Energy Security

[Rick M]

"the considerable amount of gas that the US used to import becomes available for others"

Not really, for the same reasons that you gave re. inability of US to export its gas surplus overseas.
USA gas imports come almost exclusively from Canada via pipeline. These volumes have decreased during the past 8 years as US shale gas has swamped their market.

Continentally, there is a surplus, but Canada is no better equipped than USA to export large volumes of gas or oil overseas.

Returning to the issue of Russian leverage re. oil & gas 'weapon' I believe that Russia is better positioned to bear the pain of reduced exports than Ukraine, etc are able to cope with constricted supplies, esp. re. gas during the 4 winter months (Dec. 1 -March 31st). My guess is that Ukrainians are very worried about their ability to stay warm this winter.

[Firn]

Ulenspiegel and I discussed the issue of coal vs NG before. To some extent the European LNG terminals are already there as simple container ports which handle goal.





Some companies want already to reduce the competivness of coal.

A shale boom in the U.S. led to a collapse in gas prices that’s helped consumers and stimulated industries, forcing cheaper, more-polluting coal to be shipped to Europe for use in power stations. The U.S. doesn’t have environmental obligations placed on companies, unlike in Europe, where staying competitive is a concern.

[Firn]

....those container ports handle of course coal, not goals.

I have followed intermittentdly the market for electric vehicles of all sort. As written before in quantitative terms of electric bike demand, pedal-assisted or not, China is absolutely dominating the world market The growth there has been spectacular, aided in part by laws aimed at curbing the massive emission problem in Chinese cities.

In Vietnam eBikes have greatly increased their market share, by the looks and the facts.

You’d have to be living under a rock not to notice the rising number of electric bicycles now zipping their way around Vietnam’s bustling streets, particularly in Hanoi. With the post-Tet buying stampede now in full flow, bike dealers are lining the pavements with the latest imports from around Asia. What follows is the inside word on the e-bike craze.

Everybody who has been recently in the region knows that bikes with ICE keep a large part of it's economy moving. Gas is relatively expensive which can be observed by the special type of tank used there. Quite a few people take it home so that nobody gets any strange ideas

On average, one electric bike rider who commute urban distance is estimated to pay only 50,000 Vietnamese dong (nearly 2.4 U.S. dollars) more in their monthly electricity bill.

Meanwhile, a scooter will cost around 500,000 Vietnamese dong ( 24 U.S. dollars).

...


In a recent interview with online newspaper VTC News, Nguyen Trong Thai, chief of the National Traffic Safety Committee, said that the number of electric bikes in Vietnam increased sharply in 2013 and 2014.

With IIRC around 80% of the world's production of motorbikes going to Asia trends there will have a huge impact on the global market.

[Firn]

As one can see to some degree from my recent posts I became interested into electric mobility both from a technological point and in relations to the topic of 'energy security'. I also had a blast on ebike tours, so in that case the theoretical research was matched by practical experience.

e-mobility is increasingly making inroads into fields formerly occupied by ICE*, think bikes or drones, transforming them considerably in some cases. So while an electric scooter substitutes almost perfectly an ICE one a modern pedelec is a new, far lighter hybrid form. Arguably the biggest hurdle for many applications of e-mobility, for example larger vehicles are the weight and cost of the battery. Nobody knows how quickly the technology will progress
but it is good to take the past trends into account:





Still a very long way to go to achieve density parity, even if in other areas of the powertrain electric vehicles weight considerably less.



The Price per Watt has also gone down considerably. I'm not that sure about the break-even point of the total ownership costs but it gives a good perspective.



Once again the past development is no (sure) guide for the future but it offers a perspective on the present. Today the research into battery technology is a massive topic because there is just so much of importance which gets powered by them. The economies of scales in some industries are truly gigantic with knock-off effects into smaller fields. For example small drone technology was driven to a large extent by the increasingly more capable cheaper and smaller sensors employed by smartphones. In the case of batteries the tech spread was so far quicker and wider.

*internal combustion engine

[Firn]

A side show of energy security are direct military applications. It is important to point out that the energy cosumption of military forces is overall tiny compared to one of the civil world. While 'green' initiatives by the military can have merit they should arguably closely linked to military capability and not global sustainability. For a country facing a big war effort saving in civilian consumption has just so much more scope and arguably efficiency then doing so in the military itself. This doesn't of course mean that the armed forces shouldn't try to identify the lower-hanging fruits and sensible targets and picking those.

