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Natural gas woes bigger story than crude oil
Mella McEwen, Midland Reporter Telegram
Having seen his prediction that crude oil prices would reach $65 a barrel become reality, Dr. Michael Economides is making equally bold predictions about natural gas.
Natural gas prices, he said Wednesday while visiting Midland to address the Permian Basin section, Society of Petroleum Engineers, will reach $20 per thousand cubic feet (Mcf) around Christmas.
Having forecast $65 oil, he said, he’s now predicting $100 oil “but I’m not impressed with that. Natural gas is the real story.”
Economides, professor at the Cullen College of Engineering at the University of Houston and managing partner in a petroleum engineering and strategy consulting firm, lists several reasons for his expectations of high energy prices.
One is the “perfect storm” of Hurricanes Katrina and Rita. Rita’s approach has, as of Wednesday afternoon, knocked out 73 percent of the Gulf of Mexico’s oil production as personnel were evacuated from offshore rigs and production platforms. On Tuesday, the U.S. Minerals Management Service survey of Gulf of Mexico natural gas wells found that 3.3 percent of gas production has been shut-in as a result of Hurricane Katrina three weeks ago.
There is, he said, 3.5 million cubic feet of Gulf of Mexico natural gas production off-line that likely won’t be back on the markets by Christmastime.
“What’s going to happen is we’re going to have a huge shortfall of natural gas and around Christmas there will be a bad present for the Midwest,” he observed.
(25 September 2005)
Comments on the article over at The Oil Drum.
An unnatural price shock
Business braces for dramatic hikes in natural gas bills
Justin Rubner, Atlanta Business Chronicle
Gary Nichols, energy manager for carpet-maker Shaw Industries Inc., spent most of the day Sept. 20 figuring out how much his company would pay for natural gas this winter.
“It’s not pretty,” he said.
Nichols predicts Dalton-based Shaw Industries will fork over $7.6 million to Georgia Natural Gas and other marketers in September, up from $4 million during the same month in 2004. Shaw Industries — one of the biggest consumers of natural gas in Georgia — uses the fuel to generate steam to dye and dry carpets and to cure the latex backings.
Because of Hurricane Katrina, Shaw’s September gas bill is one of the biggest the company has ever had to pay. Although the rest of the winter months likely won’t be as bad, they still will be significantly higher than last year, Nichols said.
…The bad news is similar or worse across the United States. In the Midwest, for example, prices are expected to rise as much as 71 percent, the Energy Information Administration reports.
High gas bills this season could have a ripple effect, analysts warn. If consumers have less money to spend because they are spending more on gas, consumption in general could go down.
(23 September 2005)
Go Ahead and Drive Less, if You Can
Danny Hakim and Jeremy W. Peters, NY Times
FOR three straight weeks, Americans have been buying less gasoline than they did a year ago. Consumption is dropping at a rate not seen since drivers were waiting in gas lines back in the early 1980’s. And people are turning to mass transit in record numbers in some cities.
…There are any number of reasons – from hurricanes to Middle East instability to China’s growing thirst for oil – to be pessimistic that the era of $1.50-a-gallon gasoline will ever return.
So how much can Americans cut back on their driving? How much time behind the wheel is discretionary?
Consider that the average American household used its cars and trucks for 496 shopping trips in 2001, according to an exhaustive survey of 160,000 Americans conducted by the Transportation Department. Trips were 7.02 miles in length, on average, for a total of 3,482 miles per household per year. That much driving could almost get you from New York to Juneau, Alaska, give or take a few hundred miles.
That’s a lot farther than in 1990, when the average household’s shopping trips could only get you from New York to Denver. Part of the difference stems from the fact that the length of an average shopping trip was 5.1 miles in 1990. Blame greater suburban sprawl for longer trips these days.
(25 September 2005)
Food Security Worries Could Limit China Biofuels
Emma Graham-Harrison, Reuters via Planet Ark
BEIJING – Worries about feeding the world’s most populous nation could limit the growth of China’s environmentally-friendly biofuels industry, officials and executives said on Friday.
Biofuels made from agricultural products ranging from sugarcane and wheat to waste oil from cooking, are becoming increasingly attractive as crude prices climb.
Beijing bureaucrats, concerned about rural poverty and rising oil imports, are attracted to a technology that offers a chance to cut dependence on foreign petroleum and boost the value of farmers’ output.
Its biofuel programme, originally developed in part to help tackle surplus corn stocks in the northeast, involves subsidised production of over 1 million tonnes of the fuel.
Five provinces already blend 10 percent of ethanol into all their gasoline and over 20 cities scattered across the country are also pioneering the “gasohol” mix.
But even with the additional advantage of helping clear city skies clouded by smog — up to 70 percent caused by car emissions, according to Gao Haiyang, from China’s Automotive Technology and Research Centre — the programme is unlikely to expand across the country just yet.
“Basically this country has such a large population that the top priority for land use is food crops … and at the moment they don’t want to exacerbate competition for new materials,” said Sergio Trindade, president of SE2T International.
(26 September 2005)
French Grain, Beet Areas for Ethanol Seen Surging
David Brough, Reuters via Planet Ark
PARIS – Grain and sugar beet areas used for ethanol production in France will surge this decade as biofuel demand grows in line with ambitious new government targets, analysts said.
Alain Jeanroy, director general of the Federation of Sugar Beet Growers (CGB), estimated that the beet area allocated for ethanol production in France would rise to 70,000-80,000 hectares by 2008 from some 10,000 hectares now.
