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By Many Calculations, LNG Is a Fail for BC: Report

By Many Calculations, LNG Is a Fail for BC: Report

The math for liquefied natural gas is bad on emissions, revenues, jobs, even offsetting coal in China, finds a new study.

JohnHorganInvestingCanada.jpg
Go figure. BC NDP Premier John Horgan announcing in 2018 a $40-billion investment by the consortium LNG Canada in its Kitimat terminal for processing and export. Photo: BC Government.

David Hughes, one of the nation’s foremost energy analysts, has a simple message for the governments of British Columbia and Canada when it comes to advocating for LNG projects.

“Do the math.”

Hughes has parsed the numbers and they don’t add up on methane emissions, climate change targets, resource royalties, job benefits or even basic economics.

“The math is clear,” says Hughes, whose latest 57-page report on LNG exports highlights a long pipeline of damning figures.

Emissions targets: Won’t LNG help hit them? The numbers say noThe Tyee is supported by readers like you Join us and grow independent media in Canada

The province’s CleanBC plan, for example, demands an 80-per-cent reduction in greenhouse gas emissions by 2050 from 2007 levels.

But Hughes, who was a scientific researcher for 32 years at the Geological Survey of Canada, checked the math on emissions based on energy production forecasts made by the Canada Energy Regulator.

His math is conservative. It excluded any LNG exports. It assumes current major reductions in methane leaks from gas extraction might be plugged. And it further assumes the electrification of some upstream projects. Still, Hughes found that “emissions from oil and gas production would exceed B.C.’s 2050 target by 54 per cent.”

(A group of scientists writing in Nature found the same thing on a global scale last year: just using existing fossil fuel infrastructure takes the world into climate change hell.)

…click on the above link to read the rest of the article…

The Energy Transition: Who has the right to speak?

The Energy Transition: Who has the right to speak?

Italy is not a windy country and it relies mainly on the sun for its renewable energy. Nevertheless, some spots of the Appennini mountains are swept by enough wind to make it possible to build wind plants. In the picture, you see the wind farm of Montemignaio, not far from Florence, where one of the first large wind plants in Italy was built, already in 2001. It has been working beautifully for nearly 20 years. Other wind plants are planned in Italy, but a strong local opposition and a lack of long-term vision at the national level make their construction difficult and slow.


While the ecosystem starts showing signs of collapse, we desperately need to do something to promote the renewable energy transition. But we seem to be stuck: blocked by science denial, political polarization, sheer ignorance, and slick propaganda. Mostly, what we need seems to be a new way of seeing priorities in a world dominated by financial profits only. But, as the situation becomes worse, we seem to be retreating more and more into obsolete views where everyone sees nothing but their personal short-term interests. In the text below, you can find the transcription of a speech given by Professor Andrea Pase of the University of Padua in an ongoing debate on the advisability of building a wind power plant on the Apennines, in Italy. Pase masterfully identified a key element in the question: scale, both spatial and temporal. The same concept applies to many other public utilities. Who has the right to speak about a new, planned infrastructure? It often happens that the inhabitants of the affected territories engage in defending what they see as “their” land.

…click on the above link to read the rest of the article…

Huge Debt Payments Come At Worst Time Possible For Canadian Drillers

Huge Debt Payments Come At Worst Time Possible For Canadian Drillers

The collapse in oil prices has significantly deteriorated Canada’s oil companies’ finances and has made repaying their debt more challenging. Over the past decade, Canadian firms have borrowed money to survive the previous oil crisis of 2015-2016 and boost production post-crisis. But now the second price collapse in less than five years is leaving Canada’s oil patch, especially the smaller players, extremely vulnerable as debt maturities approach.   

This year, the oil crash coincides with the highest-ever annual debt maturities in the Canadian energy sector, according to Refinitiv data cited by Reuters. In 2020, oil and gas firms have to repay US$3.7 billion (C$5 billion) in debt maturities, up by 40 percent compared to last year.  

The debt pressure adds to the Canadian energy sector’s new predicament with low oil prices, low cash flows, and low overall demand for crude oil due to the coronavirus pandemic.

