Posts Tagged ‘Natural gas’

Shale gas in Europe worries Putin

October 25, 2014

It might seem counter-intuitive for Russia to be against the advent and development of shale gas in Europe since they themselves have huge quantities of oil and gas bearing shale in SiberiaBut Russia has a very large investment in conventional natural gas production and pipelines (through Gazprom) which must be protected and nurtured. Putin needs to ensure revenues and that exports of conventional natural gas gives them a reasonable return on the investment before moving onto shale gas. About 30% of Europe’s gas comes from Russia. Russia needs Europe to go slow with its own shale gas production and to continue buying Russian gas at reasonably high prices for as long as possible. So much so that Russia has even been supporting anti-fracking groups in Europe. (It is a little ironic when the European anti-fracking alarmists take well disguised Russian funds and play into Russian hands).

The MotleyFoolNow there are accusations that Russia is working hard to keep Europe dependent on its gas supplies. According to Nato chief Anders Fogh Rasmussen, Russia is doing this by funding anti-fracking groups. That’s something that some of the larger groups deny, but it would be hard to suss out where all of their donations come from in the anti-fracking movement.

There are good reasons for Russia to undertake such a covert operation. For starters, Gazprom would suffer greatly if its European business started to slip away. Second, by keeping Europe hooked on Gazprom gas, Russia maintains a strong bargaining position in world politics.

That, however, just gives the United States more reason to come to the aid of its European allies. Right now, the export of U.S. natural gas is severely limited. With the combination of horizontal drilling and hydraulic fracturing (fracking) in the U.S., however, the flow of gas has outstripped demand and pushed U.S. domestic gas prices to record low levels.

While being able to sell natural gas to Europe would be a huge win for Europe politically and U.S. gas drillers financially, it would also be a big win for pipeline operators like Kinder Morgan (NYSE: KMI  ) . Moving natural gas from where it’s drilled to where it’s used made up roughly 50% of Kinder Morgan’s business last year. The business isn’t about natural gas prices, either; it’s about providing a service. CEO Richard Kinder describes it this way: “We operate like a giant toll road.” So, if natural gas starts going overseas, Kinder Morgan will be involved in the process and make money doing it.

The possibility of surplus shale gas from the US entering Europe and depressing sales of Russian natural gas is a nightmare economic scenario for Vladimir Putin. Even the recent drop in oil prices has seriously unbalanced the Russian budget which needs an oil price of over $100 to be in balance.

Putin takes part in final session of 11th Valdai International Discussion Club meeting

Putin at the 11th Valdai International Discussion Club meeting in Sochi

Putin is clearly worried. Russian President Vladimir Putin took part at the plenary session of the Valdai International Discussion Club in Sochi. He talked up the risks with US shale gas to Europe and talking up the benefits of Russian gas.

TassPutin: Europe’s transition to American shale gas will be suicidal for EU economies

Russian President Vladimir Putin believes that transition to shale gas will be suicidal for the EU economies. In his speech at the Valdai discussion club on Friday, Putin said that Russia’s trade turnover with the European Union stood at 260 billion dollars in the first half of 2014 even despite sanctions. He assumed, however, that the trade volumes could fall if Russia stopped all gas and oil supplies to Europe.

“We assume that it can happen at the will of our partners in Europe. But it’s hard to imagine,” Putin said, explaining that alternatives to Russian gas and oil supplies were worse.

It is either the crisis-hit Middle East where the “Islamic State” militants have stepped their operations or deliveries of shale gas and shale oil from the United States.

“We can imagine that /deliveries/ of shale oil and shale gas from the United States are possible. But how much it will cost?” Putin asked.

“This is going to be a direct way to reducing their own competitive ability because it is going to be more expensive than our pipe gas or oil delivered from deposits in Russia,” the Russian president went on to say.

“They are simply going to kill their competitive ability. What kind of a colony Europe should be to agree to this option. But I believe that common sense will prevail. The same is true of Asia,” Putin said in conclusion.

For very many reasons the very best thing that Europe (and Asia) could do would be to expedite the production of their own shale gas. It would bring down energy prices, stimulate growth, increase jobs, increase independence from Russia, increase exports, increase competitiveness against the US and consolidate energy intensive industries which are moving out. But this would have to overcome the opposition of the alarmist, European green parties who have a remarkable facility for being counter-productive.

Opposing the development of shale gas in Europe gives Russia the edge on the geopolitical playing field.

