Drum Goonies Stooged on Shale Gas

(Another long one, girls. Grab a nightcap - it will be worth it:))

The lunar space goats of the Oil Drum fired this ballistic warhead into orbit back in 2006:

The scud missile erratically pierced through the lower-stratosphere, trailed by this sooty sky-writing about N America's natural gas production: “Doesn't this graph just chill you?”

This scary infection - perhaps - largely started from one source: the two-headed peak swine of Matthew Simmons and Mike Ruppert, who, in a conversation back in 2003, crooped about an impending natural gas shortage for the US, predicting a “natural gas crisis in two years,” warning that America’s natural gas production was about to “fall off a cliff.”

This peak gas influenza quickly metastasized into the fanatic, screaming lungs of practically every high peak priest, including:

Richard Heinberg,

James Kunstler,

LATOC,

Mobjectivist,

Dieoff.org

You get the picture...

Now personally, when I first heard this - way before shale gas become prevalent - I though this was the biggest cargo ship full of horse shit rotting up the port: “We’ll just buy gas from somewhere else,” says your average common sense genius; and it turns out America HAD embarked on the construction of LNG import terminals (and had a number in place), plus America was already well suited to handle vast amounts of imported natural gas.

But then came 2008 - word of shale gas started leakin’. Where was the Oil Drum on this? They had this to say:

But until some solid, repeatable well data emerges, the Haynesville will remain more diamond in the rough than diamond ring.

[...]

So there you have a brief explanation of how the new technology is slowing, though it won’t stop, the declining gas reserve in the United States

This was posted April 10, 2008 - right when America was experiencing a near-9% increase in natural gas production, the biggest increase since the late-1950s! While America was tootin’ dimethyl sulfide, the peak herd was swattin’ their fly encrusted asses in the doomer feedlot, percolating their Oreo pupils on doomer feed pumped with $100+ oil PGH. Tasty!

Finally, during September of last year, when the main stream media was catching a whiff, the Drum ‘fessed up:

Navigant Consulting Inc (NCI) recently prepared a report called North American Natural Gas Supply Assessment on behalf of a natural gas organization called the American Clean Skies Foundation. In this report, NCI estimates the amounts shale gas and tight gas production can be increased in the next decade. These estimates suggest that US natural gas production can be ramped up by nearly 50% by 2020. How reasonable are these estimates?

[...]

My analysis indicates that NCI is correct in some respects. There is indeed a great deal of unconventional natural gas resources in the United States, and recent improvements in technology point to the possibility of significantly greater production.

[...]

EIA has recently reported a big increase in US natural gas production (8.8%, comparing the first five months of 2008 with the first five months of 2007). Some have suggested that the EIA numbers must be wrong. It seems to me
that what we may be seeing is the effect of a recent technological
breakthrough.

No, Drum geeks, this wasn't a technological breakthrough we witnessed - it was a psychological breakthrough(!): you demonstrated to the world that you, like your fellow peak diaper-changing neanderthals, DO NOT demonstrate a clear-headed understanding of technology! Now we have a massive, gaseous gas glut - something I gave a heads up months ago.

Of course the diehard peak Rambos always have a standard fallback to everything in every forum: “But shale gas is expensive; it’s EROEI is too low to make sense for America’s long-term energy future… the wells have a short shelf-life. Blah, blah, blah…”

While it’s true shale gas will remain more costly than conventional gas production, I’ve been arguing for some time that as the industry comes to better understand shale gas formations plus effective production techniques, the production costs will decline, production will go up, and it will become more efficient. I’ve argued this before on the Oil Drum; naturally, my comments were deleted (they do that?), so call my a liar. But while the peakers are bitching, people out in the field are working hard:

"There will be many Barnetts," according to Robert Aquilera, one of the world's most foremost experts on tight gas engineering. What else does Robert say on shale gas's price prospect? Here's an excerpt from his interview with Energy Tribune (click the "many Barnetts" link):

ET: Speaking of prices, what is a sustainable price for natural gas? I ask because I’ve heard some producers insist that shale gas wouldn’t be profitable when prices are under $8. Now, I’m hearing $5. What’s your take on the relationship between the relatively high cost of drilling for tight gas and the market price which has been so volatile lately?

RA: My take is that $5 to $6 will work in most cases and will make most shale plays competitive.

In other shale gas related news...

Petrohawk's record-setting shale gas wells

Shale gas expected to meet half of N America's needs by 2020.

Plenty of foreign interest in shale gas, including China, Europe (here, here, here), Canada (here, here).

Despite scale-backs in US gas drilling, Chesapeake Energy is ADDING rigs to drill the Haynesville Shale, Barnett drilling is holding steady.

Haynesville poised to become the world's largest gas field by 2020.

Haynesville profitable at $5 per mcf, $4 per mcf.

And so on…

Remember - shale gas production is in its infancy. The Drum's wise peak blowhards - who, along with the other peak priests, foretold an impending gas shortage in the US years in advance - discounted shale gas right when the dimethyl sulfide was leaking up right under their noses!! I've runned this point into the ground, but it's this - along with the peak oil community's many blunders - is why the Drum cannot be taken seriously.

Anywho, for a short recap of the past few years, here’s a graph. Guess who turned out right? (I would have a better graph, but Blogger didn't like my Adobe pick for some reason. I'll get a better one up when I can.)



- Brewskie

Wind Killing Electricity Prices

Here's a side-effect of West Texas wind power: it's driving down electricity prices due to, in some cases, surplus electricity.

Implications

A surfeit of wind energy is pushing down the price of all electricity. The real time price of electricity in West Texas, where almost all generation is wind, was negative for 23% of April 2009. The negative prices spilled over to the rest of Texas for about 1% of the month. This may be the future of the electric industry, with negative prices for a substantial amount of time each month.

[...]

The effect of these government programs is a surfeit of renewable energy projects, especially wind projects. Since electricity is fungible, the surfeit of renewable energy projects is creating a surplus of electricity capacity, and sometimes a surplus of the actual production of electricity. Since electricity cannot be easily stored, the surplus can cause operating problems and is driving down the market price for electricity in the competitive markets such as ERCOT, the Electricity Reliability Council Of Texas, which operates the electricity facilities in most of Texas.

ERCOT has identified four different market areas based on the likelihood of transmission constraints between these market areas. The smallest market area is the West market area, which is dominated by wind generation. The capacity of wind generators in the West market area is so great that they occasionally swamp the transmission lines connecting the West market area with the rest of ERCOT. During such times, ERCOT calls upon the generators in the West market area to reduce generation, essentially to dump wind.

Until recently the ERCOT procedure was to actually tell generators in the West market area to dump wind. The wind generators apparently were unhappy with the command and control attitude of ERCOT and sought an economic approach. The current ERCOT approach allows generators in the West market area to bid for access to the transmission lines connecting the West market area to the rest of ERCOT. At least that was effectively the situation for 23% of the time in April 2009. During 664 of the quarter hour periods in April 2009, the price for generation in the West market area was less than zero, with generators paying for the right to dump electricity into the grid. During 28 of those quarter hour periods the negative prices spilled over to other parts
of ERCOT.

- Brewskie

Pass the Gas-X, Please; Supply Bump Expected

The Energy Department is expecting another jump in US natural gas reserves:

The Energy Department will likely report a 108 billion- to 113 billion-cubic foot jump in natural gas reserves on Thursday for the week ended May 22, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

[...]

A reading above or below estimates can influence market trading.

Last Thursday, the EIA said natural gas inventories held in underground storage in the lower 48 states rose by 103 billion cubic feet to about 2.12 trillion cubic feet for the week ended May 15.

- Brewskie

Great Scotts! More Trash to Gas!

Waste Management is steering into other areas besides expanding its garbage collecting empire (link)...

Waste gasification, a process for converting garbage into fuel and electricity without incinerating it, may be a step closer to large-scale commercialization. Last week, Houston's Waste Management, a major garbage-collection and -disposal company, announced a joint venture with InEnTec, a startup based in Richland, WA, to commercialize InEnTec's plasma-gasification technology.

