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Reuters Industry Summit: Global Energy June 2-5
Reuters
Reuters Summits are your direct link to top business leaders, investors and regulators. Our journalists interview heavyweights in a particular industry, spin out hard-hitting breaking news and sharp analysis that can often move markets. If you want to understand what the insiders are thinking, look for Reuters Summits.
(2 June 2008)
Multiple stories. Especially interesting: What they said on hot energy topics.
US coal lobbyists unveil nightmarish vision of life after cap-and-trade law
Stephen Foley, The Independent
US businesses have spent tens of millions of dollars trying to kill a proposed law that would introduce European-style “cap-and-trade” rules on carbon emissions even before the bill hit the floor of the Senate for discussion yesterday.
Lawmakers began a week-long debate of measures to tackle climate change amid predictions of dire consequences if carbon emissions were capped. Television viewers have been treated to visions of a dystopian future where Americans are forced to cook their breakfast over candles, or where thousands of jobs have been lost because of what one opponent called “economic disarmament” by the US.
Despite publicly supporting emissions reductions, the coal industry and electricity firms that use coal-fired plants which stand to be most affected by new restrictions have been among those funding a lobbying effort to derail the current proposals.
(3 Jun 2008)
Dakota Oil Fields of Saudi-Sized Reserves Make Farmers Drillers
Anthony Effinger, Bloomberg
[Farmer John Bartelson’s] new wealth springs from the Bakken formation, a sprawling deposit of high-quality crude beneath the durum wheat fields of North Dakota, Montana and southern Saskatchewan and Manitoba. The Bakken may give the U.S. — the world’s biggest importer of oil — a new domestic energy source at a time when demand from China and India is ratcheting up the global competition for supplies and propelling average U.S. gasoline prices to almost $4 a gallon.
And unlike the tar from Canada’s oil sands, Bakken crude needs little refining. Swirl some of it in a Mason jar and it leaves a thin, honey-colored film along the sides. It’s light – -almost like gasoline — and sweet, meaning it’s low in sulfur.
Best of all, the Bakken could be huge.
(3 June 2008)
Predictions for Canada’s Natural Gas Production
benk, The Oil Drum: Canada
Canadian natural gas is important in a number of ways: It provides 17% of total US NG consumption and today contributes roughly 11% [see calc at bottom] of the energy content in a barrel of tar sands oil (which will only increase with in-situ recovery growth). By no means (conventional or unconventional), can Canada be considered to have lots of natural gas, yet, we produce more than our fair share. Accurately predicting Canadian NG supply is, of course, important for all the usual North American energy security reasons and, among others: It would be nice to know if Canadians will have NG for things other than tar sands and exports to the US. Half of all Canadian homes are heated primarily by natural gas and about 6% of Canada’s electricity sector relies on natural gas, a lot of which is used as peak electricity generation.
It’s well known that Canadian conventional gas peaked around 2001, but according to a continuing trends prediction case from the National Energy Board, it doesn’t appear as if unconventional gas will be playing a big part, at least compared against 2001 peak production levels. Below I summarize some predictions for future production of Canadian natural gas and try to estimate how much of Canada’s natural gas will be left over for regular Canadian citizens.
(4 June 2008)
US Natural Gas: Lessons from BP’s Tight Gas Facility in Wamsutter WY
Gail Tverberg, The Oil Drum
Conventional gas is disappearing; tight gas is a big part of what is replacing it. Most of us haven’t a clue as to how tight gas is produced. This post tells the story of BP America’s tight gas production in Wamsutter, WY. I also talk about some of the implications for the future.
… Possibility of Others Ramping Up Production
What is the possibility of others jumping in and ramping up production in another tight stands location?
Shale gas is different, but I don’t know how different. I suspect that some of the issues might be similar with Hayneville shale, which now seems to have the possibility of increased production.
My guess would be that if anyone wants to ramp up production quickly, it will not be easy. The number of rotary drilling rigs in use for natural gas in North America has stagnated in the last year. One reason for this may be the competition from oil, since the higher price is drawing rigs toward oil. Another reason may be that the more popular rig types are already close to full utilization. If this is the case, a company wishing to ramp up production quickly might need to make do with whatever happens to be available, even if it is not optimal for the particular application.
Figure 7. Number of North American leased rotary drilling rigs
Three of the rigs used by BP are manufactured by Helmerich & Payne. A check of its website indicates that in the past year, its land rigs were 97% utilized.
Clearly trained workers are another issue, especially with unconventional gas. Unconventional gas is expanding so rapidly that there are not enough workers to go around.
I have listed some other costs that BP has encountered, such as building roads, getting pipelines laid, and doing seismic testing. Depending on the location, a new company would need to deal with many of these issues. These are likely to take time and money, and may delay production.
I would expect that much of the research would be skipped, so as to start production quickly. Because of the important role technology plays, this could easily mean the difference between a profitable operation and an unprofitable one.
Putting these things together, it seems like ramping up production of tight gas will be a challenge. There is likely to be a delay of at least three years just to get all of the basics covered. Skipping research puts the new producer at risk of a much lower profitability level. And of course, the new producer will have to deal with the impacts of peak oil, just as BP will.
(3 June 2008)