Some companies are set to default on debts, while others are looking at restructuring options and refinancing. Banks are not generally too keen to own energy assets. But the banks may be the ultimate judge of who can refinance, who can stay afloat, or who can go belly up in this crisis, legal and industry professionals told Reuters.

Some of Canada’s oil and gas firms had not overcome the previous crisis when this one hit.

According to Bank of Canada’s recent Financial System Review—2020, the COVID-19 crisis led to widespread financial distress in all sectors, but “Canada is also grappling with the plunge in global oil prices, which hit while many businesses in the energy sector were still recovering from the 2014–16 oil price shock.”

The energy sector has the most refinancing needs over the next six months, at US$4.43 billion (C$6 billion), and faces the most potential downgrades, according to Bank of Canada.

…click on the above link to read the rest of the article…

How We Got Here: the Global Economy’s 75-Year Stumble to the Precipice

How We Got Here: the Global Economy’s 75-Year Stumble to the Precipice

Not only will there not be a recovery, but there can’t be a recovery, as those brittle extremes have been lost for good.

How did the global economy end up teetering on a precarious financial precipice? To formulate a cogent answer, let’s take a whirlwind tour of the history of the global economy 1946-2020.

Before we start the tour, I want to return briefly to my first Musings of the year, which was posted on January 4, 2020, before Covid-19 was officially announced on January 23, 2020. (The Musings Reports are sent weekly to patrons and subscribers at the $5/month or higher level.)

Instability Rising: Why 2020 Will Be Different:
“Economically, the 11 years since the Global Financial Crisis of 2008-09 have been one relatively coherent era of modest growth, rising wealth/income inequality and coordinated central bank stimulus every time a crisis threatened to disrupt the domestic or global economy.This era will draw to a close in 2020 and a new era of destabilization and uncertainty begins.”

The long-term trends set up a row of dominoes that the pandemic has toppled. But any puff of air that toppled the first domino would have toppled all the dominoes of fragility, instability and unsustainable extremes that characterize the global economy.

The whirlwind tour of the global economy’s history must include these essential dynamics: energy, currencies, globalization, debt and financialization, which broadly speaking refers to everything that renders finance (borrowing, leverage, speculation) more profitable than actually generating goods and services.

The “glorious thirty” (Les Trente Glorieuses) years from 1946 to 1975 were decades of rising prosperity in the developed world (Europe, Japan, North America) and rapid development in the first tier of developing countries in Southeast Asia and elsewhere. (Decolonized nations and China struggled with political, social and economic turmoil.)

…click on the above link to read the rest of the article…

The World’s Most Important Oil Consumers And Producers

The World’s Most Important Oil Consumers And Producers

Following last week’s release of the BP Statistical Review of World Energy 2020, I began to review and analyze the data. Today I take a deeper dive into the numbers on petroleum. Oil accounts for a third of the world’s energy consumption. That is the greatest share for any category of energy. In 2019, the world consumed a record 98.3 million barrels per day (BPD) of oil. This was nearly 1 million BPD higher than consumption in 2018, and marked the 10th consecutive record for global oil consumption.

Over the past 35 years, global oil consumption has risen by 39 million BPD, an average increase of 1.1 million BPD each year. Last year’s rise fell just short of that average.

In recent years, BP has begun to provide more granularity in the Review. In previous years, the oil consumption category included biofuels. Now, they have split biofuels into a separate category, so the consumption numbers above are for just oil and derivatives of natural gas and coal (e.g., synthetic oil).

The U.S. continues to lead all countries in the consumption of oil, but China has had the fastest consumption growth for several years. Below are the Top 10 global consumers of oil for 2019.

Related: Saudi Arabia Eyes Total Dominance In Oil And GasOil consumption fell in most developed countries and rose in most developing countries. A notable exception was Germany. Although consumption in OECD countries fell by 0.6% and consumption across Europe was down 0.3%, Germany bucked the trend and saw its consumption grow by 0.9%.

