and 4 show that it is without a doubt that the fields being tapped today are of a far lower quality. This means far more capital must be invested in order to produce the same amount of oil as 40 years ago. With the U.S. and global economy still on very shaky ground it is questionable as to where this capital will come from. There are already concerns being raised over a labour shortage in the U.S. oil industry.

Well Servicing Magazine reports that:

“There are just not enough experienced work crews to staff many more rigs coupled with various areas of the country that do not want drilling or servicing rigs working in their backyards.

No one knows how rig counts will react any more. There is only so much iron the oil patch can handle. Rigs and tubular goods cannot materialize that fast. There might be a gradual trend upward, but it’s a slow process. The reality is that rig counts can go down much faster than they can go up.”

So even if there was no looming labour and capital crisis how soon could the U.S. gain oil independence based on current growth figures?

Figure 5: Projected U.S. crude oil production (including lease condensate) based on he trend from January 2009 to February 2012.

The U.S. currently consumes 19,500,000 barrels of oil per day. If we assume that U.S. oil consumption stays the same it will take 80 years for the U.S. to reach oil independence based on the production trend from the last three years (Figure 5), unless the active rig count increases dramatically which as we have seen above is unlikely in the current economic climate. If the U.S. hopes to grow its economy in any real sense (financial abstractions in the tertiary economy don’t count) it is clearly a ridiculous assumption that oil consumption will not grow at the same time.

As with all future predictions only time will tell. But I am willing to bet that the only way that the U.S. will gain oil independence is by the economy contracting and jobs being lost. This is clearly not a winning platform for politicians to gain votes and so we will continue to see these Polyannaish statements based on little more than hope that the U.S. is on the brink of an energy revolution. The hard facts are more difficult to argue with but that won’t stop those trying to gain office and favour with the oil industry from promoting the idea of business as usual. Let’s hope they wake up before things get really bad.

Southern Limits

Economics as if the Laws of Thermodynamics Mattered

2012-05-25T11:55:42Z

There is no wealth but life. –John Ruskin

Have you ever considered the question: what is life? If we are aiming for a new economic system that will preserve and enhance life, rather than the current system, which more often than not seems to destroy and degrade life, perhaps we should consider what life is and how it is made possible. I recall learning about “living things” in high school biology classes, but always found the definitions of these “living things” to be somewhat vague. Let me try a physicist’s definition then, which might feel unfamiliar at first. A living thing is a kind of low-entropy-maintenance machine: a configuration of differentiated parts that succeeds in performing complex, interdependent functions for a prolonged period of time.

Having used the word “entropy” in the previous sentence, I should try to explain what it is. All living and non-living things (and hence all human economies, whether or not economists pay attention to the fact!) obey the laws of thermodynamics. The second law, in particular, introduces the concept of entropy and the idea that the entropy of a closed system must either remain constant or increase, but never fall. Entropy is a measure of how “special” a particular arrangement of parts is — the lower the entropy, the more “special” the arrangement. Life is “special.”

To illustrate this concept of “specialness,” imagine first a set of red and blue gas molecules, fifty of each say, bouncing around in a room. Which is more likely: (A) that all 50 red molecules will be in one half of the room and all 50 blue in the other half, or (B) that some roughly even mixture of red and blues will be present in both halves? Scenario B, is the less “special” and more likely one, but why? The answer is that there are many ways of arranging the molecules to have “some roughly even mixture” of red and blue — a great many pairs of molecules can be swapped between the halves without making a difference. However, with the perfect red and blue split, if any molecule is swapped with a partner in the other half of the room, then each half gets “contaminated” with one molecule of the “wrong” color — such a swap does make a difference. Hence what we see tends to be an equal mixture of each color, just because there are vastly many more ways of seeing an equal mixture.