Waste Management will fund the new venture, which will be called S4 Energy Solutions, as well as provide infrastructure and expertise from its waste-collecting and -processing businesses to make the technology economical. The company, which will operate and market plasma-gasification technologies, will be announcing specific projects to build facilities later this year. The involvement of Waste Management could signal that the technology, which has been more expensive than other waste-disposal options, is finally reaching a stage at which it can be practical. "Up until late last year, it was under the radar," says James Childress, the executive director of the Gasification Technologies Council. "Now the big players are finally getting involved in this."

InEnTec's technology, originally developed at MIT and the Pacific Northwest
National Laboratory, in Richland, WA, uses a multiple high-temperature processes--including subjecting garbage to plasma arcs--to break down organic materials into syngas, a mixture of hydrogen and carbon monoxide. Syngas can either be directly burned in gas turbines to produce electricity, or it can be converted into other fuels, including gasoline and ethanol. Metals and other inorganic materials in garbage can be isolated and recycled. The combination of high temperatures and an oxygen-poor environment that prevents the garbage from catching fire eliminates the production of dioxins and furans, two toxic chemicals produced during incineration.

[...]

S4 Energy Solutions plans to market the first gasification units in specialized markets such as those concerned with the disposal of automobile shredder residue or medical waste, for which landfills often aren't an option, hence companies are willing to pay more to dispose of waste. Eventually, they could be used more generally for municipal solid waste, especially in rural towns and small cities that do not produce enough waste for cheaper incinerator technologies to be practical. The technology has the benefit of allowing customers to generate some of their own electricity, which could make it more affordable.

- Brewskie

The Mid-Bossier Shale: the Haynesville Twin?

It turns out the Haynesville Shale may have a long, lost brother. Meet the Mid-Bossier Shale: a big, bloated fat boy of possibly equal flatulence as its more esteemed sibling. And you won't believe how close it's been hanging near the Haynesville boy this whole time!

EnCana Corp. says early drilling results indicate it is sitting on a potentially massive natural gas resource in the southern United States – one that's stacked on top of the already lucrative Haynesville shale of east Texas and western Louisiana.

EnCana said Wednesday it believes the so-called mid-Bossier shale could rival the size of the Haynesville reserve, which the U.S. Department of Energy has estimated contains 251 trillion cubic feet of recoverable natural gas. That's enough to supply the entire continent for 10 years, although only a fraction of technically recoverable gas is usually profitable to produce.

The bonus for EnCana is that the mid-Bossier and the Haynesville are what the industry calls a “stacked play.” Depending on location, the Haynesville shale lies between 3,200 and 4,100 metres below the surface. The mid-Bossier is 150 metres above it. Many wells drilled to obtain access to the Haynesville pass through the mid-Bossier.

Because the mid-Bossier did not initially show as much as promise as the Haynesville, and because of Louisiana land-retention regulations, companies have
rushed to drill the deeper Haynesville first. As a result, the mid-Bossier itself has been largely ignored until now.

EnCana, however, has drilled several vertical wells and, in the past few months, a single horizontal well to test the mid-Bossier. It found gas that mirrored the quality and quantity of the Haynesville.

[...]

Houston-based Petrohawk Energy Corp., which has 300,000 net acres in the Haynesville, said the mid-Bossier does not appear to be as large as the Haynesville. “It's not present where we do most of our drilling,” said Petrohawk vice-president of investor relations Joan Dunlap. The company is drilling its first mid-Bossier well and does not yet have results it can release.

EnCana owns 433,000 net acres in the Haynesville, which has shown enough promise that the company doubled its budget for the area to $580-million this year to do the work required to keep its land position.

Some analysts have estimated that Haynesville gas can be produced for $3.50 (U.S.) per 1,000 cubic feet, or slightly above the current trading range. The large, cheap supply has raised fears of a natural gas oversupply that could keep prices low for years to come.

- Brewskie

Oh-Oh... Petrobras the Tax-Evader

Hey, Petrobras. Ya gotta pay da man, otherwise he comes and takes your bling-bling.

Brazil’s national oil company, Petrobras, has come under scrutiny in an investigation that threatens to complicate government efforts to wring more revenue from the deepwater oil fields that are expected to transform the country into a global energy power.

The Senate voted last week to investigate whether Petrobras had avoided tax payments and awarded illegal contracts, among other issues. The vote was sealed by senators who oppose President Luiz Inácio Lula da Silva’s Workers Party, setting up an inquiry that is likely to drag on for months.

The investigation could prove an embarrassment for Mr. da Silva’s government, which is seeking to overhaul oil legislation to extract a much higher percentage of revenues from the deepwater oil fields, which are expected to hold five billion to eight billion barrels of oil and natural gas.

[...]

The big question now is whether the government has enough time to complete the oil reform law before Lula is out of office” at the end of 2010, said Marcos Tavares, director of Gas Energy, an energy consulting firm based in Porto Alegre, Brazil.

Mr. da Silva, who has said he wants to use additional oil revenues to set up funds for social programs like health and education, called the congressional inquiry “irresponsible” and “unpatriotic,” especially at a time when the country was coping with the global economic crisis.

The chief executive of Petrobras, José Sergio Gabrielli, said the investigation was
politically motivated, arguing Tuesday that it “won’t jeopardize Petrobras or its investments.” He added that “unfortunately, the negative headlines do affect the image of the company.”

The investigation focuses on contract bidding and tax payments. The company already fired two employees and punished three others for their involvement in irregularities in the bidding for oil platform renovations, said Lucio Mena Pimentel, a Petrobras spokesman.

The company came under increasing public scrutiny over a decision to withhold up to $2 billion in federal tax payments stemming from a supposed overpayment of taxes in 2008. Mr. Pimentel said Petrobras was allowed to do that because of legislation that protects companies from major exchange-rate fluctuations, though some analysts have questioned the company’s interpretation of the law.

Brewskie comment: Will tax-evasion put oil production into jeopardy? Not likely. There's too much riding on this. The oil majors have too much at stake in this; Petrobras has a $10 billion loan from China.

- Brewskie

Nuclear Alexander; Middle East's Nuclear Renaissance

Nuclear energy: some people love it, some people hate - it's never without controversy. Promoters point to vast resources of uranium, its greenhouse emissions, its potency for energy; the detractors point to waste (I could somewhat refute that), its high economic cost, it's potential for danger (more people die each year as a result of coal mining accidents and pollution than nuclear work-related incidents; the Chernobyl reactor was a joke). Nuclear energy - love it, hate it? Ghawar guzzler isn't here to endorse either position, it's here only to report the news. If there are better options than nuclear, they should be welcome to contemplation.

Here's some "explosive" developments on nuclear. First, Senator Lamar Alexander (R-Tenn.) is calling for the construction of 100 nuclear power plants withing 20 years, effectively doubling America's nuclear power plants. Here's an excerpt:

Senator Lamar Alexander (R-Tenn.) today told participants at the Tennessee Valley Corridor National Summit that “the United States should build 100 new nuclear power plants during the next 20 years” to put America on the path to clean energy independence.

He said, “One year ago, I came to Oak Ridge to propose a new ‘Manhattan Project’ to put America on the path to clean energy independence. The project would focus on seven ‘grand challenges’: plug-in electric cars and trucks, carbon capture from coal plants, making solar power cost-competitive, recycling used nuclear fuel, advanced biofuels from crops we don’t eat, green buildings and, finally, fusion.

“Today I am in Oak Ridge to propose that the United States build 100 new nuclear power plants during the next 20 years while scientists and engineers figure out these grand challenges. This would double America’s nuclear plants which today produce 20 percent of all our electricity, but 70 percent of our pollution-free, carbon-free electricity.

[...]

"Right now there are 17 proposals for 26 new reactors in licensing hearings before the Nuclear Regulatory Commission. That’s a start. But I think we need to go well beyond that. I propose that from the years 2010 to 2030 we build 100 new nuclear reactors to match the ones we already have operating.

The Huffington Post also reports Senator Alexander wants $700 billion for his grand vision.

The other big piece is a long, but excellent Huffington Post about a nuclear renaissance occurring in the Middle East (comes with a nice interactive map). Below:

Putting the Chernobyls and Hiroshimas aside, in the Arab world, at least thirteen nations - both oil-rich and oil-thirsty - are collaborating with world powers to build nuclear energy programs with unprecedented determination.

As energy and water needs grow, they are confronting the inevitable depletion of oil and natural gas and the nuclear option has trumped renewables (both in terms of feasibilty and economics) as a means to generate electricity while guaranteeing long-term security.