He told Reuters in an interview this week that the cereals area allocated for ethanol production in France would rise much more — to some 300,000 hectares by 2008 from around 10,000 now. The CGB represents about 90 percent of French sugar beet growers.
French Farm Minister Dominique Bussereau said last week the government’s new biofuel output targets would propel France to be Europe’s leading producer by 2010.
Prime Minister Dominique de Villepin has called for fuels to contain 5.75 percent of biofuel by 2008, a figure rising to seven percent by 2010 and 10 percent by 2015 in a programme to boost biofuel use at a time of soaring oil prices.
(26 September 2005)
China to Spend $17 Billion on Six New Hydro Plants
Reuters via Planet Ark
BEIJING – China will spend $17.3 billion to build six more hydroelectric power plants on the Yangtze River as it tries to reduce its reliance on smog-producing coal, the China Daily said on Friday.
…The plants are dwarfed by the Three Gorges Dam, the world’s biggest hydroelectric project, which has 14 700-megawatt generators.
China’s racing economy has strained the country’s electrical grid, with power demand jumping an annual 13.4 percent in the first eight months of the year.
The country, the world’s second-biggest electricity consumer, expects an electricity shortfall of about 30 gigawatts in 2005, down from 40 gigawatts last year.
(26 September 2005)
Energy group plans to build nuclear plants in Gulf states
Matthew L. Wald, NY Times
WASHINGTON, Sept. 22 – A consortium of eight companies said on Thursday that it would spend about $100 million to prepare applications to build two nuclear reactors, in Mississippi and Alabama, a step that seems to move the industry closer to its first new reactor order since the 1970’s.
The announcement was made by NuStart Energy, a consortium of companies that has substantial government financing. The consortium selected a site in Claiborne County, Miss., adjacent to Entergy Nuclear’s Grand Gulf reactor, and another in northern Alabama, next to the Tennessee Valley Authority’s long-abandoned Bellefonte nuclear construction project.
(23 September 2005)
China: Reactors? We’ll take thirty, please
Brian Bremner, Chester Dawson, Diane Brady, Joseph Weber and Carol Matlack, Business Week
Power to the People’s Republic! That could easily be the slogan of the nuclear power executives winging their way to Beijing these days to pitch next-generation reactor designs, downplay rivals’ plans, and woo the Communist Party leadership. President Hu Jintao’s government is committed to spending $50 billion to increase nuclear power generation capacity from 8.7 million kilowatts today to 40 million kilowatts by 2020.
That’s one of the largest buildouts in the industry’s history. And by the time that $50 billion is spent, some 30 new reactors will be pumping power to China’s most important cities, in addition to the nine operating today. Most are to be built along a rapidly industrializing coastal arc stretching from Shandong province in the northeast to Guangdong province in the south.
(2 October 2005 issue)
Nuclear future
Tim Flannery, Herald (Australia)
Despite the cost and the dangers of nuclear power, climate change is strengthening the case for its more widespread use.
————
…Humanity is at a great crossroads. Trillions of dollars will need to be invested to make the transition to the carbon-free economy and, once a certain path of investment is embarked upon, it will gather such momentum, it will be difficult to change direction.
So what might life be like if we choose one over the other? In the hydrogen and nuclear economies the production of power is likely to be centralised, which would mean the survival of the big power corporations. Pursuing wind and solar technologies, on the other hand, means that people could generate most of their own power, transport fuel and even water (by condensing it from the air).
If we follow this second path, we will have opened a door to a world the likes of which have not been seen since the days of James Watt, when a single fuel powered transport, and industrial and domestic needs, with the big difference being that the fuel will be generated not by large corporations, but by every one of us.
Edited extract from The Weather Makers: The History and Future Impact of Climate Change by Tim Flannery (Text Publishing, $32.95, published today).
(26 September 2005)
Recommended by Big Gav at Peak Energy.
The power beneath our feet
Tim Flannery, Herald (Australia)
There is one other option for the continuous production of power. Geothermal energy has a long history, yet despite the considerable amount of heat lying between our feet and our planet’s molten mantle, geothermal technologies provide a mere 10,000 megawatts of power worldwide.
This sorry state of affairs may soon change, for it transpires that we have been looking for heat in the wrong places. Previously, geothermal power has come from volcanic regions, where aquifers flowing through the hot rocks provide superheated water and steam. It seems sensible to seek power in such places, but consider the geology. Lava volcanoes only exist where the Earth’s crust is being torn apart, allowing the magma to come to the surface.
Iceland, formed from the ocean floor where Europe and North America are drifting away from each other, is an excellent example. There is plenty of heat in such places, but also formidable impediments to generating power, with the biggest problem being the aquifers.
…With trial plants scheduled for construction this year, the enormous potential of geothermal power is about to be tested. Geologists around the world are scrambling to prospect for similar deposits, as the extent of the resource is hardly known. There is some reason to believe, however, that Australia may be specially blessed with this type of potential power, for the continent has been moving north at about eight centimetres a year for the past 40 million years, and when it bumped into Asia 15 million years ago, enormous compressional forces were generated. As a result, in Australian mines one kilometre deep, engineers must deal with compressional forces encountered five kilometres down in places such as South Africa.
While this appears to be an exciting breakthrough, we must remember that so far very little electricity has been provided by this form of geothermal heat, and even if successful, it will probably be decades before it is contributing significantly to the world grid.
(26 September 2005)
Recent interview with author Flannery appears in the Herald: Ill winds that whisper the collapse of civilisation.
