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Ofgem loses it entirely....
The smart ones walk away.
Lessons to be learned from Canada
Who's screwing who?
Why do we fear Russia on energy?
Why electric cars will impact your natural gas bill
Optimism v pessimism
Russia and Shale 2
Russia and Shale
He's a fan. Sort of.
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Ofgem loses it entirely....
What planet is Ofgem on?
Alistair Buchanan, chief executive of the energy regulator, has found that Europe could be under-supplied by 41bn cubic metres in six years’ time, if key Russian projects – many already delayed – fail to deliver. This will affect the UK if it relies on a significant expansion of gas-fired power stations to replace retiring coal stations, while nuclear plants are not operational until 2020 and energy demand rises in a strong global economy. It would narrow to a 33bn cubic metre shortfall of gas by 2020
On AB's planet, Shale has never happened. Shale in Poland, Germany, the Netherlands, France, Switzerland, Sweden, Hungary or Austria doesn't change a thing, especially by 2020.
We cannot believe that a public official (salary £260,000) is so inexpert! Has no one in Ofgem read the papers or perhaps they should ask Jonathan Stern his opinion:
Worst Crisis of Russian gas supply imaginable had no significant effect on UK gas supplies and prices
We'll call out each and every paper who prints this rubbish! We remind them again of the words of someone who Alistair Buchanan obviously thinks is a rank amateur compared to an expert such as himself: Peter Voser the CEO of Shell quoted in the WSJ of October 13:
The U.K.'s fears of over reliance on imports of natural gas in the future are overdone because supply of the fuel will remain ample and secure, said Royal Dutch Shell PLC Chief Executive Peter Voser Tuesday.The focus of the U.K.'s fears - supply from Russia - made up less than 5% of total supply in 2008 and will be a similar proportion in 2020, he said. Shipments of liquefied natural gas and pipeline imports from Norway will be a much larger proportion of U.K. supply, he said."The U.K.'s energy challenge is acute. This raises the question why it can afford to dismiss natural gas as a future source of energy," particularly because it contains less carbon than other fossil fuels, Voser said.
Journalists at least should expect some minimum level of competency from such an important person. What's Mr Buchanan's excuse?
No wonder he gives a free pass to suppliers, the man is either totally inept or simply the most gullible man in Britain.
Posted at 10:06 PM in Current Affairs, Prices and Politics, Shale Gas Permalink Comments (0) TrackBack (0)
The smart ones walk away.
Most oil companies have never made themselves any friends in the past through a desire to "drill, baby, drill" just about anywhere, polar bears, dolphins, indigenous tribes and every other sentient being be damned.
Aubrey McLendon, head of Chesapeake Energy is disrupting, along with most things, that part of the hydrocarbon matrix that has never found a potential source they didn't like.
Gas drillers have been exploring the giant Marcellus Shale coming up from West Virginia and Pennsylvania for most of the past year, and were waiting for go ahead on drilling in upstate New York to unleash yet another gas land-rush.
Although the southern section in the Catskills,is especially attractive for being in the New York City exurbs, this portion of the Marcellus was also close to the watershed for the NYC drinking water supply. There was the potential for a big battle between classic Manhattan limousine liberals and upstaters who wanted to take the money and move to Miami, an attractive prospect in a depressed area. In short the old nimby v economy story, which usually ends up eating column inches and grand debate for years.
But not this time:
Bowing to intense public pressure, the Chesapeake Energy Corporation says it will not drill for natural gas within the upstate New York watershed, an environmentally sensitive region that supplies unfiltered water to nine million people.
The reversal seems to signal a more conciliatory tone from the gas industry, which is facing mounting opposition in New York to its drilling practices.
But before the New York Green Party uncorks the organic Champagne, this isn't a victory for them, it's a victory for rational common sense:
“We are not going to develop those leases, and we are not taking any more leases, and I don’t think anybody else in the industry would dare to acquire leases in the New York City watershed,” Aubrey K. McLendon, the chief executive officer at Chesapeake Energy, said in an interview on Monday in Fort Worth. “Why go through the brain damage of that, when we have so many other opportunities?”
