Energy industry – Feb 2

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Many more articles are available through the Energy Bulletinhomepage

Natural Gas Glut Could Hit US
Tom Fowler, Houston Chronicle
As many as seven massive natural gas export terminals are expected to start up overseas this year, expanding worldwide capacity by 20 percent and flooding markets with new supplies of the key power plant and heating fuel. Dozens of new tankers capable of carrying natural gas in a liquefied form are slated to hit the seas.

Just as these new supplies come on line, worldwide demand is expected to drop as the global recession deepens.

Operators of these new facilities are unlikely to cut back production, however, so shipments of liquefied natural gas will most likely head to the deepest markets with the greatest amount of natural gas storage capacity — the United States.
(1 February 2009)

Oil Sector Braces For Wider Fallout Of Low Crude Price
Spencer Swartz, Dow Jones via Cattle Network
Concern is rising among top energy officials that the oil industry is facing a deeper set of financial ailments and future supply problems.

“We are getting ourselves into a serious situation in the oil sector. Smaller oil companies have been hit by credit problems and lower prices and we’re seeing it now with big oil companies,” said Fatih Birol, chief economist at the International Energy Agency, in an interview on the sidelines of the World Economic Forum.

Birol estimates that around $100 billion worth of oil and natural gas drilling projects – mostly in nations that aren’t members of the Organization of Petroleum Exporting Countries – have been either delayed or canceled over the past year because of the world’s financial problems and weak oil prices.

Those reassessments may well hurt future energy supplies but they also have big implications for oil companies, big and small, and could lead to longer-term problems for consumers if enough potential supply goes undeveloped.
(29 January 2009)

Oil players stockpile cheap crude on tankers
Lynn Cook, Houston Chronicle
… some traders, refiners, big oil companies and other interests have been buying cheap oil in recent weeks and squirreling it away in storage tanks and ships with plans to unload it months from now when prices are higher.

It’s difficult to quantify exactly how much oil is being stored in ships, but Frontline LTD, which runs one of the largest crude supertanker fleets, estimates 80 million barrels of oil are drifting slowly on the high seas—roughly equal to a day’s oil consumption for the entire world.

Storage space for oil has become so tight in the U.S. it’s tough to find room onshore.
(30 January 2009)

Endangered Electricity System: The Potential of Microgrids
Shlok Vaidya, Center for Terrorism Research
In August 2003, a tree fell into a power line on Ohio’s electricity grid, causing more electricity to be rerouted across other high-voltage power lines to compensate. All was seemingly well. Within hours, however, three other major lines had failed, also due to falling trees. The cascading failures overloaded the entire Northeastern electricity grid and brought it crashing down. Over 50 million people were without power, 11 died, and the economic toll was calculated at some 6 billion dollars in that short period of time.

Was this an isolated incident, an unpredictable event that is unlikely to recur? In fact, the U.S. Department of Energy had warned of just such a calamity the year before, in a report titled the “National Transmission Grid Study”:

“There is growing evidence that the U.S. transmission system is in urgent need of modernization. The system has become congested because growth in electricity demand and investment in new generation facilities have not been matched by investment in new transmission facilities. Transmission problems have been compounded by the incomplete transition to fair and efficient competitive wholesale electricity markets. Because the existing transmission system was not designed to meet present demand, daily transmission constraints or `bottlenecks’ increase electricity costs to consumers and increase the risk of blackouts.”

Unfortunately, these warnings have not been taken to heart by electricity grid policy makers. Our national electricity grid is dependent on unstable fuel sources and could leave the country vulnerable to supply interruptions. The recent collapse of the global marketplace has accelerated this trend. To effectively combat this escalating challenge, we should not attempt to revive the national grid of old, but rather rethink electricity generation in the form of microgrids that can continue providing electricity even through times of uncertainty.

… MICROGRIDS
Rather than attempting to resuscitate the national electricity grid, the nation may be better served by fostering and funding the development of a distributed energy grid, made up of a network of self sustaining subsystems or “microgrids.” A microgrid is essentially a component of the national grid that can, in the face of interruption or disruption, provide 100% of electricity generation, management, and distribution services for its users. This design approach allows consumers to bypass unstable electricity supply chains, and makes microgrids more likely to gain start up capital during this time of economic upheaval. Sandia National Laboratories explains why:

“It is safe — it’s not introducing any new dangers. It’s secure because it uses a diverse mix of fuels — solar, wind, and oil. It’s reliable because it uses a variety of types of generators. There is a redundancy of generation and storage. It’s sustainable because it is using renewable energies. And, it is cost-effective because it uses energy sources that are readily available and appropriate for the site.”

Additionally, by generation electricity independent from the national grid, power quality can be improved. The national grid is comprised of hundreds of different generators attempting to route their produced electricity to the highest bidder. Unfortunately, this can mean increased transmission distances, which contribute to power quality decline. Alex McEachern, an expert on voltage sag immunity, argues that we should treat “power quality as a compatibility problem.” In contrast to the national grid, microgrids are independent systems able to use a single set of design specifications over short distances. In this regard, microgrids can insulate themselves from voltage sags. By being able to disconnect and sustain itself as needed, microgrids can also prevent brownouts, and blackouts much like the one the Northeast portions of the country experienced in 2005.
(27 January 2009)
EB contributor Heather Gray comments:
In this article the author states in regard to the 2003 cascade failure “The cascading failures overloaded the entire Northeastern electricity grid and brought it crashing down.”, which is incorrect. ISO New England staff in Holyoke, MA saw what was happening and disconnected Massachusetts from New York before the power failure problems could cascade into Massachusetts.

That said, I agree that having the ability to disconnect from the national grid in circumstances such as the 2003 cascade or other disasters is very important. It certainly was useful for us!