The biggest percentage increase in oil consumption was in Iran, which was the world’s 11th largest consumer. Demand there jumped by 10.0%. Iran was the only country in the world with a double-digit percentage increase in demand.

In contrast, double-digit decreases in oil demand were seen in Iceland (-12.7%), Venezuela (-11.6%), and Pakistan (-10.5%).

…click on the above link to read the rest of the article…

Nuclear powered airplanes, cars, and tanks

Nuclear powered airplanes, cars, and tanks

Preface. After all the research I’ve done on rebuildable, not renewable wind and solar, hydrogen, batteries, and other Green dreams of an endless future of growth based on them, I’ve come to see them as just as likely as nuclear airplanes and cars. Not going to happen.

***

Nuclear Airplanes

Fuels made from biomass are a lot like the nuclear powered airplanes the Air Force tried to build from 1946 to 1961, for billions of dollars. They never got off the ground.  The idea was interesting – atomic jets could fly for months without refueling.  But the lead shielding to protect the crew and several months of food and water was too heavy for the plane to take off.  The weight problem, the ease of shooting this behemoth down, and the consequences of a crash landing were so obvious, it’s amazing the project was ever funded, let alone kept going for 15 years (Wiki 2020).

Although shielding a plane enough to keep the radiation from killing the crew was impossible, some engineers proposed hiring elderly Air Force crews to pilot nuclear planes, because they would die before radiation exposure gave them fatal cancers. Also, the reactor would have to be small enough to fit onto an aircraft, which would release far more heat than a standard one. The heat could risk melting the reactor—and the plane along with it, sending a radioactive hunk of liquid metal careening toward Earth (Ruhl 2019).

Nuclear powered Cars

In 1958, Ford came up with a nuclear-powered concept, the Nucleon car that would be powered by a nuclear reactor in the trunk.

In the 1950s and 1960s, there was huge hype around nuclear energy. Many believed it would replace oil and deliver clean power.

…click on the above link to read the rest of the article…

Natural Gas Price Plunge Could Soon Lead To Shut-Ins

Natural Gas Price Plunge Could Soon Lead To Shut-Ins

Natural gas prices plunged to new lows this week, falling below $1.50/MMBtu, a catastrophically low price for U.S. gas drillers.  The factors afflicting the gas market are multiple. Prices had already fallen below $2/MMBtu at the start of 2020, weighed down by oversupply. But it wasn’t a problem confined to the U.S. There was also a global glut of LNG due to a wave of capacity additions in 2019.  

That was the situation heading into 2020. But just as the Covid-19 pandemic tore apart the oil market, natural gas also went into a tailspin. Global gas demand is expected to fall by 4 percent this year, “largest recorded demand shock” in history, according to the International Energy Agency. 

Buyers of U.S. LNG are now cancelling shipments at a rapid clip. U.S. LNG exports have declined by more than half compared to pre-pandemic levels.

“There would have been too much LNG in the world even without Covid-19,” Ben Chu, a director at Wood Mackenzie’s Genscape service, said in a statement. “Covid-19 has made it worse.”

Buyers abroad are willing to pay a cancellation fee instead of receiving shipment from U.S. exporters, a sign of how badly the market has deteriorated. For August delivery, between 40 and 45 cargoes have been cancelled, nearly double the rate of cancellation in June. 

Typically, cheaper gas can stimulate demand, particularly in the electric power sector. But that outlet is not as large as it may have been in the past, not least because gas has already been cheap for quite some time. Thus, the coal-to-gas option is limited. Without an export route, and without larger uptake from utilities, the gas glut has deepened. 

…click on the above link to read the rest of the article…

Can Geothermal power make up for declining fossil fuels?

Can Geothermal power make up for declining fossil fuels?

Preface. Geothermal power plants are cost justified only in places where volcanic or tectonic activity brings heat close to the surface, mainly in “ring of fire” nations and volcanic hot spots like Hawaii.   Even then drilling can only be done where the rocks below are fractured in certain ways with particular chemistries.  A great deal of heat needs to be fairly close to the surface as well, since drilling deeply is quite expensive.

