Blowout week 42

(Euan is taking a break this week. It’s also his birthday today, so Happy Birthday, Euan.)

Interest this week focuses on the budding oil price war between the US and Saudi Arabia, so we lead off with this story:

Marketwatch:  Can Saudi Arabia beat North Dakota in a price war?

Commodity strategists led by Seth Kleinman at Citi argue that the Saudis aren’t likely to throttle back output, in part because they apparently “think that they can win any price war” with U.S. shale producers. The bottom line, they said, is that the Saudis could conceivably win a price war, but it would be a “painful, pyrrhic and short-lived” victory as the price floor for shale continues to fall.

More stories below the fold, including a reported breakthrough in fusion technology, threats from Vladimir Putin and counterthreats from Tony Abbott, European car manufacturers begging the EU for mercy, anti-radiation pills for Canadians living near nuclear plants, a newly-discovered ocean methane sink, and to conclude, a pro-renewable energy rally that fell flat in every sense of the word.

Business Week:  U.S. Oil Producers May Drill Themselves Into Oblivion

Remember the fall of 2008? As the world spun out of control and the price of everything crashed, a barrel of oil lost 70 percent of its value over about five months. Of course, prices never should’ve been as high as $146 that summer, but they shouldn’t have crashed to $40 by the end of that year either. As the oil market has recovered, there have since been three major corrections, when prices have fallen at least 15 percent over a few months. We’re now in the midst of a fourth, with oil prices down more than 20 percent since peaking in late June at around $115 a barrel.

CNBC:  Gloves off over oil: Saudi Arabia versus shale

“The bearishness in the global oil market is all being driven by the U.S. shale revolution,” Seth Kleinman, head of Global Energy Strategy at Citi, told CNBC. “It’s being driven by this massive infrastructure build out that we’ve seen over the last few years and it’s taken the market a lot more time to catch up and act more rationally.”

Daily Caller:  Saudis Strategize To Curb US Oil Production

As oil prices continue to plummet, Saudi Arabia is signaling to the world oil market it’s willing to settle for much lower oil prices — a possible scheme to slow booming U.S. oil production, according to an exclusive report by Reuters. OPEC states have been hurting because of falling oil prices due to booming production outside of the oil cartel — much of it from U.S. shale formations. OPEC members, like Venezuela, have been urging the Saudis and others to cut production enough to push oil above $100 a barrel to bolster finances.

Times-Picayune:  Feds to offer 40 million acres in Gulf of Mexico for oil, gas drilling

The lease sale will cover all the available unleased areas in the central Gulf of Mexico, more than 7,000 lease blocks spanning 40.5 million acres. The locations of the proposed lease areas range from three to 230 nautical miles offshore. Leases will extend to federal waters more than 11,000 feet deep. The sale will also include leases located along the U.S.-Mexico nautical border, an area newly opened to oil and gas activity as a result of new trade agreement reached between the two countries.

Offshore Magazine:  Alta discovery extends Barents Sea oil frontier

Lundin Norway has discovered a potentially large new oil and gas accumulation in the southern Norwegian Barents Sea. The semisubmersible Island Innovator drilled well 7220/11-1 on the Alta prospect, 20 km (12.4 mi) northeast of the company’s Gohta discovery (well 7120/1-3) and 160 km (99 mi) from the Norwegian mainland. Two drillstem tests were conducted in the oil zone, producing a maximum of 3,260 b/d of oil and 1.7 MMcf/d (48,139 cm/d) of gas through a choke constrained by rig facilities .Lundin estimates the recoverable resource potential in the 125-400 MMboe range.

Telegraph:  Vladimir Putin issues new ‘large nuclear power’ warning to West

“Our partners should be well aware that attempts to put pressure on Russia with unilateral and illegitimate restrictive measures will not bring about a settlement, but rather impede the dialogue,” Mr Putin said in an interview with Respublika. The Russian leader added: “We are hoping that our partners will understand the imprudence of attempts to blackmail Russia, [and] remember what discord between large nuclear powers can do to strategic stability.”

Guardian:  Tony Abbott says he will ‘shirtfront’ Vladimir Putin over downing of MH17

Tony Abbott says he will “shirtfront” Vladimir Putin over the downing of MH17, claiming his conversation with the Russian president at the G20 would be “the toughest conversation of all”. The prime minister resorted to the Australian Rules football term for roughing up an opponent to describe his approach to Putin’s presence in the country next month.

