Friday, March 26, 2010

Oil Reserves "Exaggerated by One Third"

A number of years back, prominent energy analyst Matthew R. Simmons, in his Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, stated that Saudi Aramco and other oil producers routinely overstated their reserves, and this claim is now being seconded by Saudi Aramco itself, which recently admitted that the famous Gwaihir field, the world's largest oil field, is showing distinct signs of exhaustion and that its production might peak as early as 2015.

Other voices are now chiming in. Scientists and researchers from Oxford University in UK state that global oil reserves are overstated by a third by producers, Saudi Aramco prominent among them, in order to bolster investment and market share. Additionally, a paper published recently by these researchers states, such authorities as the ever-optimistic International Energy Agency (IEA) and Energy Information Administration (EIA), and political leaders who rely on these agencies for policy guidance, have taken these overly optimistic estimates at face value even though they have been unofficially recognized as exaggerated among oil insiders for many years. 

The Oxford researchers also point out that "unconventional" sources of oil such as the Canadian tar sands and deep-water offshore fields are also included in reserve estimates. While these sources certainly count as reserves, they are extremely expensive to exploit and oil prices must rise substantially to justify their production. These difficult-to-access sources of oil most likely will become our principle sources in a few years, as the "elephant" fields in the Middle East, Mexico, Russia, and South America pass their peak production. Production from Mexico's formerly massive Cantarell is collapsing , and Mexico, which has been a major supplier of oil to the fuel-guzzling U.S. will soon cease to export oil.

Here in the United States, the world's most energy-dependent nation, we are airily complacent and inert in the face of declining global oil supplies and rapidly increasing global competition for the remains, while other hungrier and less complacent industrial economies, notably cash-rich China, are not taking their futures for granted and are aggressively locking up future supplies of dwindling natural resources. American political leaders are coming late to recognition of the direness of the fossil fuel situation, and even as they unwillingly, and almost in passing, acknowledge that supplies might be a problem in some distant future, that we have plenty of time and in any case can switch to natural gas, another resource subject to peaking and inevitable decline as we ramp up consumption.

We will probably need $4 a gallon gasoline and deeper economic hardship as a result, to shake us awake and motivate us to do what we desperately need to do, which is develop new means of energy production and most of all change the way we live, consume, and inhabit the land. By then, it will be too late to mitigate the effects of a sudden and drastic contraction in available fuel supplies.

Thursday, March 25, 2010

Illinois Senate Votes to Lift Nuclear Moratorium

In a rare fit of rationality, the Illinois Senate has voted to rescind the 23-year-old moratorium on the development of nuclear power in this state. See title link.

One wonders what came over them. Maybe there's a new virus going around. If so, I hope it becomes a pandemic. But maybe they were just Scared Straight by the recession and the relentless upward creep of liquid fuel prices. Maybe it's realizing that Illinois, the crucible of civil nuclear power and once a manufacturing powerhouse, is quickly fading to second-tier status (or worse) economically as our manufacturing has moved away, first to southern states and then offshore.

And perhaps our pols are at last becoming Peak Oil-aware, and realize that natural gas will soon follow oil to peak production, then to inevitable decline and eventual depletion. At last Peak Oil is beginning to get media attention, and our leaders are beginning to recognize that the decline of fossil fuels is a much larger threat to our civilization than Global Weirding. This is not to trivialize the challenges presented by rapid climate change, but to say that the decline of concentrated energy is a much larger threat.

The Obama administration also seems to recognize the towering threat to our ability to support ourselves and provide the basic decencies with either fossil fuels or the "renewable", diffuse forms of energy such as wind and solar, and that reliance upon them will make us much poorer and that there's no way that we can run any fraction of our systems with them. Gradually, by increments, the administration seems to be moving away from its former commitment to wind and solar, possibly recognizing that there is no way that the incredibly concentrated energy available only from nuclear can ever be matched, either in cost or reliability, by the diffuse energy available to solar and wind farms.

Now we can hope for the regulatory reform necessary to permit the development and deployment of newer, cleaner, safer, and vastly cheaper nuclear technologies, such as the Molten Salt Reactor and Liquid Fluoride Thorium Reactor.