The reasons drilling is so difficult and expensive are:

  1. You have to remove all the rock you’ve cut from the hole which gets harder and harder as the hole gets deeper
  2. Drilling erodes the drill bit and pipe so you have to keep replacing them
  3. Drilling heats the rock up, so it has to be cooled down to keep the equipment from getting damaged
  4. The deeper you go, the hotter it gets, and the more expensive the drilling equipment gets using special metallurgy
  5. the fluids wreak havoc on boreholes by destroying their liners and concrete plugs, and are very corrosive,  it’s scary stuff (Oberhaus 2020)
  6. Pipes have to be thick and heavy to survive pumping pressures, about 40-50 pounds per foot. A deep well might have a million pounds of piping.  Just its own weight can break it if not well made, and at some point it’s hard to find hoisting equipment with enough power to lift it
  7. If the rocks aren’t stable, the hole may collapse
  8. There are often pressurized fluids that want to flow up the hole that can cause a dangerous blowout
  9. Some deep rock leaches toxic or radioactive materials, which increases costs to dispose of them and can make the drilling equipment hazards to touch

…click on the above link to read the rest of the article…

Chesapeake Files For Bankruptcy, Wiping Out $7 Billion In Debt And Any Existing Equity Value

Chesapeake Files For Bankruptcy, Wiping Out $7 Billion In Debt And Any Existing Equity Value

After years of melting, the Chesapeake icecube is finally history: at exactly 350pm on Sunday afternoon, the company that launched the US shale boom, finally gave up and filed for a pre-packaged bankruptcy in the Southern District of Texas. In so doing, the company with roughly $9.5 billion in debt has become one of the biggest victims of a spectacular collapse in energy demand from the virus-induced global recession, and follows the collapse of another high-flyer in the US oil patch, Whiting Petroleum, which filed for Chapter 11 at the start of April after championing what was once the premiere U.S. shale field, the Bakken of North Dakota.

As part of its prepack agreement, Chesapeake announced that it had entered into a Restructuring Support Agreement (“RSA”) with 100% of the lenders under its revolving credit facility, holders of approximately 87% of the obligations under its Term Loan Agreement, approximately 60% of its senior secured second lien notes due 2025, and approximately 27% of its senior unsecured notes, pursuant to which Chesapeake will implement a Chapter 11 plan of reorganization to eliminate approximately $7 billion of debt.

Of course, since 73% of unsecured bondholders refused to sign off on the deal, expect a very vicious bankruptcy fight over the recoveries, as hedge funds that accumulated positions in the bonds unleash hell in their fight with the secureds (even as the equity committee claims that all classes above it should be unimpaired).

Also, we have some bad news for Jefferies, which won’t be able to repeat its hilarious attempt to fund the company in bankruptcy by selling stock to Robnhood daytraders: as part of the RSA, the Company has secured $925 million in debtor-in-possession financing lenders under Chesapeake’s revolving credit facility.  The DIP will provide Chesapeake the capital necessary to fund its operations during the Court-supervised Chapter 11 reorganization proceedings.

…click on the above link to read the rest of the article…

Peak Fuel Demand Will Occur Within 10 Years

Peak Fuel Demand Will Occur Within 10 Years

It has been a tough few months for the oil industry, and there’s more pain on the way as the industry struggles with disruptive forces that could completely transform it. Now, according to BloombergNEF, oil and gas companies have one more thing to worry about: peak fuel demand.  In an outlook for road fuels published earlier this month, BloombergNEF forecasts that gasoline demand will peak in 2030, with diesel following three years later. As a result, demand for crude oil from the road transport sector is seen peaking in 2031, BloombergNEF said, at 47 million barrels daily. That’s higher than BloombergNEF’s 2019 projection, which saw oil demand from light and heavy-duty vehicles peaking at 45.1 million bpd.

To fully realize the implications of this trend, here is some context. As of 2019, road transport accounted for more than 40 percent of overall global oil demand. What’s more, road transport has accounted for more than half of total oil demand growth over the past two decades. Peak demand for road transport fuels, therefore, is a harbinger of peak oil demand.