Military e-mobility is of course a diverse topic and it's application depends, like in the civilian world, on the specific circumstances. An electric MBT for example would be right now a lot of steps backwards in key areas like march speed, range and 'refueling'. On the other side of of the spectrum are micro drones which give the soldiers an eye up in the sky. In that case electric power has no competitor.

Staff like the Velocopter are highly interesting, but there much will depend on the development of battery price and density in the next decades. More on it's homepage.

[davidbfpo]

[Firn]

How Much Energy Does the U.S. Military Consume? – An Update

The DoD accounted for around 1 percent of the US energy consumption and 80 percent of the federal government energy consumption.

It's share in oil consumption is thus of course closer to 2 percent due the fact that USA as a whole have this energy consumption mix:

[Dayuhan]

Ulenspiegel and I discussed the issue of coal vs NG before. To some extent the European LNG terminals are already there as simple container ports which handle coal.

Container ports don't handle coal, they handle containers. Coal would move through a bulk cargo terminal, which uses very different equipment. Coal ports are typically specialized and associated with specific power plants.

The days when a port was a port are long gone... the basic need to bring ship into proximity with shore remains, but the infrastructure for handling different cargo is very different. A good example is the US and its gas terminals. The US has a number of regasifacation terminals, which are designed to receive LNG, convert it back to gas, and feed it into a distribution grid. As the US no longer imports gas, these facilities are largely useless. The US cannot export gas at this time because despite a surplus of gas, none of the terminals are equipped with the infrastructure needed to liquify gas and load it onto ships. They can take it off, but they can't put it on. The industrial plant required for liquification is completely different from that used for regasification.

Gas import or export facilities are single-purpose dedicated installations that require large investments of time and money to build. They cannot be flipped from one purpose to another, something which is occasionally overlooked in discussions.

[Firn]

Container ports don't handle coal, they handle containers. Coal would move through a bulk cargo terminal, which uses very different equipment. Coal ports are typically specialized and associated with specific power plants.

....

Gas import or export facilities are single-purpose dedicated installations that require large investments of time and money to build. They cannot be flipped from one purpose to another, something which is occasionally overlooked in discussions.

Thanks for catching that error, what was I thinking? As I stated before coal imports can substitute natural gas imports and indeed they do to some degree. Obviously in the short-term is limited by the existing infrastructure along along chain, but it is very important to state the obvious, as I often do. Things get more elastic with time of course...



Demand:





Supply:








Of course part of those coal imports are, especially in the eastern European countries, from the same sources as the NG and oil....

[Rick M]

Today Ron Patterson posted some highlights from the latest energy outlook which is conducted annually by a team of Russian analysts.

In one scenario they forecast a peak in coal production prior to 2040. In all scenarios they see abundant oil supply. Many of these projections seem quite unrealistic (Canada at over 7 mbpd in 20 years time?).

Ron has warned for some time that Russian oil production is peaking. He feels that this new outlook confirms that view, which is the real story here:
http://peakoilbarrel.com/russias-take/#more-4111

[Dayuhan]

Ron has warned for some time that Russian oil production is peaking.

What does he mean by "peaking"? It is certainly true that without substantial investment Russian production is likely to start dropping soon, but there's no reason to see that as a "peak" imposed by geologic constraints ("running out of oil"). It's a constraint imposed by policy, and reversible by policy.

[Rick M]

I'm reluctant to speak for Ron, but I have followed his research for many years and am confident that I am accurately representing his views.

Both Ron and I see little reason to quibble over the cause of a peak in production. The cause could be geological, geopolitical, lack of investment, price uncertainties, etc or any combination thereof.

Both of us see little value in attempting to predict the timing of the global peak. Also, we both see this peak as being fairly imminent and having a severe impact, mostly because we are so unprepared for it.

When Russian experts confirm what was previously hinted at (ie. that Russian oil production is close to reaching its maximum), this is important info because Russia is a leading oil exporter.

Neither of us views the projections for Russian oil as being constrained by policy nor reversible by policy.

[Dayuhan]

As I stated before coal imports can substitute natural gas imports and indeed they do to some degree. Obviously in the short-term is limited by the existing infrastructure along along chain, but it is very important to state the obvious, as I often do. Things get more elastic with time of course...