Planet Ark:  U.S. military lays out plan for coping with climate change

Defense Secretary Chuck Hagel unveiled the Climate Change Adaptation Roadmap at the Conference of Defense Ministers of the Americas held in Arequipa, Peru. While it may not be possible to precisely project all of the impacts of climate change, Hagel said that uncertainty “cannot be an excuse for delaying action.” Rising sea levels, extreme weather events and other consequences of a changing climate could exacerbate “many challenges, including infectious disease and terrorism,” the department said. “The military could be called upon more often to support civil authorities, and provide humanitarian assistance and disaster relief in the face of more frequent and more intense natural disasters,” the plan noted. Hagel warned that the department was already beginning to see some of these impacts.

Mail:  Climate change is being slowed by plants far more than expected, researchers reveal

Plants are slowing the effects of climate change far more than expected, researchers have found. They said the impact of rising CO2 levels on plant growth has been underestimated by 16 per cent, as they thrive with more of the gas in the atmosphere. And as plants absorb CO2, this has led to overestimates of how much of the greenhouse gas is left in the atmosphere.

Los Angeles Times:  U.S. considers climate change plan that would mandate emission cuts

The United States is considering a proposal to combat climate change that would require countries to offer plans for curtailing greenhouse gas emissions on a certain schedule but would leave it to individual nations to determine how deep their cuts would be, said Todd Stern, the nation’s chief climate negotiator. “If we were to conclude a new climate agreement in Paris along the lines of what I just outlined, would we have accomplished much? I think the answer is unequivocally yes,” Stern said.

Mining:  China’s new coal import tax a disaster for Australian miners

China’s bombshell decision to impose tariffs on coal imports could prove to be the tipping point for Australian miners already struggling to stay afloat. The move by the economic powerhouse to introduce the new duty of between 3% and 6% beginning Wednesday shocked and angered Aussie producers, responsible for a quarter of Chinese coal imports. The Minerals Council of Australia’s Brendan Pearson said the decision was a poor one.

Hamilton Spectator:  Nuclear reactors near active volcanoes in Japan called unsafe

A prominent volcanologist disputed Japanese regulators’ conclusion that two nuclear reactors were safe from a volcanic eruption in the next few decades, saying Friday that such a prediction was impossible. A cauldron eruption at one of several volcanoes surrounding the Sendai nuclear power plant in southern Japan could not only hit the reactors but could cause a nationwide disaster, said Toshitsugu Fujii, head of a government-commissioned panel on volcanic eruption prediction.

Star Canada:  Nuclear watchdog orders anti-radiation pills for Ontarians near power plants

Hundreds of thousands of people who live near Ontario’s nuclear power plants will have to be given supplies of anti-radiation pills under new orders from Canada’s nuclear regulator. Currently, stockpiles of potassium iodide (KI) pills are kept in pharmacies and community centres for people who live within 10 kilometres of the Pickering, Darlington, and Bruce nuclear stations. But the Canadian Nuclear Safety Commission updated regulations last Friday to require that the pills be distributed to all homes, businesses and institutions within the “designated plume exposure planning zone” by December 2015.

Guardian:  Wind power is cheapest energy, EU analysis finds

Onshore wind is cheaper than coal, gas or nuclear energy when the costs of ‘external’ factors like air quality, human toxicity and climate change are taken into account, according to an EU analysis. The report says that for every megawatt hour (MW/h) of electricity generated, onshore wind costs roughly €105 (£83) per MW/h, compared to gas and coal which can cost up to around €164 and €233 per MW/h, respectively. Nuclear power, offshore wind and solar energy are all comparably inexpensive generators, at roughly €125 per MW/h.

Express:  Electric bills to soar by £1000 thanks to reliance on wind power

The green crusade of successive governments is set to double electricity bills for households and cost homes £26 billion a year by 2030, it was claimed yesterday. The cost of renewable energy and carbon taxes will put an extra £983 a year on household bills by then, compared to relying on a mix of nuclear and new gas-fired power stations, three experts told a Lords committee. The Scientific Alliance report highlights warnings by the regulator Ofgem that the margin for electricity production for the 2015-16 winter will be at an all-time low of 2 per cent compared to the pre-privatisation requirement of at least 20 per cent. It means that in times of high demand, such as during very cold weather, Britain would be at risk of power cuts.

Telegraph:  Plans for 1,000 miles of subsea power lines to cut British energy bills

More than 1,000 miles of subsea power lines connecting Great Britain to France, Norway, Denmark, Belgium and Ireland could be constructed by 2020, under plans set out by energy regulator Ofgem. The giant electricity cables could cut British household energy bills and help keep the lights on by allowing the country to import cheaper power from the continent, the regulator said. Ofgem said that seven new interconnector projects had now been deemed viable for potential construction by 2020. They would entail more than £6bn in investment and could provide up to 7.5 gigawatts of electricity – enough to power 22m homes in Britain, the regulator said. The projects include plans for the world’s longest interconnector, a 460 mile cable linking the UK to Norway. The link is expected to raise power prices in Norway but allow UK consumers to access cheaper hydroelectric power.