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Shale gas potential delays new natural gas pieline under the Baltic

November 19, 2013

It will be slower than in the US, but shale gas will also be a game changer in Europe. Even though Russia has huge reserves of shale gas and shale oil, they would also prefer that the transition to shale gas should not go too fast. They have so much invested in the Natural Gas infrastructure that they need to keep the sales of natural gas going to ensure a return. Gazprom has the enviable dilemma of protecting an existing revenue stream by preventing the too rapid establishment of another revenue stream. One problem for Gazprom of course is that shale gas is much more widespread across Europe and their virtual monopoly with Siberian natural gas will be threatened.

In any case the energy scene is changing fast and the planned investment in additional gas pipelines under the Baltic Sea from Russia to Germany have been delayed by Nord Stream.

Swedish Radio News: The gas pipeline consortium Nord Stream are delaying their plans for one or two more pipelines under the Baltic Sea. According to Nord Stream’s adviser, Lars Grönstedt, the shareholders want further analyses of the rapidly changing energy market. 

The USA has quickly become almost self-sufficient in energy because of its own shale gas , and it has led to Europe buying more cheap coal than before. “I can not comment directly on the shareholders’ deliberations. But I can guess that since gas has changed to such an extent just the last twelve months , it needs some deeper analysis” says Lars Grönstedt. 

Nord Stream pipeline image http://russia-media.ru/

Nord Stream’s current pipeline has two channels extending from Vyborg in Russia to Greifswald in Germany under the Baltic Sea to deliver Russian natural gas to Europe.  

Nord Stream had planned to add one or two further gas pipes and held public information meetings last spring –  including on Gotland. It is a project that is expected to cost about $9 billion, and in Sweden alone could create some two hundred jobs during construction. 

Nord Stream’s shareholders, five European energy companies , including Russia’s Gazprom , have postponed these plans. The changes in the energy market as Lars Grönstedt mention, are due in part to America’s increased shale gas . 

I suspect that Gazprom’s best way of maximising revenues is by holding up current natural gas prices but not so high that the development of shale gas is accelerated and not so high that gas users shift to coal (as the large utilities are doing in Germany). A delicate calculation and which would require a slow development of their gas distribution pipelines.

But for the private consumers, the lowest cost would be if shale gas development was speeded up.

 

Biofuels produce twice as much carbon dioxide per kWh as natural gas

October 31, 2013

Of course, carbon dioxide is proving to be of much less importance to global warming than the alarmists would have us believe. Sharply increasing carbon dioxide concentrations have had no impact on global temperatures for the last 17 – 18 years and the supposed link between man-made carbon dioxide emissions and global temperatures is looking very shaky.

It has been another “feel-good” assumption that burning wood, peat, bioethanol and biofuels in general are “carbon neutral”. But that is just wishful thinking. “… only about half as much CO2 per kWh is released when using natural gas rather than wood”.

“Both this and the original method used models of the forest. Models are by definition simplifications. The simplifications a researcher makes will vary according to the issues at hand, the questions being asked. You realise how much earlier analyses have oversimplified things when more refined models yield completely different answers.” 

ScienceNordic reports that scientists from the Cicero Centre for Climate Research and the Norwegian University of Science and Technology used a new method for quantifying the contributions of bioenergy to global warming as compared to fossil energy such as oil and gas.

But further research now indicates that the real climate effect of wood burning is less advantageous.

“By refining their method I determined that the emission of one kg of CO2 from biomass is the equivalent of about 1.25 to 1.5 kg fossil CO2.  So it’s much higher and less climate friendly,” says Bjart Holtsmark, a researcher at Statistics Norway.

In other words, if Holtsmark’s calculations are correct, the climate impact of using slow-growing forest wood for fuel is greater than the burning of fossil fuel, given a 100-year time frame.

Holtsmark says that the original method failed to account for how logging leaves behind dead tree parts. When trees are cut, a considerable amount of tree “waste” remains in the forest to rot and oxidise – and emit CO2.

“This aspect of the carbon balance sheet for bioenergy needs to be included,” he says. “The usual practice in forestry is to take out the trunks, while leaving the branches, treetops, stumps and roots. But the trunk only comprises half the tree’s living biomass.”

He explains that even if the branches and tops are taken out with the trunks, the stumps and roots will be left behind to oxidise into CO2. …… 

…. Holtsmark also asserts that the combustion of timber releases more carbon dioxide per kWh of heat energy than oil and gas.

“For example, only about half as much CO2 per kWh is released when using natural gas rather than wood. When this is taken into account, the picture for bioenergy from slow growing forests becomes even less advantageous.”