The immediate outlook for fuel demand is also not rosy, with the lockdowns and international movement restrictions erasing ten years’ worth of demand growth, according to BloombergNEF. This effect will likely be temporary; as lockdowns ease, demand for fuels begins to recover, even though it remains doubtful whether it will recover fully to pre-pandemic levels.

So, what are the culprits behind this looming slump in fuel demand? First, there is fuel efficiency: a factor that, according to BP, will improve so much that energy consumption in the transport sector will only rise by 20 percent by 2040. BP made that forecast last year, long before the coronavirus. Now, those changes could accelerate.

…click on the above link to read the rest of the article…

30% Of U.S. Shale Drillers Could Go Under

30% Of U.S. Shale Drillers Could Go Under

U.S. shale was one of the big losers of the Saudi-Russian price war that many saw as a war on U.S. shale. Producers scrambled to stay afloat as prices sank back to lows not seen since 2016, and they are still scrambling. Banks are giving them the cold shoulder, worried that many will not be able to pay their debts. Is there a way out? According to various forecasting agencies, there is, but it will take a while. A Bloomberg analysis of forecasts for the shale industry made by outlets such as the International Energy Agency, energy consultancy Rystad, IHS Markit, Genscape, and Enervus suggests shale will be back on its feet by 2023, with production back to over 12 million bpd.

This is not a long time for a full recovery, really, especially given the current circumstances, including shut-in wells, abandoned drilling plans, tight cash, and, for many, looming bankruptcies.

As much as 30 percent of shale drillers could go under if oil prices fail to move substantially higher, Deloitte said in a recent study, as quoted by CNN. These 30 percent, the firm said, are technically insolvent at oil prices of $35 a barrel. Right now, West Texas Intermediate is higher than $35 but not by much. Oil is now trading closer to $35 than to $50—the level at which most shale drillers will be making money.

And they need to make money: banks have started cutting credit lines for industry players as they reassess their assets and the production that they promised would be realized from these assets. According to calculations by Moody’s and JP Morgan, cited by the Wall Street Journal, banks could reduce asset-backed loan availability for the industry by as much as 30 percent, which translates into tens of billions of dollars.

…click on the above link to read the rest of the article…

Energy and Institution Size

Energy and Institution Size

This week was a first for me. I participated in an academic conference that was entirely online. The conference — called Thermodynamics 2.0 — was designed to connect the natural and social sciences. It was a fitting place to discuss my research, and there were many interesting (virtual) talks.

I’ve posted here a recording of my presentation, called Energy and Institution Size. In it, I discuss how firms and governments tend to get larger as energy use increases. And I tell you why I think this happens. (Spoilers … I think it has to do with hierarchy.)

If you’re a regular reader, you’ll have seen much of this material before (hereherehere, and here). But perhaps you’ll enjoy an audiovisual presentation of it. If you’re a new reader, this talk is a good introduction to my work.

You can download the slides here. If you want to dive into the methods, you can read about them over at PLOS ONE. For a more recent article about the same evidence, check out Economic Development and the Death of the Free Market.

How to Get Off Fossil Fuels Quickly—and Fairly

How to Get Off Fossil Fuels Quickly—and Fairly

Researchers from the National Renewable Energy Laboratory (NREL) discuss panel orientation and spacing for a project on simultaneously growing crops under PV Arrays while producing electricity from the panels in South Dearfield, Massachusetts. The project is part of the DOE InSPIRE project seeking to improve the environmental compatibility and mutual benefits of solar development with agriculture and native landscapes.PHOTO FROM SCIENCE IN HD/UNSPLASH Climate experts share a range of ideas and strategies for envisioning a better future.


When it comes to a just transition, it’s going to take a radical reimaging not only of our economy but also of our culture and the shape of our social structures. YES! co-hosted a conversation with experts from the nonprofit The Land Institute to discuss policy proposals and new ways to rebuild our sense of self and community from the bottom up.