Over all, Mr. McClendon said, the company’s holdings in the watershed are “a drop in the bucket” compared with the Marcellus field’s potential. He suggested that Chesapeake had more to lose by drilling there than by forgoing it, even though he contended such drilling would do no harm.
“How could any one well be so profitable that it would be worth damaging the New York City water system?” he said.
The simple fact is that there is so much gas that contrary to reputation, drillers can be choosy. Bad luck if you own land in the Catskills. And Dorset. There often will be those among the legions of UK nimbyists who secretly want to sell out and move to Marbella. The lesson from New York is possibly don't protest too much.
Posted at 01:14 PM in Energy Tech, Next Big Things, Shale Gas Permalink Comments (1) TrackBack (0)
Oct 27, 2009
Lessons to be learned from Canada
The UK and the EU aren't the only places where there are long held dreams of expensive grand energy projects. Alaska has been dreaming of gas pipelines tothe lower 48, and next door the Mackenzie Valley pipeline from the Beaufort Sea to Alberta is another project that at one time might have made sense.
Today? Reality intrudes:
Ottawa has decided not to proceed with its investment in the $16.2-billion Mackenzie Valley Pipeline, sources said, throwing the future of Canada's largest construction proposal into doubt....Bob Hastings, an analyst at Canaccord Adams, who has been following the pipeline saga for decades, does not think it will be built.
"The price of gas isn't fantastic and the only thing that has really happened in the last year or so is that we've found a heck of a lot of shale gas close to consumer markets," he said. "And what would you rather do? Buy gas from up in the Northwest Territories, a long, long, long, long, long, long ways away at a very high cost, or get the gas that is just next door?"
Will Europe learn similar lessons regarding Nabucco? Or Carbon Capture, or nuclear or storage for that matter?
At the end of the day, most of the money will come from banks anyway, with government guarantees unable to cover anywhere near the entire cost. All of the above projects are underpinned by gas being constrained physically or politically. Take away the foundation and nothing may ever get built, grand or small.
Simply substitute Turkmenistan for Northwest Terrritories above, and ask does Nabucco make sense?
Posted at 05:43 PM in Current Affairs, Energy Prices, Prices and Politics, Shale Gas Permalink Comments (1) TrackBack (0)
Oct 26, 2009
Who's screwing who?
If you are a gas trader, then the view is far different from being a gas consumer:
Shale Is Really Screwing Natural Gas Investors
Production of natural gas from shale has been surprising both industry players and analysts on the upside, which clearly isn't helpful for natural gas prices either now or into 2010.
Whoa! When prices were over £1 a therm in summer 2008, was that helpful? For end-users now, or at least for those who have consistently followed our advice and only, and we mean ONLY, bought on day ahead prices, then things are looking better all the time:
Thus the era of ultra-cheap natural gas could be upon us, which would be bad news
Not so disastrous news for end users, and not so bad for the economy either. Everyone has to pay for energy, what is so bad when we all can pay less for it? Energy is simply a tax that isn't democratic: taxation without representation. If taxes were lower, markets would be ecstatic. Lower energy should be good news too. But not at some guys over the Barrel at Platts:
One recent example of just how jaw-dropping the US shale gas story has become came from big independent Newfield Exploration. Houston-based Newfield said in a conference call this week that its production from Oklahoma's Woodford Shale today is 308,000 Mcfe/d, versus about 240,000 Mcfe/d at June 30 -- up nearly 30% in less than four months. Moreover, the company has an inventory of 28 drilled but uncompleted Woodford wells waiting to be put online by early 2010, signalling the potential to boost production still higher.The astounding output jump prompted a comment from analysts at investment bank Wells Fargo, who in an October 22 report called Newfield's gushing Woodford production trend "disturbing." They noted the company's output had "reached recent highs despite (a drilling) slowdown and deferred completions."
But Newfield, and the Woodford field, are hardly the only purveyors of über-volumes of gas. Despite cutbacks in activity elsewhere, dozens of companies both large and small are drilling away at shale and other unconventional plays which they claim continue to offer towering economic rates of return. Their efforts have resulted in huge gas volumes flowing around the US and also recently in Canada. But with just a week left in the refill season, US gas storage bins are brimming over with the commodity. And current demand is not enough to use it all, which could continue the surplus into next year.
