Energy Security

[Rick M]

I agree, Ulen

Kiefer credits Patzek and many others:
"The author gratefully acknowledges Randall Rush, Charles Hall, Paul Waggoner, James Bartis, Jesse Ausubel, Tim Garrett, Thomas Homer-Dixon, Freeman Dyson, Andrew Marshall, David Pimentel, Tad Patzek, Jason Hill, Wayne Henson, Peter Brabeck-Letmathe, and Tom Elam for their contributions to his understanding of the issues discussed herein. Any errors are the author’s alone." - Acknowledgements (Kiefer, p. vii)

Kiefer's footnotes include references to other Peak Oil/ASPO/TOD analysts:
Murphy, Hagens, Rapier, etc.

The first peak oil book was written almost 30 years ago. "Beyond Oil: The Threat to Food and Fuel in the Coming Decades" (1986) states:
"A more frequent recommendation is that agriculture become a producer of energy, through the production of alcohol from crops and crop residues.
This approach has some appeal, but it's hardly a panacea. For one thing, alcohol's energy profit ratio is only slightly above 1. For another, current studies point to as much as a ninefold increase in erosion when all crop residues are removed for alcohol production." - Gever et al, p. 245

[Firn]

This editorial in the famous sientific-journal Angewandte Chemie by Michel Hartmut, who won his nobel prize for key work in the field of photosynthesis, is an excellent summary on the issue.

Taken together, the production of biofuels constitutes an extremely inefficient land use. This statement is true also for the production of bioethanol from sugar cane in Brazil.

...

Recommendations

Because of the low photosynthetic efficiency and the competition of energy plants with food plants for agricultural land, we should not grow plants for biofuel production. The growth of such energy plants will undoubtedly lead to an increase in food prices, which will predominantly hit poorer people. The best use of the biomass lies in its conversion into valuable building blocks for chemical syntheses. Usage of the available biomass for heating purposes or for generating electricity in power stations, thus replacing fossil fuels, is preferable over biofuel production. The saved fuels can be used for transportation purposes.

Clearing rainforests in the tropics and converting them into oil palm plantations is highly dangerous because the underlying layers of peat are oxidized and much more CO2 is released by the oxidation of organic soil material than can be fixed by the oil palms. The rainforests possess an important role for the climate and constitute a valuable resource for novel compounds for drug discovery. With respectto the carbon footprint, it would be even much better to reforest the land used to grow energy plants, because at a 1% photosynthetic efficiency, growing trees would fix around 2.7 kg of CO2 per square meter, whereas biofuels produced with a net efficiency of 0.1% would only replace fossil fuels which would release about 0.31 kg CO2 per m² upon combustion!

...

The [Green] Alternative

Commercially available photovoltaic cells already possess a conversion efficiency for sunlight of more than 15%, the electric energy produced can be stored in electric batteries without major losses. This is about 150 times better than the storage of the energy from sunlight in biofuels . In addition, 80% of the energy stored in the battery is used for the propulsion of a car by an electric engine, whereas a combustion engine uses only around 20% of the energy of the gasoline for driving the wheels. Both facts together lead to the conclusion that the combination photovoltaic cells/electric battery/electric engine uses the available land 600 times better than the combination biomass/biofuels/combustion engine.

The future of our individual transport has to be electric!

To come back to our old Saudi discussion their pricing policy gets even more criminal. We in snowy parts of the world suffer from a lower solar energy input, especially in the winter. Our batteries suffer from the cold and we need to heat our cars. This makes the economics of the combination less attractive*. The Saudis have far more energy input by the sun per m², hardly any opp. costs for that land use and in general suffer far less battery drain due to cold and do not need a similar of heating.

A car gets heated by the thermal energy which is 'lost' to it's propulsion. This reduces it's efficiency gap compared to an electric car.

[Ulenspiegel]

@Firn

It is a little bit embarrassing for me, but the very good source you gave, Prof. Hartmut Michel, head of the Max Planck Institut fuer Biophysik, Frankfurt/M., should have come from me, I did part of my PhD in a program that was supervised by him.

http://onlinelibrary.wiley.com/doi/1....201200218/pdf

[Firn]

@Firn

It is a little bit embarrassing for me, but the very good source you gave, Prof. Hartmut Michel, head of the Max Planck Institut fuer Biophysik, Frankfurt/M., should have come from me, I did part of my PhD in a program that was supervised by him.

http://onlinelibrary.wiley.com/doi/1....201200218/pdf

There are worse PhD progams. However your words guided me to the right google search terms.

I just liked the way he layed out the basics and came to the logical solution. While I know very little in the field I just can not imagine that we will see that gap in efficiency or ROEnergy closing enough to have a competitive bio fuel combination.

