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The post describes how new supercritical CO2 Brayton Cycle turbines may revolutionise the efficiency of electricty generation. Background image, existing Rankine Cycle steam turbine. Foreground, Brayton Cycle turbine with same power rating.

Let’s say you and I need to move 1 million tons of sand. You show up to the site with a backhoe and a dump truck, and I show up with a teaspoon. Naturally you ask me what the heck I’m planning to do with that teaspoon. I answer seriously with “Every little bit helps.”

Would you think me rational?

The problem with people advocating reducing carbon dioxide emissions is they are frequently bringing a teaspoon to do the work. Oh, they don’t call it a teaspoon, they’ll show you all sorts of fanciful projections and imaginary outcomes, but at the end of the day, it is still a teaspoon. And no, the teaspoon doesn’t help – we are wasting time energy and money on things that have no hope of moving that mountain.

The U.S. EIA International Energy Outlook 2017 projects that world energy consumption will grow by 28% between 2015 and 2040. Most of this growth is expected to come from countries that are not in the Organization for Economic Cooperation and Development (OECD). Non-OECD Asia (which includes China and India) accounts for more than 60% of the world’s total anticipated increase in energy consumption.

The world currently uses nearly 22,000 TWh/yr. of electricity. But this is far less than what we need. If the world, everyone on it, used electricity as frugally as Europeans, we would need approximately 34,617 TWh/yr. So we need a LOT more electricity. That is just electricity mind you – if we go to electric cars we need much more than that to power transportation.

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

US Oil Exports Are Exceeding Almost All Predictions—Thanks to Fracking

October 16, 2018

US Oil Exports Are Exceeding Almost All Predictions—Thanks to Fracking

And crude oil exports are supposed to double by 2020, according to the San Antonio News-Express. That’s a lot of oil — and almost all of it is fracked.

That should come as no surprise. In August 2015, my story for DeSmog, “Lifting Ban On U.S. Crude Oil Export Would Enable Massive Fracking Expansion,” pretty much sums up what is happening now. However, that’s not what the industry experts at the time were predicting.

Last year I noted how quickly these experts, from energy consultants to academics, were proven wrong in their predictions about the effects of overturning the 40-year-old ban, which occurred in December 2015.

If exports double by 2020, those experts will be that much more wrong. Perhaps the best example of this phenomenon is from a December 2015 newsletter from CME Group — a commodities trading group that stood to profit greatly from trading U.S.exported oil. The newsletter, which takes a question-and-answer format, included the following:

Question #2: Will lifting the crude oil export ban result in greater U.S. production?

The answer: No.

Couldn’t get more wrong that, but CME now lists U.S. WTI crude on its website as one of the top commodities it trades. I guess there’s a lesson here about whether to trust a commodities trader.

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

US Demands For More Oil Could Backfire

October 8, 2018

US Demands For More Oil Could Backfire

This week the State Department accused OPEC of hiding spare capacity exceeding 1.4 million barrels daily. It urged the cartel to use it to stop the oil price rally that has continued uncomfortably close to midterm elections. The request—or demand, depending on your interpretation—is unprecedented and it might do more harm than good.

Bloomberg quoted a veteran energy analyst from Jefferies, Jason Gammel, as saying, “This is the lowest level of spare capacity in the global system relative to demand that I’ve ever seen. Spare capacity is moving to a precariously low point.” The problem is, nobody seems to be certain exactly how much OPEC’s spare capacity is.

In its latest Short-Term Energy Outlook, the EIA estimated OPEC’s spare production capacity at 1.66 million bpd. But the International Energy Agency last month estimated OPEC’s spare capacity at 2.7 million bpd and is fast declining. What we do know, however, is how much spare capacity Saudi Arabia has: 1.3 million bpd, as revealed by the Energy Minister of the Kingdom during the Russian Energy Week in Moscow.

This is bad news. Until now, various sources, including the Saudis themselves and the EIA, put the Kingdom’s spare capacity at between 1.5 and 2 million bpd. In June, President Trump said the Saudis could pump 12 million bpd. The IEA concurred. Saudi Arabia’s September production rate rose to 10.7 million bpd.

From this level of production, with 1.3 million bpd in spare capacity, we get a maximum production rate of 12 million bpd, indeed. However, Khalid al-Falih delivered a worrying message: Saudi Arabia will spend US$20 billion on maintaining and boosting its spare capacity in the coming years. The news naturally cast doubt on whether the current capacity will be sufficient to cover demand.