Fire Ice (methane hydrate) success in Japan gets India all excited

March 17, 2013

I get the impression that not only the oil and gas industry but also countries with limited energy resources have not been this energised about prospects for energy independence for a long time ( and perhaps not since the discovery of North Sea Gas). First came Shale gas and then Shale oil and now Fire Ice is catching the imagination. The sheer abundance of methane hydrates around the globe and the thought that much of this gas could soon be economically extractable is almost intoxicating for those involved.

“The worldwide amounts of carbon bound in gas hydrates is conservatively estimated to total twice the amount of carbon to be found in all known fossil fuels on Earth”.

I posted recently about the successful flow test for extracting gas from deep sea methane hydrate conducted in Japan. Of course commercialisation of this technology is still many years away (though Japan hopes this could be as early as 2016). Deposits of methane hydrate are known to be extensive and generally exist either under permafrost or under the sea. The deep sea deposits were laid down under conditions of high pressure (deep sea conditions). India is known to have substantial deposits and this is now getting some people very excited:

Types of methane hydrates deposits

Economic Times:

Estimates of global reserves are sketchy, but range from 2,800 trillion to 8 billion trillion cu.metres of natural gas. This is several times higher than global reserves of 440 trillion cu. metres of conventional gas. However, only a small fraction of hydrate reserves will be exploitable.

Methane hydrate is a mixture of natural gas and water that becomes a solid in cold, high-pressure conditions in deep sea-beds (where the temperature falls to 2 degrees centigrade). It is also found in onshore deposits in the permafrost of northern Canada and Russia. Heating the deposits or lowering the pressure (the technique used by JOGMEC) will release gas from the solid. One litre of solid hydrate releases around 165 litres of gas.

India has long been known to have massive deposits of methane hydrate. These are tentatively estimated at 1,890 trillion cu.m. An Indo-US scientific joint venture in 2006 explored four areas: the Kerala-Konkan basin, the Krishna-Godavari basin, the Mahanadi basin and the seas off the Andaman Islands. The deposits in the Krishna Godavari basin turned out to be among the richest and biggest in the world. The Andamans yielded the thickest-ever deposits 600 metres below the seabed in volcanic ash sediments. Hydrates were also found in the Mahanadi basin.

Formidable economic and environmental challenges lie ahead. Nobody has yet found an economic way of extracting gas from hydrates. Industry guesstimates suggest the initial cost may be about $30/ mmBTU, double the spot rate in Asia and nine times higher than the US domestic price. JOGMEC is optimistic that the cost can be cut with new technology and scale economies.

The Indian National Gas Hydrate Program (NGHP) Expedition was conducted together with the US Geological Service

The World’s Largest Potential Energy Resource
Released: 2/7/2008 9:21:21 AM

An international team led by the U.S. Geological Survey (USGS) and the Directorate General of Hydrocarbons, which is under the government of India’s Ministry of Petroleum and Natural Gas, conducted the expedition.

Highlights include:

  • gas hydrate was discovered in numerous complex geologic settings, and an unprecedented number of gas hydrate cores and scientific data were collected;
  • one of the richest marine gas hydrate accumulations ever discovered was delineated and sampled in the Krishna-Godavari Basin;
  • one of the thickest and deepest gas hydrate occurrences yet known was discovered offshore of the Andaman Islands and revealed gas hydrate-bearing volcanic ash layers as deep as 600 meters below the seafloor;
  • and for the first time, a fully developed gas hydrate system was established in the Mahanadi Basin of the Bay of Bengal.

“NGHP Expedition 01 marks a monumental step forward in the realization of gas hydrates becoming a viable energy source,” said USGS Director Mark Myers. “This partnership combines the expertise of two organizations dedicated to understanding gas hydrates, and research results provide new and exciting information about this important potential energy resource.”

Directorate General of Hydrocarbons Director General and NGHP Program Coordinator V. K. Sibal said, “The global gas hydrate resources are estimated to be huge. Although the exploration and exploitation of gas hydrates pose significant challenges, the opportunities are unlimited. The combined wisdom of the scientific community from across the world could provide the answers and solutions to many of these challenges. The Indian gas hydrate program has been fortunate in having the benefits of a truly global collaboration in the form of the first gas hydrate expedition in Indian waters. The results of the studies are not only encouraging, but also very exciting. I believe that the time to realize gas hydrate as a critical energy resource has come.”