A highly interesting aspect of the photosynthesis is the way the energy efficiency maps against the sunlight. I will have to think about that. There are many aspects like shaded areas in forests and meadows, the other scarce resources which put an upper limit on needed solar power the specific history of evoultion.

P.S: Berkshire invested and invests heavily into renewable energy through MidAmerican.

MidAmerican’s electric utilities serve regulated retail customers in ten states. Only one utility holding company serves more states. In addition, we are the leader in renewables: first, from a standing start nine years ago, we now account for 6% of the country’s wind generation capacity. Second, when we complete three projects now under construction, we will own about 14% of U.S. solar-generation capacity.

[Firn]

BTW I did have a good chat with my uncle, which according to a local paper 'makes' the power of a relative small utility company

He his a hydro man and very hands-on. While he is the manager of several powerplants he still can not resitst to fish out trash and footballs in front of the bars of a certain river plant.

In any case he would like to see a stable regulatory environment, hopefully on a more European scale to enable more secure investments. Quite understandable in a very capital-intensive business. The Alps are already quite exploited in terms of hydropower but he certainly sees a lot of potential in pumped-storage hydroelectricity. Right now some of 'his' hydroplants do indeed work as a buffer for conventional/thermal plant as you can switch them quickly on and off without losing efficiency.

So far the energy mix does in theory profit from a greater amount of renewable energy sources like PV as the demand is higher during day. From a grid view it all those decentralized mini-plants are a bit of nightmare to manage and even worse, lessen the profit achieved by delivering power at the right time.

[Ulenspiegel]

IIRC the Alpes have a storage potential of 30 TWh in Austria and Switzerland. Many reservoirs or more exactly the attached generators/ pumps have often a quite low capacitor factor, I found for Austria values between 10 and 45%. Therefore, connecting theses reservoirs with German or Italian wind and PV capacity would be IMHO a relatively cheap approach to long term storage of reneables, we only need more transmission capacity.

In Norway and Sweden we have larger reservoir with 80 TWh and 34 TWh, respectively, and the same low capacity factors for generators and pumps.

Germany has a demand in winter (fog, no wind) of around 20 days worth of energy (~35 TWh), have not found any good numbers for Italy.

[Firn]

IIRC the Alpes have a storage potential of 30 TWh in Austria and Switzerland. Many reservoirs or more exactly the attached generators/ pumps have often a quite low capacitor factor, I found for Austria values between 10 and 45%. Therefore, connecting theses reservoirs with German or Italian wind and PV capacity would be IMHO a relatively cheap approach to long term storage of reneables, we only need more transmission capacity.

In Norway and Sweden we have larger reservoir with 80 TWh and 34 TWh, respectively, and the same low capacity factors for generators and pumps.

Germany has a demand in winter (fog, no wind) of around 20 days worth of energy (~35 TWh), have not found any good numbers for Italy.

So far the storage potential of water was in general just used to cover the ups of demand and not the ups of supply. It seems quite logical that if we have a more variable amount of supply an investment to 'arbitrage' in both ways could make a lot of sense.

The grid we have today is of course the result of the developments in the last decades. A more capable, better interconnected European grid could indeed smooth out the variable and diverse inputs by the large network effects and greatly ease the storage and management of energy...

From an economic standpoint of the big utilities a more fragmentated grid can of course more profitable. It limits the 'free market' supply and allows one to return more on the (old) investments made in conventional power plants. I say this as a very recent stockholder of RWE, E.ON, GDF Suez and ENEL, which all have lost massively in value in the last years.

[Ulenspiegel]

So far the storage potential of water was in general just used to cover the ups of demand and not the ups of supply. It seems quite logical that if we have a more variable amount of supply an investment to 'arbitrage' in both ways could make a lot of sense.

The grid we have today is of course the result of the developments in the last decades. A more capable, better interconnected European grid could indeed smooth out the variable and diverse inputs by the large network effects and greatly ease the storage and management of energy...

From an economic standpoint of the big utilities a more fragmentated grid can of course more profitable. It limits the 'free market' supply and allows one to return more on the (old) investments made in conventional power plants. I say this as a very recent stockholder of RWE, E.ON, GDF Suez and ENEL, which all have lost massively in value in the last years.