[...]

With electricity and desalination demands estimated to increase by about 10 percent annually by 2015, the GCC is in dire need of diversifying its energy sources.

The UAE alone estimates it would need 40,000MW of electricity to meet domestic demand by 2020. With drafted plans to generate 15,000MW of electricity from nuclear energy by 2020 at a quarter of the cost of gas powered plants, the UAE already has several construction companies bidding to sign on.

Meanwhile, France, Russia, China and the US are ardently working to sign lucrative deals with the eager Arabs, who are also competing with one another to attract the best investors and suppliers, despite previous plans of regional cooperation.

The UAE is moving fast to be the first Arab country to develop a nuclear power program as they have been fast-tracking the process (which usually takes 10-15 years) to fulfill the requirements by 2016. Through engaging vendors and supplier countries at events such as last week's nuclear summit, their plans may soon become realized.

Within a decade there could be about a dozen nuclear reactors in the region, which makes the option of having a regional enrichment facility extremely viable.

"Regional cooperation makes economic sense rather than investing foolishly," Araj said.The issue of waste disposal poses a key incentive for Arab states to work together. A nuclear repository would reduce stress on smaller countries like the UAE by excusing them from needing their own. "It doesn't make sense for each country to have a nuclear repository to store high-level waste for a long long time," Araj said.

"If one nation were to host the regional repository in exchange for financial incentives, they would need to safeguard the waste for 100-150 years until the radioactivity had decreased to the environmental levels - then it would no longer pose a threat."

Other noteworthy nuclear developments are:

• Russia has a target of meeting 23% of electricity needs through nuclear by 2020.

• China plans to add possibly 60 GW of nuclear energy by 2020, 120-160 by 2030.

• India's nuclear ambitions.

- Brewskie

China Rumored to be Implementing Strict Fuel-Economy Standards

China's calls itself the "most business friendly country in the world (others would beg to differ)," and China seems intent to follow one business maxim with energy: doing more with less.

The new plan would require automakers in China to improve fuel economy by an additional 18 percent by 2015, said An Feng, a leading architect of China’s existing fuel economy regulations who is now the president of the Innovation Center for Energy and Transportation, a nonprofit group in Beijing.

The plan is going through the interagency approval process, with comments sought from automakers, and is scheduled for release early next year, he said.

The average fuel economy of family vehicles in China is already higher than in the United States, mainly because cars in China tend to be considerably
smaller than those in the United States — and are getting even smaller because of recent tax changes.

Cars with small fuel-sipping engines are now subject to a 1 percent tax, while sports cars and sport utility vehicles with the largest engines are subject to a 40 percent tax. Stricter fuel economy standards have won support from four interest groups within the Chinese government, said a Chinese government official who spoke on the condition of anonymity because he was not authorized to discuss the issue.

[...]

China uses a different system from the United States to regulate fuel economy. China sets minimum standards for each of 16 weight categories and tests only urban fuel economy, not highway driving.

Adjusted for these differences, the average new car, minivan or sport utility vehicle in China already gets the equivalent of 35.8 miles a gallon this year based on the American measurement system of corporate averages and will be required to get 42.2 miles a gallon in 2015, Mr. An said.By comparison, President Obama announced last week that each automaker will be required to reach a corporate average of 35.5 miles per gallon by 2016.

The details of China’s new fuel economy standards may favor domestic automakers at the expense of multinationals, several auto industry officials said. That is because the new rules call for the steepest increases in fuel economy — as much as 26 percent — for midsize and compact cars, market segments where multinationals are strong. Subcompacts, a market where domestic automakers are stronger, will be required to increase their gas mileage by as little as 9 percent compared with the existing standards, which took effect on Jan. 1.

- Brewskie

Sanyo's 23% Solar-Effieciency is a "Hit"

The Sanyo Hit:

Several key processing breakthroughs in the lab have seen conversion
efficiencies of Sanyo’s Heterojunction with Intrinsic Thin layer ‘HIT’ solar
cells raised from 22.3% to 23%. The new internal record results have been
validated by the National Institute of Advanced Industrial Science and
Technology (AIST).

Sanyo said that it was able to reduce the
recombination loss of the electrical element (charged carrier). Recombination loss occurs when the negative electron and positive hole (carriers) that are produced within the solar cell combine and disappear, causing a loss in the electrical current produced by the cell, resulting in a reduction in output of the solar cell. This was reduced by surrounding the energy generation layer of single thin crystalline silicon (c-Si) with high quality ultra-thin amorphous silicon (a-Si) layer, while not damaging the c-Si surface. The open circuit voltage (Voc) then increased from 0.725V to 0.729V.

Optical absorption loss in the a-Si layer was also reduced. Although the company did not say how this was achieved, a reduction was made for both the a-Si and transparent conductive layers. However, Sanyo noted that the absorption of short-wavelength solar radiation by the a-Si layer and that of long-wavelength solar radiation by the transparent conductive layer were the causes of the optical absorption loss. As a result of its research efforts, the short circuit current (Isc) improved from 39.2mA/cm2 to 39.5mA/cm2.

The final key development came by reducing electric current loss via the inherent resistance. Sanyo said that a newly developed electrode material for use as the grid
electrode and a higher-aspect ratio through improving printing technology, combined to reduce resistance loss when an electric current flows through the grid electrode. As a result, the fill factor (FF) was improved from 0.791 to
0.80.

- Brewskie

Nuke Spam and Save $3.6 Billion in Energy

McAfee fuels the mobs' bonfire, placing greater pressure on lawmakers to do something about those annoying emails.

A new study from software developer McAfee this week could put new pressure on lawmakers to do something about the spam problem.

It turns out that unwanted e-mail messages are not only annoying; the writing, routing and deleting of spam uses about 33 billion kilowatt-hours of electricity each year. That equates to the electricity used by 2.1 million U.S. homes.

So that makes spam a $3.6 billion energy hog.

In fact, McAfee was full of fun facts about the detriment of spam. The 6.2 trillion spam messages sent globally produced the equivalent emissions of 3.1 million vehicles burning 2 billion gallons of gas.

And being a developer of anti-virus software, McAfee was kind enough to point out that spam filtering prevented the use of 135 billion kWh.

- Brewskie

Redesigned Plane Wings Could Reduce Fuel Consumption by 20%

The University of Warwick has an interesting study of wings that waggle airflow, directing it sideway, that could reduce fuel consumption by 20%. If the light nods green, the tech. may be available by 2012 (link).

Wings that waggle airflow, directing it sideways, could cut down airline fuel usage by 20 percent because of research funded by the Engineering and Physical Sciences Research Council and Airbus in the UK.

Associate Professor Duncan Lockerby, with Coventry, UK-based University of Warwick, told the Cleantech Group today that he’s exploring a new approach to
reducing mid-flight drag through tiny air-powered jets that redirect air, making it flow perpendicular to the direction of motion. He envisions “hundreds of
thousands of jets of air potentially over the surface of the aircraft.” Warwick has received £1 million ($1.6 million) for the three-year project to better understand the physical mechanisms of the process and progress the technology.

[...]

The jets work according to the Helmholtz resonance principle—when air is forced into a cavity the pressure increases, which forces air out and sucks it back in again, causing an oscillation—similar to when air is blown over the orifice of a bottle.

We’re trying to exploit this blowing-over-a-bottle effect,” said Lockerby, who works in the University of Warwick’s Fluid Dynamics Research Centre in the School of Engineering and holds a doctorate in computational fluid dynamics.

- Brewskie

Buffet Bucks for Volkswagon Electric

Volkswagen singed a deal with Chinese carmaker BYD for a lithium-ion battery partnership.

Volkswagen says it has signed a "memorandum of understanding" with Chinese carmaker BYD to explore "options for partnership in the area of hybrids and electric vehicles powered by lithium batteries."

Warren Buffett's Berkshire Hathaway bought a 10 percent stake in BYD last fall, and Buffett has been personally promoting the company's efforts. (See last month's WBW post Fortune Puts Warren Buffett In "Car of the Future" Driver's Seat.")

Dow Jones notes that many of the world's biggest automakers are scrambling to "secure supplies of batteries for alternative vehicles" and reports that BYD is also talking to Ford Motor about "similar arrangements."