The discussion was prompted by a new book, The Green New Deal and Beyond, by Stan Cox, the Land Institute’s lead scientist for perennial crops. He was joined by his colleagues, Director of Ecosphere Studies Aubrey Streit Krug, and President Emeritus Wes Jackson. The event was moderated by YES! contributing editor Robert Jensen.

Together they share a range of ideas and strategies for envisioning a better future.

The conversation has been edited and condensed for clarity.

ROBERT JENSEN: I would propose that the most important word in the title of your book, Stan, is “beyond.” We know the Green New Deal is not a fully fleshed out political program yet, but why do we need to go beyond it?

…click on the above link to read the rest of the article…

Canada’s Oil And Gas Industry Is Critical To Its Economic Survival

Canada’s Oil And Gas Industry Is Critical To Its Economic Survival

  • Canada’s oil and gas industry is yet to receive any funds from the federal government despite being that largest industry in the country.
  • The nation’s economic recovery will be intimately linked with the recovery of its oil and gas sector.
  • Top executives at oil and gas firms are still waiting for specifics on the loan program

Canada sees the oil and gas industry as crucial to its economy and economic recovery after the pandemic, and the federal government is working on getting funds through to the industry, which hasn’t seen any financial help from the loan programs, Federal Natural Resources Minister Seamus O’Regan said.

“The bottom line is the country is not going to recover unless the oil and gas sector recovers,” Calgary Herald columnist Chris Varcoe quoted O’Regan as saying on Monday on an online seminar with Calgary-based ARC Energy Research Institute.

“This is the biggest industry in the country. It’s our biggest export, so there is a lot on the line for everybody,” the minister said.

Canada’s federal government has set up programs to support businesses, including in the oil and gas industry, with relief financing to help them overcome the crash in oil prices and the COVID-19 pandemic. Canada’s oil firms, however, were still struggling early this month to understand what it takes to qualify for a federal government program. Meanwhile, industry representatives said they were unaware of any firm that could access financing under those programs.  

Top executives at many Canadian oil firms are still waiting for specifics regarding the program for loans while their companies review eligibility criteria. Some managers believe that the federal government’s intentions are good, but the details are still unclear. Others feel deceived and question whether the federal government is sincerely intent on helping the oil industry.

…click on the above link to read the rest of the article…

Global Gas Production Set To Tumble In 2020

Global Gas Production Set To Tumble In 2020

  • Natural gas production, which was originally projected to grow in 2020, is now facing an estimated decline of 2.6 percent.
  • Associated gas from oil fields is going to be hit hardest, with an expected decline of 5.5 percent compared to 2019 levels
  • The biggest drop in associated gas production will be in North America, which makes up roughly half of the global output

The Covid-19 pandemic has landed a lasting blow to both oil and gas markets. Global oil production has absorbed the lion’s share of the impact, but natural gas output, which was previously set to grow, is also set to decline by 2.6 percent this year, Rystad Energy forecasts. Production of associated gas from oil fields will be hit most, losing some 5.5 percent compared to 2019 levels.

Before Covid-19 forced a new reality upon the energy world, Rystad Energy expected total natural gas production to rise to 4,233 billion cubic meters (Bcm) in 2020, from 4,069 Bcm last year. Now this estimate is revised down to 3,962 Bcm for this year, rising to 4,015 Bcm in 2021 and to 4,094 in 2022.

Production from natural gas fields, which was initially expected to rise to 3,687 Bcm this year from 3,521 Bcm in 2019, is expected to reach 3,445 Bcm instead, recovering to 3,485 Bcm in 2021 and further to 3,551 Bcm in 2022.

The most affected output in percentage terms is the one of associated gas, which was initially forecast to stay largely flat year-over-year from the 2019 level of 547 Bcm. It is now expected to fall to 517 Bcm instead in 2020, rising to 530 Bcm in 2021 and 542 Bcm in 2022. Associated gas will likely only again exceed 2019 levels from 2023 onwards.

…click on the above link to read the rest of the article…

Olduvai IV: Courage
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Olduvai II: Exodus
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