Guardian:  How close is the UK to a power blackout?

The biggest challenge to the UK’s energy supply margin isn’t years ahead, the data suggests, but very soon indeed – by the winter of 2015-16. The trouble for those managing our power is a combination of factors hit all at once: old generators are being switched off for the last time, gas plants – those best able to plug shortfalls – are being mothballed for the medium to long-term due to the abundance of cheap coal, and the plans for next-generation power production haven’t yet kicked in. The net result is that the UK’s supply margin, according to forecasts by Ofgem, is predicted to fall from a tight 6% at the peak of winter demand in 2014-15 to a possible low of less than 2% just a year later. The situation would be much worse if energy use hadn’t fallen so sharply; despite a growing population, peak demand has fallen from about 60GW in 2005-06 to 54GW in 2013-14, and a large portion of that drop happened in the past 12 months. That lower energy requirement is what makes all the difference between the forecast showing the UK just barely keeping the lights on and the prospect of midwinter blackouts.

News Scotland:  Securing Scotland’s energy.

First Minister Alex Salmond today (16 October, 2014) hailed pumped storage hydro as the natural complement to Scotland’s renewables revolution, and argued the case for transferring energy policy powers to Holyrood.

UK Government:  Response to Express article “Electric bills to soar by £1000”.

We have prevented a predicted energy crunch by investing in an energy mix that includes renewable sources like wind and solar to work alongside other technologies. We certainly aren’t ignoring nuclear or gas – in the last two weeks we moved forwards in the construction of a new nuclear plant that will provide clean power for six million homes and announced that there had been huge interest in the first ‘capacity auction’ designed to encourage gas generation.

Offshore Wind:  Billions Set to Be Invested in German Offshore Wind Projects

After the reform of the Renewable Energy Sources Act (EEG) took the uncertainty off the market this summer, decisions for new investments of more than three billion euros had been made already and another seven billion will follow, German media quoted the Managing Director of the country’s wind industry network (WAB) Ronny Meyer. “The confidence and trust in the offshore wind energy and the politics is restored,” he said.

Detroit News:  European auto industry pleas for CO2 mercy

Leaders of the European auto industry are pleading for mercy from ever-tightening and bottom-line busting fuel economy rules imposed by politicians, but it looks like they are wasting their collective breath. At the Paris Car Show earlier this month, Volkswagen, Europe’s biggest car maker, said that if fuel consumption rules are tightened again, this would be “fatal” for the industry. The plea, from VW CEO Martin Winterkorn, fell on deaf ears, despite being echoed by Fiat Chrysler Automobiles CEO Sergio Marchionne, General Motors Europe chief Karl-Thomas Neumann, and Ford of Europe CEO Stephen Odell. Almost immediately, the European Union (E.U.) Commission’s director of Industry and Enterprise Carlo Pettinelli said Europe would indeed be seeking more from the industry even though the rules are already the toughest in the world. But he at least conceded, in an interview with Automotive News Europe, that this might be delayed from 2025 until 2030.

MSN News:  Lockheed claims fusion breakthrough

Lockheed Martin Corp said on Wednesday it had made a technological breakthrough in developing a power source based on nuclear fusion, and the first reactors, small enough to fit on the back of a truck, could be ready for use in a decade. Tom McGuire, who heads the project, said he and a small team had been working on fusion energy at Lockheed’s secretive Skunk Works for about four years, but were now going public to find potential partners in industry and government for their work. Initial work demonstrated the feasibility of building a 100-megawatt reactor measuring seven feet by 10 feet, which could fit on the back of a large truck, and is about 10 times smaller than current reactors, McGuire told reporters.

Technology Review:  An Industrial-Size Generator That Runs on Waste Heat, Using No Fuel

Power plants waste huge amounts of energy as heat—about 40 to 80 percent of the total in the fuel they burn. A new device could reduce that waste, cutting fuel consumption and carbon emissions by as much as 3 percent and saving companies millions of dollars. The generator makes use of a novel, highly efficient thermoelectric material discovered recently at the University of Michigan.

Oregon State University:  Scientists discover carbonate rocks are an unrecognized methane sink

Sediment-based microbes form an important methane “sink,” preventing much of the chemical from reaching the atmosphere and contributing to greenhouse gas accumulation. As a byproduct of this process, the microbes create a type of rock known as authigenic carbonate. “In some ways, these rocks are like armies waiting in the wings to be called upon when needed to absorb methane.”