Now I can state the notion of entropy precisely — the entropy of such a set of molecules is a number that is large when there are many ways of swapping pairs of molecules and getting the same overall state, and small when there are few ways of swapping them and getting the same overall state. Explicitly, an entropy S is given by Boltzmann’s entropy law:

S = k log W

Here k = 1.38 x 10−23 joule/kelvin (Boltzmann’s constant), W is the number of ways of swapping the components of a state (say red and blue molecules) without making an overall difference to that state and log W means “the natural logarithm of W” — the power you have to raise Euler’s number (e = 2.718) to in order to get W (for example if W is equal to e then log W is equal to 1, because e to the power 1 is e).

Boltzmann’s tomb, with his famous entropy law above the bust

That little equation of Boltzmann’s explains a huge number of phenomena. For example, why do hot things tend to get colder and cold things hotter? Easy — bring a hot thing and a cold thing into contact and it’s like the red and blue molecules all over again — there are many, many more ways for hot molecules and cold ones to get mixed together equally than for them to stay separated into a hot part and a cold part. So the temperature equalizes.

Another example: why do balls bounce lower and lower, but never start bouncing higher and higher? Easy — after they’re done falling, ball molecules are moving more, on average, than floor ones. During each bounce, there are more ways of sharing out this motion randomly amongst the ball and floor than there are of keeping all the faster molecules in the ball and all the slower molecules in the floor. So this sharing out is what happens, and the ball eventually stops bouncing. The opposite case — a ball spontaneously bouncing higher and higher — never happens in practice because it is so unlikely. That’s how you can tell a film is being played backwards; everything that happens is so unlikely that it is never seen to happen in practice. These examples demonstrate the second law of thermodynamics: the total entropy always increases and never decreases because of how incredibly unlikely a decrease is.

What about life and entropy? A living thing has a very low entropy compared to its surroundings, because there are not many ways of swapping its constituent parts and leaving it in an invariant state. For example, swapping molecules between your heart and brain wouldn’t leave you in “an invariant state” — it would kill you! In fact, coming into thermodynamic equilibrium with your surroundings is also known as being dead!

Next question: how is life able to maintain this low-entropy state, in apparent defiance of the second law? Well, life is part of the Earth-sun system. We can regard this as “a closed system” to a very good approximation — a vast ocean of space separates it from other systems. But the Earth alone (plus moon, of course!) is not “a closed system.” The sun — a nuclear fusion reactor — provides the Earth with a constant input of low-entropy “organized” energy in the form of high-intensity photons (particles of light). Plants use this energy to make food which animals (including humans) eat, keeping the low-entropy-maintenance machinery of life running.

The Earth-sun (plus moon) system, of which the human economy is a sub-system

Save for a few ocean vent ecosystems, this low-entropy input from the sun makes all life on Earth possible, and hence all human economies (again, whether or not economists pay attention to the fact!). When we humans burn reserves of oil and coal laid down over millennia in a geological eye-blink, we are liberating the low-entropy energy captured from ancient sunlight and buried deep underground.

The second law of thermodynamics has profound implications for our economic systems. A constant stream of low-entropy energy from the sun is required to maintain life’s organized state. Without this “entropy gradient” the machinery of life would soon wind down, like the bouncing balls or mixing molecules did. So in order to prolong life on Earth, we should try to use this vital low-entropy input as efficiently as possible, to recycle it through all sectors of the economy. We should certainly not waste it and assume that we will be able to increase our use of it more and more and more, forever.

Unfortunately, most mainstream economists don’t seem to have heard of the second law of thermodynamics. Perhaps this isn’t really their fault, since it’s not in their textbooks. But it should be. It governs all life and all systems on Earth, including the economy. As our leaders in business and government race to implement misguided economic models that are not founded upon the laws of thermodynamics, and as nation after nation refuses to question the pursuit of never-ending economic growth, we draw closer to a fate that will end in tears for the human race. I worry that the tears have already begun falling.

Steady State

ODAC Newsletter - May 25

2012-05-25T09:37:31Z

G8 leaders meeting last weekend in Camp David will have been cheered by the recent slide in oil prices – albeit that the weakening in price is largely a consequence of the increasingly dire economic news. Nevertheless the group issued a statement to the effect that should the price start heading back in the other direction they will be calling on the IEA to take action...