- Brewskie

2009 US Bike Sales Surpassing Car Sales!

Cheap gas and plump asses aren't enticing Americans to pack into Ford APC's...

During the first quarter of 2009, more bicycles were sold in the US than cars and trucks. While the Great Recession is hurting bike sales, they didn't fall as fast as automobiles. Around 2.6 million bicycle purchases were made, compared to ~2.5 million cars and trucks that left our nation's lots.

I don't mean to say that bicycle sales are unfazed by the recession. They are actually down more than 30% from the first quarter of 2008. But that percentage drop is slower than the 35+% drop in sales for cars and trucks. Since nationwide gasoline prices are now rising above $2.40 per gallon at the pump, we may see another wave of US residents shifting to bicycles for their everyday trips. The large savings from riding a bike over short distances rather than driving can help consumer confidence and support economic recovery.

- Brewskie

The Rats will Develop "Speculation Diabetes"

I've made several posts in the past remarking oil's gluttenous supply, the nature of speculation reasserting itself into the market; now some analysts are seeing light of this, that a soon oil price drop will formulate. It turns out - surprise, surprise! - OPEC is backpedaling. Read below or click the link:

After oil passed $60 a barrel for the first time in six months, the New York Mercantile Exchange’s fastest-growing options trade in July is for a 18 percent drop.

The number of options to sell oil at $50 a barrel for July settlement rose 22 percent last week to 24,948. Traders expect prices to fall because U.S. crude inventories are 1.8 percent below the highest level in two decades, the International Energy Agency says demand is falling the most since 1981, and there’s enough unsold crude stored in offshore tankers to supply the U.S. for a week. Oil traded as high as $62.16 today in New York.

“Oil prices are rising way ahead of reality, way ahead of fundamentals,” said Eugen Weinberg, a senior commodity analyst at Commerzbank AG in Frankfurt. “It would be more reasonable for prices to drop a little and correct to $50 or below.”

Crude jumped as high as $62.26 a barrel on May 20 on optimism that the worst of the global recession and the Organization of Petroleum Exporting Countries agreed to cut supplies by the most on record. Now, economic reports are increasing speculation that the world economy will continue to sputter, and OPEC, which meets May 28 in Vienna, has yet to complete the supply curbs it promised in December.

[...]

The number of contracts to sell July oil at $50 a barrel, or so-called put options, tripled to 24,948 on May 21 from May 7, according to Nymex data. The second most-popular contract for July settlement is the right to sell at $40, with 23,254 outstanding. There are almost twice as many positions that profit if oil falls as low as $40 a barrel as there are bets on a rise to $70.

[...]

Japan’s economy, the world’s third-largest oil consumer, shrank at a record 15 percent pace last quarter as exports declined 26 percent. The European economy contracted at the fastest pace in 13 years, and the World Bank said optimism for an economic recovery in China may be “premature.” The U.S. and China are the biggest oil users.

‘Large Correction’

“Given the high level of crude inventories and contraction in activity in advanced economies, we still expect a large correction from these levels,” said Harry Tchilinguirian, the senior oil market analyst at BNP Paribas in London. “A low $40s level is still possible” before the end of September, he said.

Oil traded as low as $59.53 today in New York on speculation that OPEC won’t announce more production cuts this week even as the global recession curbs fuel demand. Among oil analysts, 25 out of 27 surveyed by Bloomberg predict OPEC will maintain a target of 24.845 million barrels a day at the Vienna conference this week.

The 11 OPEC members outside of Iraq produced 25.81 million barrels a day in April, an increase of about 225,000 from March and the first increase in nine months, according to OPEC’s latest monthly report. Those 11 collectively made 77 percent of the 4.2 million barrels a day of planned output cuts, down from a revised 82 percent for March.

- Brewskie

Offshore Drilling Rigs for Petrobras: No Problem?

Last month I posted this piece about a potential drilling rig shortage for Petrobras; this new piece suggests there could be a supply glut. Okay, I'm confused.

Petrobras will drive the demand for deep-water rigs but the brazilian giant should be in no hurry to commit to newbuilding contracts given the excess floater supply through mid-2012, according to ODS-Petrodata’s Gavin Strachan.

Strachan estimated that about 20% of the floaters under construction have not been contracted. The excess supply will allow Petrobras the option to either charter or purchase rigs to meet its drilling requirements, he said.

Petrobras has unveiled plans to commission the construction of 28 floaters for long-term charters to be deployed in the gigantic oilfields off Brazil from 2013 to 2017. These rigs are expected to have a rated water depth of about 7200 feet.

Given most units under construction are built to drill in 10,000 feet of water, Strachan said Petrobras is more likely to consider the purchase options if there are any "distressed newbuilds" in the market.

According to market data collected by ODS-Petrodata, recent day rate for a seven-year floater charter from a local contractor exposed to the Brazilian market only is about $350,000.

- Brewskie

Mazda Introduces Single-Nanocatalyst Technology

Mazda will introduce single-catalyst technology in its 2010 Mazda3. Why is this significant? As is true with nanotechology, if something can be built on a considerably smaller scale, it means you need less of a resource to construct it - such as platinum, an integral "piece" to modern-day catalyst converters.

Read below or click the link:

Mazda announced that it will be the first to use singlenanocatalyst technology in automobile catalytic converters. This highly durable new catalyst significantly reduces the amount of precious metals used and effectively purifies vehicle exhaust gases.

The idea here is with the single-nanocatalyst, the under-floor catalytic converter in the Mazda3 requires only 0.15g/L of precious metals, which is approximately 70 percent less than the 0.55g/L required in the previous model. Even with the substantial reduction in precious metal usage, the 2010 Mazda3 meets the latest emissions regulations.

The way catalysts work starts with their design, consisting of a base material coated with precious metal particles, such as platinum, rhodium and palladium.

In conventional catalysts, exposure to hot exhaust gases causes the precious metal particles to agglomerate into larger clumps, which reduces their effective surface area and catalytic activity. To counteract this, an increased amount of the precious metals is required to maintain an efficient purification performance.

Mazda uses nanoparticles of the precious metals instead of larger particles, so less metal is needed to produce the same surface area over the ceramic base of the catalyst.

In addition, the life of the new converters is expected to be significantly longer, so even as your new Mazda3 gets older, you won't have to worry as much about passing the dreaded smog test.

- Brewskie

Solar-Powered Plane Crosses the Alps

Click this link for a video of the SunseekerII solar plane flying across the alps.

- Brewskie

Brazilian Biofuels (Rainforest Free!)

New Scientist has this interview with plant scientist Marcos Buckeridge, who gives an optimistic appraisal of Brazil's untapped potential for biofuel production, and its yet unrealized agricultural capacity (link):

How do you do make it sustainable?

A few years ago, when the search for fossil fuel replacements became more urgent, Brazil rediscovered the sugar cane ethanol programme it put into place in the 1970s because of the oil crisis. Back then, nobody worried about sustainability. Now we have to show why Brazil's sugar cane ethanol is different from America's maize ethanol. It is unfair to lump the two together. Our bioethanol is produced by using less than 1 per cent of Brazil's total agricultural area. It does not destroy preserved areas or compete for land with food crops. In fact, Brazilian food production should increase in the next five years. People fear sugar cane will be planted in the Amazon rainforest, but it is too humid for sugar cane there. We want to supply the world with green ethanol without cutting down a single tree. That's the challenge.

How much progress have you made?

At the moment only about one-third of the sugar cane biomass can be transformed into energy. It is an inefficient process. If we can make ethanol from the non-edible parts of the plant as well, we can double productivity. To achieve this, we need to know more about the plant's structure. That's where I come in. I've spent 20 years as a plant cell-wall biologist. We've set up a virtual research institute, and expect that, within five years, this will lead to new technologies to produce fermentable sugars from the non-edible parts of the plant. It's an exciting time to be a plant biologist in Brazil. You could say it's our Manhattan Project. We're preparing the ethanol bomb!

Are you concerned about the ecology of where sugar cane is
grown?

I am determined to push for sugar cane to be grown in a sustainable way, conserving or regenerating forest areas in sugar cane fields. So instead of a sea of cane stretching as far as the eye can see, there would be areas of forest too. Things are changing. The government of São Paulo - where half of Brazil's bioethanol is produced - has just introduced more drastic laws requiring that 20 per cent of fields must be set aside as ecological corridors.