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

EIA’s Electric Power Monthly – August 2018 Edition with data for July

October 4, 2018

EIA’s Electric Power Monthly – August 2018 Edition with data for July

chart/

The EIA released the latest edition of their Electric Power Monthly on September 25th, with data for July 2018. The table above shows the percentage contribution of the main fuel sources to two decimal places for the last two months and the year to date.

For the month of July, the total amount of electricity generated was the second highest amount generated for any single month since January 2013 at 410,148 GWh, 2,302 GWh less than the amount generated in July 2016. Coal and Natural Gas fueled almost 68.5% of US electricity generation in July and while the contribution from Coal increased from 27.36% in June to 28.18% in July, the contribution from Natural Gas also increased by slightly more than five percentage points, reaching an unprecedented 40.28% up from 35.02% in June. Nuclear power generated 72,456 GWh, 3.97% more than it did in June but, due to the increase in total generation, the percentage contribution to the total actually declined to 17.67% from 18.77% in June.

In July, the contribution from All Renewables at 13.01% fell further below that from Nuclear at 17.67%, similar to July 2017 when the ramp up of total generation resulted in the percentage contribution from All Renewables falling further below that from Nuclear. The absolute contribution from Solar declined from it’s all time high in June of 10,880 GWh to 10,049 GWh, with the corresponding percentage contribution declining to 2.45% as opposed to 2.93% in June. The amount of electricity generated by Wind decreased by almost 35%, from 24,411 GWh to 15,897 GWh and coupled with the increased total generation, the percentage contribution declined from 6.58% to 3.88% in July. The contribution from Hydro decreased 13.53% from 27415 GWh in June to 23706 GWh, resulting in the percentage contribution decreasing from 7.39% in June to 5.78%. The combined contribution from Wind and Solar decreased to 6.33% from 9.51% in June. Consequently the contribution from Non-Hydro Renewables also decreased to 7.23% from 10.48%.

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

The “Weakest” EIA Report In Years

August 20, 2018

The “Weakest” EIA Report In Years

The EIA just published one of the “weakest” weekly oil reports in years, which suggests troubled waters ahead for the global oil market.

The timing of the report is not ideal, coming amidst a currency crisis in Turkey, which has raised fears of financial contagion in other emerging markets. The strength of the dollar is putting a long list of currencies under pressure, vexing policymakers around the world. Some countries, such as Argentina, are aggressively hiking interest rates to defend their currencies (although the peso continues to fall). Others, such as Turkey, are resisting any rate hikes at all, which is clearly not a solution to capital flight and a sharp devaluation.

It is too early to tell whether or not the sudden crisis will be confined to Turkey or if it will mushroom into an emerging market conflagration that sends emerging markets – and perhaps even the global economy as a whole – into a tailspin.

These currency troubles could severely undercut global oil demand. Not only are crude oil prices close to multi-year highs, but the strength of the dollar and the relative weakness of a variety of currencies in the developing world, combine for a toxic brew to demand. Oil prices are up some 6 or 7 percent on the year, but in Turkey, imported oil is now 60 percent more expensive – the result of the meltdown in the lira.

While the specific percentages might vary from country to country, much of the world is experiencing painful increases in fuel because so many currencies are being trampled by the strength of the dollar.

The early signs of trouble to the oil market are starting to materialize. The EIA’s weekly report showed a massive 6.8-million-barrel increase in crude oil inventories.

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

The Productivity Problem In The Permian

August 16, 2018

The Productivity Problem In The Permian

The multi-year campaign to boost efficiency and productivity in the U.S. shale patch could be nearing its limits.

Output in the Permian basin is already starting to slowdown, largely due to pipeline constraints. However, there is also a series of other data points that suggests that shale drillers are bumping up against a ceiling in terms of productivity and efficiency.

New data from the EIA shows a rather startling slowdown in the amount of oil that the average rig can produce from a new well in the Permian. In September, the EIA expects new-well production per rig to fall by 10,000 barrels per day (bpd) in the Permian, compared to August levels. That means that when a company deploys a rig to drill a new well, that rig will produce a little less oil than it did compared to the average rig did a month earlier.

(Click to enlarge)

New-well productivity has seesawed a bit over the years, spiking in 2016 when the industry scrapped inefficient rigs during the market downturn. Indeed, some of the recent decline in new-well productivity can be chalked up to the industry rushing to drill more. In this sense, it isn’t that the rigs are necessarily less productive, just that there are so many of them out there in the Permian, that the productivity figures fall because the denominator is larger.