Put us with the happy end-users and the realist traders
While prices are now teetering at the $5/Mcf level, many industry observers look at storage figures and scratch their heads. Says one: "Given the amount of gas sitting around out there, it's a mystery why prices are so high.
Posted at 08:37 PM in Energy Prices, Next Big Things, Shale Gas Permalink Comments (0) TrackBack (0)
Why do we fear Russia on energy?
A foundation of UK energy policy is that we're running out of gas, making us dependent on the charity of others.
A sub text of much of the same policy is security of supply. But why are fears over security of supply directed against Russia who is accused of following in the footsteps of Molotov in any number of places, this one just happening to be today's FT, but it could be anywhere
The US ambassador to Sweden last year denounced Nord Stream as a "special arrangement between Germany and Russia" and called on the EU to counteract "Russia's energy weapon".
The reality is far more boring, and one of Britain's top energy experts, Jonathan Stern of the Oxford Institute for Energy Studies pointed out earlier this year talking about the Russia/Ukraine dispute of January 2008, in slide 16 of this fascinating presentation:
Worst Crisis of Russian gas supply imaginable had no significant effect on UK gas supplies and prices
No Hot Air, somewhat like Jonathan Stern, believes in facts, not anecdotes. He points out that the worst disruptions to energy supply come from the UKCS not from external sources. He also points out that they are for the most part short term, not structural. In other words, sometimes bad luck happens. To which we would add, it's much more bad luck to try and avoid it. Think of how many people bought long term prices that only provided the dubious value of paying double or more for energy in the name of risk avoidance.
Back to the Red Menace. Oops, we don't call it that anymore. Maybe we should mention the Cold War, so we can see how insane today's view of Russian energy weapons are. Example number one: Coal.
Coal and Gas are roughly tied as sources of generation. We always thought it bizarre that although 70% of UK coal is imported, no one has kittens over security of supply. But that was before we found out who the number one source of imports to the UK is.
How does the UK reconcile dependency on Russian coal with concerns about over-dependency on gas?
Coal supply is fundamentally more flexible  Not dependent on pipelinesMore diverse supplier base
We know a thing or two about energy. But we didn't know this! Coal supplies about 40 per cent of UK electricity, 70 % is imported (28% of total), Russia supplies 60% of that. Or in other words, 15% or so of UK electricity is directly at the mercy of the evil empire: Russia's energy weapon.
But why do we hear about gas. Russia supplies at tops 5% of UK demand, and that is debatable, Jonathan Stern says it's none and there isn't a better expert on Russian gas around. But why don't we hear how insecure we are about coal? Gas is just as fundamentally flexible, doesn't depend on pipelines and has a far more diverse supplier base than coal.
Posted at 07:31 PM in Current Affairs, Energy Prices, Prices and Politics Permalink Comments (1) TrackBack (0)
Oct 25, 2009
Why electric cars will impact your natural gas bill
We always have thought that a key paradigm shift in energy is how we are using less of it. But what would be the impact of electric vehicles on gas and power use?
The answer is that we don't yet know, but we should at least start asking the question. One more transformation over the next few years looks like being EVs.
After years of hope and hype, electron-powered driving finally appears to be on the verge of reality.In the next three years, at least a dozen pure electric or plug-in hybrid cars are slated to hit the market in the U.S. Electricity-driven vehicles from giants such as General Motors Co. and Nissan Motor Co., as well as start-ups like Fisker Automotive Inc. in Irvine, will provide consumers with a wide variety of choices. ..
Battery makers and automakers alike are tooling up factories to produce big volumes of electric vehicles. Meanwhile, power utilities and regulators are scrambling to figure out just how big the market will be...
"This is happening and it's happening soon," said Mark Duvall, director of electric transportation at the Electric Power Research Institute, an independent, nonprofit research group. "By the end of 2011, consumers will have more choices in vehicles they can plug in than they currently do for hybrids."...
But in the last couple of years, huge improvements and new battery chemistries "opened the opportunity" for ambitious product plans, she said. Gioia predicts that as many as a quarter of new vehicles sold by 2020 will be electrics, plug-in hybrids or traditional hybrids.