- Brewskie

Lockheed War Titans to Build 290 MW Arizona Solar Thermal Plant

Looks like Lockheed Martin is actually good for stuff other than building bombs to wreck Iraq. This will be its first solar thermal project.

Defense contractor Lockheed Martin is building its first large-scale solar power plant -- a $1.5 billion, 290-megawatt solar thermal plant about 75 miles west of Phoenix.

Under the deal announced Friday, Lockheed will build and operate the plant for developer Starwood Energy Group, which has a contract to sell the power to utility Arizona Public Service Co. when it is complete in 2013.

It's the first project under a Lockheed/Starwood partnership first announced in 2007, aimed at marrying Starwood's deep pockets and project expertise and Lockheed's experience in space-based photovoltaic applications to bring utility-scale solar power projects to Earth.

[...]

BrightSource uses a "power tower" design -- a field of mirrors, or heliostats, to concentrate the sunlight and heat the water atop of a central tower to make steam to power a turbine. Its first plant, a 110-megawatt solar thermal station in Ivanpah, Calif., is set to begin construction in 2010 and begin operation in 2012.

Lockheed, on the other hand, will use a parabolic trough design, using 3,000 100-meter reflective troughs to focus sunlight on fluid-containing tubes that carry the heated fluid to a heat exchanger to generate steam (see Solar Thermal: Which Technology Is Best?).

California's investor-owned utilities like PG&E and Edison are under a state mandate to include 20 percent of its power mix with renewable electricity. Arizona Public Service also has a mandate to provide 4.5 percent of its power from renewable sources by 2014.

- Brewskie

Juicing More AC Out of Solar

Why solar will continue to become more efficient, cheaper (link):

There's more to solar power than blue glassy panels shimmering on rooftops. Just as important are the inverters that convert DC power created by the solar panels into grid-ready AC power. Typically, all the panels in a rooftop PV system are connected to one large inverter mounted on the side of a house.

Startup Enphase Energy of Petaluma, CA, is now making the first micro-inverters. These smaller inverters can be bolted to the racking under each solar panel, to convert DC power into AC for each panel individually. The company claims that the devices will increase a PV system's efficiency by 5 to 25 percent and decrease the cost of solar power.

[...]

In addition to DC-to-AC conversion, inverters are in charge of getting the most power from solar modules. They have a logic circuit that constantly searches for the best voltage and current levels at which the panels can operate. (Power is the product of voltage and current.)

In a conventional PV system, solar panels are wired together in series, and their combined high-voltage DC power is fed to an inverter. Therefore, the inverter's logic circuit optimizes the total current and voltage levels. But if one panel's current drops, it limits the overall output of the system. "Something as simple as a leaf blowing over a module, or dust or debris or shade on one module, will affect the entire array of all those modules that are connected in series," says Leesa Lee, director of marketing at Enphase.

Micro-inverters optimize the voltage-current levels at each panel individually. This squeezes the most power from each panel and then adds it together, increasing the system's efficiency. "Any impact on a module is limited to that module alone," Lee says. In addition, the equipment cost for micro-inverters is about 15 percent less than the cost for a traditional system, she says, because expensive DC components, such as signal combiners and disconnects, can be replaced with off-the-shelf AC parts.

- Brewskie

Asia's Got a Gas Glut, Too

The always dependable Big Gav has this on Asia's gas glut...

Supplies of liquefied natural gas from proposed plants in Australia, Papua New Guinea and Indonesia may exceed demand in the Asian region by at least 57 percent, data from Wood Mackenzie Consultants Ltd. show.

The combined capacity of some LNG projects in Papua New Guinea, Australia and Indonesia is more than 44 million metric tons while the Asia-Pacific market, led by China, requires 28 million tons a year in 2015, Noel Tomnay, Wood Mackenzie’s head of global gas and power research, said in a report yesterday. The projects are seeking approvals in 18 months, he said.

“The Pacific offers a last bright spot for sellers as Wood Mackenzie forecasts China demand growth to retain a tight market in the 2013 to 2015 period which is currently propping up long- term contracts,” Tomnay said in the e-mailed report. “But the balance is a delicate one which may shift in just the next 18 months.”

Exxon Mobil Corp., Chevron Corp., Royal Dutch Shell Plc, Total SA and Mitsubishi Corp. are among those developing LNG ventures in Australia, Indonesia and Papua New Guinea. China is building more than 10 LNG terminals on its eastern coast to meet a target of doubling the use of the cleaner-burning fuel.

LNG sellers’ market influence will wane in the next few years, Wood Mackenzie said. Natural gas prices are set to decline because of recession and lower demand that contributes to a supply glut.

- Brewskie

Introducing Peakers' Hall of Shame

James Kunstler - I had a fist full of Zimbabwe Dollars ready to purchase a new Prius for fire sale prices - what happened to the Memorial Day blowout, where everything under the sun would be sold for liquidation? You lied to me; how could you?

Michael Ruppert - you proclaimed last year gold would be in the neighborhood of $2,000 by now - it's not even half way there. I trusted you, Ruppert... how could you fib to me?

It's with great delight that the folks of Ghawar Guzzler are please to announce the newest subsidiary: Peakers' Hall of Shame. This blog will be comprised of one post; it will consist of lackadaisical peaker quotes, mishap predictions, and idiotic mistakes. It will be updated periodically, so check in now and then.

Peakers may be quick to forget, but Ghawar Guzzler is not. Let's hold these folks accountable!

(Brewskie update: Okay, the space is being filled now. Check in from time-to-time.)

- Brewskie

Off Through Memorial Day

I'll be off until next Tuesday and will be unable to reply to comments until then. I'll be resuming full production next Tuesday.

- Brewskie

Tackling the Lithium-Sulfur Battery

Lithium-sulfur batteries could potentially make the high-tech lithium-ion batteries today look like a Model T battery tomorrow (link); companies like Sion hope to make this a reality...

Lithium-sulfur batteries, which can potentially store several times more energy than lithium-ion batteries, have historically been too costly, unsafe, and unreliable to make commercially. But they're getting a fresh look now, due to some recent advances. Improvements to the design of these batteries have led the chemical giant BASF of Ludwigshafen, Germany, to team up with Sion Power, a company in Tucson, AZ, that has already developed prototype lithium-sulfur battery cells.

[...]

In terms of addressing safety issues, three advances could account for Weber's confidence. Methods of chemically treating lithium metal electrodes can prevent at least some dendrite formation, although not all researchers are convinced that this approach will be sufficient. Also, improved polymer and ceramic membranes that separate the two electrodes and resist being pierced by the dendrites could prevent short circuits. The batteries, however, could still be vulnerable to short circuit if they're damaged. To prevent electrolyte fires, Nazar says that less volatile electrolytes could be used with lithium-sulfur batteries because they have lower voltage than lithium-ion batteries.

Other issues, including low conductivity and a limited number of recharge cycles, seem to have been addressed at least in part by Sion Power. The company has produced cells that store more than twice as much energy as lithium-ion batteries available today, something BASF hopes to improve. And Weber says that the batteries can last the lifetime of a car, although this may be based on projections from Sion Power, rather than measured performance.

John Kopera, Sion Power's director of commercial operations, says that the company's current batteries are rated for 50 cycles, and that it has a "comprehensive plan" to reach about 1,000 cycles. (That's enough for as much as 300,000 miles of driving, with a battery pack that provides a 300-mile range.)

Both companies are keeping details of their advances to themselves. But this week, in the journal Nature Materials, Nazar described one possible approach to solving these problems. In the past, researchers have improved conductivity by combining sulfur with carbon. Nazar went a step further by taking electrodes composed of regularly spaced carbon tubes and making them just a few nanometers wide. (Their structure is different from that of carbon nanotubes.) Nazar's team then packed sulfur into the nanoscale spaces between these tubes, so that most of the sulfur atoms sit close to conductive carbon, making them accessible to both electrons and lithium ions.
The carbon tubes also helped solve the issue of polysulfides, which can kill a cell prematurely.

The carbon tubes effectively trap the polysulfides in place until they are fully converted to dilithium sulfide, which does not poison the battery. Coating the carbon with a polymer that has an affinity for polysulfides also helps keep them in place. But it's not clear whether BASF might also try a nanostructured electrode to improve Sion's materials. So far, Sion Power has not used nanostructured materials, Kopera says. One challenge with Nazar's approach is that it will be difficult to manufacture the carbon tube electrodes in high volumes.