The interesting question for me is, are the big utilities in Germany really in a good strategic position? They are severely indebted and are loosing at least 2% market share per year. The killer for them is onshore wind power that is owned by German farmers, who will replace 15000 old turbines with new ones within the next ten years providing at least additional 90 TWh per year of electricity (+15% of gross demand). :-)

[Firn]

The interesting question for me is, are the big utilities in Germany really in a good strategic position? They are severely indebted and are loosing at least 2% market share per year. The killer for them is onshore wind power that is owned by German farmers, who will replace 15000 old turbines with new ones within the next ten years providing at least additional 90 TWh per year of electricity (+15% of gross demand). :-)

To answer that one would need a long post. I'm quite sure that I got enough value for the price and that over the remaining life of their assets the discounted cash flow will be worth it.

For now the lack of important power highways and the decreasing financial costs gives them more time to manage their problems. For example RWE pays overall currently 5%, but the latest long-term bond yields under 2%. 10% of the 6% long-term liabilities should be replaced by similar low yielding ones or partly financed out of the operating income with lower capex. Long-term bonds issued by RWE are priced very high. The low yields for pension fonds hit the earnings the other way around very high.

Now I know it is easy to comment from home but RWE certainly managed to get a lot of bad bond deals for their balance sheets, doing a lot of capex when financing them was expensive and cutting now back when financing is cheap. Not quite at the level of Hewlett-Packards stupidity of buying massive amounts of shares back when the prices were 4 times higher and buying nothing back at the current depressed prices, not to forget that they blew 8 billions out of 12 IIRC on a single software acquisition...

[Firn]

A Norwegian talks about hydro power and the potential big battery called Norge.

Green energy yes but not in my backyard...

[davidbfpo]

Hat tip to 'The Interpreter' from Australia's Lowy Institute for this BBC report:

Japan says it has successfully extracted natural gas from frozen methane hydrate off its central coast, in a world first. Methane hydrates, or clathrates, are a type of frozen "cage" of molecules of methane and water.

Link:http://www.bbc.co.uk/news/business-21752441

It does seem a little early to expect this is a saviour for Japan.

[Rick M]

Here is the latest from Lt. Col. Davis re. optimism over US tight oil surge:
http://www.huffingtonpost.com/daniel...b_2898256.html

As Davis points out, the eventual "confluence" (late this decade) of KSA exporting 3 mbpd less as China needs 6 mbpd more could be a troublesome combo.

[Firn]

Interesting:

In the February 21 issue of Nature Magazine, Mr. Hughes reported that "much of the oil and gas produced [in shale formations] comes from relatively small sweet spots within the fields. Overall well quality will decline as sweet spots become saturated with wells, requiring and ever-increasing number of wells to sustain production." More ominously, he notes, "high-productivity shale plays are not ubiquitous, as some would have us believe. Six out of 30 plays account for 88% of shale-gas production, and two out of 21 plays account for 81% of tight-oil production." Even the typically optimistic EIA echoed the concerns about sweet spots and the likelihood high levels of production cannot be sustained.

It is obvious that you pick first the low-hanging fruits. I think it is now incredibly difficult to get the predictions right, but is save to say that:

a) It looks like a boom.

b) It will end.

In late February, the EIA reported that "Saudi Aramco's CEO Khalid al-Falih warned that rising domestic energy consumption could result in the loss of 3 million barrels per day (bbl/d) of crude oil exports by the end of the decade if no changes were made to current trends." The New York Times reported that Chinese consumption by 2020 could be almost two-thirds greater than it was in 2011, resulting in a 6 million barrels per day (mbd) increase. Thus, viewed in context evidence indicates that U.S. domestic oil production could max out as early as 2017 and then begin a slow decline -- just as Saudi Arabia could be exporting 3 mbd less and China could be needing 6 mbd more. The consequences to the U.S. economy of such a confluence could be drastic.

This fits into the discussion we had earlier. Oil is a finite ressource with remarkable properties and as chemical energy store we have no equal substitute.

Saudi Arabia, like Venezuela and other oil states does follow a perverse economic policy which makes no economic but all the more political sense. It offers it's rare and precious ressources at laughable prices thus drastically increasing local demand and lowering energy efficiency.

Even a short look at the Wiki reveals that fossil fuels deliver pretty much every Joule consumed in SA. The economic oil boom has been followed by a demographic boom with vast and inefficient hunger for cheap oil which now soaks up an ever bigger part of the revenue stream.

And to think that Solar, which has become cheaper and cheaper would be a perfect economic match to a great deal of the Saudi energy needs.

PS: Oh wait there is even a nice recent paper about it. An 8 year old should be able to do the math. Much more people x vastly increased consumption per capita = big problem if the ressources are finite, the output limited and the external revenue the lifeline as roughly the overall output = internal consumption + external consumption. Instead of earning good money and storing it for a dry day the are throwing away more and more per year.

PPS: This means for the US and Western Europe that they should try hard to become more efficient and move their energy mix away from those fuels. Fracking could have been a vastly bigger gift twenty years down the road.