WUWT:  Renewable energy letdown in Wisconsin

In Madison, Wisconsin, demonstrators gathered outside the Public Service Commission to protest against a requested rate structure change by the local utility company, Madison Gas and Electric. During the protest, they decried the use of “dirty coal” and called for more renewable energy. To make their point, they had a blow-up coal power plant that was running on a fan powered by wind and solar charged batteries. Before the protest was over, however, the batteries died and their solar panel could not produce enough energy to keep the power plant standing upright.

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12 Responses to Blowout week 42

  1. For the last day, wind has been generating more electricity than nuclear in the UK. That is some sort of landmark.

  2. Euan Mearns says:

    The quote that caught my eye most on my 109th birthday was this one:

    in the last two weeks we moved forwards in the construction of a new nuclear plant that will provide clean power for six million homes

    Ed Davey, UK Secretary of State for Energy (well that’s what the post should be titled)

    Nuclear waste contains some of the most toxic substances known to Man and is highly radioactive and yet Mr Davey considers this to be a clean energy source. He is clearly insane. Nuclear power, like all energy sources, has an environmental cost, that needs to be weighed against the benefits that energy source brings.

    And with a population of 68 million or so, perhaps 34 million homes, it seems like we could power the whole of the UK on about 6 Hinkleys. Anyone?

    • Euan: At present there are about 23 million households in UK consuming an average of 4,600 kWh/year per household. This gives a total annual household consumption of 106 TWh.

      If Hinkley Point (3,200MW) runs at 90% load factor it will generate 25 TWh a year. So you could in theory supply electricity to every household in the UK with slightly more than four Hinkleys.

      The problem is that nothing is left over for industry, commerce and transportation, which between then consume another ~218 TWh. You would need another nine Hinkleys for that.

      And hope that none of them breaks.

      • Sam Taylor says:

        Or that no faults are found in the design or common, affecting all the plants and taking them offline. While having one design is great for utilising economies of scale, it does rather decrease your resilience.

        • Roberto says:

          While having one design is great for utilising economies of scale, it does rather decrease your resilience.’

          Well, I guess that 100 nuclear power plants in the USA, and 58 in France, running on average since more than 30 years demonstrate that your sentence/conclusion is exaggerated, too say the least…


          • Sam Taylor says:

            The French have at least 6 different plant designs in operation, I suspect there would be many more in the US. This is a good thing. If all the reactors in the UK were based on the same design as Hartlepool, for example, the UK would have had something of an energy crisis around 2009. Systemic risk is something which manifests itself over the very long term, and is best avoided where possible.

    • One of the two turbine halls is shut down and I don’t see it running again before winter. We had better hope it is a windy, mild one.

    • Sam Taylor says:

      I was chatting to a friend who works in nuclear, and he reckons that hartlepool and heysham should be switched back on before December, but at reduced capacity. Should add a bit more juice back in.

  3. Colin MacDonald says:

    Regarding the completion between Saudi oil and American shale oil, I wonder why the Dakotans haven’t considered a Norwegian style model for their oil development. In other words they are having to spend huge amounts on infrastructure to exploit a resource that may be exhausted within a decade and for a price that may be about to plummet. Why not have sustainable shale that can keep the state going for decades rather than tearing up the Great Plains for a short term benefit of little value. The Norwegians made a conscious decision to leave oil in the ground for future generations, I think others could learn from them.

    • Regarding the completion between Saudi oil and American shale oil, I wonder why the Dakotans haven’t considered a Norwegian style model for their oil development.

      Norway is a sovereign country where oil and gas resources are owned by the government and exploited by Statoil, which is 67% owned by the government. So if Norway decides it wants to curtail production to preserve resources for the future it only has to say the world and production gets curtailed.

      North Dakota doesn’t have this luxury. It’s a state, not a country, and its oil and gas resources are being exploited by numerous private companies on privately-owned, state-owned and tribal lands. It might indeed make sense for ND to reduce production when oil prices are low, but it probably wouldn’t have the legal right to impose production restrictions even on state-owned land, where it’s locked in to lease commitments, and certainly not on private land. The feds couldn’t do much either because only 4% of the land in ND is controlled by the federal government.

      But if North Dakota ever did succeed in curtailing production for the benefit of future generations two things would happen. First, there would be a mass exodus of oil companies from ND and the ongoing oil boom there would come to an abrupt halt. Second, the elected representatives responsible for this would find themselves facing an indefinite period of unemployment as soon as the recall election was held. It’s the American Way.

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