- Brewskie

Crazy Asians Have 100% Solar-Powered Stadium

The always venerable Big Gav - the smartest writer of the Oil Drum - has this bit on a 100% solar-powered stadium in Taiwan (great pictures):

Taiwan recently finished construction on an incredible solar-powered stadium that will generate 100% of its electricity from photovoltaic technology! Designed by Toyo Ito, the dragon-shaped 50,000 seat arena is clad in 8,844 solar panels that illuminate the track and field with 3,300 lux. The project will officially open later this year to welcome the 2009 World Games.


Building a new stadium is always a massive undertaking that requires millions of dollars, substantial physical labor, and a vast amount of electricity to keep it operating. Toyo Ito’s design negates this energy drain with a stunning 14,155 sq meter solar roof that is able to provide enough energy to power the stadium’s 3,300 lights and two jumbo vision screens. To illustrate the incredible power of this system, officials ran a test this January and found that it took just six minutes to power up the stadium’s entire lighting
system!

The stadium also integrates additional green features such as permeable paving and the extensive use of reusable, domestically made materials. Built upon a clear area of approximately 19 hectares, nearly 7 hectares has been reserved for the development of integrated public green spaces, bike paths, sports parks, and an ecological pond. Additionally, all of the plants occupying the area before construction were transplanted.

- Brewskie

EIA Predicts "Fairly Loose" Oil Market for Next 2 Years

This from the EIA's crystal ball...

The U.S. on Tuesday forecast that crude oil markets will stay "fairly loose" over the next two years, noting that OPEC will have difficulty implementing pledged crude output cuts.

"The second Organization of Petroleum Exporting Countries agreement for substantial production cuts has failed, thus far, to support substantially higher prices," the Energy Information Administration, a wing of the U.S. Energy Department, said in a monthly forecast. "The outlook for supply and demand fundamentals indicates a fairly loose oil market balance over the next two years."

The Short-Term Energy Outlook issued Tuesday by the EIA is the first to
include monthly forecasts through December 2010.

In announcing two output cuts, OPEC has tried to shore up oil prices by agreeing to curtail output by a total of 4.2 million barrels a day from its September 2008 production level of 31.4 million barrels a day, but oil futures prices have continued their plunge, although they have stabilized somewhat since the beginning of the year. Oil futures, which recently traded around $38 a barrel, are down more than 70% from all-time highs.

- Brewskie

Pemex Finds Fair Heavy Oil Find

Pemex hit a 100 million barrels oil/gas prize near the Ayatsil Field.

Pemex, as the company is known, is ramping up exploration spending to correct decades of underinvestment and stabilize production, which has fallen by a fifth since 2004.

One of the discoveries, the Tekel-1 well, found heavy oil near Ayatsil, a field discovered last year that Pemex expects to produce around 150,000 barrels a day by 2012.

During a meeting with journalists, Pemex CEO Jesus Reyes Heroles said
the well, by itself, will add 100 million barrels of oil and natural gas reserves.

"It confirms the extension of the Ayatsil field," he said. "Ayatsil is very promising."

- Brewskie

"Many Barnetts" and other Roberto Aguilera Pearls

Robert Aquilera, one of the world's most foremost experts on tight gas engineering, shares his insight on shale and tight gas. Here's an excerpt:

ET: Speaking of prices, what is a sustainable price for natural gas? I ask because I’ve heard some producers insist that shale gas wouldn’t be profitable when prices are under $8. Now, I’m hearing $5. What’s your take on the relationship between the relatively high cost of drilling for tight gas and the market price which has been so volatile lately?

RA: My take is that $5 to $6 will work in most cases and will make most shale plays competitive. However, there are several factors that have to be taken into account while considering your question. Depth of the reservoir and its relation to the size, lateral extent, thickness, initial productivity and production decline of the prize are key considerations. There are deep and shallow shale gas reservoirs. For example the Haynesville shales can reach more that 13,000 ft. On the other hand the Fayettville shales can be found at less than 4,000 ft. And there are even shallower shales with reasonable potential in Saskatchewan at about 1,000 ft. Availability of drilling, completion and hydraulic fracturing equipment is another key consideration. For example, for the same stimulation; mobilization of hydraulic fracturing equipment, materials and personnel to the Saint Lawrence Lowlands of Quebec to stimulate the Utica shale is very expensive compared with a more mature area where the required equipment might be readily available.

Strategic alliances with service companies would help to mitigate this problem. Proximity to suitable markets, government support and stockholder engagement are other key considerations. Many of these issues can be incorporated in cumulative long run supply curves similar to the ones developed for global conventional gas and other resources by Roberto F. Aguilera and his professors in the Division of Mineral Economics at the Colorado School of Mines. These graphs present cross-plots of total average production cost per unit volume vs. future gas volumes and as such give an idea as to what are reasonable prices to develop each one of the plays under consideration.

ET: We also discussed the Barnett Shale in Texas. You said “There will be many Barnetts around the world.” What did you mean? And where do you expect the future Barnetts to be found?

RA: As indicated in our World Petroleum Congress (WPC) paper you mention in the introduction of this interview, tight gas reservoirs are present in almost all petroleum provinces around the world. The same holds true for shales -- more so because shales are a very important source rock. So my vision of several Barnetts around the world stems from the pervasive presence of shales. Black shales of South America and Africa are similar to those of North America in their association with sandstone and siltstone. Black shales of central Europe and the western part of the former Soviet Union are associated with carbonate reefs, an association that as far as I know is not present in North America. But in the same way that all naturally fractured reservoirs are different, all shale gas reservoirs are also different. I like to consider each one as a research problem by itself. Repeating the same successful drilling and
completion approach carried out in one shale reservoir, without the necessary
research and careful evaluation, may lead to major fiascos, headaches and financial losses in another shale reservoir. As to where the future Barnetts can
be found, I anticipate that it will occur primarily in regions which previously
have shown significant discoveries of oil and gas. But because of the supply and
demand issues mentioned above, it will take several years (maybe decades in some
areas) before shales outside the US and Canada are developed.

- Brewskie

The Gas Glut Won't Die (and Other News)

Natural gas futures fell to the most in nearly 2 years as supply rises...

Natural gas futures fell the most in almost two years after a government report howed a bigger-than- forecast increase in U.S. inventories, as the recession cut demand for the industrial fuel.

Stockpiles rose 103 billion cubic feet last week to 2.116 trillion cubic feet, the Energy Department said. Analysts expected a gain of 95 billion. Supplies were 22 percent higher than the five-year average as factories and power plants trimmed purchases during the worst economic slowdown in a half century.

This LNG terminal may have nothing but time, spider webs...

A liquefied natural gas industry expert from Houston says the new Canaport LNG terminal in Saint John may not be as busy as anticipated when the project began.

Construction is nearly finished at Canaport LNG's onshore facilities in Saint John, and Repsol Energy Canada is expecting its first commissioning tanker to arrive by the end of next month.

Barbara Shook, the Houston bureau chief for the Energy Intelligence Group, a research organization that covers the oil and gas industry, said recent large-scale discoveries of shale natural gas deposits in Canada and the United States have lessened the need for imported liquefied natural gas.

Shook said that could affect the number of LNG tankers coming to Saint John.
"They couldn't be operating at a worse time. Instead of being short natural gas, North America is in another glut," Shook said.

China is hosting its first shale gas conference; US-based Harding Shelton co-hosts...

Harding Shelton Group (HSG), a team of U.S. experts in shale gas development based in Dallas, TX and Oklahoma City, OK, co-hosted with Yangtze University an unprecedented sharing of technology in a two-day symposium organized by PetroChina and the Chinese Petroleum Society. Culminating the conference was the signing of documents that set up the structure through which PetroChina, HSG and the university will evaluate the shale gas potential in China.

[...]

"The opportunity to produce shale gas in China is similar to what has taken
place in the United States in highly productive areas like the Barnett Shale.
Collaborative efforts with China can address the challenge of demand for new
energy sources through this technology exchange," said John Shelton, HSG
Chairman.