Sunday, March 21, 2010

Cricket Connection Problems

Am I the only person suddenly experiencing difficulties with my Cricket 3G broadband, or are other Cricket customers also experiencing trouble in connecting, time outs, and extremely slow page-loading with their Cricket wireless broadband?

I became a Cricket customer in August of 2009, and subscribed to the cellular phone and wireless 3G broadband "bundle" in order to free myself from land connections altogether. For the first five months, the broadband connection was absolutely flawless- it connected almost instantly and loaded pages quickly. Downloading and uploading files of all types was extremely easy and rapid.

However, in the past month or so, I've experienced almost daily difficulty in getting connected, staying connected, and accessing web pages. Time outs have become extremely frequent.

If you are a Cricket user, how has your experience been? Please chime in with any comments and remarks you have.

Federal Loan Guarantees for Inefficient Energy

Federal loan guarantees may be doing more to harm the development of efficient alternative energy than aid it, by funding inefficient and/or obsolete forms of power generation.

At first blush, the $8 Billion in loan guarantees for nuclear power development sound like good news for the nuclear power industry, now experiencing a shaky revival after 30 years of pariah status. However, the nuclear plants now being planned are Generation III light-water reactors, mostly AP-1000s. While these plants are a vast improvement on older plants built in the industry's infancy, they still will employ a nuclear technology based on uranium, and that are tremendously costly and time-consuming to build, requiring massive structures that must be constructed on-site from the ground up, requiring hundreds of different, expensive skill sets. Most of all, they employ a technology that is being rendered obsolete by the development of many other nuclear technologies, which are intrinsically much safer and generate far less waste, or almost none at all, and can be built at a much lower cost relative to the amount of power generated while extending the fuel cycle for many decades or even centuries. However, too many people have a massive stake in the current obsolete nuclear industry, from building contractors and organized labor, to equipment manufacturers, all of whom will realize handsome profits from the construction of plants costing $8 billion and up to build, and they are working hand-in-glove with the principal nuclear regulatory authority, the sclerotic NRC, to retard the development and deployment of the many new and vastly more advanced, efficient, and safe nuclear technologies. In the absence of regulatory reform, it will be for nimble, flexible, hungry countries like India, that are not hamstrung by existing technologies and their lobbyists, to develop the most modern and efficient techniques such as the Liquid Fluoride Thorium Reactor, while the United States continues to commit massive portions of its rapidly shrinking wealth to obsolete 20th century industries like automobiles, suburban house-building, and light-water reactors.

At least these nuclear plants will produce the quantities of reliable, on-demand electricity our economy requires,and they will do it with minimal carbon emissions, which is rather more than can be said for the wind and solar pipe dreams being given loan guarantees. $1.37 B in loan guarantees have been granted for the construction of the Ivanpah Solar Electric Generating System, to be built in California, and which will generate 392 Megawatts of electricity. The plant will not be able to stand alone, but will require a gas-powered assist in the mornings and during overcast weather.

As Charles Barton at Nuclear Green points out: "If you factor out the gas assist, you get actual low CO2 emission solar thermal power out of this thing for a mere $15,0000 per available kW, which is only THREE TIMES what it would cost to put in a nuke plant, if you assumed that Lester Brown is correct when he cites the Areva plant in Finland as the true "tombstone" poster plant that will kill the nuclear renaissance because it costs $5000 per available kW after the cost overruns are included It would take about 11.7 of these Brightsource "392 MW" nameplate 123 MW actually available on average projects to equal the output of the far too expensive for Lester Brown to consider using Areva Finland nuke. Lester touts solar thermal, so, let's see, for a mere $16 billion or so, you could cover 75 square miles of places the Sierra Club, et al, say they don't want to see covered and use generating stations like these instead.