The impact of infrastructure and transition cost on elasticity and substitution is often underrated, as when we hear facile solutions like "Europe can replace Russian gas with US gas" proposed. There are also common misunderstandings on the US gas glut... even if gas is very cheap in the US, consumption will rise slowly because transitioning from oil to gas doesn't happen overnight. LNG and CNG are perfectly viable vehicle fuels, but nobody wants to buy the vehicles unless the fueling infrastructure is in place and nobody wants to install the fueling infrastructure until the vehicles are out there. A utility with oil fired power plants is not going to just shut them down and build gas plants. The transition will happen if the gas price stays low, but as you say, it will take time, likely decades

Given the central importance of Russian oil and Saudi oil to the global export market, any constraint on their ability to produce and export (regardless of cause) could have serious implications.

True, but understanding the nature of the constraint is critical to formulating policy. Even the term "maximum" raises questions: absolute maximum or maximum possible with existing levels of infrastructure and investment?

[Rick M]

All good points, Steve.

We have at least two major problems. First, we will never know what the ultimate recoverable reserve (URR) is or 'ought to be' because there are so many complex factors & interactions including geology, technology, investment, infra, market forces, royalties and other gov't policies, etc. Consequently, we have a very good understanding of past production but present production is dynamic and future production is a bit of a crap-shoot.

Second, energy (and oil supply in particular) is so fundamental to modern life that a significant constraint in supply (regardless of cause) would probably cause such turmoil that effective policy responses would be next to impossible. This was the point stressed by both Hirsch and by Bundeswehr, though in different ways. Hirsch argued that we need to plan and implement mitigation strategies at least one decade before peak (ie. our best guess as to when peak may occur, but that's very difficult to predict as we are seeing).

Bundeswehr warned that economies function within a narrow band of relative stability: although economies can sustain their principal functions despite cyclical fluctuations and the occasional shock, there is the potential for an economic tipping point to be breached. Over-stressed economic systems could suddenly find themselves beyond that band of stability, at which point the entire system could react chaotically. Given the multitude of interconnections within our modern economy, one can readily imagine chain reactions which could destabilize the entire global economic system.

James Hamilton has done excellent analyses of the interactions between high oil prices (which are now required to maintain fracked LTO and bitumen production) and recessions. I think we've underestimated the role of high oil prices in both creating the 2008 financial mess and in perpetuating the ongoing recession. I also think we are wasting precious time between the peak in conventional oil production (which virtually everyone agrees has occurred) and the impending peak and decline of US LTO.

As for policy responses to oil shocks, it's worth noting that both Canada and USA seem to have backed away from formal planning for fuel emergencies. The planned government response now seems to be one of non-response: the term that's used is "full price pass-through." This strategy strikes me as doomed to fail (primarily because of its effects on vital food supply chains) and therefore irresponsible. But I also appreciate the near-impossibility of attempting to ration/allocate, pick & choose, subsidize, etc.

I will let Bundeswehr have the final word:
We are unable to think about the consequences of Peak Oil via our everyday experiences, and can only draw partial historical parallels. It is accordingly difficult to imagine what kind of impact a gradual withdrawal of one of the most important sources of energy would have on our civilization. Psychological barriers account for the suppression of irrefutable facts and lead to an almost instinctive rejection of in-depth discussion of this difficult issue.
The occurrence of Peak Oil is, however, unavoidable.

[Firn]

Elon Musk - The Future of Energy and Transport is a long, quite interesting interview and Q&A with one of the most acclaimed innovators of the last years. Personally I'm always quite sceptical when somebody gets showered with so much praise, however so far the achievments are indeed great and he certainly has a very sharp intellect. His approach to the question about biofuel shows a part of his approach to things, which is of course surprisingly basic and almost painfully obvious. Other scientists came to the same conclusion and have been quoted. That basic insight gets of course supported by an amazing effort in many areas.

The oil crisis has certainly shown the world how painful an energy supply shock can be for the global economy. In normal times our global markets are doing a mostly great job at solving the market problems. Given how much damage a lack of supply can do the importance of energy security rightly demands answers on how to avoid such big or even bigger shocks in the future.

Personally I think that in the long run the key is both a moderation and shift in consumption as well as far higher share of renewable energy production on home and friendly soil. The importance of fossil fuels in the Western energy mix should decrease considerably while ideally getting supplied by larger numbers of entities. It's energy competitors must get increasingly cheaper and more efficient in production, transport and storage. Thankfully technological progress makes the renewable approach ever more attractive and in some cases it is already the cheaper option.

Arguably deposits like those now getting depleted in the USA should ideally be regarded more as national treasure and reserves for difficult times rather then cheap but weak short-term boosts for the economy.