HSG, through Harding Shelton Energy Consulting (Beijing) Limited, signed a Memorandum of Understanding with PetroChina's Research Institute for Petroleum Exploration and Development in Langfang (RIPED-Langfang)
for evaluating shale gas as a new energy resource for the coal-dependent
country. The collaborative effort will also include studying drilling
technologies that would be unique to the various basins of China. HSG and PetroChina will be working with the energy laboratories at Yangtze.

And in a small side-distraction, the town of Hunginton, NY, has recently announced it will fuel its fleet of garbage trucks with CNG. Bravo, guys!

The board approved a resolution authorizing Supervisor Frank P. Petrone to apply for $260,000 in federal stimulus funds administered by the Long Island
Clean Cities Coalition to help purchase two new compressed natural gas
garbage trucks and to retrofit two existing trucks to run on compressed natural gas. The total cost of the project is $574,000; the application is for the maximum reimbursable amount.

[...]

The town already has 18 hybrid vehicles and one alternate fuel vehicle, the car assigned to Petrone. The town hopes to have the first of the trucks in service
by the end of the year.

- Brewskie

Blazin' Cellulosic Ethanol and Palm Oil Breakthroughs

Both are a little old, but I'm in the midst of getting caught up on everything, and thought they were worth mentioning.

Here's TR on a cellulosic ethanol breakthrough:

Mascoma, a cellulosic biofuels company based in Lebanon, NH, reports significant advances in its goal of simplifying the cellulosic ethanol process by skipping the use of costly enzymes, which could potentially reduce cellulosic ethanol's production costs by 20 to 30 percent.

Mascoma's strategy, called consolidated bioprocessing, aims to combine the multiple steps of ethanol production into one, using genetically engineered superbugs that perform the multiple steps involved in making cellulosic ethanol. The company reports a series of advances that it says brings it "substantially closer to commercialization." Mascoma announced the results recently at the 31st Symposium on Biotechnology for Fuels and Chemicals, in San Francisco.

Existing technology to produce ethanol from cellulosic sources involves a multistep process: plant material such as paper pulp and switchgrass are first pretreated, to separate cellulose from the rest of the plant matter. Cellulose is then mixed with enzymes that break it down into sugars. Yeast then takes over to ferment the sugars into ethanol.

As a less costly alternative, Mascoma researchers are engineering microbes to combine the last two steps of the process: breaking down cellulose, and converting sugars into ethanol. They say that if they can get microorganisms to make ethanol at sufficiently high rates, they can reduce the amount of expensive enzymes needed to break down cellulose, which can normally take up half of ethanol's production costs.

The company is exploring three potential organisms for ethanol production: two types of bacteria, and one yeast strain. C. thermocellum and T. saccharolyticum are thermophilic bacteria, able to withstand high temperatures such as those experienced in reactors. Researchers have been interested in both bacterial strains for years due to their natural ability to both convert cellulose into sugar and ferment sugar into ethanol.

[...]

The company has begun to test all three engineered microbes at a pilot plant in Rome, NY, and it plans to have a commercial scale-up by 2010.

The sprawled growth of palm oil is controversial. Still, here's a recent bit worth mentioning:

A Malaysian conglomerate said Tuesday it has sequenced the genome for the oil palm, a development that will allow it to produce new varieties that will double yields of the edible oil.

Sime Darby, the world's largest listed palm oil producer, said it had achieved the breakthrough in a project with biotech firm Synamatix which had analysed 93.8 percent of the plant's genome. "With this breakthrough, Sime
Darby is ready to lead and change the future of the oil palm industry," Sime Darby Plantations managing director Azhar Abdul Hamid told a press conference.

"In 2008, Sime Darby had an oil yield of about 5.0 metric tons per hectare for Malaysia and with this we will be able to double oil yield to 10 to 12 metric tons of palm oil," he added. Azhar said that within 10 years, 15 percent of its palm oil estates would be replanted with the improved varieties and that all estates would have the new variety within 30 years.

[...]

Prime Minister Najib Razak said the development would lead to price stability and support the alternative fuel industry, which has faltered due to uncertain supply as the price of the commodity has plunged last year.

"It will be possible for us to raise yields so high, food supply needs will never be an issue again and we will be able to feed the need for alternative fuels as well with increased palm oil production," he said.

- Brewskie

Hitachi's Potent Lithium-ion Battery

Did you know Japan accounts for 70% of the world's electric car patents? It's little wonder when you have bellwethers like Hitachi cranking out lithium-ion batteries practically juiced up on a concoction of plutonium, and Alex Rodriguez's cocktail of steroid/HGH supplements. This demon packs the "world's highest power density of 4,500W/kg, 1.7 times the output of the company's mass-produced, automotive lithium-ion batteries;" sampling starts this fall!

You can read about it here. Big hat tip to B Cole for sniffing this out.

Hitachi, Ltd. (NYSE:HIT / TSE:6501,hereinafter Hitachi) today announced that Hitachi, Ltd. and Hitachi Vehicle Energy, Ltd. which develops and manufactures lithium-ion batteries for automotive applications, such as hybrid electric vehicles, have developed a lithium-ion battery having the world's highest power density of 4,500W/kg, 1.7 times the output of the company's mass-produced, automotive lithium-ion batteries. Sampling of the new battery by domestic and overseas car manufacturers will start in the fall.

To reduce internal resistance, the battery employs a new manganese cathode and an original Hitachi battery structure, in such as thinner electrodes, power collection method and effective configurations to achieve the world's highest output.

The new battery will be on display at the Automotive Engineering Exposition 2009 held at PACIFICO Yokohama from May 20 to May 22. Right now.

- Brewskie

The Rebirth of Minnesota Iron

Minnesota's Iron Range once built America's formerly famed steel back. New technology may bring it back:

Just west along Route 169 from the Hull-Rust-Mahoning mine, near the town of Keewatin (pop. 1,164), a vast domed structure dominates a tailings basin left by the defunct Mesabi Chief mine. The dome can't be seen from the highway, and few Rangers (and even fewer mining corporations) know it's there. Inside sits equipment that could prove to be as significant to the region as the 1950s-era discovery of a way to extract iron from low-grade taconite rock. The earlier technique arrived in the nick of time for the Range, for its hematite - known locally as "natural" ore - was almost depleted. Similarly, the dome at Keewatin is home to a revolutionary process, dubbed "magnetation," that can extract valuable iron from the tailings - just when the Range is in need of new sources of ore.

"Our process," says Rod Hunt, 83, who, along with mining veteran Al Fritz, 78, co-founded upstart Magnetation Inc., "is the equivalent of the fabled philosopher's stone of yore. We can't turn base metal into gold, but we can process the millions of tons of natural-ore tailings and extract the iron that got missed the first time around."

[...]

Magnetation's first challenge was to show that its patent-pending technology could indeed extract the "lost" iron. This it has done emphatically - since Feb. 23 its plant has been shipping concentrate rich enough for blast furnaces to turn it into pig iron, the raw material for steel.Now it must compete price-wise with the world's mining giants. Magnetation will never match them on volume: Brazilian mining behemoth Vale (VALE), the world's largest iron ore producer, ships about 250 million metric tons annually, compared with Magnetation's tiny initial target of 300,000 metric tons. But Lehtinen is certain that Magnetation can compete on price. Although he won't discuss costs, Lehtinen insists that Magnetation is already the lowest-cost producer in the U.S. and can match Vale, as well as mining giants BHP Billiton (BHP) and Rio Tinto (RTP), all of which must ship their ore long distances to their main customers.

"Our raw material is all around us," Lehtinen explains. "It's easy and cheap to extract, and it has already been crushed." Indeed, the main input is the water needed to convert the tailings into a mudlike slurry that can be fed through the magnetation process, where, as the name suggests, giant magnets separate the weakly magnetic hematite from the nonferrous elements of the tailings - mainly silica. And thanks to Shaughnessy's 150-acre tailings basin, getting started was relatively easy.

- Brewskie

Nat. Gas Drilling is Dying Everywhere. Not with Shale

The peakers' standard fallback with shale gas is it's too expensive, too energy-intensive to secure America's energy comfort despite the rich abundance. Well, despite the relative cost and the producers' recent money tumble, it appears shale gas interest remains vibrant:

On the Hayneville Shale,

Last August, Chesapeake Energy had only four rigs tapping into the Haynesville shale natural gas deposit in northwest Louisiana and east Texas. Now, the company has 24—and plans to add eleven more by next summer. Despite the economic downturn and the collapse of natural gas prices (now at a six-year low), energy companies like Chesapeake are charging into shale gas deposits because of the growing pressures for cleaner, abundant domestic energy.