Given that solar and wind are in themselves not only the costliest forms of power generation but are intermittent and unreliable, and therefore dependent upon gas and coal backups, it's difficult to consider them truly renewable, and they would certainly raise the cost of electricity out of the reach of many poor consumers. The requirement for a fossil fuel backup effectively cancels out any environmental benefit to be derived from solar and wind, especially in consideration of the steep environmental costs of gas drilling, which releases more radiation into the environment than uranium mining and nuclear fission, and coal mining, the environmental devastation of which is well-documented. Moreover, the materials used to manufacture the components of these systems, and their  massive land requirements, give them an ecological footprint equal at least, and probably exceeding vastly, that of a large nuclear plant capable of supplying a major city with large amounts of reliable, on-demand power necessary to run our civilization.

The Department of Energy and the various government loan programs are not working to assure us of reliable, cheap energy going forward nearly so much as they are obstructing the development of future energy sources in favor of entrenched constituencies, namely the current fossil fuel and old-style nuclear power industries, and the environmentalist lobby, while disguising the true costs of the programs involved. Regulatory reform, with the goal of streamlining the licensing process for proven technologies and less obstruction for newer, more efficient technologies, in combination with more mass production of designs and components, would reduce costs substantially and make it possible to get plants online more quickly.

Tuesday, March 16, 2010

Is $80 A Barrel the New Floor For Oil?

Anybody who is still in denial regarding the reality of Peak Oil need only consider the type of drilling being done now. Never has so much money been committed to such high-risk drills in places so difficult to access and requiring so much new and expensive technology, for such relatively trifling yields, as with the deepwater drills being done by Chevron and Petrobas.

Newsweek writer Matthew Philips, in his article last week, Journey to the Center of the Earth, called this deepwater field, which could contain enough oil to supply the U.S. for ten years, "perhaps our best shot at energy independence." If so, we are destined for considerable economic hardship and material deprivation going forward, because the cost per barrel of drilling alone is nearly 50% more than the current price of oil, about $80 a barrel.

Chevron's offshore drilling platform, the Tahiti, is located about 190 miles from the shore in the deep waters of the Gulf of Mexico, where the drill must plunge through 7,000 ft of water, then through a thick layer of much and a salt bed beneath it that is over a mile deep, and then through several miles of crust to reach a paybed estimated to contain 85 billion barrels of sweet crude. That's a real giant, a stunning find relative to the relatively piddling yields projected for other deep sea drills, which are expected to yield 15 billion barrels at best, or the Bakken formation, which is considered to be good for 3.5 billion barrels at the most.

But it will not be cheap oil, and we can put to rest any dreams we may have of seeing $30 a barrel oil ever again.The project is expected to cost about $100 Million, which means that if it yields the 85 billion barrels thought to reside there, the cost per barrel will be $117.64. And that assumes that all 85 billion can be recovered, and that nothing major goes wrong with the project to cause massive cost overruns, which are pretty optimistic assumptions.

Why would Chevron do a drill that costs at least $117 a barrel when oil is currently trading around $80? Now we know why oil companies have been a little recalcitrant about obeying the command to "Drill, baby, drill!" and you have to figure that there must be a very powerful incentive to induce the people who front the money and risk to do the drilling to embark on such a massively risky project. Chevron is, after all, a business, and we can safely assume that it isn't doing this to take a $37 a barrel loss. The oil producers can only be extending themselves to this extent in the belief that near-future oil prices will support these projects and give them a decent return on this massive investment, and they must have a reasonable basis for believing that the supply/demand balance will work in their favor.

There is less dispute everyday over whether Peak Oil is a reality, and the major argument now is not if but when, and the estimated years of arrival are closer together. Kenneth Deffeyes believes that 2005 was the year that global production peaked, and points out that production has never exceeded that year's level. Other analysts say 2008, and most ominously of all, Sadad as Husseini of Saudi Aramco predicts that its Gwaihir field, the largest in the world, will reach peak production in 2015.

Just as the early Peak Oil prognosticators warned, demand is increasing while each new discovery is smaller and harder to exploit, and we're now arriving at the interstice between increasing demand and declining supplies, and arguments about exactly what year the peak will occur or has occurred are really beside the point. We will be paying more for less, not only oil, but everything that is somehow dependent upon it. And that means just about everything.

Looks like we are in for a long economic convalescence.