It's too early to say at this point how much electricity, and gas to generate that, will be needed to power EVs. But it's not too early to say that abundant natural gas and distributed generation is the way to supply those needs whatever they end up being.
Posted at 06:24 PM in Energy Tech, Next Big Things, Renewables Permalink Comments (0) TrackBack (0)
Optimism v pessimism
Barack Obama certainly still believes in hope, as we see from his visit Friday to the energy innovation leaders at MIT:
Firstly he concentrates on the good news:
Dr. Moniz is also the Director of MIT's Energy Initiative, called MITEI. And he and President Hockfield just showed me some of the extraordinary energy research being conducted at this institute: windows that generate electricity by directing light to solar cells; light-weight, high-power batteries that aren't built, but are grown -- that was neat stuff; engineering viruses to create -- to create batteries; more efficient lighting systems that rely on nanotechnology; innovative engineering that will make it possible for offshore wind power plants to deliver electricity even when the air is still.
What a contrast to the the UK doom and gloomsters, who are cheerleaders for blackouts, Peak Oil, high price and blaming greens for everything since the Garden of Eden. But the President knows that there are plenty of people who want to fail in the US as well:
The naysayers, the folks who would pretend that this is not an issue, they are being marginalized. But I think it's important to understand that the closer we get, the harder the opposition will fight and the more we'll hear from those whose interest or ideology run counter to the much needed action that we're engaged in. There are those who will suggest that moving toward clean energy will destroy our economy -- when it's the system we currently have that endangers our prosperity and prevents us from creating millions of new jobs. There are going to be those who cynically claim -- make cynical claims that contradict the overwhelming scientific evidence when it comes to climate change, claims whose only purpose is to defeat or delay the change that we know is necessary.
Let's consider cynicism. As far as we can figure out, CC deniers are in two camps. Firstly, those who unrealistically aren't very comfortable with any idea of change and seem to be proposing an ostrich approach, and refuse to confront change. These are the guys who were complaining about how restrictions on children in coal mines would burden British industry.
But it's the second group of CCD's who are more exactly energy security hypocrites. On one hand, industry will be crippled by climate change costs, but to avoid either carbon or security of supply issues (they often mix them up), they are in line with their hands out asking for state handouts for CCS, Nuclear, and more gas storage. There is also a sub group of mad scientists schemes ranging from the promising (tidal power) through the interesting (space based solar) to the barking (geo-engineering).
But the President again on the general attitude of pessimists:
...this one is far more dangerous because we're all somewhat complicit in it. It's far more dangerous than any attack made by those who wish to stand in the way progress -- and that's the idea that there is nothing or little that we can do. It's pessimism. It's the pessimistic notion that our politics are too broken and our people too unwilling to make hard choices for us to actually deal with this energy issue that we're facing.
There are a lot of people who strongly believe that government will never solve anything, despite a number of government successes: World War Two, mass education, public health, infrastructure, etc etc.
Cynicism is healthy. No Hot Air is built on it's near at hand neighbour, skepticism. And we often think that pessimism is useful in that one is never disappointed and sometimes surprised, where optimists are just asking to be let down.
The pall of permanent doom that hangs over much of UK political thought is far more dangerous than any clouds of smog. This is even more dangerous in energy policy where the new world of abundant energy combined with the optimism coming out of places like MIT is totally at odds with the unreality of energy catastrophe the doomsayers want to peddle.
Posted at 12:00 PM in Current Affairs, Next Big Things Permalink Comments (0) TrackBack (0)
Oct 23, 2009
Russia and Shale 2
More on Gazprom and US shale via AFP:
There is little doubt Gazprom has the resources to reach its US trading targets, particularly if Russia's massive arctic Shtokman field comes online in 2014 as planed.
But according to Fadel Gheit, a senior oil and gas analyst at Oppenheimer & Co, Gazprom and other foreign majors may be entering the US market for reasons beyond market share.
Gazprom's real goal, he said, could be acquiring cutting edge technology that can exploit the difficult-to-access but potentially massive reserves of gas from shale rock.
"The United States has far more advanced shale gas drilling technology. It is basically in the hands of the smaller producers, not the Exxons, not the BPs and not Shell.