But it’s also a reflection of the fact that drillers are being forced into less desirable locations with the field so crowded.

“We believe that the short-cycle nature of shale exploitation and the intensity of activity in the Permian means that production from Tier 1 geological locations (e.g., those with the best pay, the optimum pressure) is starting to move to Tier 2, which is unable to achieve the same rates of productivity,” Standard Chartered wrote in a note.

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

The U.S. Oil Production “Mirage”

August 4, 2018

The U.S. Oil Production “Mirage”

Some of the surge in U.S. oil production this past spring might have been “a mirage.”

On July 31, the EIA released monthly data on U.S. oil production, which revealed a decline in U.S. output of 30,000 bpd in May, compared to a month earlier. The dip is a surprise, given the widespread assumption that U.S. shale production was continuing to grow at a blistering pace.

To be sure, a big reason for the decline in overall output was the 75,000-bpd decline in production from offshore Gulf of Mexico. But Texas production only rose by 20,000 bpd, a disappointing figure that likely came in far below what most analysts had expected.

Moreover, the monthly total of 10.442 million barrels per day (mb/d) for May is sharply lower than what EIA itself thought at the time. Here are the weekly estimates for U.S. oil production that the EIA put out back then:

April 6: 10.525 mb/d
April 13: 10.540 mb/d
April 20: 10.586 mb/d
April 27: 10.619 mb/d
May 4: 10.703 mb/d
May 11: 10.723 mb/d
May 18: 10.725 mb/d
May 25: 10.769 mb/d

The weekly estimates tend to be less accurate than the retrospective monthly numbers. That is not a new dynamic, and estimating on a weekly basis inherently involves a lot of guesswork, so this is not a knock on the EIA.

Yet the discrepancy is rather striking. Not only did the EIA estimate that production in April and May was much higher than it actually was, but the agency also thought production was rising quickly.

If the weekly estimates were to be believed at the time, production would have climbed from 10.525 mb/d in early April to 10.769 mb/d by the end of May, an increase of 244,000 bpd over a roughly eight-week period.

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

USA and World Oil Production

June 5, 2018

USA and World Oil Production

All data below is from various sources. All US data is from the EIA. Unless otherwise noted is in thousand barrels per day.

US C+C production through April, 2018. For the last 8 months, the average increase in US production has been 168,000 bpd. Most of this has come from the Permian.

This chart is through February, 2018. US net imports peaked in 2006 and have dropped about 9.5 million barrels per day since then.

Alaska through March, 2018. Alaska’s decline has definitely slowed.

GOM through March. The resurgence in GOM production seems to have petered out about a year and a half ago and is now holding at about 1.7 million barrels per day.

North Dakota through March. Has shale production peaked in North Dakota? It does appear that they are having trouble increasing production in the last six months.

Texas through March, All that increase in US production has come from Texas, primarily from the Permian. For how long and for how much will this increase continue? I have no idea but guesses will be welcome in the comments below.

This data is from the Canadian National Energy Board and is through December, 2018. They say all data from September 2017 through December 2018 is an estimate. They are expecting production to bottom out in May 2018 and then increase for the remainder of the year.

This data is from the Russian Minister of Energy and is through May, 2018. Russian production has been almost flat for the last three months. Data from the Russian Minister of Energy averages about 400,000 barrels per day higher than the EIA’s estimate.

China through February, 2018. China is clearly in decline though the decline seems to have slowed.

Mexico through February, 2018. Mexico is in a slow decline though the decline has slowed in the last few months.

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

The Problem with EIA Shale Gas and Tight Oil Forecasts

April 3, 2018

The Problem with EIA Shale Gas and Tight Oil Forecasts

Each year the U.S. Energy Information Administration (EIA) produces forecasts of U.S. oil and gas production in its Annual Energy Outlook (AEO), which is widely viewed as an authoritative assessment of what to expect for future U.S. oil and gas output (the EIA prefers the term “projection” to “forecast”). The EIA’s reference case is considered as the most likely scenario by industry, policy makers, and the media.

Considering that AEO reference case forecasts for shale gas and tight oil production in recent releases are remarkably optimistic when considered at the play-level in terms of well productivity, decline rates and prospective areas, I find this baffling and worrisome. It’s one thing for industry to paint a rosy picture of future production, but something altogether different when a government agency—tasked with providing the American public with objective information—does it.

AEO2018, for example, projects that shale gas production will be 130% higher in 2050 than in 2016, while tight oil production will grow by 74%, all at relatively low prices. This despite the fact that average production from individual wells falls 70–90% in the first three years and entire fields would decline 20-40% a year if new wells weren’t constantly drilled.