The Star-Telegram remarks that while gas rigs are down, the rig count for the Barnett Shale (which is down from its October high) has been holding steady as of late...

The number of rigs drilling for oil and natural gas in the U.S. declined by 10 this week, to 918, the lowest level in over six years, Bloomberg News reported Friday based on data from Houston-based oil-field services firm Baker Hughes. The rig count has fallen 54 percent from 1,992 on Nov. 7. In Texas, the rig count dropped by 13, to 342. Nationally, rigs drilling for oil fell by nine, to 181, the lowest since the summer of 2005. Rigs drilling for gas fell by two, to 728, the lowest level since early 2003. But the rig count was stable Friday at 77 in the Barnett Shale gas play, unchanged from a week earlier, RigData reported. Thirty-one rigs were drilling in Tarrant County, up four. There were 12 active rigs in both Johnson and Wise counties. While Barnett drilling has plunged from its peak of 214 rigs in October, the 77 working rigs represent over 10 percent of gas drilling in the U.S.

Petrohawk is flyin' high...

Petrohawk Energy Corporation ("Petrohawk" or the "Company") (HK 22.77, -1.37, -5.68%) today announced its first quarter 2009 operational results, including updated drilling results from the Haynesville Shale, and the results of core analysis and recent wells completed in the Eagle Ford Shale.

Production for the quarter was approximately 412 million cubic feet of natural gas equivalent per day (Mmcfe/d), a 14% quarter over quarter increase and a 58% increase over first quarter 2008. During the quarter, Petrohawk drilled 165 gross wells, of which 34 were operated, with a success rate of 99%.

Petrohawk utilized eight horizontal rigs on average in the Haynesville Shale during the first quarter, not including spudder rigs. A total of 15 operated and 16 non-operated wells were drilled. Of the operated wells, 11 were on production at the end of the quarter. Additionally, five operated wells drilled in late 2008 were put on production, bringing the total number of Haynesville Shale wells completed by the end of first quarter to 28. The average initial production rate for operated wells completed during the quarter ranged from 3.3 Mmcfe/d to 24.8 Mmcfe/d, averaging 17.1 Mmcfe/d. The average initial production rate for all operated Haynesville Shale completions to date, excluding two previously reported wells that were mechanically compromised, is approximately 18.0 Mmcfe/d.

So despite the cheap gas eviornment and shale gas's expense, it seems the producers are going after the "hard and costly" gas, not the "cheap and easy" gas.

- Brewskie

The Rats are Back on the Ship

Oil's above $60 a barrel, gas is $2.50 a gallon. Not that this is something to complain about, but don't inventory stocks seem pretty healthy? Do you smell a rat? You've guessed right. Our recent relative spike is sponsored by the seem myopic bastards who brought last year's $100+ a barrel pain, our current financial distress. Looks like oil's recent rise is two-fold: Wall Street dipping its greasy hand in the oil cookie jar, and the "almighty" dollar taking a rest in the infirmary. There's been much discussion about this:

Here's one...

U.S. crude-oil inventories are at their highest levels in almost two decades, and demand has fallen to a 10-year low, but crude oil prices have climbed more than 70 percent since mid-January to a six-month high of $62.04 on Wednesday.

Meanwhile, although refiners are operating at less than 85 percent of capacity, which leaves them plenty of room to churn out more gasoline if demand rises during the summer driving season, the price of gasoline at the pump has climbed 28 cents a gallon from a month earlier to $2.33.

This time, Wall Street speculators — some of them recipients of billions of dollars in taxpayers' bailout money — may be to blame.

Big Wall Street banks such as Goldman Sachs & Co., Morgan Stanley and others are able to sidestep the regulations that limit investments in commodities such as oil, and they're investing on behalf of pension funds, endowments, hedge funds and other big institutional investors, in part as a hedge against rising inflation.

These investors now far outnumber big fuel consumers such as airlines and trucking companies, which try to protect themselves against price swings, and they're betting that the economy eventually will rebound, that the Obama administration's spending policies and Federal Reserve actions will trigger inflation — or both — and that oil prices will rise.

Here's a recent piece from Businessweek,

Here is the case for a price bubble: Oil inventories are at a 19-year high; the U.S. alone has some 1 billion barrels sitting in storage tanks, according to Mark Williams t the Associated Press. Demand for oil is set to fall to its lowest level in five years, says the U.S. Energy Information Administration.

The opposite case goes as follow: The market is factoring in expected inflation because of global deficit spending; Chinese investment spending is reviving. Over at Alaron, Phil Flynn says these are also genuine “fundamentals.”

Regardless, there always seems to be reason offered up to trust in a price run-up. After all, markets are all about emotions, as Robert Shiller notes. Yet, there are still sober voices. In my view, the Financial Times’ Chris Flood delivers it straight: Prices are rising because of various types of trading gambles. Flood quotes Mike Wittner, a senior oil analyst at Société Générale saying the following: “Recent price strength is not based on fundamentals, but on financial flows.”

Even the Drum foresees a price drop...

My analysis indicates that in recent months, as much as 2 -3 Mb/d of global petroleum supply has been used to build inventories. This is about to come to an end, because available storage is getting closer and closer to full and contango has begun to flatten. When additions to storage cease, the resulting drop in demand can be expected to lead to substantial downward pressure on oil prices.

It's one of those Kieth Olbermann "WTF!?" moments.

- Brewskie

The Drum is Croaking Faster than Cantarell

Interesting stat-shot from Freddy Hunter. TOD web page hits are down 50% from its Sept. '08 peak. Looks like the Drum is sliding down the "slippery slope" faster than Mexico's finest! Professor Goose lamented earlier of the Drum's slight readership decline, and the Drum has been trying to endure the tough times by opening up "thy beggar's hand." Pity the mighty Drum... web page hits are as deflated as GM's stock.

If you guys want to be taken seriously, here's a hint. Stop deleting contrarian comments so a truly educational, civil discussion can happen.

- Brewskie

Apology to AndrewRyan

Andrew, it's with regret that I'll be unable to write the second post on James Kunstler. I realize, with a second glance, the facts I have in the rough draft do not hold up, and do not warrant posting. While peakers have the luxury to ignore facts, Ghawar Guzzler does not. We're better than that.

- Brewskie

Status Update II

We're out of the woods, kids. I should be back to posting on a regular basis in a few days. I've been out of the loop the past few weeks - I just found JD of Peak Oil Debunked has semi-retired today! Anyways, Ghawar Guzzler will be adding a new feature after Memorial Day - stayed tuned!

- Brewskie

The "Floating Glut" Grows

Even with my hectic schedule, I can still find a bit of time to make a post.

Oil's crept up a bit lately, huh? Big deal. Remember last year when we thought $80 a barrel was cheap. That's right - don't forget it.

Anywho, I was taking a peek at things and you wouldn't know the ever-present glut has shrunk; in fact, it's grown. Here's a bit from Investor's Chronicle:

Rotterdam is Europe's largest port and refinery centre, with land-based storage for an estimated 75m barrels of oil. However, its tanks are believed to be nearing capacity, leaving inbound tankers with nowhere to discharge their stocks and effectively forced to serve as expensive floating storage vessels.

Many tankers have been forced to drop anchor outside the port (I saw lines of tankers moored off the Dutch coast during a recent flight to Amsterdam) with others lying idle off the coasts of Texas, Nigeria and southern England. Some 30 to 50 supertankers, each carrying around two million barrels of crude, are now believed to be serving as floating storage, together with a similar number of smaller vessels carrying refined products. That's around 100m barrels of oil, more than enough to satisfy one day's total global consumption.

So the "floating glut" has grown from 80m barrels to 100m barrels.

- Brewskie

Ghawar Guzzler Update

Hi everyone,

I apologize for the infrequent posting as of late, but the real world has been commanding all of my focus - particularly an obscene(!) project that's been going seemingly for entirety (568 pages with more to come, plus loose ends to tie up).

While I will post when I can, it's likely to be infrequent until things cool down.

- Brewskie