PPPS: The battery Norge looks more attractive and it might be a very smart choice to limit the oil output just like they limit the money stream going into their economy.

[Rick M]

Hi, Firn

Yes, it's obvious about the best, low-hanging fruit being consumed first, etc.

But the purpose of Dave Hughes' comprehensive paper re. unconventional fuels (Feb. 13, 178 pgs) was not to state the obvious. Rather, it was to refute the recent hype from Maugeri, Morse, IEA, etc that "peak oil is dead"... USA will be self-sufficient in oil supply once again, Bakken boom can be replicated world-wide, etc.
From the perspective of the 'average' North American reader, the recent hype is probably what's obvious, and many citizens probably wonder why Hughes, you or I would waste our time worrying about future oil supply when the evidence is so obvious that PO was a false alarm.

Hughes' focus is global, rather than US-centric, and it is clear from his data that a relatively brief surge in American tight oil will not solve long-term supply concerns over global liquid fuels.

KSA is central to the global oil market, and the entire world will feel it when Saudi export capabilities eventually diminish.
Paul Stevens at CH continues to do excellent work re. Saudi export decline. The 2011 paper that you suggest is excellent. So is an earlier 2008 paper which also predicts that KSA will be done as an exporter of significance around 2040.
(A discussion of the 08 paper was posted up-thread on p. 2, #28.)

[davidbfpo]

Yesterday for a short time the security of UK gas supplies came to the fore; after the loss of one pipeline connection, due to a faulty pump, a cold snap, a sudden increase in prices and outsiders being told very little was in reserves.

Links:http://www.bbc.co.uk/news/business-21897715 and with more detail:http://www.independent.co.uk/news/uk...e-8544975.html

Not to overlook the bizarre:

To make matters worse heavy snow and high winds in Cumbria forced the Sellafield nuclear power plant to close...

Thankfully Sellafield is not a major generator. More significant, even if planned for was the switching off yesterday of Didcot 'A', a 2,000 megawatt (MW) coal-fired plant:http://www.bbc.co.uk/news/uk-england...shire-21698037

[Rick M]

Thanks for the UK info, David.
I see that this week's forecast is still cool, but the weather (at least in the south of England) looks like it's going to moderate. I wonder how many Brits have a back-up source of heat (old coal burners?), or even proper insulation.

As an update to Davis' article yesterday, there is some discussion in today's Drumbeat:
http://www.theoildrum.com/node/9909#more

[davidbfpo]

Rick asked:

I wonder how many Brits have a back-up source of heat (old coal burners?), or even proper insulation.

Very few modern homes have a back-up source, let alone a working chimney and 'clean air' regulations restrict smoke emissions in virtually all urban areas.

Insulation is another matter, although the government has repeatedly had campaigns to get home insulation improved - the last was free for all, rather than those on public benefits. Most modern homes are reasonably insulated, notably double glazing and doors. Cavity wall insulation is not standard and attic / roof insulation is haphazard.

[flagg]

Hat tip to 'The Interpreter' from Australia's Lowy Institute for this BBC report:

Link:http://www.bbc.co.uk/news/business-21752441

It does seem a little early to expect this is a saviour for Japan.

I strongly suspect(and would bet heavily against it/short it for profit if it were possible) that this is little different that a moon made of gold and oil.

Massive amount of tangible value and energy, but the cost/energy invested in recovering it would be far greater than the value/energy gained.

[davidbfpo]

I read AM today that two LNG deliveries from Qatar are due to arrive in the UK, within two days and so restore reserves. How the UK which still has its own gas under the North Sea, in the midst of winter, has 1.5 days in reserve eludes me.

For a contrarian viewpoint Christopher Booker adds:http://www.telegraph.co.uk/earth/ene...gy-policy.html

[Firn]

I read AM today that two LNG deliveries from Qatar are due to arrive in the UK, within two days and so restore reserves. How the UK which still has its own gas under the North Sea, in the midst of winter, has 1.5 days in reserve eludes me.

For a contrarian viewpoint Christopher Booker adds:http://www.telegraph.co.uk/earth/ene...gy-policy.html

To be honest I'm quite surprised to read the low amount of reserves. Reserves mean of course costs. Is it the task of the government or a private company, and if the latter is the case, gets it financial support for a strategic reserve?

I stayed little time in the UK but I can not remember heavily insulated housing units. Of course the weather tends to be milder then here in Alps so the ROI should be quite lower. I will take a quick look.

@Rick M: I enjoyed the article and I think the author did a fine job to get his important points across. With the obvious I just wanted the tell myself 'stupid' as I didn't think about that and the consequences first...