I recently assessed the EIA’s AEO2017 forecasts and assumptions for all major shale gas and tight oil plays using a proprietary commercial database of well production data—a database that the EIA itself uses for its own analysis. The study revealed that the EIA has overestimated the likely future production of shale gas and tight oil for most plays by a wide margin. This is a result of overestimating the size of the prospective area and hence the number of wells that can be drilled, and underestimating future declines in well productivity.

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

Oil Prices Fall As EIA Confirms Inventory Build

March 28, 2018

Oil Prices Fall As EIA Confirms Inventory Build

After a surprise 5.32-million-barrel inventory build reported by the American Petroleum Institute (API) weighed on oil prices yesterday, the Energy Information Administration (EIA) is reportinga build of 1.6 million barrels for the week ending March 23.

The markets, which have not had a chance to react to the EIA report as of the time of writing, could ease their downward trend given the nearly 4-million difference in build in the official figures.

However, they could also take this as confirmation of a reversal of expectations. Heading into Tuesday’s API data, expectations were for a draw of around 430 million barrels.

The authority said refineries processed 16.8 million bpd of crude in the reporting period, unchanged from a week earlier. Gasoline production averaged 10.3 million bpd, compared with 9.9 million bpd a week earlier, and distillate output averaged 4.8 million bpd last week, versus 4.5 million bpd a week earlier.

Gasoline inventories, the EIA said, fell by 3.5 million barrels in the week to March 23. In the week before that, gasoline inventories marked a decline of 1.7 million barrels. Distillate inventories last week shed 2.1 million barrels, compared with a decline of 2 million barrels in the prior week.

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

United States as energy exporter: Is it “fake news”?

March 4, 2018

United States as energy exporter: Is it “fake news”?

Much of the media coverage of the American energy industry implies that America has become a vast and growing exporter of energy to the rest of the world and that this has created a sort of “energy dominance” for the country on the world stage.

Whether such reports qualify as so-called “fake news” depends very much on three things: 1) How one defines “fake news,” 2) whether writers of such reports qualify the words “imports” and “exports” with the word “net” and 3) which energy sources they are discussing.

In this case let’s define “fake news” as claims that official, publicly available statistics show plainly to be false. By that criterion anyone who claims that the United States is a net energy exporter would certainly be guilty of propagating “fake news.”

Energy statistics from the U.S. Energy Information Administration (EIA) show that in November 2017 (the most recent month for which figures are available) the United States had net imports 329.5 trillion BTUs of energy in all its forms.* That’s down from a peak of 2.74 quadrillion BTUs in August 2006, something that is certainly a turnabout from the previous trend. But all claims that the United States is a net energy exporter must be labeled as unequivocally false.

It turns out, however, that most people making misleading claims about America’s energy situation don’t actually say or write things which are technically false. What they do is use language which intentionally or unintentionally misleads the reader or listener.

For example, the claim that the United States is an exporter of crude oil is true. But that claim is entirely misleading. While the United States exports about 1.5 million barrels a day (mbpd) of crude oil, it also imports 7.5 mbpd.

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

EIA’s Shocking U.S. Oil Production Predictions

March 1, 2018

EIA’s Shocking U.S. Oil Production Predictions

Between 2010 and 2015, annual oil production in the U.S. grew by four million barrels per day (BPD). Production dipped in 2016, but then U.S. crude oil production again rose by 1.2 million BPD between January and December 2017, to levels that haven’t been seen since the early 1970s.

The surge in production is a result of growth in tight oil (more commonly known as shale oil). Many, including myself, never imagined that oil production could grow enough to threaten the U.S. oil production peak from 1970. But that looks inevitable at this point.

This production increase raises the question: Just how much will U.S. tight oil production increase before it peaks and begins to decline? Another million BPD? Three million BPD?

The Energy Information Administration’s latest Annual Energy Outlook (with projections to 2050) attempts to answer this question, modeling several scenarios for future oil production.

The Reference case projection assumes that known technologies continue to improve along recent trend lines. The economic and demographic trends that were used reflect the current views of leading forecasters.

In the High Oil and Gas Resource and Technology case, lower costs and a higher resource availability than in the Reference case are assumed. In the Low Oil and Gas Resource and Technology case, the assumption is of lower resources and higher costs.

Here are the EIA’s projections:

(Click to enlarge)

U.S. oil production projections.