"These companies are paying very hefty entry fees to gain a window into the technology. Gazprom I don't believe is interested in production itself, they are interested in production technology. It's pay to learn."
And Gazprom may face commercial challenges to US trade, even with its resource clout.
With China's economy growing apace and European energy prices still high, those markets remain more attractive.
Although Gazprom has a 20-year plan to bring liquefied natural gas to the United States from Russia's enormous Sakhalin-2 field, the firm has preferred to cash in on higher Asian demand and higher European prices.
Still, energy analysts expect regional price differences to ease as the market becomes more global and as regional powerhouses like Gazprom and Chinese firms move into new markets.
One boon for Gazprom's US business may come from an unlikely source -- the federal government. Congress is considering new regulation governing carbon emissions.
"It is all good," Hattenberger said of the proposals, arguing emissions curbs could propel gas use as a cleaner alternative to coal and oil.
"We are still very bullish on US demand," he said
Whatever is going on here, one rather obvious question to be asked in Europe is: Does this sound like the big bad Gazprom that we should be so fearful about that we should spend huge sums of money on technological dead ends like CCS, Nuclear, Storage or Nabucco to avoid being dependent on Russian gas? Far more money we must point out than any alleged economic damage from gas interruptions.
Gazprom is simply acting like a mature, grown-up international oil company. Let's folllow their example.

Posted at 03:06 PM in Energy Prices, Next Big Things, Shale Gas Permalink Comments (1) TrackBack (0)
Oct 22, 2009
Russia and Shale
Back in June, Stephen Holditch showed figures that the former Soviet Union had 627 TCF of shale, compared to 509 in Western Europe.
Gazprom recently went into the US market, allegedly to try and import more LNG, a thankless task in today's market. Another reason?
Gazprom said it may consider acquiring a US shale-gas producer to gain the know-how to exploit similar fuel deposits at home.“An acquisition of a shale-producing company could make a lot of sense,” John Hattenberger, president of Gazprom’s US energy-trading unit, said.“Russia has huge shale reserves,” he said in a Bloomberg report.
Posted at 10:35 PM in Current Affairs, Shale Gas Permalink Comments (1) TrackBack (0)
He's a fan. Sort of.
We've written before of support for natural gas and shale from US green groups like the Sierra Club, Waterkeepers' Alliance and the progressive Centre for American Progress.
But what about the biggest green of all: Al Gore. What does he think? He isn't for shale, but he doesn't open his mouth or start clutching his chest when others on the platform do.
Sen. Reid opened his remarks by saying, “I’ve been converted. I now belong to the Pickens church,” in reference to the plan pitched by Oklahoma oilman T. Boone Pickens to ramp up the role of natural gas (and wind power) in U.S. electricity generation. Natural gas has roughly half the carbon emissions of coal when used to generate electricity.
And here's the photo:
T. Boone Pickens is a most unlikely darling of environmentalists.T. Boone Pickens is a billionaire who made most of his fortune by purchasing and selling shares in energy companies. But, as detailed by Kambiz Foroohar for Bloomberg, Pickens is now touting the Pickens Plan, which would use natural gas to power the 6.5 million diesel trucks which drive up and down America’s roads. By doing so, Pickens says that the United States can save 2.7 million barrels of oil per day, which is over half of what the country imports on a daily basis from OPEC.
The obstacles are large, but if a former oilman like Pickens can win over Harry Reid and Al Gore, his plan may reach fruition.
News from China of Gore actually saying something:
Gore, whose remarks in Beijing focused on solar, wind and geothermal power, expressed skepticism that natural gas, nuclear power or biofuels were realistic energy sources to harness in order to achieve large reductions in carbon emissions.Gore, who won the Nobel Peace Prize in 2007 for his work to publicize the dangers of global warming, said nuclear power was too expensive and could be used to make weapons, biofuels might spark food price rises and natural gas, which emits two-thirds the carbon of oil, was only a “promising transition fuel.
"Promising transition fuel?" Could be better, could be worse. But we can live with that.
Posted at 10:26 PM in Current Affairs, Prices and Politics, Shale Gas Permalink Comments (0) TrackBack (0)
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