Methane hydrate deposits around the world: Graphic Der Spiegel

 

Russia losing the shale gas wars

October 1, 2012

The advent of shale gas is not only a game-changer regarding power generation but also a game-changer in the area of energy and geopolitics. The Russian dominance in the European gas markets is being threatened and they are now joining forces with various environmental groups in an unholy alliance to restrain the development of shale gas production in Europe.

But in the long-term I expect Russia will join the shale-gas movement. They have larger resources of oil and gas bearing shales  than most others.

Wall Street Journal (Associated Press):

The Kremlin is watching, European nations are rebelling, and some suspect Moscow is secretly bankrolling a campaign to derail the West’s strategic plans. It’s not some Cold War movie; it’s about the U.S. boom in natural gas drilling, and the political implications are enormous. Like falling dominoes, the drilling process called hydraulic fracturing, or fracking, is shaking up world energy markets from Washington to Moscow to Beijing. Some predict what was once unthinkable: that the U.S. won’t need to import natural gas in the near future, and that Russia could be the big loser.

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South Africa could join the shale gas band-wagon

March 9, 2012

Karoo, South Africa: image Wikipedia

The Karoo is a semi-desert natural region of South Africa with two main sub-regions – the Great Karoo in the north and the Little Karoo in the south. The region is known to contain shale-gas deposits some 4,000m below the surface but the extent of the deposits have yet to be fully investigated.

Now Econometrix has published a new report on the potential for growth that Karoo shale gas could provide. The report is supported by Shell who are planning to explore the deposits. A pdf version of the report is available from Shell here: Karoo Shale Gas Report – February 2012

To put quantitities in perspective the 485 trillion cubic feet of gas (14 trillion cubic metres)  thought to be in the Karoo compares with 25 trillion cubic metres in China and about 13 trillion cubic metres in the US. (The Age of Gas: China has enough shale gas for 200 years).

IOL, South Africa reports:

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The Dawning of the Age of Gas

February 22, 2012

If the 19th century was the dawn of the Age of Coal and the 20th century was the Age of Oil, the 21st century seems to be well on the way to being the Age of Gas.

Gas shales are being found all over the globe. The US has reserves of 860 trillion cubic feet of shale gas. In many countries gas-bearing shales have not yet been fully explored but known reserves include; in China (1,275tn cubic feet), Argentina (774tn), Mexico (681tn) South Africa (485tn), Canada (388tn), Libya (290tn), Algeria (231tn),  Brazil (226tn), UK (200tn), Poland (187tn) and France (180tn). Exploration is still under-way in Russia, central Asia, India, the Middle East, south- east Asia and central Africa. New finds of Natural gas are being discovered off the coast of East Africa. Exploration is now extending to deposits of  methane hydrates in the deep sea (>500m) and under permafrost. For electricity generation and large scale heating (district heating) gas is likely to be the preferred alternative. By 2030, gas will probably overtake coal and oil as an energy source. Compressed gas for transport is already in use. Wind and solar energy will not be insignificant but will remain expensive and just a minor contributor. Even where the renewables are used for political ends, gas will have to provide the necessary back-up.

The IEA called it in their special report: Are we entering a golden age of gas.

Reuters reports that new finds are converting East Africa into a gas hub: Statoil find adds to East Africa gas hopes

Martin Wolf writes in the Financial Times: Prepare for a Golden Age of Natural Gas

… the EIA notes that “the advent of large-scale shale gas production did not occur until Mitchell Energy and Development Corporation experimented during the 1980s and 1990s to make deep shale gas production a commercial reality in the Barnett Shale in North-Central Texas.” But, by now, it adds, “[t]he development of shale gas has become a ‘game changer’ for the US natural gas market.”

Now China gears up for the shale gas revolution

February 14, 2012

China has reserves of shale gas at least 50% greater than in the US and is the latest country hopping onto the fracking band-wagon. The Chinese are looking to acquire minority interests in technology companies owning fracking technology in the US and are pushing ahead with their plans for production of shale gas. It seems quite clear now that whenever the global economic recovery finally gets going, the availability of shale gas will be one of the contributing factors. I expect we shall see a boom in exploration for shale gas reserves, in increasing production of shale gas and a boom in gas-fired power generation. There may well be a boom in the sales of gas turbines for power generation within the next 2 -3 years.

“Peak” gas is nowhere in sight. And the fracking technology developments seem to have application even for the recovery of large amounts of gas from methane gas hydrates which are found under deep sea-beds (>500m deep) and even under thick layers of permafrost. While this may take another 10+ years to develop, it makes it even more unlikely that any “peak” gas scenario can develop.