Every case assumes at least a few more years of tight oil supply growth. The Reference case shows shale/tight oil production growth of two to three million BPD over the next three years, before leveling off and remaining at approximately that level until 2050.

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

EIA USA Reserve Estimates

February 21, 2018

EIA USA Reserve Estimates

EIA reserve estimates for USA for 2016 have been issued (a couple of months later than usual). The numbers they provide are ‘proven’ reserves of crude, condensate and natural gas.

chart/

The data is provided directly by the E&Ps with some adjustments made by EIA for missing numbers. The data show reserves for the end of a given year, plus the reasons for change over the year: basically discoveries, production, revisions and sales. Until 2015 EIA had different categories for discovery (essentially a new reservoir, although there may be new pockets in existing freservoir) and extension (an increase in the area of an existing field). Recently most of this category has been extensions to LTO fields (i.e. an increase in the expected economic drainage area of a play). This year the reporting has changed so all discoveries and extensions are reported as a single figure and I’ve shown only this sum for previous years too. I have summed revision gains and losses plus adjustments to give a net number, and similarly for sales and acquisitions.

This year the data include non-producing reserves. I don’t know for sure if this is new but I haven’t noticed it before and can’t find any history for previous years. ‘Non-producing’ may mean reserves behind wells that are offline (e.g. are uncompleted, for maintenance or because of lack of processing or transport capacity); or that have real development plans for their production (typically starting within the next five years according to SEC rules, although for large, long cycle conventional projects the time can be extended). The undeveloped values for 2016 are shown on each chart.

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

LNG comes to Boston, a harbinger of the future?

February 18, 2018

LNG comes to Boston, a harbinger of the future?

The most curious natural gas story of the year so far comes out of Boston and seems to have echoes of a deepening Russia-related scandal in Washington. A liquefied natural gas (LNG) tanker bearing natural gas produced in part in Russia delivered its cargo to the Boston area for insertion into the natural gas pipeline system there. Apparently, the Russian company that supplied some of the gas may fall under U.S. sanctions against the financing and importation of Russian goods.

One of the many ironies of the delivery is that the United States is simultaneously importing LNG in one place even as it exports LNG from another. (I’ll explain later why this may become a more frequent occurrence in the years ahead.)

The hue and cry from the natural gas partisans blamed Boston’s predicament on the lack of pipelines to carry growing gas production from the nearby Marcellus and Utica shale deposits to needy Bostonians whose gas supplies had been depleted by a deep winter freeze.

Within the context of this narrow appraisal, the partisans are mostly correct. Attempts to bring more pipeline gas to New England have come to grief, especially in New York state where residents have strongly opposed new natural gas pipelines and storage facilities.

In addition, the state banned hydraulic fracturing—the main method for extracting gas from the Marcellus and Utica deposits—in 2014, claiming the process threatened water supplies. That ban, of course, prevented any shale gas development in southern New York under which the deposits lie. And, it brought into disrepute all things related to hydraulic fracturing or “fracking” including natural gas pipelines and storage facilities.

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

U.S. Department of Energy Doubles Down on Shale Optimism

February 13, 2018

U.S. Department of Energy Doubles Down on Shale Optimism

The U.S. stock market is not the only thing that’s gotten overheated in the last few years. Exuberance over U.S. energy output has hit a record high as natural gas production has reached its all-time peak, and oil production nears highs not seen in 47 years. Thanks to the so-called “shale revolution” (tapping previously inaccessible fossil fuels in shale rock deposits through the use of hydraulic fracturing and horizontal drilling technologies), the U.S. government has green-lighted liquefied natural gas export terminals and pipelines and lifted the ban on oil exports. The statistical arm of the U.S. Department of Energy—the Energy Information Administration (EIA)—predicts that the United States will become a net energy exporter in the next five years, a status we haven’t enjoyed since Eisenhower was president.

Although shale development represents a remarkable technological achievement (made possible by cheap loans and questionable finances), the EIA seems to be betting heavily on the long-term prospects of tight (shale) oil and shale gas production, apparently in the erroneous belief that what goes up must keep doing so. This despite ample warning signs that the “shale revolution” will be a short-lived phenomenon. In fact, the higher production goes, the faster and sooner it will decline.

Since 2011 my colleague at Post Carbon Institute, David Hughes (an expert on fossil fuel production who worked for the Geological Survey of Canada for 32 years), has been sounding the warning bell about the danger of betting our energy future on shale. Through intensive analysis of oil and gas production data, he has identified a clear pattern of quite rapid boom and bust cycles in shale plays.

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

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