Shale gas reserves: Reuters graphic

Forbes reports:

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Benefits of shale gas are real and measurable

January 18, 2012

The advent of shale gas has moved the peak of “peak-gas” into the future by some 250 years. This together with the fact that gas-fired power plant have the shortest construction times and the lowest investment costs of any form of power generation  provides the possibility to hold down electricity generation costs. The increase in generation costs in recent times has been the natural consequence of the subsidy regimes for wind and solar power plants and the opportunistic rush to renewable power. Huge fortunes have been made by “green” developers as the subsidies have been milked – but consumers have only seen rising electricity prices.

Bloomberg  reports:

A shale-driven glut of natural gas has cut electricity prices for the U.S. power industry by 50 percent and reduced investment in costlier sources of energy. With abundant new supplies of gas making it the cheapest option for new power generation, the largest U.S. wind-energy producer, NextEra Energy Inc. (NEE), has shelved plans for new U.S. wind projects next year and Exelon Corp. (EXC) called off plans to expand two nuclear plants. Michigan utility CMS Energy Corp. (CMS) canceled a $2 billion coal plant after deciding it wasn’t financially viable in a time of “low natural-gas prices linked to expanded shale-gas supplies,” according to a company statement.

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Wind power has less potential than claimed and the role of gas is underestimated

August 14, 2011

That the intermittent nature of solar and wind power inherently limits how such capacity can be installed and despatched seems pretty obvious but has always been underestimated by the renewable energy lobby. As subsidies are reduced in the face of government cutbacks and as the still very high costs of renewable power work their way into electricity tariffs some of the “green sheen” surrounding solar and wind power is becoming decidedly tarnished.

A new  study of the UK energy system has been published by the Oxford Institute for Energy Studies 

The Impact of Import Dependency and Wind Generation on UK Gas Demand and Security of Supply to 2025

By Howard Rogers

Summary: This paper by Howard Rogers challenges the assumption of UK government policy papers and projections that, as a result of substantial increases in renewable and other low carbon generation capacity, the role of gas in the will decline rapidly over the next decade and beyond. The study suggests that gas will retain a central and undiminished role in the UK power generation sector. Although its role in the power generation sector may change, gas is likely to be particularly important in respect of ensuring security of supply in the context of increasing intermittent wind generation. As a result, additional gas storage will be needed and, given current market conditions, immediate attention needs to be devoted to creating incentives to ensure this will be provided.

The Telegraph writes:

UK Windpower targets are ‘unfeasible’

Howard Rogers, senior research fellow at the Oxford Institute for Energy Studies, said in a study that Britain’s power network is not built for wind power accounting for more than a third of capacity on the system.

He said that any more than 28 gigawatts of wind would mean it is likely that turbine owners would regularly have to be paid to keep capacity off the system. Earlier this year, six wind farms were paid £900,000 to stop generating for one night, because the system became overloaded.

The study challenges the ambitious estimates in a study commissioned by the Government which estimates that 58 gigawatts of wind is likely to be built in a “medium activity” scenario by 2030, out of a total system of 80 gigawatts of capacity. …. Mr Rogers said this does not fully consider the ability of the grid to cope with the intermittency of wind, which often does not blow at all or can be too strong, causing overload.

“It would appear that the more ambitious targets for wind generation in the UK have been formulated without a full appreciation of the costs and complexities caused by the intermittency of very substantial levels of wind generation,” the report says. “The analysis concludes that the maximum feasible level of wind generating capacity is 28 gigawatts.

At higher levels than this, the country faces the prospect of short notice intervention to reduce turbine output with the added complication that forecasts of wind speed beyond six hours into the future are inherently uncertain.”

The Oxford Institute for Energy Studies is allied to three Oxford University colleges but also receives funding from “members” and sponsors, such as gas producers BP and BG Group and companies with huge investments in wind power, including Centrica and Dong Energy. Its gas research is also sponsored by National Grid.

Professor Jonathan Stern writes in the preface to the study: “It is no part of the remit of the Oxford Institute for Energy Studies gas research programme to promote natural gas, either in the UK or more generally. We are gas researchers not advocates or lobbyists. However, our research increasingly suggests that the likely future role of gas in energy balances has and continues to be underestimated.”

Related:

Wind stops wind power….. 

Bio-gas is out, shale gas is in and there is no “peak” gas in sight!


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